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(Bloomberg) — Crypto prime broker Hidden Road Partners urged clients to sell off all balances and positions on embattled virtual currency exchange FTX.com and to convert them into US dollars, according to an email viewed by Bloomberg News.

Hidden Road, which months ago completed a $50 million funding round with backers including Citadel Securities and FTX’s venture capital arm, FTX Ventures, told clients in a message Wednesday that they have until 7:30 p.m. New York time to liquidate holdings at FTX.com. Hidden Road said that under a clause in customers’ contracts it was declaring an “exchange default.”

The decision shows how turmoil at FTX is emanating to a wider group of firms involved in digital assets — while also underscoring the criss-crossing ties between many of the crypto world’s platforms. Representatives for Hidden Road and FTX declined to comment. 

As FTX Chief Executive Officer Sam Bankman-Fried awaited a potential bailout from Binance on Wednesday, he told investors that without a cash injection his company would need to file for bankruptcy. He said FTX faced a shortfall of up to $8 billion and needed $4 billion to remain solvent. Binance later pulled out. 

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(Bloomberg) — Forbes Media LLC is in exclusive discussions with an investor group that could put the magazine publisher in the hands of a new owner.

The interested buyer is a consortium of family offices and foreign investors “that is strategically aligned with the Forbes executive team and our goals for growing the company,” Forbes spokesman Bill Hankes said in an email.

Forbes, which features millennial-focused wealth tips and “30 Under 30” lists, entered exclusive talks last year to be acquired by a group led by Michael Moe’s GSV Asset Management, Bloomberg News reported at the time. A transaction could have valued the company at more than $600 million, Bloomberg reported.

Those talks went cold when the publisher sought to go public through a merger with the black-check firm Magnum Opus Acquisition Ltd. Axios later reported that acquisition talks with GSV had resumed and were slated to close in the first quarter of this year.

“The continued investment interest we’ve seen in our company is a testament to the entrepreneurial spirit, hard work, and results that our team consistently delivers,” Hankes said. But its remains unclear if any deal at current juncture would result in a partial or full sale.

Forbes competes with Bloomberg News and parent Bloomberg LP in tracking the wealth of billionaires across the globe and providing financial information. Forbes’s most recent acquisition discussions were reported earlier by the New York Times.

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(Bloomberg) — Crypto.com will be publishing its audited proof of reserves, CEO Kris Marszalek says in a tweet, noting that transparency is more important than ever in this critical moment for the industry. 

“We share the belief that it should be necessary for crypto platforms to publicly share proof of reserves and Crypto.com will be publishing our audited proof of reserves,” he said.

This comes amid a liquidity crunch for industry heavyweight FTX. Rival Binance had eyed a rescue of FTX but backed out, citing issues beyond its ability to help. 

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(Bloomberg) — Omead Afshar, who led operations at Tesla Inc.’s new plant in Texas, is now at SpaceX working on Elon Musk’s ambitious Starship deep-space rocket, according to people familiar with the matter.

Afshar has been named vice president: Starship production at the company, formally known as Space Exploration Technologies Corp., according to two of the people, who asked not to be identified discussing private information.

It’s not known if he is now working at both companies. Afshar hasn’t been seen at Tesla’s Austin plant for a number of weeks, two people said.

Afshar didn’t immediately respond to a request for comment. Neither did representatives of SpaceX and Tesla. Musk, who has a close relationship with Afshar, also didn’t respond.

Musk is chief executive officer of both electric vehicle market-leader Tesla and closely held rocket launch and satellite operator SpaceX. The two companies have significant operations in Texas, including Tesla’s headquarters in Austin and SpaceX’s launch site in the Gulf Coast community of Boca Chica.

As of Wednesday evening, Afshar’s LinkedIn profile still listed him as working at Tesla, with the job title listed as a cowboy emoji.

Internal Scrutiny 

In July, Afshar was under scrutiny in an internal investigation at Tesla for his role in a plan to purchase hard-to-get construction materials, Bloomberg reported.

Some employees were fired as part of the investigation and Afshar was expected to depart the electric-vehicle maker, people with knowledge of the matter said at the time. It wasn’t clear if he was moved as a result of the investigation.

Musk has a long history of shuffling executives from one part of his empire to another, or sharing them across his companies. Charles Kuehmann is vice president of material engineering at both Tesla and SpaceX, while current Tesla engineers are now helping Musk to overhaul Twitter Inc.

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(Bloomberg) — Coupang Inc., the South Korean e-commerce firm backed by SoftBank Group Corp., posted its first operating profit on record after winning more customers and improving cost efficiency. 

