Wall Street: Crypto folks want their money back

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Hi. I'm Aaron Weinman. Winter is well and truly here for the crypto space. Fintechs like Coinbase and Block have got nervous earnings coming and Wall Street is bracing for the downturn.

Before we get into that, just a kind reminder that it's the last call for nominations for Insider's 2022 class of Wall Street rising stars. Nominate here.

Also, there is breaking news from London this morning after the Bank of England hiked interest rates by 50 basis points for the first time since 1995.

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Photo Illustration of a stock market arrow going through a courthouse with cryptocurrency exploding out of it.

1. August might be hot in New York City, but it's been a winter storm for crypto. The month is barely four days old, but already, the US Securities and Exchange Commission is clamping down on questionable crypto schemes and Wall Street has lowered expectations for fintechs like Coinbase and Block.

Coinbase, which reports second-quarter earnings on Aug. 9, has lost more than three quarters of its market cap (around $18 billion on Wednesday) this year, while Block has shed in excess of half its value (Approximately $50 billion on Wednesday). Block reports earnings today.

To rub salt in crypto wounds, the startup Nomad on Tuesday lost almost $200 million after hackers exploited a flaw in the blockchain-transfer platform's security defenses. The hackers were able to let users enter any value into the system and siphon off the funds, even if Nomad lacked the necessary assets in its deposit base.

At the heart of the matter, however, is that popular cryptocurrencies have spiraled this year. Bitcoin, for example, has nearly halved in value.

Companies — from Coinbase to Celsius — flew too close to the sun by hiring, and then firing, thousands. Robinhood, the pandemic darling that got everyone from the Bodega attendant to seasoned Wall Streeters playing the stock market, partially blamed the crypto freefall for its latest round of job cuts.

Investors, burned by big losses, are now gearing up for court battles. Over 200 cases have been filed, some settled in the million-dollar range, some investors lost, and others are still going. Insider's Jack Newsham spoke to lawyers and investigators about what investors are doing to try to get their money back.

In other news:

Downtown Chicago

2. Angelo Gordon investors just learned of a rape claim against a former executive. The chief executive of a California pension fund said the litigation "raises concerns" and that the fund is "monitoring the situation closely."

3. Disgruntled lenders are fuming at the marketing process of a loan marketed by Goldman Sachs and JPMorgan, Bloomberg reported. The first-lien lenders to a loan for Avaya have hired law firm Akin Gump to examine legal options over what they viewed as inadequate disclosures about the transaction.

4. Carlyle has amassed a portfolio of 130 Brooklyn apartments. Carlyle's investment is the latest example of how cashed-up investment firms are becoming corporate landlords and replacing traditional mom-and-pop property owners.

5. Staying on real estate, mortgage rates will fall back to Earth after an unprecedented climb. The dip in rates should make homes more affordable, Bank of America analysts said.

6. Healthcare startup Calibrate's chief executive used a Zoom call to cull staff. Minutes later, the employees' company laptops were automatically wiped and rebooted.

7. Adtech firm Criteo completed the acquisition of rival Iponweb at a revised price. The deal had been jeopardized because much of Iponweb's team is based in Russia. The revised deal valued the target at $250 million, plus a $100 million earn-out.

8. New York City's comptroller has chided BlackRock over its fossil fuel holdings, according to this report from Gothamist. Brad Lander and national climate activists are calling on the asset manager to stop investing in the expansion of fossil-fuel infrastructure.

9. Here are five little-known stocks that one of Germany's foremost portfolio managers is betting on now. Andreas Strobl is a senior PM at Berenberg Bank and his job is to unearth successful, little-known firms to invest in. He shared his insights, and stocks to avoid, with Insider.

10. Goldman Sachs and Thoma Bravo just helped an artificial-intelligence startup raise $90 million. Here's a look at the pitch deck that Aisera used to raise the cash. Thoma Bravo, meanwhile, just agreed to buy ID company Ping Identity for about $2.8 billion.

Done deals:

  • Alternative asset manager Balbec Capital has raised over $1.5 billion for its fifth, and largest, flagship fund to date. The fundraise also includes a $100 million expandable co-investment vehicle.
  • Brightwood Capital has provided a term loan to the Yardbird Group, a Miami-based restaurant company. Proceeds will come from Brightwood's third fund and Yardbird will use the money to enhance its existing operations.

Curated by Aaron Weinman in New York. Tips? Email aweinman@insider.com or tweet @aaronw11. Edited by Hallam Bullock (tweet @hallam_bullock) in London.

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