America’s Justice Department charged Sam Bankman-Fried with fraud, money-laundering and violating campaign- finance laws in relation to the collapse of FTX, a crypto exchange. He was arrested in the Bahamas, where FTX is based. The department said that FTX’s “phenomenal downfall” was not a case of mismanagement, but instead one “of intentional fraud, plain and simple”. It alleges that Mr Bankman-Fried misappropriated FTX’s money for personal use, to repay debts owed by his hedge fund, Alameda, and to give millions to political candidates. It is a spectacular fall from grace for a man who had been lauded for his “effective altruism”.
Meanwhile the pressure increased on Binance, a rival crypto exchange to FTX, following a run of withdrawals from its business. Nansen, a blockchain analytics firm, said that Binance had seen net outflows of as much as $3bn over 24 hours.
It was a busy week for the Justice Department, which also announced that Danske Bank had pleaded guilty to defrauding American banks by lying about its “deficient anti-money laundering systems”. Danske, Denmark’s largest bank, processed suspect transactions worth $160bn from its branch in Estonia through American banks. Much of the money came from Russia. Danske is to pay $2bn in fines.
The Federal Reserve raised its benchmark interest rate by half a percentage point, taking it to a target range of 4.25% to 4.5%. The half-point increase follows four consecutive rises of three-quarters of a percentage point. The central bank has eased the pace of tightening as it balances the need to tame soaring consumer prices with ensuring that the economy is not plunged into a recession. The European Central Bank and the Bank of England followed suit and also raised their key rates by half a percentage point.
November’s inflation figure helped steer the Fed’s decision. The annual rate, as measured by consumer prices, dropped to 7.1% from 7.7% in October, the lowest it has been all year, but still well above the average of 2.1% in the three years before covid-19. In Britain inflation fell to 10.7%, though the cost of alcohol in pubs and restaurants increased, just in time for Christmas.
The Securities and Exchange Commission voted to continue with plans that would introduce the biggest shake-up to America’s stockmarket rules in a generation. The most contentious proposal would compel brokers to send orders for buying and selling shares from small investors to an auction, an idea that is being resisted by Robinhood and other brokerages that focus on retail investors. The plans are open to public comment until at least March 31st.
Big tech pushed further into the world of high finance when Microsoft and the London Stock Exchange announced a strategic partnership in which the software giant will provide the bourse with cloud-computing services and take a 4% stake in the LSE and a seat on its board. The LSE stressed that the arrangement was about more than “simply lifting” assets to the cloud, and would see Microsoft help it build products and access markets.
Microsoft’s deal was some good news for the company, following the decision of the Federal Trade Commission to try to block its $75bn acquisition of Activision Blizzard. The FTC thinks that Microsoft’s Xbox would stifle competition among rival video consoles for Activision’s blockbuster games, such as “Call of Duty”.
A bipartisan group of politicians in America’s Congress introduced a bill that would ban TikTok from the United States because of concerns that the app’s Chinese owner, ByteDance, leaks user data to the Chinese government. The Biden administration is currently looking at alternative ways to allow TikTok to operate. Donald Trump tried in effect to ban TikTok, but was rebuffed by the courts.
Amgen, a biotech company, struck a deal to buy Horizon Therapeutics for $28.3bn. Horizon’s assets include treatments for rare diseases and inflammatory conditions such as gout, which is associated with rising obesity levels.
The member states of the EU reached agreement on imposing a tax on the carbon-dioxide emissions of imported goods, such as steel, cement and fertiliser, the world’s first carbon border adjustment mechanism. Supporters say the scheme levels the playing field for European firms that are subject to EU emissions levies. But it is has angered the developing world, which emits relatively high levels of greenhouse gases.
During the pandemic over a dozen apps offering speedy delivery of groceries were launched in America and Europe. The industry is now consolidating, the latest example being the takeover of Gorillas by Getir. Gorillas, based in Germany, now operates in just a handful of countries. Getir, a Turkish startup, has a wider reach, and with its acquisition of Gorillas it is now truly lord of the jungle.