The third-quarter operating profit amounted to $77.4 million, compared with a loss of $315 million on that basis a year earlier, the US-listed company said in a statement Wednesday. Net revenue climbed 10% from a year earlier to $5.1 billion, while the number of active clients rose 7%.

Coupang, which went public in New York last year, has adopted more technology at its distribution centers and raised the price of its monthly delivery membership to improve its profitability. The company is set to gain market share as smaller e-commerce startups struggle to raise funds in a tough market for tech stocks and venture financing, said Kim Myoung-joo, an analyst at Korea Investment & Securities.

“In 2023, Coupang’s position in the market will be solidified through an online-market shakeup,” Kim said ahead of the results. “A lot of startups are facing financial crises as they are having difficulties raising funds amid high interest rates.”

Kim expects Coupang’s online commerce market share in South Korea to rise by 3.8 percentage points to 24% next year and by 5 percentage points in 2024, projecting the company will reach annual net income in 2026.

Founder and Chief Executive Officer Bom Kim has vowed to bring Coupang to profitability by expanding its business and improving operational efficiency. Shares of the company have lost about half their value since it went public in one of last year’s highest-profile initial public offerings.

On a conference call, Kim said Coupang will continue to add features to its monthly delivery service. The membership program, similar to Amazon.com Inc.’s Prime, now costs 4,990 won a month — about $3.65 — up from 2,900 won.

“While the macro conditions are uncertain, we continue to be confident about our ability to drive the inputs that we control in our business,” he said.

(Adds Chief Executive Officer comment, details of fee increase)

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(Bloomberg) — Blue Origin LLC, the space launch vehicle startup founded by Amazon.com Inc. chair Jeff Bezos, expects next month to complete a review of a recent accident but won’t send another rocket aloft until sometime in 2023. 

The company’s vice president of its New Shepard rocket’s mission and fight operations, Audrey Powers, told attendees Wednesday at a conference in Washington, D.C., that the technical assessment of the September mishap will be finished in December, and that it wouldn’t fly again until next year, a Blue Origin spokesperson confirmed in an emailed statement. Powers’ comments were tweeted earlier by a Washington Post journalist.

The Federal Aviation Administration is overseeing an investigation of the aborted launch of an uncrewed suborbital New Shepard rocket shortly after takeoff on Sept. 12. The mission was only carrying research payloads, but Blue Origin also has flown passengers on its rocket starting in July of 2021, when Bezos was part of a debut crewed mission.

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(Bloomberg) — President Joe Biden said Elon Musk’s relationships with other countries are “worthy of being looked at,” though he declined to say whether the world’s richest man was doing anything inappropriate.

“I think that Elon Musk’s cooperation and or technical relationships with other countries is worthy of being looked at,” Biden said at a White House news conference Wednesday. “Whether or not he’s doing anything inappropriate — I’m not suggesting that. I’m suggesting they’re worth being looked at. But that’s all I’ll say.”

Last month, people familiar with the matter said the Biden administration was discussing whether the US should subject some of Musk’s ventures to national security reviews, including his deal for Twitter Inc. and SpaceX’s Starlink satellite network.

One element of the $44 billion Twitter Inc. deal was the presence of foreign investors in Musk’s consortium. The group includes Prince Alwaleed bin Talal of Saudi Arabia, Binance Holdings Ltd. — a digital-asset exchange founded and run by a Chinese native — and Qatar’s sovereign wealth fund. Musk’s Tesla Inc. electric-vehicle company derives about 25% of its revenue from China.

Musk, who once called Biden a damp sock puppet “in human form” has frustrated officials in the US and Europe and drawn praise from America’s rivals for tweets to announce proposals to end Russia’s war in Ukraine and threaten to cut financial support for Starlink internet service in Ukraine. 

On Monday, a day before the midterm elections, Musk urged Americans to vote for Republicans, arguing that “shared power curbs the worst excesses of both parties.”

Once he acquired Twitter late last month, Musk embarked on a flurry of changes. After unseating top management and the board, he laid off roughly half the company’s workers — though some employees were asked to come back. 

(Updates with context, in final paragraph.)

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(Bloomberg) — The Justice Department is looking into the turmoil surrounding Sam Bankman-Fried’s FTX.com and the liquidity crisis that has pushed the firm to the brink, according to a person familiar with the matter. 

Officials from the Justice Department are working with Securities and Exchange Commission attorneys probing the matter, said the person. Representatives for the SEC and Justice Department declined to comment. A representative for FTX didn’t immediately return a request for comment on the Justice Department interest, which was first reported by the Wall Street Journal. 

