August 2, 2022
Photo: Karen Bleier/AFP via Getty Images
Good morning, and welcome to Protocol Fintech. This Tuesday: the FDIC’s crackdown, Solana Spaces and LendUp’s failure.
The team behind b8ta has gone Web3. Its new venture, Solana Spaces, markets Web3 merch from outlets similar to the glossy new-hardware showcases b8ta ran. In fact, its New York outpost is in the same Hudson Yards location as a former b8ta store. The real test may be if Solana Spaces opens up a store in its hometown of San Francisco, where b8ta faced a harrowing series of robberies. The blockchain can only offer so much security IRL.
— Owen Thomas (email | twitter)
Regulators have a message for banks amid the crypto crash: Be careful of the company you keep. Especially if they’re prone to running their mouths about deposit insurance.
The Federal Deposit Insurance Corp. warned banks last week that they need to monitor how their crypto customers advertise the availability of insurance, after at least one case in which it said customers were misled. The notice could create headaches for banks that partner with crypto companies and other fintech firms — once a growth market, now a growing disaster field.
The notice is the latest fallout from the Voyager Digital bankruptcy. The FDIC and Federal Reserve sent a cease-and-desist order to the crypto lender on Thursday, saying it made misleading statements about insurance coverage.
The FDIC was already tightening things up before the crypto crash. In April 2021, the FDIC’s board of directors began setting rules for how the agency can investigate and punish misuse of its name and logo.
Banks would rather not be the enforcers. The industry generally supports efforts to crack down on false advertising about deposit insurance, but keeping tabs on customers’ marketing is a step too far.
The biggest challenge, Meade said, is the lack of a stick for banks to wield. They could try to cancel the business, but that could be difficult depending on the bank’s contract or deposit agreement, he added. This will be an issue for companies beyond crypto to watch closely. Fintech companies that market themselves as banks but are not actually chartered institutions have been a point of constant tension. And the FDIC is not the only regulator watching this space: The Consumer Financial Protection Bureau has similarly promised to take action against firms that are not clear about what deposit insurance covers.— Ryan Deffenbaugh (email | twitter)
They created Digital People. Now they've made celebrities available as Digital Twins: Soul Machines co-founder and CEO Greg Cross and his co-founder Mark Sagar, Ph.D., FRSNZ are leading their Auckland and San Francisco-based teams to create AI-enabled Digital People to populate the internet, at first, and soon the metaverse.
Visa must face claims that it profited from videos of child sexual abuse. A federal judge in California rejected Visa’s motion to dismiss claims related to processing payments for the parent company of Pornhub, a decision Visa says raises questions about the liability payments firms face while processing billions of transactions.
On Protocol: The crypto crash has deterred ransomware criminals. Tighter security and a government crackdown has also held down their take.
The SEC filed charges against 11 people involved in an international "crypto pyramid and Ponzi scheme" that raised more than $300 million.
Wanted: crypto whistleblowers. New York State Attorney General Letitia James published a notice Monday urging workers to contact her office if they witnessed improper behavior inside a crypto company. She also asked investors who believed they’d been deceived to get in touch.
LendUp Global has begun liquidating its assets. That includes its neobank subsidiary, which the company had said would continue operating after regulators forced another unit to stop lending. The windup is happening through an assignment for the benefit of creditors, a quieter alternative to a public bankruptcy.
Also on Protocol: New York fined Robinhood’s crypto unit $30 million over compliance failures.Binance.US delisted a token identified by the SEC as a security. The exchange said it would delist the AMP token “out of an abundance of caution” after the SEC alleged it was a security last month in an insider trading case against a former Coinbase employee.
Real estate iBuyer Opendoor has settled charges with the FTC, agreeing to pay $62 million and cease practices the FTC called "deceptive."
Opendoor buys homes directly from consumers as an alternative to the traditional home-selling process, using algorithms to price the homes in what it says is a faster and more convenient process. Opendoor has grown quickly in recent years, managing to avoid the pitfalls that hit rival Zillow as home prices gyrated during the pandemic.
Opendoor had said it offered "market-value" offers and lower transaction costs, and its marketing materials claimed that net proceeds of a transaction were higher with Opendoor than a traditional sale, the FTC said.
Read the full story on Protocol.com.— Tomio Geron (email | twitter)
Former a16z partner Rex Salisbury launched a $20 million fintech fund. The fund is the first for his new VC firm, Cambrian Ventures, and is backed by the founders of NerdWallet, Plaid, Simple, Alloy, Modus, SoFi, and more.
Andreessen Horowitz invested in Gary Vee’s NFT project, VeeFriends, in a $50 million seed round. The firm called VeeFriends “a blueprint for effectively leveraging Web3” and was the sole investor in the round.
Pogo raised $14.8 million in seed funding. The firm’s product allows users to earn money for sharing data; it likens the service to the Honey browser extension, which helps users find coupons online. The round was led by Josh Buckley and also included Slow Ventures, Village Global and The Chainsmokers.Parisian social investing app Shares raised $40 million in a Series B funding round led by Valar Ventures. The app helps investors build networks with family and friends.
They created Digital People. Now they've made celebrities available as Digital Twins: Soul Machines is at the cutting edge of AGI research with its unique Digital Brain, based on the latest neuroscience and developmental psychology research.
Thanks for reading — see you tomorrow!