Cole Gottlieb

DraftKings Inc. is shutting down its non-fungible token, or NFT, marketplace and its game associated with NFTs, ending the product line of digital-sports collectibles based on blockchain technology that it started in 2021 through a collaboration with Tom Brady's NFT startup. #Boston #tech #news #massachusetts #NFTs #NFT #draftkings #sportsbetting #TomBrady #startups #crypto #blockchain

9

Axiom Bank in Miami, FL was served a consent order yesterday from the Office of the Comptroller of the Currency. Axiom Bank is another community bank involved in #BaaS. Among traditional banking, they are in the debit and pre-paid card issuing space, as well as merchant processing. There are a few things that stand out that I note below, but most of what is outlined by the OCC we have seen in a host of other bank orders. So, I will stick with the unconventional aspects: 1) It is frustrating that the regulatory material cited in the order is old… meaning, they are telling this #bank (and others) to fix certain issues and having them refer to almost decades old guidance. This is a sign of what is the biggest problem plaguing responsible innovation. We have decades old (in some cases 50 years) requirements and guidance that has never been updated to fit the current state, much less prepare us for future state. We cannot keep citing outdated, in some cases, ill-fitting guidance and expect to get good results. Our regulatory framework needs CPR now. Exactly what I’ll be addressing at the J5 next week. Part of responsible innovation for #fintechs comes from clear and forward-thinking regulatory frameworks. 2) “adhered to by Bank staff” and "staff comply"... seems like our screening process Hyper-S Research could help detect effective #financialcrimes investigators. 3) Specifically, a good reminder for all non-big banks when it comes to reliance upon an #AML system – there are other depts or processes outside of what gets fed to the AML system that must be incorporated into your “suspicious activity monitoring program”. We often include this in our validation scope, as FIs are sorely missing out on key data and access and should have some type of monitoring that most AML systems cannot address. Looking at you commercial lending, wealth mgmt., wholly owned mortgage co subs, etc. 4) Noted in recent orders, validations MUST include the customer risk rating criteria! 5) TPRM expectations, if you haven’t started operationalizing the somewhat vague guidance docs, look at pgs. 18-19 for your starting point. 6) “The Board shall review/assess the effectiveness of….” fill-in the blank. Again, how will these Board members review the effectiveness of these various elements when not a single Board member has AML experience? Same question I asked for the #TDBank of the world. The way in which bank Boards are put together needs a major overhaul. Receiving 30 minutes of training once a year does not make an informed, educated, connected or effective Board. Our board advocacy groups, staffing, and publications *MUST* do better. AML and #sanctions training cannot be an afterthought in any type of conference or publication. #ifollowdirtymoney

179

22 Comments

The Fed isn't wasting any time coming back from Labor Day - issuing two enforcement actions - one to First Interstate Bank, Billings, Montana Flood insurance violations with a civil money penalty $70,000 (not AML/KYC related) and to United Texas Bank in Dallas, an AML/KYC-related Cease and Desist Order. Some highlights below - and link in comments: 💸 The C&D Order is related to significant deficiencies related to foreign correspondent banking and virtual currency customers, specifically risk management and compliance with applicable laws, rules, and regulations relating to anti-money laundering. 💰BaaS is NOT explicitly identified as a source of risk in the C&D Order. The C&D Order identified the following six areas of required improvement: 🧑‍💼Board Oversight: Within 90 days of the effective date of this Order, the board of directors of the Bank shall submit a written plan acceptable to the Supervisors to strengthen board oversight of the Bank’s compliance with the BSA/AML Requirements and the regulations issued by OFAC. 📇Corporate Governance: Within 60 days of the effective date of this Order, the Bank’s board of directors shall submit a written corporate governance plan acceptable to the Supervisors that fully addresses the findings and recommendations in the independent third-party report dated January 31, 2024. 👨‍⚖️ BSA/AML Compliance Program: Within 60 days of the effective date of this Order, the Bank shall submit a written revised BSA/AML compliance program acceptable to the Supervisors. 💵 Customer Due Diligence: Within 60 days of the effective date of this Order, the Bank shall submit a written revised customer due diligence program acceptable to the Supervisors. ℹ Suspicious Activity Monitoring and Reporting: Within 60 days of the effective date of this Order, the Bank shall submit a written revised program acceptable to the Supervisors to reasonably ensure the identification and timely, accurate, and complete reporting by the Bank of all known or suspected violations of law or suspicious transactions to law enforcement and supervisory authorities, as required by applicable suspicious activity reporting laws and regulations. 📏 Office of Foreign Assets Control Compliance: Within 60 days of the effective date of this Order, the Bank shall submit a written plan acceptable to the Supervisors to enhance the Bank’s compliance with the OFAC Regulations, including, but not limited to, enhanced OFAC screening procedures, an improved methodology for assessing OFAC risks, training related to compliance with the OFAC Regulations appropriate to the employee’s job responsibilities that is provided on an ongoing, periodic basis, and enhanced policies and procedures to ensure compliance with the OFAC Regulations. https://lnkd.in/gEXymUzB

