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(Bloomberg) — Grayscale Investment LLC has brought in a top legal mind from the former Obama administration as it weighs the possibility of the US Securities and Exchange Commission rejecting its application to convert its $20 billion Bitcoin trust into an exchange-traded fund. 

The crypto asset manager announced Tuesday that is has hired Donald Verrilli, who worked as US solicitor general from 2011 to 2016, as additional legal counsel. Grayscale’s decision to hire Verrilli comes after the firm’s CEO Michael Sonnenshein said “all options are on the table” if the SEC rejects its proposal to turn Grayscale Bitcoin Trust (ticker GBTC) into a physically-backed ETF. The regulator has repeatedly denied similar applications. The SEC has until July 6 to make a final decision.

Read more: ‘All Options’ on the Table in Grayscale’s Fight for Bitcoin ETF

“In the name of being prepared for all possible outcomes, if one option is potentially bringing a lawsuit against the SEC, well what better person to have as a legal strategist than somebody who has represented the US government?” Craig Salm, the firm’s chief legal officer, said in an interview with Bloomberg.

Grayscale has argued that converting the trust into an ETF would likely bring the price of GBTC closer to its net asset value. GBTC currently trades at a 30% discount relative to NAV. Unlike an ETF, GBTC shares can’t be created and destroyed to keep up with demand shifts, making it effectively a closed-ended fund. Grayscale said last month the conversion would unlock as much as $8 billion in value for investors. 

Verrilli has been working with the firm’s internal lawyers, as well as external lawyers at Davis Polk & Wardwell LLP, to get ready for possible litigation, including preparing substantive legal arguments and coming up with a procedural strategy, according to Salm. 

Verrilli “has really strong background experience, especially in cases involving the Administrative Procedure Act,” Salm said.

During Verrilli’s tenure with the Obama administration, he successfully argued the government’s position in landmark Supreme Court cases on same-sex marriage and the Affordable Care Act. As solicitor general, Verrilli was the officer directly below the attorney general in the US Department of Justice. After he left the Obama administration, he opened the Washington, D.C. office of the law firm of Munger, Tolles & Olson LLP. 

Strengthening the legal team reaffirms Grayscale’s “commitment to doing whatever we need to do to convert GBTC into an ETF,” Salm said. 

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(Bloomberg) — A Twitter Inc. shareholder wants a judge to force the social-media platform to hand over internal files about spam and fake accounts that have become a hot-button issue in billionaire Elon Musk’s $44 billion buyout of the company. 

John Solak, who owns five Twitter shares, sued the company in Delaware Chancery Court Tuesday for records related to discussions between its directors and executives about problems with so-called bot accounts. 

Musk, co-founder of electric-car maker Tesla Inc., said this week that Twitter is violating the terms of his $54.20-per-share offer by refusing to give him more information about how much of the platform’s traffic is driven by fake accounts. He’s threatening to blow up the deal over the issue. 

Read More: Musk’s ‘Buyer’s Remorse’ Won’t Get Him Out of Twitter Deal

“Stockholder’s purpose in seeking these books and records is to investigate the possibility of board-level breaches” of legal duties to investors over directors’ failure to properly oversee public disclosures of the bot numbers, according to the complaint.

Representatives of San Francisco-based Twitter didn’t immediately respond to an email message seeking comment on the suit. 

Twitter is incorporated in Delaware, home to more than 60% of Fortune 500 companies. Investors often sue in Delaware to gain access to files of companies incorporated in the state to collect information that can be used in lawsuits against firms or directors. They have to show a proper purpose for accessing the files, however.

Musk has seized on the fact that in regulatory filings, Twitter reported fewer than 5% of all users are bots, while they may make up as much as 20% of the company’s audience. He’s demanding more information about those accounts.

In his suit, Solak also wants files about discussions between Twitter directors and executives on whether Musk damaged the company by disparaging some of its employees and the firm’s attempts to “mitigate” the harm.

The billionaire targeted Vijaya Gadde, Twitter’s lead in-house lawyer, as the platform’s “top censorship advocate” over the company’s decision to prevent users from sharing a New York Post story about President Joe Biden’s son Hunter.

