Technology

Vauld vault empties in crypto crisis


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If regulators and lawmakers describe the current state of cryptocurrencies as like the “Wild West”, advocates view it more as a Robin-Hood style redistribution, robbing the rich institutions of their monopoly on moving and managing money, while empowering poor ordinary users.

The concept is probably not behind Sam Bankman-Fried’s reported interest in acquiring the Robinhood app-based brokerage. Still, the co-founder of the FTX cryptocurrency exchange has been instrumental of late in lending support to the band of merry men challenging the established order.

So far he has been protecting the blockchain ecosystem with tightly controlled short-term loans, but on Friday, he signed a deal with BlockFi that includes an option for his exchange to buy the lending platform for up to $240mn. It had been valued at $4bn after a funding round last summer. BlockFi chief executive Zac Prince said the agreement included a $400mn revolving credit facility from FTX US, as well as an option to be bought at a “variable price . . . based on performance triggers”.

The 30-year-old billionaire has also extended loans to crypto broker Voyager Digital, totalling $485mn in cash and bitcoin. On Friday Voyager announced that it was “temporarily suspending trading, deposits, withdrawals and loyalty rewards”.

Today, Vauld, a crypto lender backed by the Coinbase exchange and investor Peter Thiel, halted withdrawals and trading on its platform and said it was looking at all options, including restructuring. The Singapore-based company, which offered clients annualised returns of up to 40 per cent to lend out their crypto tokens, said clients had yanked almost $200mn from its platform in the past three weeks as high-profile failures spooked investors.

With the prices of digital assets crashing, BlockFi and another lender Celsius last month both said they would have to halt withdrawals, while hedge fund Three Arrows Capital — one of the market’s biggest investors — failed, ensnaring other parties.

Line chart of Bitcoin price ($) showing Kryptonite

Managers of bitcoin funds are slashing fees to lure investors back into the asset class, although, for true believers, their enthusiasm for the future of crypto is undimmed.

Elaine Moore observed crypto evangelists at a big Web3 conference in San Francisco last month. Asking one attendee how he felt about the dramatic fall in crypto prices, he said he was just looking forward to buying some more.

The Internet of (Five) Things

1. Further fintech falls in value
Buy now, pay later fintech Klarna is set to raise fresh capital at a valuation of about $6.5bn, a fraction of the $46bn it was valued at just a year ago, three people with direct knowledge of the matter told us. The $600mn deal, which is being finalised, will involve investors including Sequoia Capital and Abu Dhabi’s Mubadala putting money into the Swedish company.

2. Google closes privacy loophole
Google is closing a loophole that has allowed thousands of companies to monitor and sell sensitive personal data from Android smartphones, an effort welcomed by privacy campaigners in the wake of the US Supreme Court’s decision to end women’s constitutional right to abortion. It has also announced it will automatically delete the location history on phones that have been close to a sensitive medical location such as an abortion clinic. Undercover Economist Tim Harford writes this month on how to avoid a privacy apocalypse.

3. Algorithms on the menu in Japan
Japanese legal experts have said an antitrust case related to a local restaurant website could change how large internet platforms such as Google, Facebook and Amazon operate in the country, forcing them to reveal the inner workings of their secret algorithms. Kakaku.com has been asked to disclose part of its algorithms relating to restaurant ratings.

4. UK politicians urge ban on Chinese CCTV companies
Scores of MPs and peers from across the political spectrum have called on Boris Johnson to ban on ethical grounds the sale and use of surveillance equipment in the UK from two Chinese companies, Hikvision and Dahua. Both have already been blacklisted by the US over Beijing’s use of their equipment in the repression of Uyghur Muslims in China.

5. Chinese hacker hiring continued unchecked
Hackers with suspected links to China’s intelligence agencies were still advertising for new recruits to work on cyber espionage, even after the FBI indicted the perpetrators in an effort to disrupt their activities. Eleanor Olcott and Helen Warrell continue their investigation into Chinese tech company Hainan Tengyuan.

Tech tools — high-end home entertainment

LG launched a media chair this year that combines a recliner with a 55in curved screen (pictured), golf simulation has moved on to immersive home enclosures, “CIPOD” cinema pods are the latest in home cinema. Mark Ellwood has been looking at the latest and greatest in home entertainment for House & Home.

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