Crypto concerns It was a busy day in the cryptocurrency world, but not necessarily a good one for those hoping to legitimize digital currencies. A federal judge ruled initial coin offerings are subject to securities fraud laws, giving regulators “a victory in their crackdown on cryptocurrency crimes.” The ruling in New York “was the first time a federal court had weighed in on the government’s jurisdiction over ICOs in a criminal case” and “will likely strengthen the hand of U.S. authorities going after alleged bad actors in the multibillion-dollar business.”
The Securities and Exchange Commission fined a hedge fund manager and the operators of a cryptocurrency website “in two cases that represent a new front in the government’s campaign to police the market for digital assets.” The settlements “are the first actions against a hedge fund and brokers involving virtual currencies or digital tokens.”
The Financial Industry Regulatory Authority issued its first disciplinary action involving cryptocurrencies. The agency filed a complaint against Timothy Tilton Ayre, claiming he “attempted to lure public investment in his worthless public company.” Finra said Ayre committed securities fraud by distributing HempCoin, an “unregistered cannabis-focused cryptocurrency.”
The value of all cryptocurrencies has now plunged below $200 billion, down more than 75% since peaking at $832 billion in January.
Despite that bad news, true believers in crypto aren’t giving up. Take Olaf Carlson-Wee, who “turned $14,502 into a $150 million personal fortune by going all-in on cryptocurrencies right before bitcoin became a household name.” Since then, however, his fund, Polychain Capital, the world’s largest crypto hedge fund, has lost “around 40% of the $800 million it made for clients last year through a combination of investment losses and withdrawals by some of its earliest investors.” But the 29-year-old wunderkind “is undeterred by recent losses.”
The market now even has its own lobbying group. The Blockchain Association is “the first fully fledged lobbying group in Washington representing entrepreneurs and investors who are building off the technology behind bitcoin.” Among its founding members are exchange operators Coinbase and Circle, technology start-up Protocol Labs, and investors Digital Currency Group and Polychain.
American Banker discusses approval of the Gemini dollar and the Paxos Standard by the New York State Department of Financial Services. "But many observers remain skeptical the approvals represent a new attitude by regulators, including the NYDFS," the paper says.
Goldman tarnished A former Goldman Sachs partner reportedly quit the bank after he filed a whistleblower claim and his concerns were not brought to the company’s board. James C. Katzman, the former head of Goldman’s West Coast mergers-and-acquisitions practice, called the bank’s whistleblower hotline four years ago about what he said were various unethical practices by his fellow workers.
The case “represents a rare public airing of frictions” within Goldman’s 450 partners, the Financial Times says. “It also shines an unflattering light on the bank just weeks before the October 1 date when Lloyd Blankfein, chief executive, passes the baton to his successor David Solomon.”
Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc., listens during an interview hosted by Politico in Washington, D.C., U.S., on Thursday, June 13, 2013. Blankfein said debate about when the Federal Reserve will raise interest rates may help avoid "a jarring surprise" to markets. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Lloyd Blankfein
Andrew Harrer/Bloomberg
“Mr. Katzman’s complaints suggest that, a decade after Goldman’s actions during the financial crisis severely tarnished its reputation, the firm continues to struggle with cultural problems,” according to the New York Times, which broke the story. The paper says Solomon knew about Katzman’s claims.
Goldman’s stock dropped for the 10th straight day on Tuesday, its “longest losing streak since becoming a public company” in 1999. The skid surpassed long declines during the financial crisis in 2008. Other financial stocks have also been under selling pressure in recent weeks.
Helping cities JPMorgan Chase is launching a $500 million five-year program to fund public-private partnerships in as many as 30 U.S. cities. The program, called “AdvancingCities,” will “focus on four philanthropic areas: job training, neighborhood revitalization, small-business growth and consumer financial health.” Wall Street Journal, Financial Times, American Banker
The Financial Times profiles CEO Jamie Dimon and speculates who may replace him when he retires.
The bank said it is moving some of its wealth management operations from London and will establish a “significant business” in Luxembourg in advance of Brexit.
Quotable
"When you have Tom Bradys on the field, you let them be the quarterback and you can be the coach. In many cases, I’m more like the coach now.” — JPMorgan Chase CEO Jamie Dimon, who is handing off more of his day-to-day responsibilities to Daniel Pinto, the bank’s corporate and investment bank chief, and Gordon Smith, who heads its consumer banking unit.
Brendon Falconer, finance chief of the Indiana company since 2019, faces felony child molestation charges. But CEO James Ryan says management is focused on the CapStar integration and organic growth.
Institutions and their investors are facing pressure from climate activists, cautiously awaiting interest rate cuts and adjusting to new Federal Reserve and FDIC policies.
A new Citizens Bank survey suggests rising check-fraud incidents are driving middle-market companies to accelerate plans to fully adopt digital payments. But 70% of all businesses will continue to rely on checks for years to come, according to recent data from the Association for Financial Professionals.
After several quarters of slumping investment banking and trading fees, the Charlotte, North Carolina-based company reported a big uptick from that division, which helped compensate for a large decline in net interest income.