The case is Solak v. Twitter Inc., 2022-0491, Delaware Chancery Court (Wilmington).

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(Bloomberg) — US medical device makers Agilent Technologies Inc. and Danaher Corp. are among parties considering offers for British life sciences firm SPT Labtech, people familiar with the matter said. 

Investment firms Novo Holdings A/S and EQT AB have also been studying the business, which is being sold by Battery Ventures, the people said, asking not to be identified because the information is private. Initial offers are due in the coming days for SPT, which could be valued at about £600 million ($749 million), according to the people. 

There’s no certainty the suitors will proceed with offers, and other bidders could emerge, they said. Spokespeople for Agilent, Battery Ventures, EQT and Novo declined to comment. Danaher didn’t immediately respond to requests for comment. 

Tech-focused Battery Ventures has been working with an adviser to explore a sale of SPT, which makes tools for liquid handling and sample preparation and management for scientists, Bloomberg News reported in February. 

SPT has been expanding through acquisitions, buying Apricot Designs and BioMicroLab last year to boost its laboratory automation offerings. It’s also formed a partnership with US health-care giant Thermo Fisher Scientific Inc. to co-market solutions for variant detection at lower costs.

Any deal would add to roughly $90 billion of takeovers of European health-care companies over the last 12 months, data compiled by Bloomberg show. Goldman Sachs Group Inc.’s private equity arm agreed to buy a controlling stake in specialty pharmaceutical firm Norgine BV last month in a deal valuing the business at about $2 billion. 

Elsewhere, Blackstone Inc. is nearing an agreement to buy Advarra Inc. in a deal that would value the drug-research services company at about $5 billion, Bloomberg News reported previously.

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(Bloomberg) — Cboe Global Markets Inc. is returning to its roots in Chicago’s financial district with the opening of a new trading floor.

The company moved its Cboe Options Exchange into a remodeled space in the Chicago Board of Trade building. The 40,000-square-foot (3,716-square-meter) space, which opens Monday, gives market participants updated equipment and additional physical space to execute trades in the options market.

“The move is not new so much as it’s a continuation of our efforts to answer customer demand for physical presence, which has grown,” Chief Executive Officer Ed Tilly said in an interview. “We would not be opening a trading floor if a customer had no utility for this.” 

Few exchanges have continued pit trading, as hand signals and verbal communication transition to electronic systems. Still, floor trading creates iconic imagery that can be used as a marketing tool, and the physical practice remains useful for executing larger orders. The New York Stock Exchange still maintains its floor, a historic landmark, in the financial district in New York City, while Nasdaq Inc. and others operate without a physical trading space.

Investors are able to choose how they route their orders, either electronically or through a broker-dealer who stands on the floor of an exchange such as Cboe. For more complex orders, most investors prefer “face-to-face, pit-style trading” for better price and execution in options, Tilly said. 

Cboe, previously known as the Chicago Board Options Exchange, continues to operate its equities and futures exchanges electronically. The three additional options exchanges Cboe maintains are also all-electronic, meaning it doesn’t require a physical space or the so-called “open outcry system” in which orders are shouted and matched by brokers and market makers that occupy physical space in a building.

The company’s new trading floor was built to handle heavy volume in index options trades, while nearly all equity options trades are handled electronically. The firm said it executed roughly 36% of its index options trades on the floor via open outcry, rather than automation, from January through the end of May. 

Ring the Bell

Cboe’s new space is home to around 120 trading booths and more than 330 kiosks where brokers and market makers can plug in their individual systems. Like NYSE, CBOE’s floor also features a bell on a platform overlooking the trading floor that guests can ring at the start and close of the markets each day. 

The four largest pits in the space will cover options trading in the S&P 500, Cboe Volatility Index, Russell 2000 Index and SPDR S&P 500 ETF Trust. Still the vast majority of trades across the options market are done electronically. 

The Chicago-based exchange operator has also been building its presence abroad, expanding in Europe, Asia and North America with the acquisition of Aequitas Innovations Inc., the parent of Toronto-based NEO Exchange. It also added new asset classes with the purchase of cryptocurrency company Eris Digital Holdings earlier this year.

