Business

➚ BUY: Share sales: Companies are cautiously issuing stock again. At least 35 (already public) companies have sold new slugs of stock since Feb. 1, according to data from IPO Boutique, suggesting a thaw in the deep freeze on new listings.

➘ SELL: Shale’s share: The boom in blasting trapped oil from rock, which made the U.S. a leading producer, is ending. The Wall Street Journal reports that energy companies are hitting fewer gushers in Texas shale formations and their most-productive wells are drying up.

The pay JPMorgan is seeking to claw back from Jes Staley, a former star executive who went on to be CEO of Barclays (he stepped down in 2021) and close confidant of Jeffrey Epstein, in the latest twist in the Wall Street blame game stemming from the financier’s crimes and death. The amount could grow: JPMorgan, which is being sued for facilitating Epstein’s predation, is trying to put Staley on the hook for any damages.

According to new documents the bank filed in court late Wednesday, one of Epstein’s accusers described “a powerful financial executive” who sexually assaulted her; JPMorgan identified that person as Staley, who had courted Epstein as an elite client when he ran the firm’s private bank. An attorney for Staley, who has denied knowledge of Epstein’s crimes, declined to comment to the Wall Street Journal.

Foreign doors open for crypto as US cracks down

THE SCOOP

The unlikely winners of the U.S. crypto crackdown are a collection of foreign countries courting digital-asset companies that no longer feel welcome in America.

Saudi Arabia, Japan, and France are among the countries wooing crypto companies, with representatives from those nations getting in touch with Binance, Coinbase, and others about creating friendly regulatory frameworks as well as potential incentive packages to relocate or expand their presence, people familiar with the matter said.

BRADLEY’S VIEW

The international competition could set off a regulatory race to the bottom in an industry with volatile assets and sometimes opaque operations. Germany, Italy, United Arab Emirates, Bahrain, and South Korea are among the other countries trying to win digital-asset businesses, several crypto executives said.

But they’re also feeling pressure from U.S. regulatory action. The Securities and Exchange Commission has hit the industry with a host of enforcement actions, including an insider trading case at Coinbase and registration failures at BlockFi. The agency’s decision to sue stablecoin issuer Paxos over unregistered securities infuriated many crypto firms.

Several venture capitalists focused on the crypto space told Semafor they’ve paused investments in U.S. projects until there’s more regulatory certainty.

The agency has scared traditional industries like banking away from working with crypto companies, effectively “smothering it with a pillow,” as one frustrated crypto executive said.

The response from the SEC has been a bit heavy handed. And the U.S. turning its back completely on the space lets other countries enjoy the spoils of the industry’s maturation while U.S. users will still be vulnerable to abuses by sketchy players.

There are also legitimate uses for the broader blockchain technology that powers cryptocurrencies, despite the current volatility. Hospital systems dealing with hackers taking patient data for ransom are turning to decentralized blockchain systems, and government agencies like California’s Department of Motor Vehicles are cutting through bureaucratic red tape with the technology.

KNOW MORE

Gulf states have been aggressively courting crypto companies, thanks in part to the regional rivalry between the UAE and Saudi Arabia in attracting businesses. Aramco, Saudi Arabia’s $2 trillion state-owned oil conglomerate, just announced it is working on co-developing blockchain technology with different companies, while Dubai is setting up relocating digital-assets businesses with banking services, commercial leases, and visas.

Bahrain’s central bank has straightforward licensing regulations for digital asset firms with low capital requirements, and applicants are given a decision within 60 days. Meanwhile, South Korea’s newest president ran on a pro-crypto platform.

ROOM FOR DISAGREEMENT

The arm of American regulators is long. The arrest of Sam Bankman-Fried, the founder of crypto exchange FTX, in the Bahamas at the request of American authorities, shows that U.S. prosecutors can still grab you overseas. He is accused of defrauding U.S. investors and users, among other allegations. (Bankman-Fried is an investor in Semafor, which plans to repurchase his interest.)