20

5 Comments

SoLo Funds, backed by tennis legend Serena Williams, hit with 6th regulatory action & Evolve Bank & Trust data breach: The company, an unlicensed P2P payday lender backed by VCs that include Techstars, ACME Capital, and Serena Williams' Serena Ventures, as well as belonging to Visa's FastTrack program, has had a rough go of it lately. A botched tech transition from working with Synapse and Evolve Bank to Treasury Prime and Bangor Savings Bank left users unable to access their accounts or borrow funds for weeks. The CFPB filed a suit against the company, alleging it deceives borrowers with its "tip" and "donation"-based business model and through the use of "dark patterns." Now, SoLo Funds has been hit with what is at least its SIXTH regulatory action, settling with the Pennsylvania attorney general over its alleged illegal "tip and donation" model. The company will pay restitution, a civil penalty, investigation costs, and will cease attempting to collect on unpaid principal, "tips," "donations," and fees for loans in the state, totaling over $530,000. SoLo Funds also had data on its users compromised in the recent Russia-linked hack of Evolve Bank & Trust, though the company does not appear to have notified its users of the situation yet. More in this in the most recent Fintech Business Weekly through the link in the comments below.

100

19 Comments

Launching the redesigned bi-weekly private-credit newsletter. Private Lenders Get Pickier; Demand Holds Up; AI Front & Center. Please share thoughts and comments. https://lnkd.in/eDGF8edW #privatemarkets #credit #lending #investing #debt #banks #WallStreet #privateequity #AI

2

Mergers remain slow but there are still those out looking for a deal. Consider Celero Commerce, backed by LLR Partners, which is up for sale and the JPMorgan-backed Finexio, which is looking for investors. #deals #privateequity #fintech #payments

11

Has the SEC gone too far this time? With the Wells Notice to RobinHood, the SEC is essentially pushing for Crypto PROHIBITION and not regulation. Consider that RobinHood was FORCED to offer crypto through a NON Broker Dealer affiliate as the SEC & FINRA would not allow the BD a "non securities" license. Today, those regulators seem to be claiming that the crypto products they offer ARE securities & the NON BD is breaking the law. Programmers would call such a contradiction a "deadly embrace" where the rules are such that NO FIRM CAN COMPLY. Thus, this action is emblematic of this administration attempting to PROHIBIT the 40% of Americans estimated to own crypto from doing so... FWIW, the future of capital markets is digital & the rest of the world is starting to embrace it. As a result, if this administration is re-elected and continues on its Prohibition path, I suspect that it will be as successful for crypto as prohibition was for alcohol... (with similar results in increased fraud, etc)