Cboe’s first trading floor dates back to CBOT’s former smoking lounge in the 1970s, a 4,000-square-foot space located on the fourth floor of the same building where the new trading floor is located, overlooking Chicago’s financial district. The exchange later expanded its trading floor to the seventh floor because of growing demand for US listed options trading.

The company has since opened a new global headquarters in Chicago’s historic Old Post Office building, where Cboe’s corporate office remains. 

(Corrects building name in second paragraph of story published Monday.)

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(Bloomberg) — Fox News won’t show continuous live coverage of Thursday’s first televised hearing into the deadly attack on the US Capitol, putting the conservative news outlet at odds with its competitors.

Fox News said on Monday it will cover the hearings that begin at 8 p.m. New York time “as news warrants” on its flagship news channel. Fox News will offer special coverage beginning at 11 p.m., after its regular schedule of primetime shows by hosts Tucker Carlson, Sean Hannity and Laura Ingraham. Live coverage will be relegated to other platforms like the Fox News website, Fox News Audio and Fox Business Network.

Rival networks plan to interrupt their primetime lineups for the hearings. CBS and ABC will air the proceedings live, according to network representatives. NBC will offer live coverage on its cable news channel, MSNBC, and its streaming service, Peacock, and special coverage on its network channel.

Read More: What the Jan. 6 Committee Has Done, and What’s Next

Fox News’ decision has drawn criticism online, including from lawmakers. US Representative Adam Kinzinger, one of two Republicans on the House select committee investigating the attack, tweeted last night that Fox News employees who want to maintain credibility as journalists should “speak out, or quit. Enough is enough.”

Members of rival media networks as well as prominent Democrats, including Hillary Clinton and Representative Steve Cohen of Tennessee, also criticized Fox.

A Fox News Media spokesperson did not respond to a request for comment. 

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(Bloomberg) — The US warned North Korea of strong punishment if it conducts a nuclear test, as Washington and a United Nations’ watchdog agency have said signs indicate Pyongyang could soon set off its first atomic device since 2017.

“There would be a swift and forceful response to such a test,” Deputy Secretary of State Wendy Sherman said in Seoul in a Tuesday meeting with her South Korean counterpart.

“Any nuclear tests would be in complete violation of UN Security Council resolutions,” she said, adding it would be destabilizing to world security. Sherman didn’t elaborate on specific measures but suggested the US would work with its allies to levy punishments.

 

 

North Korea may conduct a nuclear weapons test “any time,” including as soon as this week, Sung Kim, the US special representative for North Korea, told reporters on a conference call later Tuesday.

“We know that the North Koreans have done preparations for a nuclear test, and we will be obviously vigilant and be in close touch with our allies and partners to be able to respond very quickly, very swiftly should the North Koreans proceed,” he said.

The American envoy said such a response would probably include taking the issue to the United Nations. But there’s almost no chance Russia or China, which have veto power on the UN Security Council, would support any new sanctions against North Korea, as they did in 2017 following a series of weapons tests that prompted then-President Donald Trump to warn of “fire and fury.” 

The two countries in late May vetoed a council resolution drafted by the US to ratchet up sanctions on North Korea for its ballistic missile tests this year.

The UN’s International Atomic Energy Agency said it has observed indications North Korea “may be preparing for a nuclear test.” IAEA Director General Rafael Grossi said at a meeting Monday of the agency’s Board of Governors such a test “would be a cause for serious concern.”

A test of a nuclear device would be North Korea’s seventh and the fifth under leader Kim Jong Un. His regime last tested a nuclear weapon in September 2017, which was its most powerful atomic bomb by far with an estimated yield of between 120-250 kilotons.

Any display of the weapons in Kim’s nuclear arsenal would serve as a reminder of the pressing security problems posed by Pyongyang that have simmered as US President Joe Biden’s administration has been focused on Russia’s invasion of Ukraine and as North Korea has shunned offers by the US for talks without conditions.

Satellite imagery indicated workers have been digging a new passageway at the Punggye-ri site, where North Korea has conducted all of its previous nuclear tests, specialist service NK News and others reported.

