Crypto.com Expanding Debit Card to Australia After Becoming Visa Principal Member

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Bloomberg

(Bloomberg) – Credit Suisse Group AG raced to contain the widening fallout from the collapse of Greensill Capital as it acknowledged defaults are coming in a $10 billion group of now-frozen funds that the bank touted for their safety.Facing client furor and regulatory probes over the collapse of the short-term debt funds, the Swiss bank demoted one of its top executives, withheld bonuses for some and separated the asset management unit at the center of the scandal from the much more valuable wealth unit.Chief Executive Officer Thomas Gottstein, who has largely shied away from making deep changes since taking over a year ago, is contending with threats of litigation and demands from regulators to hold more capital as the crisis renews questions about risk management and controls. Clients from rich individuals in the Middle East to Swiss pension funds are expressing their anger over potential investment losses, threatening key relationships far beyond the asset management business.“There remains considerable uncertainty regarding the valuation of a significant part of the remaining assets,” the bank said in its annual report on Thursday. “The portfolio manager has been informed that certain of the notes underlying the funds will not be repaid when they fall due.”The bank has so far returned about $3.1 billion to investors and said it has an additional $1.25 billion in cash across the four funds.Shares of Credit Suisse rose 3.1% at 4:18 p.m. in Zurich amid broad-based gains in bank stocks. Before today, the bank had lost more than 8% since freezing the funds March 1.As part of the changes announced Thursday, Eric Varvel, who oversaw asset management from the U.S., will be replaced next month by Ulrich Koerner, until recently the head of the fund unit at rival UBS Group AG. The payout and vesting of variable compensation for a number of senior employees involved in the Greensill debacle – up to and including the executive board – is on hold so the bank can reconsider it.Asset management will become a separate unit, with Koerner reporting directly to CEO Gottstein. Varvel will work alongside Koerner in the coming months and then focus on his other roles as CEO of the bank’s U.S. holding company and chairman of the investment bank. The changes cap two frenzied weeks in which the bank launched an internal probe, brought in outside help to deal with regulators’ queries and sought to calm investors by returning cash portions of the funds.In most cases when an asset manager has to liquidate a fund, losses are borne by the investors. But for Credit Suisse, which sold the products across business units, the case isn’t as clear-cut. The funds were used to invest money for retirees, the bank pitched them to corporate treasurers and insurers, and offered them to rich families as an alternative to cash.Credit Suisse sold a disproportionate amount of the funds – more than $1 billion – through its private banking arm in the Middle East, according to people familiar with the matter. It was part of a push to move rich Middle Easterners, who frequently hold large amounts of money in Switzerland, out of costly cash deposits and into fee-generating investments.Some of the Swiss bank’s most important clients in the Gulf also borrowed against their holdings in the funds to amplify returns, the people said, asking for anonymity to discuss internal information. These clients are now facing the dual problem of potential losses in the Greensill-linked funds and possibly calls to put up more collateral for their borrowings.The situation has left Credit Suisse bankers in the region scrambling to salvage client relationships, without being able to answer key questions about the extent of possible losses and who will end up paying for them.At home in Switzerland, where Credit Suisse is a top provider of investment management services for retirees, at least one pension plan has been pressuring the bank and local politicians to ensure they’re made whole, according to a person familiar with the matter. The pension is asking why the bank didn’t take action despite warning signs, the person said.A spokesperson for Credit Suisse declined to comment.Varvel’s replacement marks the highest-level shakeup so far in the wake of the Greensill debacle, after the bank temporarily removed a number of lower-ranking managers while it conducts the probe. A Credit Suisse veteran of almost three decades, he took over as head of asset management in 2016, pursuing a “barbell strategy” of focusing on alternative investments on the one hand, and cheaper, passive instruments on the other.While he was able to boost assets under management, the unit has been in the spotlight for the wrong reasons recently. On top of the issues with the Greensill-linked funds, setbacks include a $450 million impairment on a stake in York Capital Management, the closure of two re-insurers backed by the unit’s insurance-linked securities strategy, and a 24 million-franc charge on seed capital for a real estate vehicle.The Greensill-linked funds initially invested in loans backed by invoices that would be paid in a matter of weeks or months, making them relatively safe. But as they grew into a $10 billion strategy, they strayed from that pitch and much of the money was lent against expected future invoices, for sales that were merely predicted, Bloomberg has reported.Credit Suisse rated the flagship fund the safest on a scale of one to seven, in part because many of the assets were insured. A high-octane version of the fund that didn’t use insurance was still given the second-safest rating in investor documents. Credit Suisse decided to freeze them after a major insurer of the assets refused to continue coverage.Some investors are now threatening legal options, Credit Suisse said. Edouard Fremault, a partner at Deminor in Brussels, a company that funds investment-recovery litigation, said his firm has already been approached by around 10 investors in the funds. The investors are private and corporate clients of Credit Suisse in the U.K. and Switzerland, according to a person familiar.Credit Suisse earlier this week warned it may take a financial hit related to Greensill. Questions also remain surrounding the bank’s decision to further its exposure to the former billionaire financier by providing a $140 million bridge loan last fall, and whether Chief Risk Officer Lara Warner played a key role. The bank has said she only learned of Greensill’s problems securing insurance cover for its supply chain finance loans on Feb. 22, about a week before Credit Suisse gated the funds.(Adds shares in sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Visa Inc. (V) - Crypto.com Inks Global Partnership With Visa: What’s Next?