35

7 Comments

Capital One reported earnings Tuesday, post-close. Below are my quick takeaways: ⤵⤵⤵ ➡ Period-end deposits of $351.4Mn, a +2.2% increase YoY and +0.1% increase QoQ ➡ ➡ 83% of deposits were FDIC-insured, up from 82% a quarter prior ➡ ➡ Average deposits of $349,488Mn, a +1.7% increase YoY and +1.1% increase QoQ ➡ ➡ Paid an average of 3.56% yield on $322,581Mn of interest-bearing deposits during the quarter, up +65bps YoY and +3bps QoQ ➡ NCOs of 3.36%, up +54bps YoY and +3bps QoQ ➡ ➡ 30+ day delinquency rate of 3.63%, up +27bps YoY but down (4)bps QoQ Credit Card ➡ Purchase volume of $165,143Mn, a +4.6% increase YoY and +10.0% increase QoQ ➡ ➡ Spend per customer largely flat (see quote below) ➡ Average loans HFI of $150,467Mn, an +8.4% increase YoY and +0.5% increase QoQ ➡ NCO rate of 6.00%, up +159bps YoY and +10bps QoQ ➡ ➡ 30+ day delinquency rate of 4.16%, up +39bps YoY but down (34)bps QoQ Consumer Banking ➡ Average loans HFI of $75,386Mn, a (3.0)% decline YoY but +0.4% increase QoQ ➡ Auto loan originations of $8,463Mn, an +18.2% increase YoY and a +12.5% increase QoQ ➡ ➡ Pulled back on some auto loans in 2022/23 due to what they believed were artificially inflated credit scores. Current auto headwinds include high interest rates and vehicle values. Used auto continues to be high relative to historical standards. ➡ Average deposits of $300,794Mn a +5.3% increase YoY and a +2.2% increase QoQ ➡ ➡ Average deposits interest rate of 3.22%, up +76bps from a year prior and +7bps from a quarter prior ➡ NCO rate of 1.87%, up +44bps YoY, but down (16)bps QoQ ➡ ➡ 30+ day delinquency rate of 5.60% up +30bps YoY and +39bps QoQ ➡ ➡ ➡ 30+ day delinquency rate comprised of auto at 5.67% and retail banking at 1.57% ➡ Rich Fairbank, CEO, “The spend per customer is really pretty flat when you see spend growth at a company like Capital One, the purchase volume growth is really being driven by the new accounts.” ➡ “The pace of year-over-year increases in both the charge-off rate and the delinquency rate have been steadily declining for several quarters and continued to shrink in the second quarter. On a sequential quarter basis, the charge-off rate, excluding the Walmart impact, was down 8 basis points and the 30-plus delinquency rate was down 34 basis points. ➡ Andrew Young, “NIM in the quarter benefited from the termination of the revenue sharing agreement with Walmart as well as modestly higher yields in the auto business. These 2 factors were roughly offset by the seasonal effects on yield in the card portfolio and a slight increase in the rate paid on retail deposits.” If you found value in this post, please like 👍 and share for visibility Looking for more fintech and consumer lending coverage? ➡ Follow/connect with me here for earnings updates, join my Discord server (for the full breakdown + archives), and remember to subscribe to the Cross River IQ (fka PeerIQ by Cross River) weekly newsletter #consumerlending #fintech #earnings

35

4 Comments

🏦 Industry Insight: The Continued Consolidation in U.S. Banking The recent seizure of Republic First by U.S. regulators, followed by its acquisition by Fulton Bank, signals ongoing consolidation in the banking industry—a trend mirroring Canada’s model where a handful of large institutions, known as the "Big Five," dominate the market. Drawing from my experiences with Canada's stable yet efficient banking sector, it's apparent that U.S. banks could glean significant lessons. For instance, Fulton’s acquisition, which nearly doubles its presence in Philadelphia, raises questions about the effects on competition and consumer services. As we witness U.S. banking inch closer to a Canadian-style consolidation, what could this mean for competition and consumer advantages? How can we strike a balance between banking stability and a competitive market landscape? Both aspects theoretically benefit consumers, but I’m keen to hear your thoughts: How might these trends reshape the banking industry and inform future business strategies? #banking #finance #regulation #businessstrategy #marketconsolidation #CanadianBanking

6

1 Comment

International interoperability: Many networks like FedNow, ACH, and PIX work only domestically, making international transfers slow and expensive (e.g., through SWIFT). Leveraging stablecoins can enable a real-time payment network by bridging many local payment methods.

7

1 Comment

✨ FinTech sector thrives with 26 deals totalling $783M showing robust industry growth. Highlights include: 🔵 Yendo Leads FinTech Funding with $165M: Yendo, based in Dallas, secures $165M in debt financing for vehicle-secured credit cards, aiding underserved consumers in accessing revolving credit.💳 🟠 Alkira Raises $100M in Series C: On-demand network infrastructure leader Alkira closes a $100M Series C round to enhance innovation and meet growing cloud application demands.🚀 🟢 Cover Genius Secures $80M Series E: Embedded insurance provider Cover Genius raises $80M to expand digital insurance solutions and integrate AI for claims processing.🛡️ 🔵 Annapurna Finance Attracts $75M Investment: Microfinance leader Annapurna Finance receives $75M from Piramal Alternatives to support growth and MSME financing.📈 Please see the full report below from our friends at FinTech.Global including details of all 26 deals. #FinTech #FundingNews #FinancialGrowth #Startups #TechTrends #RokaSearch