About 20 warplanes from the US and South Korea, including F-35A stealth fighters, conducted a combined air power demonstration over waters off the west coast of the peninsula, South Korea’s Joint Chiefs of Staff said Tuesday.

The “martial protest” showed the allies’ “overwhelming response” against North Korea’s threat, the joint chiefs said in a statement. New South Korean President Yoon Suk Yeol, a conservative who took office on May 10, has pledged closer security cooperation with Biden and a stepping up of joint military exercises.

US and South Korean forces on Monday fired eight missiles after North Korea launched a similar number the day before. It marked the first time the allies have had a tit-for-tat launch since 2017, according to the Yonhap News Agency.

North Korea’s launch pushed the number of ballistic missiles test-fired this year to an annual record of 31, which includes at least two failures. Pyongyang also appeared to be responding to what it saw as provocations, firing off what was likely the biggest single-day barrage during Kim’s decade in power as the US and South Korea finished joint naval exercises in international waters in the vicinity of Japan’s Okinawa prefecture.

North Korea for years has called joint drills a prelude to an invasion and nuclear war, and threatened retaliation.

(Updates with comments from US envoy Kim starting in fourth paragraph)

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(Bloomberg) — Kara Swisher, the prominent tech reporter, commentator and Recode co-founder, is leaving her role as columnist and podcaster at the New York Times to return to Vox Media.

Swisher will host a new interview show at the Vox Media Podcast Network that will serve as a companion to “Pivot,” a business and technology program she’s co-hosted with New York University professor Scott Galloway for nearly four years. The new show is slated to launch in the fall and will be introduced at Vox Media’s upfront event Vox Media Now on June 9.

Swisher said she’s become “very interested” in owning intellectual property and sharing in the benefits of building a business alongside a partner. That interest, along with wanting to try new formats and create new things, spurred her move.

“I’m 60 years old this year, I’ve made a lot of stuff for a lot of people,” Swisher said in an interview. “I want to do what I want to do. I want to make whatever I want to make, and I think that’s a great thing.”

Swisher’s relationship with Vox Media goes back years. She and her business partner Walt Mossberg sold their technology website and business, Recode, to Vox Media in 2015. As part of that deal, Vox also acquired the brand’s various podcasts, including her show “Recode Decode.”

Swisher left that show in 2020 to join the Times as a podcaster, with Vox Media later rebranding the program “Decoder” and Verge Editor-in-Chief Nilay Patel now hosting. Swisher became a Times opinion contributor in 2018, but never completely severed her Vox Media ties, continuing to host “Pivot” in addition to her Times work.

Although Swisher “loved” working for the Times, she was the “most entrepreneurial” during her years at Vox.  Swisher said she wants to move away from regular writing and focus more on podcasting and events, like the invite-only Code conference she puts on with the company.

“One good thing about working with a company like Vox is they’re very open to entrepreneurial ways,” she said. “Every media company should be thinking about talent.”

Swisher declined to provide specifics of her new deal,  but said she wants to share in the success of new businesses and hopes to use this three-year agreement to highlight different voices and experiment with the interview format.

Her new show, she said, will be more topical and sassy, similar to “Pivot.” That show now has “millions” of monthly listeners, according to a Vox spokesperson, and Swisher said she wants to build on its strong community.

The Times is “incredibly proud” of its work with Swisher, according to Jordan Cohen, a spokesperson. Cohen also said Swisher’s interview podcast “Sway” had a “fantastic run” and will release its final episode in late July.

(Updates with Swisher comments starting in seventh paragraph, Times comment at end.)

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(Bloomberg) — Discord Inc. — the online chat platform that’s drawn scrutiny as the place where the suspect in the mass shooting in Buffalo, New York, allegedly documented his plans on a private server — has hired its first federal lobbyists.

The company chose bipartisan group Monument Advocacy, which spent a total of over $10 million last year lobbying for dozens of companies, including tech giants Amazon.com Inc. and Microsoft Corp. 

“Discord wants to make sure policy makers in Washington, D.C., understand how the service works, our efforts to keep users safe and our company’s plans for the future,” according to a statement from the company.

