Never miss an update. You won't have to worry about missing anything. Christine Weaver . My life has not been ruined by having to write about Elon Musk on Saturdays, the former mergers and acquisitions lawyer told me. When we hear on the news "$8 billion collapse!" it's all fake because of crap like the Serum tokens. His column discusses current events in corporate finance and market. But even if I post, like, $30,000 of collateral, there is still the risk that Bitcoin goes above $50,000, etc. Hes the least offensive person in finance, said Gary Shteyngart, the author of Super Sad True Love Story. When Mr. Shteyngart was working on his latest book, Lake Success, a darkly comic novel about a hedge funder spiraling out of control, he asked Mr. Levine to review a draft for accuracy. The tone, though, is anything but pedantic. Never use a token you created as collateral suggests, to me, that FTX accepted its FTT token as collateral, probably from Alameda, probably in exchange for borrowing assets that it owes to customers. Theyll probably lend you like $100 against $200 of their stock, in an ordinary-course transaction; they just wont do too much of it. Then it sticks the envelope in a vault, and if at any point you ask for your money back, it opens the vault and hands you your envelope. He will come to you and say heres my Bitcoin back, Id like to withdraw my dollars. But you dont have his dollars, or not all of them; half of them are with Customer A. (Most notably, there *are* loan products. It just takes the $100 out of your envelope and replaces it with 99, etc., always keeping exactly the right amount of money (in whatever currency you like that day) in exactly your envelope. I joke that people want a lock of his hair.. Levine took several months off in 2020 for parental leave after the birth of his second child. It makes for a tricky decision for Zhao, known in the crypto world as CZ: Follow through with rescuing his onetime top rival and shoulder the financial and regulatory burdens, or let FTX crumble and sort through the potential wreckage? In financial news a medium not known for cultivating eccentric or literary voices theres no other writer quite like Mr. Levine, a former Goldman Sachs banker whose deadpan style mixes technical elucidation and wit. Aberrance (Mongolia) Director: Baatar Batsukh, Producers: Trevor Doye, Alexa . You can check your account balance, and Coinbase says you have 0.5 Bitcoin or whatever. No actual bank works that way. Sure, he was at Sesame Place, the theme park just outside Philadelphia, with his kids when Musk announced his Twitter bid, and then stayed up until midnight that night to get his newsletter, Money Stuff, out. Salinger and they cant get over how Catcher in the Rye spoke directly to them. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Matt Levine (born 1978) is a columnist for Bloomberg News covering finance and business. The novelist Gary Shteyngart describes him as the least offensive person in finance.. Anyway it is still early and confusing but that seems to be the story of FTX. In August, Musk had said he was done offloading Tesla stock and that it was important to avoid an emergency sale of the shares in case he was forced to close the Twitter acquisition and struggled to bring in additional equity partners. You can subscribe at. You wont have to worry about missing anything. Each day, Levine publishes Money Stuff, a widely read, free newsletter. As of yesterday's close, it had a stock price of $0.0004 and a market capitalization of about $98,000; it trades an average of about $13.26thirteen dollars and twenty-six centsworth of stock each day, though it had a big day last week when almost $400 worth of stock traded. Matt Levine Matt Levine Matt Levine. As of June 30, the companys assets amounted to $14.6 billion. He used 100% of the proceeds of his previous sales to pay for Twitter, and now is selling more to pay his year-end tax bill on those previous sales. The Only Crypto Story You Need, by Matt Levine - "Where it came from, what it all means, and why it still matters." (archive; also btw What Is Code? His answer, at least for now, is that the financial hole appears too deep. Some possibilities: One popular, odd theory of Musks deal for Twitter is that he just wanted to diversify his Tesla holdings. 