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Crypto.com, a Hong Kong-based cryptocurrency exchange platform, has announced a global partnership with Visa Inc (NYSE:V) that includes principal membership in Visa’s Australian network and a planned roll out for fiat lending with crypto collateral via the Crypto.com Visa Card.

What Happened: The Crypto.com Visa Card was launched in Singapore in November 2018 and is now available in the U.S. and Canada, as well as across Europe and the Asia-Pacific countries. Card users can convert cryptocurrency into one of six fiat currencies — U.S. dollar, Canadian dollar, British pound, euro, Hong Kong dollar and Singapore dollar — and use the card in credit or debit transactions, including ATM withdrawals.

Crytpo.com noted its new Visa principal membership will enable the direct-issuance of its Visa card in Australia. The company is also planning to expand the card’s availability into other markets where it currently does not have service.

What Else Happened: Furthermore, Crypto.com has debuted “Spending Power,” which will allow cardholders to access funds in their Crypto.com crypto wallet as collateral for a loan and instantly spend fiat anywhere Visa is accepted.

And later this month, Crypto.com will begin issuing virtual cards in Europe to allow users to start spending without have a physical card for their transactions.

“Signing the global partnership with Visa and becoming a principal member with the world’s leader in digital payments affirms our commitment to accelerate the world’s transition to cryptocurrency,” said Kris Marszalek, co-founder and CEO of Crypto.com. “I’m also excited to deepen our relationship with our customers via direct-issuance of cards around the world and roll-out Spending Power, allowing them to access the value of their crypto today.”

“Digital currencies have the potential to extend the value of digital payments to a greater number of people and places, and we’re eager to work with companies bringing this vision to life,” added Cuy Sheffield, head of Crypto at Visa. “Through our partnership with Crypto.com, one of the largest Visa card programs connected to a crypto exchange available today, we are making it quicker and easier for people to spend digital currency worldwide.”

(Photo courtesy Crypto.com)

The world’s largest crypto fund manager is offering new trusts that invest in 5 different cryptocurrencies

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Yuriko Nakao/Getty Images

Grayscale Investments is offering new trusts that invest in five different cryptocurrencies.

The new trusts will invest in Basic Attention and Decentraland tokens, Chainlink, Filecoin, and Livepeer.

Investor demand for digital currencies has never been higher, Grayscale CEO Michael Sonnenshein said.

Digital currency asset manager Grayscale Investments announced Wednesday that it is offering five new investment trusts, bringing its single-asset lineup to 13.

The new trusts are launching into fairly niche segments of the crypto space, with three investing in Chainlink, Filecoin, and Livepeer, which are blockchain-based digital payment systems. One will invest in Ethereum-based Basic Attention tokens, while the fifth will hold coins in the virtual reality platform Decentraland. These trusts are among the first of their kind to solely invest in the digital currencies underlying each investment product.

“Digital currencies have reached an inflection point,” Grayscale CEO Michael Sonnenshein said in a statement. “Investor demand has never been higher, and every day we’re seeing new entrants to what has surely become a bona fide asset class.”

Decentraland is an Ethereum-based blockchain platform where users can operate VR applications. Decentraland

Grayscale said all five trusts are open for subscription by eligible individual and institutional accredited investors. The decision to launch them was based on assessment of investor demand and the integrity of each cryptocurrency, Sonnenshein told Bloomberg in an interview. The asset manager’s biggest product is still its $34 billion Grayscale Bitcoin Trust.

The new cryptocurrencies it has chosen have much smaller market values in comparison to bitcoin. Basic Attention tokens are known to track consumers' time and attention on websites, with the goal of understanding how to efficiently distribute advertising money.

Chainlink runs on the Ethereum blockchain, with a technology that enables delivery of price feeds into decentralized finance applications. Filecoin is a storage service provider that enables anyone to rent spare storage space on their computer, creating a huge source of data storage.

Livepeer is a decentralized video-streaming network for those who wish to add live or in-demand video to their networks. Meanwhile, Decentraland tokens can be used to buy up virtual plots of land and goods and services within its virtual-reality space.

Grayscale said it plans to continue a tradition of creating “novel pathways” for investors to access the opportunities that digital currencies may offer.

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