The scrutiny adds to mounting legal headaches in Washington for Bankman-Fried. The SEC and the Commodity Futures Trading Commission are investigating whether FTX.com mishandled customer funds, and the regulators are looking into the firm’s relationships with other parts of his crypto empire. 

The initiation of inquiries does not necessarily mean that anyone will be accused of wrongdoing.

 

 

–With assistance from Yueqi Yang, Olga Kharif, Chris Strohm and Ava Benny-Morrison.

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(Bloomberg) — Coupang Inc., the South Korean e-commerce giant backed by SoftBank Group Corp., raised its earnings forecast for 2022 and narrowed its losses as higher monthly membership fees and improved operational efficiency helped boost profitability. 

The company now expects to make a profit before interest, tax, depreciation and amortization, compared with an earlier projection for a $400 million loss. Its second-quarter operating loss narrowed to $67 million, compared with a $514.9 million loss a year earlier. Total net revenue rose 12% to $5 billion in the period, while the number of active clients rose 5%.

The shares rose 6% in New York in extended trading. 

The Seoul-based company has been trying for years to boost profitability in its core delivery business, most recently raising the monthly fee for its “Rocket Wow” service — similar to Amazon.com Inc.’s Prime membership — earlier this year. Founder and Chief Executive Officer Bom Kim has said the company’s expansion is helping profitability. 

“We do expect benefits to continue to come from greater economies of scale, improved operational excellence and the growth of higher margin categories and services,” Kim said on a post-earnings conference call. “But as we’ve stressed, the rate of improvement will not be consistent. As a result, the efforts will materialize unevenly.”

Kim mentioned there are some disruptions in near term due to higher inflation as well as fuel costs. In the long-term, the company will try to achieve targets of 7% to 10% or higher adjusted EBITDA, he said.

Amazon topped expectations for the June quarter, helped by its cloud computing division as it faces inflationary pressures in transportation costs and merchandise. The e-commerce giant is lowering costs by reining in hiring, but it is pursuing acquisitions to develop new growth opportunities. 

Coupang is also ramping up spending in entertainment and streaming content and on its food delivery service, as it searches for growth. It’s also preparing financial services such as installment loans, according to local media. 

(Corrects operating loss in the second paragraph)

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(Bloomberg) — President Joe Biden said he expects to discuss issues including Taiwan and trade with his Chinese counterpart Xi Jinping at a summit in Asia next week, but that he would make no “fundamental concessions” in their talks.

Biden said he and Xi would meet at the Group of 20 summit in Indonesia, a highly anticipated encounter that comes at a low point in US-China relations.

“I’m not willing to make any fundamental concessions” in the talks, Biden said at a White House news conference on Wednesday. “I’m looking for competition not conflict.”

He added that he and Xi “will discuss a number of other issues including fair trade and relating to his relationship with other countries in the region.” 

Asked about previous assurances Biden’s made to defend Taiwan in the event of a Chinese attack, the president said he’s “going to have that conversation” with Xi.

“The Taiwan doctrine has not changed at all,” he said of US policy toward the self-governing island.

Biden has pledged repeatedly to defend Taiwan militarily in the event of an invasion. His aides have insisted those comments did not indicate a shift away from the longstanding One China policy or the strategic ambiguity that have governed the relationship for decades and maintained peace in the Taiwan Strait.

China has responded forcefully to the American president’s previous public pledges on defending the island and considers it meddling in its internal affairs.

“What I want to do with him when we talk is lay out what each of our red lines are — understand what he believes to be in the critical national interests of China, what I know to be the critical interests of the United States and determine whether or not they conflict with one another,” Biden said. “And if they do, how to resolve, and how to work it out.”

The meeting will be their first face-to-face encounter since Biden took office and the first time the two men will be speaking since their call last July. US officials have sought to lower expectations and stressed the conversation was necessary to ensure the relationship doesn’t veer into conflict.

Biden is heading into the meeting after the midterm elections, which were not the stinging rebuke some had predicted.

At the same time, the Chinese president has tightened his grip on China after securing a precedent-shattering third term as leader in October. Xi has pledged to reunify Taiwan with the mainland, by force if necessary, and said he would double down on his strict Zero-Covid policy that has caused China’s economy to slow down and Chinese citizens to protest.

The world’s two largest economies have long been in discord over trade, human rights and Taiwan but tensions reached a new high after US House Speaker Nancy Pelosi visited Taipei in August and the US last month imposed curbs on semiconductor technology exports to China.

Biden will likely press Xi to take a stronger stand against Russian President Vladimir Putin and his war in Ukraine and raise concerns about China’s human rights violations and economic practices.

–With assistance from Jennifer Jacobs and Justin Sink.

(Updates with quotes and background throughout.)

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