1

New FDIC proposed rule on brokered deposit reshaping the #BaaS model: For now: ▶️ Deposits viewed as brokered if a #fintech program uses multiple bank partners ▶️ But if the fintech program is partnered with one bank, the BaaS deposits can be considered core due to the "exclusive deposit placement arrangement" exemption But new rule eliminating the above exclusivity exception, threatening the existing BaaS model In addition: ▶️ New rule also bringing in concerns about liquidity and balance sheets of banks (https://lnkd.in/gyyDPmi2) ▶️ Several trade associations and observers have publicly opposed this new rule-making, including ICBA (https://lnkd.in/g8es5q9w) #digitalbanking #corebanking #bankingsolutions #payments #fintechsolutions #digitaltransformation #fintech #baas #neobanks #challengerbanks #embeddedfintech #creditunions #communitybanks #embeddedfinance #nichebanking #bankasaservice #creditunions #communitybanks #startup #banktech

10

Stripe has made a monumental move in the Crypto industry with its acquisition of Stablecoin Fintech Bridge, marking its largest acquisition to date at $1.1B. Notably, this acquisition is also the Crypto industry's largest ever, signifying a significant shift in the market. What's more astonishing is that this news comes just a month after Stripe reinstated Crypto Payments following a 6-year hiatus. With $3.2T of Stablecoins moving monthly, Stripe is strategically positioning itself to capitalize on this growing sector. https://lnkd.in/erfv5FJC #Stripe #Crypto #Acquisition #StablecoinFintechBridge

7

🔍 Breaking News: The SEC Targets Consensys Over Unregistered Broker Activities The cryptocurrency landscape faces yet another legal challenge as the SEC has filed a lawsuit against Consensys, the company behind the popular MetaMask wallet, for operating as an unregistered broker. This marks another significant action by the SEC, targeting staking services and claiming that such platforms require registration due to their fee structures and service offerings. According to the SEC, since January 2023, Consensys has engaged in the unregistered sale of securities through its MetaMask Staking service, accumulating over $250 million in fees. The complaint specifically identifies staking programs like Lido and Rocket Pool as investment contracts, thereby classifying them as securities. Furthermore, the SEC has labeled several prominent crypto assets as securities, including: 1. Polygon (MATIC) 2. Mana (MANA) 3. Chiliz (CHZ) 4. Sandbox (SAND) 5. Luna (LUNA) Despite previous losses in similar legal battles, the SEC continues its stringent approach towards cryptocurrency regulation. Consensys, on the other hand, remains confident in their position, anticipating a favorable outcome in this lawsuit. 🤔 As this situation unfolds, it raises critical questions about the future of staking services and the broader implications for the crypto industry. What are your thoughts on this development? How do you see this affecting the landscape of digital assets and their regulation? Stay tuned for more updates as this story progresses. #CryptoNews #SEC #Consensys #CryptoRegulation #DigitalAssets #Blockchain #MetaMask

1

Robinhood's ride to fintech supremacy has been almost as volatile as the meme stocks that trade on its platform. Its IPO debut on July 28, 2021, ended with the stock down 8% to $34.82. Led by co-founders Vlad Tenev and Baiju Bhatt., then a clean-shaven duo with long, flowing locks, the company struggled to break the perception as a place for 20-somethings to buy one share of GameStop and call it a day. In 2022, the company slashed headcount by 9% in a first round of cuts, then by 23% in the second. Its stock hit a record low of $6.81 on June 13, 2022. Today, the business has finally begun to haul in major profits, and the stock is up a sizzling 220% this year. the rearview mirror. Yet a plethora of product releases later, CEO Tenev walks in for Yahoo Finance's Comeback of the Year at our NYC headquarters. Tenev, now 37, sports shorter hair that's on the cusp of looking like peers at corporate rivals Charles Schwab or JPMorgan. Today, the business has finally begun to haul in major profits, and the stock is up a sizzling 200% this year. "I remember when we entered the public markets, it was sort of at the height of the secular bull market and we felt good. But the business now is much stronger across pretty much all dimensions. We have nine business lines that are generating over a hundred million in annual revenue," Tenev told me. Tenev and I chat on what's ahead for Robinhood, our Comeback of the Year award winner. ⬇️ https://lnkd.in/gA8xuXAu

36

3 Comments

New story for Reorg w/ Katherine Schwartz - JP Morgan and Citigroup have begun marketing a $2.6B loan and bond package to buyside participants backing Clayton Dubilier & Rice's acquisition of cloud software developer Presidio from BC Partners, according to sources. A source familiar with Presidio’s deal said they expect the deals to be well received since it is a known credit in the market despite it changing hands in sponsors. Read more at Reorg: https://lnkd.in/gwuH5CWR #leveragedfinance #leveragedbuyout #lbos #leveragedloans #highyieldbonds

7