THE VIEW FROM BUSAN, SOUTH KOREA

Korea’s second-largest city believes it can reverse the aging demographics of its population with the help of a new industry. Local officials want to build a publicly-run crypto exchange, and the country’s new President Yoon Suk Yeol won his election, in part, because of support from young voters who want the country to embrace the digital asset industry.

NOTABLE

• Forbes details internal fund transfers at Binance that mimic those of FTX, but Binance says the story and others drew incorrect conclusions, detailing in a new blog post how to understand wallet transfers.

In the tug-of-war over butts-in-seats, managers might be regaining some lost ground. Fewer job postings are advertising remote-work options. The data also points to less hiring in fields, like tech, that lend themselves to work-from-wherever setups.

Three long-running Wall Street legal fights with echoes of the 2008 financial crisis are having their day in court.

• What remains of Lehman Brothers lost a bid to force a European insurer to pay it $500 million on a late-2000s swaps trade. The insurer had closed out the trade using calculations that Lehman’s lawyers later said defied “the laws of financial physics,” but a New York judge found its reasoning — the assets were so toxic nobody would put a price on them — sound enough. — Liz
• A lawsuit over hedge-fund pay ended in a mistrial after a jury couldn’t decide whether founder Paul Touradji, a protege of the late Julian Robertson, owed two of his former traders more than $90 million in compensation dating back to 2009. The long-running dispute — with made-for-the-tabloids details such as death threats and Donald Trump Jr. connections — isn’t over yet; the lawyer for the two traders said they will pursue a retrial. — Bradley
• Jim Dondero, the investor who pioneered the convoluted debt instrument known as a collateralized debt obligation, which helped fuel the 2008 crisis, remains in bankruptcy in a sprawling case related to his once high-flying hedge fund, Highland Capital. What Dondero says should have been a relatively simple restructuring has turned into a four-year boondoggle led by a judge he accuses of bias who recently denied his fourth request in two years that she recuse herself.
  
  Among his complaints: While overseeing the case, she wrote a novel about a corrupt, litigious Texas hedge-fund manager who ran a fund called Ranger Capital, a name used by a predecessor of Highland. (In her ruling, Stacey Jernigan wrote that she was unaware of that fact, though it’s mentioned in court filings.
  
  Believe it or not, this comes up often enough that the bar association has weighed in, saying that judges “may not write about or discuss a pending case… even in a work of fiction.” — Liz

Tech-company valuations have fallen sharply, and hundreds of Silicon Valley unicorns — those valued at $1 billion or more in their latest fundraisings — are at risk of losing their horns. Forge Global, where investors can buy and sell shares of private companies, said the average is trading at a 39% discount to its latest valuation. (Forge itself is worth 85% less than when it went public a year ago.) Bradley asked its CEO what’s next.

Silicon Valley Bank is known as a lender for tech companies but is now trying to calm investors after posting huge losses on bonds bought at the worst possible moment, just before rising interest rates made them less valuable. It lost $1.8 billion in a firesale of $21 billion of those bonds, which carried an average yield of less than half what Treasuries are paying these days.

It’s trying to raise $1.75 billion in fresh cash, and promised to replace tech-company deposits — which are being burned fast as startups struggle — with steadier funding. That will be increasingly expensive after Moody’s downgraded the company’s credit rating, a body blow to financial institutions.

Australia’s official mint has been shipping impure bullion to its largest client, the Shanghai Gold Exchange, since 2018, according to documents uncovered by the Australian Broadcasting Company. Now Perth Mint may be forced to recall $9 billion of diluted gold bars sold to China. A “scandal of the highest level,” one insider told the ABC, and the second time this year metal sellers have been caught duping buyers. Trafigura, a metals trader, is looking at a $600 million loss after realizing it bought cargo ships of nickel that didn’t contain any.

Credit Suisse is delaying the release of its annual report after getting questions late Wednesday from U.S. securities regulators over revisions to its past financial statements. The announcement sent the bank’s shares tumbling close to their all-time low. It’s been a hellish few years for Credit Suisse, which has laid off thousands, moved to spin off its trouble-prone investment bank, posted losses so embarrassing that they have turned into memes, and faced rumors of insolvency.

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— Liz and Bradley