3. But FTX doesnt have their money; it has FTT, and a loan to Alameda. Bloomberg's web site requires a subscription but you can also get the Money Stuff articles as an occasional email.It arrives at most once per day. FTX made up the Serum token on there own. Any institutional lending activity at Coinbase is at the discretion of the customer and backed by collateral. This sounds like a bad business model: The bank needs to pay for real estate and tellers and vaults, and it is not doing anything with your money. So the more people who sign up for Robinhoods service, and the more they trade, and the more volatile the stocks that they trade are, the more money Robinhood makes. By this standard, the last week of January 2021 was incredibly, incredibly good for Robinhood, an amazingly perfect week. Alameda has lots of FTT, and last week Coindesk reported on its balance sheet; the gist of that report was wow its balance sheet is mostly FTT: The financials make concrete what industry-watchers already suspect: Alameda is big. How Is That a Good Thing? And in fact Coinbase does have other revenue models besides charging trading fees, some of which are more run-vulnerable than what I say in the text. All of the knowledge that Matt has is available to him at all times, Mr. Mystal said. Remarkably, Mr. Levines piece was written more than an hour before the market went haywire. Mr. Levine says the book may have changed his life. Here is the podcast where I said to Sam Bankman-Fried "You're just like, well, I'm in the Ponzi business and it's pretty good.". S&P. When I was an investment banker, one thing that I did was pitch convertible bond offerings to companies. Unlike many other retail brokers, Robinhood charges these market makers a variable fee that is, roughly speaking, higher for very volatile stocks. A coverage banker an investment banker whose job was to know companies and advise them on financial topics would bring me to a meeting with the chief financial officer of one of her companies to talk about convertible bonds. chris@latitude38.com . Ledgers, Bitcoin, Blockchain, in which he lays out the basics of Bitcoin's technology. And so, at 33, Mr. Levine sat down to write. In 2007, he took a position at Goldman Sachs, applying his knowledge of corporate law to the financial markets. Receive a summary of the day's top tech newsdistilled into one email. Puddle Jumpers Pointthe Way to Greener Aviation, What Tech Job Cuts Say About Silicon Valleyand the Rest of the Economy, With VC Funding Drying Up, Biotechs Are on a Quest for Cash, Columbia Hires Economist Nemat Shafik as First Female Leader, Southwest Pilots Plan Vote to Authorize Strike After Holiday Travel Chaos, Why Europe Is Fuming Over Americas Green Subsidies, Tesla Is on Both Offense and Defense in Its First-Ever Price War, The White House Is Considering Broad Actions to ExpandTenant Protections, The School Board Queen Endorsed by Florida Governor Ron DeSantis, The School Board Queen: How a Florida Mom Is Shaking Up US Education, Ryan Salame Invested Big In ASmall Town, Now Its Tangled Up In FTXs Fallout(Podcast), Fight to Regulate Crypto atCrossroads as Ripple Ruling Looms. Learn more about a Bloomberg Law subscription. I wasnt aware that novels were allowed to be like this, and also that footnotes were allowed to be funny, he said. But Mr. Levine was never a high roller. To find out more about the company that provides the tech for this newsletter, visit Substack.com. Tyson Foods CFO Arrest Adds to Governance Challenges for Board. It was like this long, Matt-type silence, and then kind of a sigh, and then: OK, Mr. Shipley recalled. Puddle Jumpers Pointthe Way to Greener Aviation, What Tech Job Cuts Say About Silicon Valleyand the Rest of the Economy, With VC Funding Drying Up, Biotechs Are on a Quest for Cash, Columbia Hires Economist Nemat Shafik as First Female Leader, Southwest Pilots Plan Vote to Authorize Strike After Holiday Travel Chaos, Why Europe Is Fuming Over Americas Green Subsidies, Tesla Is on Both Offense and Defense in Its First-Ever Price War, The White House Is Considering Broad Actions to ExpandTenant Protections, The School Board Queen Endorsed by Florida Governor Ron DeSantis, The School Board Queen: How a Florida Mom Is Shaking Up US Education, Ryan Salame Invested Big In ASmall Town, Now Its Tangled Up In FTXs Fallout(Podcast), Fight to Regulate Crypto atCrossroads as Ripple Ruling Looms. Above the Laws sister blog Dealbreaker, focusing on Wall Street gossip was hiring. Yet he gives the same impression of personalization to readers who know little about finance. The mysterious outage of Tweetbot and other third-party Twitter clients that began Thursday night was an intentional suspension, according to internal messages viewed by The Information. The SEC is sort of . I encouraged him to use his own voice, Ms. Levin said. Microsofts expected investment in OpenAI, destined to be one of the biggest startup stories of the year, comes with a whole lot of strings attached. The whole extended . I write the Money Stuff newsletter at Bloomberg Opinion. On that note: Changpeng Zhao moved fast when Sam Bankman-Frieds FTX.com was on the brink, offering to take it over and stem any further crypto contagion. Bloomberg offered Mr. Levine stability and a larger platform. "I write a lot about people who have gotten in trouble with the SEC or the Justice Department. Subscribe to get full access to the newsletter and website. Yes. The business model of real-estate companies is pretty much, you borrow a lot of money, you use it to buy buildings, and you rent out space in the buildings to tenants. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz, and a clerk for the U.S. Court of Appeals for the 3rd Circuit. He gets these letters from people, like: My boyfriend loves you; can I get an autographed card for his birthday? said his friend, the journalist Mary Childs. I wrote a story about crypto for Bloomberg Businessweek. It was a cleareyed, colorful distillation of something almost no one had contemplated. Your accounts show that you owe clients 100 Bitcoins and $2 million and 150,000 FTT, and they owe you back 100 Bitcoins and $2 million, and you have 150,000 FTT of collateral, so everything balances. Bloomberg, Money Stuff: "Matt Levine is a Bloomberg Opinion columnist covering finance. But where do you get the money that you are lending to the customer? Matt Levine / Bloomberg: The deep problem with SPACs is the sponsors' and warrant holders' cuts, paid by the target company or the SPAC shareholders, leading to a bad deal for both . One other point here is that if this is the story, then it is not a liquidity crisis but a solvency one. If I short Bitcoin at $20,000 via futures and put up $4,000 of collateral, that is a leveraged trade; if Bitcoin goes above $24,000 then my collateral is gone. Red Flags Are (Mostly) in the Eye of the Beholder, By Aaron Harris · Jan. 18, 2023 9:00 AM PST. It would go out of business in fairly short order. Matt Levine is a columnist for Bloomberg News covering finance and business. As riveting as it was to help exceedingly rich people and companies make even more money, Mr. Levine was not happy. Matt Levine. Some of Mr. Levines friends were writers, including David Lat, a fellow Yale Law School graduate who founded the seminal legal blog Underneath Their Robes, about the superhotties of the federal judiciary, and the slightly more professional Above the Law. Tiger Global Slashes Value of Private Tech Bets by Billions, Documents Show. The way it works is roughly that you open an account and send dollars to Coinbase, and then you tell Coinbase Id like to buy some Bitcoin with those dollars, and Coinbase buys Bitcoin and holds on to it for you and charges you a fee for that transaction. It is not a plot-driven novel. Mayor pete may be a dunce, but he knows how to get money; . Subscribe to get full access to the newsletter and website. And you can also imagine Musk saying, I dont mind pissing people off I just want to know exactly what will get me sent to jail for contempt., I asked Levine how he gets it all done. He structured derivatives agreements that let companies and other Goldman clients buy and sell stocks using a variety of methods meant to help them reduce their taxes or get a better price. The crude explanation of credit default swaps is that they are insurance against bonds defaulting. If you think of the token as more or less stock, and you think of a crypto exchange as a securities broker-dealer, this is completely insane. After graduating from Harvard in 2000, with a major in classics, Mr. Levine taught Latin at a high school in a Boston suburb. The show's format pits 3 contestants against . This makes FTT kind of like stock in FTX: The higher FTXs profits are, the higher the price of FTT will be. Its neurotic, commenting on the nature of modernity itself. Used with permission. Happy Thanksgiving! . I dont want to sell my Bitcoin, because I am a true believer and also do not want to realize gains for tax purposes. In this description I have drawn on Twitter threads from Jon Wu, Lucas Nuzzi and an anonymous Wassie Lawyer, who make arguments along these lines, as well as this Substack post from Byrne Hobart. Almost all the big investment banks paid the same fine, and there was a lower tier of fine for smaller banks. 