Hi from Los Angeles, and welcome back to Semafor Business, a twice-weekly look at the world of big money.
I’m in town for the Milken Global Conference, where 3,500 attendees gathered this week for the annual confab. More nakedly commercial than Davos and less celebrity-studded than DealBook, Milken is the financial world’s unabashed homecoming. It’s the smoke-filled back room, except it’s happening right out in the sun-drenched lobby of the Beverly Hilton.
The mood is not quite gloomy but cautious, though not as cautious as some think it ought to be. “People are too happy here,” noted Katie Koch, CEO of credit shop TCW. She predicted “some bad accidents” ahead in a “medium to hard landing” for the economy. The collapse of First Republic, the third U.S. bank failure this spring, hung over the crowd, too.
The investment du jour is clearly private credit, which has doubled since 2017, to $1.3 trillion. Proponents say it’s more disciplined than loans from banks, which ship the debt off their books as soon as they can, and wieldier than the bond market. Critics note declining lender protections and borrowers padding their earnings with fuzzy add-backs. The next year will be telling, but I’ll note that while recessions might sometimes be sparked by stock-market crashes, credit meltdowns sustain them.
Onto today’s big story: A new lawsuit essentially accuses some of Silicon Valley’s elite of insider trading in shares of Coinbase. The company’s CEO and CFO, along with venture capitalists Marc Andreessen, Fred Wilson, and Katie Haun, are among those who sold shares of the crypto exchange just after it went public, knowing its fees were falling and it would soon need to raise cash, the lawsuit alleges. Read on for more.