SBF Squirms, Bitcoin ETF Eyes Launch ’Within Months’ (Future of Finance | Week in Review)

A weekly five-point roundup of critical events in fintech, the future of finance and the next wave of banking industry transformation. 

Another Set of Crypto’s Grown-Ups Are In Trouble

What happened: The New York Attorney General sued many of the people behind crypto lending firm Genesis and crypto exchange Gemini over what it said were misstatements and omissions meant to hide a $1 billion hole in its balance sheet.

Why it matters: The implosion of funds like Three Arrows Capital and the damage done to companies like Gemini was a shock when they first happened. People like crypto investor Barry Silbert were largely considered to be the adults in the room during the crypto boom. That they’re now accused of lying to cover their tracks is yet another blow to the credibility of the space.

What’s next: The presumption of innocence, of course. Also, this case will get 1/10th the attention of SBF and FTX, because it’s not nearly as juicy. But the presence of Genesis investors the Winklevoss twins will help some in that department. (By Tim Copeland, The Block)

Pour One Out for DJ D Sol

What happened: Amid an avalanche of negative stories portraying him as a tough person to work for, Goldman Sachs CEO David Solomon announced that he was officially giving up the one thing that seemed to make him happiest: DJ’ing on the side.

Why it matters: “It almost certainly doesn’t” is probably the most honest answer here. However, the fact that the most famous banker in America had a very public hobby at least humanized a sector where everyone often appears, at least from the outside, to be the same starched shirt. I guess this could also mean things may be even less pleasant from now on for Goldman Sachs actual employees, who now have to deal with a boss without his go-to stress reliever.

What’s next: The world will search in vain for someone in banking who comes close to being as interesting as Solomon briefly was. It will be disappointed by what it finds. (By Joshua Franklin, The Financial Times)

Sam Bankman-Fried Thought A Lot About Which Emojis to Tweet

What happened: The prosecution in the FTX trial introduced a whole slew of new text messages and Signal chat logs showing what was happening behind the scenes in the days and hours leading up to the company’s implosion.

Why it matters: Because the prosecution is in part trying to prove that Sam Bankman-Fried is not some generational genius and philanthropist but a stimulant-addicted kid who knew he was doing something wrong almost from the jump. These messages (go read them!) might go a long way towards convincing a jury.

What’s next: The ultimate will-he, won’t-he question: Does SBF testify? (By MacKenzie Sigalos, CNBC)

Plaid Has a CFO, Also Soon a Public Listing

What happened: “US financial technology start-up Plaid has hired its first chief financial officer, a milestone in its highly anticipated plans to go public following a failed sale to Visa two years ago.”

Why it matters: Because there are so few IPOs these days that every one of them will get extra special attention. But also, Plaid is sort of the king of making lemons out of lemonade. Visa sale gets blocked leads to tripling valuation during Covid leads to maybe being the last private company to get a great funding round before the interest rate raises. Now Plaid is going public at a time when it’s perceived that going public is extra risky. So maybe that means it’s not.

What’s next: True fintech believers who aren’t also accredited investors have a chance to own a small piece of the future. (By Joshua Franklin, The Financial Times)

The Bitcoin ETF Is Coming ’Within Months’

What happened: “The Securities and Exchange Commission will likely approve multiple spot bitcoin exchange-traded fund applications soon, given it did not appeal a recent ruling in the case brought against it by Grayscale Investments, according to JPMorgan.”

Why it matters: An inaccurate tweet about ETF approval from a crypto publication recently caused a 5% spike, which may give us some hint as to the value of this decision. That said, ETFs have existed in other countries for a while. It’s possible there’s an increase in the price of Bitcoin and it’s possible it’s already priced in.

What’s next: People who watch the price will continue to watch the price. (By Yogita Khari, The Block)