Monument Advocacy will lobby for the company on content moderation and privacy issues, according to a disclosure filed last week. The hiring, which went into effect two weeks before the shooting, comes as lawmakers ended a long-standing lull in negotiations around a federal privacy law. Lawmakers released a draft federal privacy bill last week, which prioritizes concerns around the sharing of children’s data. 

The five lobbyists assigned to Discord include Jeff Gary, who previously worked for Microsoft as a policy analyst on contract. Monument Advocacy didn’t respond to a request for comment. 

Discord recently faced scrutiny after the man accused of killing 10 people at a grocery store in Buffalo allegedly posted about his plans on a private Discord server for months, inviting others to view it about a half hour before he acted. 

Earlier: Buffalo Massacre Suspect Mapped Plans on Discord App for Months

The tragedy sparked investigations by the attorneys general of New York and New Jersey into whether Discord failed to properly enforce policies on expressions of extremism and hateful conduct. 

Discord hosts more than 150 million monthly users. The platform originally became popular among gamers, but the user base has diversified and increased in popularity since its launch in 2015. 

(Updates with details on federal privacy bill in the fourth paragraph)

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(Bloomberg) — PayPal Holdings Inc. will let users transfer certain cryptocurrencies to other customers, exchanges and external wallets, a new service that’s part of the company’s effort to boost usage of its app.

“This is really about access and utility,” Jose Fernandez da Ponte, senior vice president and general manager for PayPal’s blockchain, crypto and digital currencies business, said in an interview. “We are greatly enhancing the utility of moving crypto around.”

The company also said the New York Department of Financial Services granted PayPal a “BitLicense,” which governs businesses working with virtual currencies, according to a statement on the firm’s website Tuesday. PayPal said it was the first company to convert a conditional BitLicense into a full one. 

PayPal first started allowing customers to buy, hold and sell Bitcoin, Ethereum, Bitcoin Cash and Litecoin in late 2020. The new service lets customers transfer those coins, including from crypto exchanges such as Coinbase Global Inc. 

PayPal is pivoting away from a strategy of simply trying to add millions of new users, and instead is seeking to encourage existing customers to use its app more frequently. Average revenue per active account doubles for customers who use services beyond the traditional checkout button PayPal has long been known for. The company has said customers open their wallets twice as often after they sign up for crypto offerings. 

PayPal has also been exploring the launch of its own stablecoin, and is interested in connecting users with web3, the catchall term for decentralized finance, nonfungible tokens, and other crypto applications, though no specific decision has been made, Fernandez da Ponte said. 

The recent downturn in the crypto market won’t prevent PayPal from continuing to expand its crypto team. 

“We think a substantial amount of commerce and payments will happen on digital currencies in the future, and we are playing the long game,” Fernandez da Ponte said. 

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(Bloomberg) — The Democratic Republic of Congo has ordered mobile-phone companies operating in the African nation to pay a levy estimated at about $180 million a year, people with knowledge of the matter said.

The operators including Orange SA, Vodacom Group Ltd., Airtel Africa Plc, and Africell Holding SAL received invoices sent by the regulator through a consultancy, 5C Energy, the people said, asking not to be identified because the matter is private. The amount is based on the invoice the firms received for a seven-week period, they said. 

Years of corruption and mismanagement has left government finances in Congo, one of the world’s biggest producers of copper and the main source of cobalt, in shambles. That’s prompted President Felix Tshisekedi’s government to find ways to broaden its tax base and boost its revenue. 

Congo’s four mobile carriers — “Africell, Airtel, Orange and Vodacom — have been invoiced various amounts by the regulator following the introduction of levies,” the Federation Des Entreprises Du Congo, the main business association, said. “As things stand, all the carriers in the DRC have rejected these invoices as irregular and therefore unenforceable.”

The industry body said it wants to continue talks with the government and regulator to avoid raising prices. 

The additional fee includes an amount charged on every voice minute, message, and megabyte of data used by customers, said the people. The levy cannot be passed onto users, they said. 

Vodacom could not immediately comment on the matter, while Airtel and Orange declined to comment. Several calls, emails and messages to the Congo government, and 5C Energy remained unanswered. 

Congo last year dropped a plan to tax mobile operators, following opposition from the public as it could lead higher costs.  

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