Welcome back, to Fintech Weekly.
It feels ironic that a matter of weeks after the Hollywood Writers Guild of America (WGA) strike came to an end with a settlement on the role of AI in the industry, OpenAI just served up a week of real-life drama that no Hollywood script could match. It is not the subject matter of this newsletter to delve into the finer details of that particular story so we have referenced a few articles below that have covered this story this week, but we will look at the impact this had on a certain payments company.
How much have CZ and Binance been fined? 💰
What happened to Worldcoin during the OpenAI soap opera? 📉📈
Where are Paystack making job cuts? ✂️
Why are Central Bank Digital Currencies still struggling according to Mastercard? 😫
Who did Google cut a special deal with? 🤝
When did HSBC have an IT Outage? 👨💻
How much have CZ and Binance been fined? 💰
A lot can change in a year. Last November Sam Bankman Fried resigned himself and his crypto empire FTX to defeat when Binance Founder CZ passed on the opportunity to bail out the FTX. SBF tweeted “you won” as he raised the white flag. A year on and CZs reign as CEO of Binance is over after he accepted a plea deal which will cost him $50 Million and cost Binance $4.3 Billion. The deal is one of the largest ever secured by the US Department of Justice. Of course, this all follows Bankman Fried being found guilty of fraud and facing up to 115 years in prison. It seems neither SBF nor CZ has “won” after all. "I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself", CZ said in a post on X. Those mistakes refer to the apparent complete lack of compliance on Binance which resulted in the crypto trading platform facilitating hundreds of millions of dollars of transactions to US sanctioned countries including Iran and Russian occupied Ukraine as well as terrorist organisations. The company was accused of a "web of deception" by The Securities and Exchange Commission (SEC)
Perhaps more importantly, the crypto industry as a whole stands to lose the most as trust in the sector is justifiably extremely low. Those that remain working at Binance may hope that a future for the company still exists as they accepted the appointment of an independent compliance monitor for three years and to report its compliance efforts to the U.S. government, alongside the fines.
Richard Teng, a former Abu Dhabi regulator and later Binance's regional markets head, will take over as CEO. "My focus will be on: 1) reassuring users that they can remain confident in the financial strength, security and safety of the company 2) collaborating with regulators to uphold high standards globally that foster innovation while providing important consumer protections 3) working with partners to drive growth and adoption of Web3," he posted on X.
Sources:
Read more on this story from BBC, The Guardian, Wall Street Journal, CoinDesk
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In Other News:
What happened to Worldcoin during the OpenAI soap opera? 📉📈
It has been a hectic week for Sam Altman. For those of you who happened to blink at any stage in the last seven days, here is a very brief summary of events. Altman, as CEO of OpenAI was speaking on the future of AI last week in San Francisco, then the 6 person board of the non-profit company he helped build to a valuation of ~$90 Billion unceremoniously voted to remove him as CEO. OpenAI President Greg Brockman also resigned in solidarity, followed by 700 staff also threatening to resign. Microsoft, OpenAI’s biggest investor, were completely blindsided by this decision wasted no time offering Altman and his loyal mutineers roles with their AI department. OpenAI, then reinstated Altman et al, all within 5 days. The soap opera was well covered by all major publications so I will link a few of the articles I found most informative here, here, and here. One element of the saga that received less coverage, and is more relevant to the theme of this newsletter was the impact all this has on Worldcoin, the crypto project Altman has also founded and we have covered several times in recent months. The price of WLD illustrates just how turbulent Altmans week has been. On the day of Altman’s ousting from OpenAI, the share price of Worldcoin fell 10%, largely due to the speculation and uncertainty surrounding the announcement. OpenAI simply stated that the board “no longer has confidence in [Altman’s] ability to continue leading” the company but did not clarify the impact this would have on any of Altman’s other projects. As the price chart shows, order was quickly restored as Altman was reinstated.