4. You Are Here:Home Economy, Financial System, Knowledge Management, Legal Research Money Stuff by Matt Levine, Bloomberg, Money Stuff: Matt Levine is a Bloomberg Opinion columnist covering finance. Bankman-Frieds fortune basically vanished, as did his emperor aura. Venture capital investors in FTX which last raised money at a $32 billion valuation are probably getting zeroed, the price of FTT collapsed, and now regulators are investigating. Matt Levine is a finance columnist for Bloomberg News. Twitters ad business is not recovering. Every new edition of the newsletter goes directly to your inbox. The documents didnt indicate that the transactions were pre-planned. Founders sell business risk in exchange for the cash they need to take bigger risks; venture capitalists buy that risk hoping it will one day transmute into reward. Expert Institute Award for Best Legal Tech Blog One is that FTX is an exchange for levered traders, offering products like perpetual futures and leveraged tokens that build in margin lending. . Mr. Levine got the job, paying something north of $50,000. So really it is like I want to trade dollars for euros and you want to trade euros for dollars so the bank takes $100 from me and gives $99 of it to you (and keeps $1) and takes 100 from you and gives 99 of it to me (and keeps 1). He fetched his copy of The Histories and read it to me.). As he ascends, he reflects on the lives of his friends and his own lifes course. By 2011, Mr. Levine had decided to leave Goldman. I feel like people who are true celebrities must have some charming repartee they can just kind of spin up automatically, said Levine, and everyone sort of leaves feeling good about the interaction. But the other weird thing about this bank is that, every day, you come in and say hey Id like to exchange my dollars for euros or my euros for pounds or whatever, and each time you do that the bank charges you a dollar. Get back to work. On top of that, US regulators are circling FTX, investigating whether the firm properly handled customer funds, as well as its relationship with other parts of Bankman-Frieds crypto empire, Bloomberg News reported Wednesday. Levine is known for his humorous, witty, deadpan writing style. Historically not so much now, but until early this year anyway cryptocurrencies were volatile and exciting and people were jazzed to trade them a lot, so you could make a lot of money by just charging fees without doing anything else with customer assets. FTX issues a token called FTT. Colleen Levine . Each of them is overcollateralized you only lend Customer A half the value of her Bitcoin, and you only lend Customer B half the value of his dollars so you feel pretty safe. Also a Twitter markdown and a SPAC CFO YOLOs GME. Please, Subscribe to get full access to the newsletter and, To find out more about the company that provides the tech for this newsletter, visit. "[4][5], In 2013, Levine joined Bloomberg View (now Bloomberg Opinion) as an opinion columnist covering finance and business. FTT goes down, leaving FTX undercapitalized, leading to customer withdrawals, leading to ruin. You can subscribe at this link, or read the archive at this link. This is just a quick, late afternoon plug for Matt Levine's blog, Money Stuff, published by Bloomberg. Robinhood Markets Inc. is in the business of getting people to trade stock (and options, and cryptocurrencies) on their phones. Matt Levine: No, I agree. Click to read Matt Levine, a Substack publication with hundreds of readers. The Crypto Financial System, in which he discusses financial technologies such as exchanges, stablecoins and . Also the Celsius bankruptcy estate and the FTX risk engine. Here is a link. If thats the case, then a crash in the price of FTT will destabilize FTX. The SEC may have more power over airlines than Secretary Buttigieg.However the SEC has not (yet) gone after Southwest. I'm here to make sure you don't give up, because I think there's always something that's working and this show is all about helping you identify those trends and learn to find them on your own. If Ms. Levin found an audience by tearing down the personalities of Wall Street, Mr. Levine set to work pulling apart its structures, to better explain the wiring in the walls. 2016, 2017 and 2018 JPMorgan Says Frank Was Fraud. Sign up now so you don't miss the first issue. Mr. Levine deconstructs the topics in a way that is less like a conventional business column and more like he is providing an introductory course on the subject. In college, at Harvard, Mr. Levine began writing emails to his friends that were leavened by footnotes. [3][4] His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150,000 subscribers as of October 2020. His newsletter is Money Stuff. Your dollar loan to Customer A is now underwater: You loaned her 50% of the value of her Bitcoin, but Bitcoin fell by 90%, so she owes you more than her collateral is worth. The analogy is: Imagine a weird sort of bank. But it sure has been a distraction! Eventually he called CZ himself, and they announced a non-binding letter of intent for Binance to acquire FTX and make customers whole. BeSpacific - 3rd Place. published Apr 27, 2018, 10:03:35 AM, by Matt Levine (Bloomberg View) WeWork. I'm also on Twitter and LinkedIn. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz, and a clerk for the U.S. Court of Appeals for the 3rd Circuit.. I just hope he doesnt get poached by some deep-pocketed mainstream news organization which will end up stifling the very thing hes best at.. You call her up and ask her for more money a margin call but she, sensibly, doesnt answer the phone. He just has so much else going on. Money and stuff. (His column is currently on a parental leave hiatus, and will return this winter.). In general it should not be possible to bankrupt an investment bank by shorting its stock. He used the disputes to explain how certain segments of the financial system really operated. Telegram Group Inc. has pulled in $1.7 billion by selling newly created cryptocurrency to fewer than 200 . Futures, risk, fraud, securities fraud and Wirefraud. One day Customer A might come in, pay off her dollar loan, and ask to take her Bitcoin back. Im doing a bit, he says. Mr. Levines favorite subjects include insider trading statutes, bond-market liquidity and the ubiquity of securities fraud, but his columns are never boring. But it is held in a custody account for you. It read like a bedtime story about West Texas Intermediate Crude. But selling billions of dollars of Tesla stock to fund a weird quest to buy Twitter would I mean, be a distraction at least. The problem with this is that it is wrong-way risk. The fine is $200 million per bank (SEC and CFTC combined). He never joined an elite social club or spent six figures on a Hamptons summer rental. If the tenants pay more in Thu, 06 Aug 2020. Bloomberg: Balance of Power focuses on the politics and policiesbeing shaped by the agenda of President Biden's administration. Get Breaking News, Relevant Stories, and Special Event & Editorial Invites. [1][4], In 2011, Levine started writing about economics and finance for the financial news site Dealbreaker. Hes a very smart guy who is very much not a lawyer, and that is very fruitful.. When FTX.com, one of the largest crypto exchanges, was instantaneously vaporized yesterday, Coinbase put out a statement, the gist of which was dont worry, we are not going to be instantaneously vaporized. The part that I want to focus on is this paragraph: There cant be a run on the bank at Coinbase. Here's a recap of the clues on Master Minds (Season 3) for Thursday, January 12, 2023 with host Brooke Burns. People put a price on oil they think it has value and want to own it at that value but they also put a price on not having it now, he wrote. Oliver Keens asks: has our morality changed or are we just too deferential, confused or downright hypocritical to discuss it any more? If you are a crypto exchange, you might issue your own crypto token. 5. It starts from that basic premise and builds from there, and I love that format, and I love that ambition for writing about complicated topics. Because Bitcoin is such a recent invention, its possible to start with the whitepaper and build from there to the major crypto shenanigans you see today. So whereas the basic model of Coinbase is they buy Bitcoin for you and put it in an envelope, the basic model of FTX has to be they lend you money to buy crypto and then make use of your crypto to get the money. In financial terms, they have to rehypothecate your collateral; you cant expect them to just keep it in an envelope if theyre lending you the money to buy it. Similarly, I find a lot of good one-off recommendations on HN; is the hit ratio 100%, or even 50%, goodness no. If they all take their money out, thats a bank run. His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150,000 subscribers as of October 2020. 3. But that was kind of fun! Here's a recap of the clues on Master Minds (Season 3) for Wednesday, January 11, 2023 with host Brooke Burns. Lately my favorite read has been Matt Levine's Money Stuff articles from Bloomberg News. All Rights Reserved. This site requires JavaScript to run correctly. The co-founders of Instagram, which Facebook Inc. bought in 2012, quit on Monday (Sep. 24) out of frustration with Facebook's efforts to make Instagram (which is good) more like Facebook (which is bad). [1][4], After graduating Harvard, Levine was a high school Latin teacher. Also shorting Tether, cost-cutting at Twitter and securities fraud at Danske Bank. FTT is a bet on FTXs future profits. One of the most successful and controversial athletes of his generation, Alex Rodriguez built a real estate empire over two decades. The essential tech news of the moment. The way it makes money is that each time its customers trade stocks (or options, or cryptocurrencies), Robinhood sends their order to a market maker, and the market maker pays Robinhood a tiny fee for the right to execute the order.
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