Sources:
Read more on the story in TechCrunch
Where are Paystack making job cuts? ✂️
Nigerian payments Fintech, and Stripe subsidiary Paystack announced this week that they will be making 33 job cuts in Europe and the Middle East in an effort to double down on their African market operations. Paystack was founded by Nigerian entrepreneurs in 2015 and acquired by Stripe in 2020 for a reported $200 Million as part of the Collison Brothers expansion into the African market. The job cuts at Paystack follow the 14% of staff Stripe had to let go last year. Paystack now operates in seven African countries after expanding into Ivory Coast, Egypt and Rwanda earlier this month, adding to its existing operations in Ghana, Kenya, Nigeria, and South Africa. The large underbanked population coupled with rising smartphone adoption makes Africa an extremely promising market for payment firms like Stripe, although they will have competition from Fintechs such as Interswitch, Flutterwave and Jumia Technologies, who have already achieved billion-dollar-plus valuations.
Sources:
Read more on Irish Independent, TechCrunch
Why are Central Bank Digital Currencies still struggling according to Mastercard? 😫
Over recent months we have discussed the work Mastercard is doing to support to development of Central Bank Digital Currencies (CBDCs). The payment processing giant established a CBDC Partner Program, a group of leading blockchain technology and payment service providers which includes Ripple, Consensys, Fluency, Idemia, Fireblocks, Consult Hyperion and G+D, to develop a shared understanding of “the benefits and limitations of CBDCs and how to implement them in a way that is safe, seamless and useful”. Mastercard also collaborated with the Reserve Bank of Australia and the Hong Kong Monetary Authority in developing CBDC pilots in recent weeks. However, speaking at the Singapore Fintech Festival, Ashok Venkateshwaran, Mastercard's lead for blockchain and digital assets for Asia-Pacific stated that adoption remains an issue when it comes to CBDC growth. Customers are too comfortable with today’s money, so there is no motivation to adopt anything new. This comes a week after IMF Managing Director Kristalina Georgieva urged countries to make a more proactive push to develop CBDC, also speaking from Singapore.
Sources:
Read more on CoinDesk and Reuters
Who did Google cut a special deal with? 🤝
Google and Epic games are in court this week as the creators of Fortnite games claim that Google’s commissions on in-app purchases are anticompetitive. In addition, Epic claim that Google exercise their unfair power in the marketplace when negotiating special deals with developers and manufacturers running their own app stores. One of the big scoops from the trial so far was when, Google’s Head of Global Partnerships Don Harrison confirmed Spotify paid a 0 percent commission when users chose to buy subscriptions through Spotify’s own system. If the users picked Google as their payment processor, Spotify paid Google 4 percent, a significant discount compared to Google’s more common 15 percent fee. This was a detail that Google were very eager to keep private. Google and Apple both have a significant influence on users purchasing behaviours, and app developers are largely powerless and forced to pay the tech giants fees, which are as high as 30 percent commissions on Apple. Only the very small minority of app developers like Spotify and Netflix can match Apple and Google’s negotiating power as the utility of a smartphone is undeniably depleted if the use of these apps is negatively impacted.
Sources:
Read more on the story on The Verge, The Verge
When did HSBC have an IT Outage? 👨💻
HSBC UK were scrambling on Black Friday to resolve an IT outage that left some customers without access to their banking services. This presented a perfect storm for the banks IT department as not only were many customers looking to view their online banking to determine if they still had funds remaining to splash out on a few more ‘necessary’ purchases on what was predicted to be the busiest Black Friday to date. Furthermore, being the last Friday of the month it was payday for many customers who were left in the dark as to whether their funds were safely deposited in their accounts. Of course, with some online purchases requiring 3DS verification, this was a major disruption. HSBC UK said in a statement: “We’re working hard to restore HSBC UK’s mobile and online banking service, including the authorising of online card purchases via the app. We understand this is really frustrating for some of our customers, and we are really sorry for the inconvenience.”
Sources:
Read more on the story on Yahoo Finance, Yahoo Finance
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