Fintech Update, 12/19 - 1/8
Hi! It’s Monday, January 9, 2023.
Happy New Year! We hope you had a wonderful holiday and your year is off to a good start. We’re excited to be kicking off the year with review of the past three(!) weeks, and we’re looking forward to all the great things to come in 2023.
As always, we’d love to hear from you – reach out any time via LinkedIn, Twitter, or email. We’re also looking for our first editorial intern! Let us know if you or someone you know might be interested in joining the team. – Joe, Kieran, and JC (Team TFU)
The Rundown
Coinbase settled for $100M with the New York Department Financial Services over issues with its compliance with anti-money laundering requirements. The settlement, which includes a $50M penalty and requirement that $50M be invested in the crypto exchange’s compliance program, ends an investigation finding that Coinbase had not performed sufficient background checks on onboarded customers.
Jack Ma will relinquish control of Chinese fintech giant Ant Group, following a major crackdown by Chinese regulatory authorities. Ma, who has hardly been seen in public since he criticized China’s financial sector in 2020 (resulting in Chinese regulators canceling Ant’s IPO at the 11th hour), will see his 50% share in the conglomerate reduced to 6% following “further corporate governance optimization.”
A joint statement by US regulators warned banks that exposure to cryptocurrency opens them up to an array of risks, among them scams and fraud. The Fed, OCC, and FDIC noted that they have “significant safety and soundness concerns” with banks that focus on crypto or have “concentrated exposures” to the sector.
Binance.US reached a deal to “acquire the crypto assets and customer deposits of Voyager Digital” for $1.02 billion – only months after the crypto exchange explored a last-minute purchase of FTX before it declared bankruptcy. Voyager, which itself declared bankruptcy in July 2022 in the wake of Three Arrows Capital’s (3AC) demise, described the Binance.US offer as “the highest and best bid . . . with the core objective of maximizing the value returned to customers and other creditors on an expedited timeframe.”
(Not strictly fintech, but noteworthy!) The Consumer Financial Protection Bureau (CFPB) ordered Wells Fargo to pay over $2 billion to 16 million affected consumers, and an additional $1.7 billion civil penalty, for legal violations that included “illegally assessed fees and interest charges on auto and mortgage loans . . . unlawful surprise overdraft fees . . . [and] other incorrect charges to checking and savings accounts.”
Crypto payments company Wyre is rumored to be shutting down. Not too long ago (April 2022), Bolt announced a definitive agreement to acquire Wyre for $1.5 billion. Reminder: life comes at you fast.
The Reading Nook
Writing for CNBC, Hugh Son predicted that 2023 will be a year of “reckoning” for fintech, predicting significant market consolidation as many companies struggle to survive amid a drying-up of VC funding and sharply declining valuations as the market corrects itself after years of low rates led to cheap funds and big investments. We agree, and continue to see upside for companies – particularly B2B – with cash in the bank and enough discipline to survive through the lean times. It may get bumpy, but the companies that ride it out will emerge stronger on the other side.
Jeremy Solomon and Max Liebeskind at NYCA wrote a great piece - Leading with Context: Credit in the Digital Age. The piece focuses on fooling FICO, contextual credit, and a call for a better bureau.
Selected fundings
South Korean finance super app Toss raised $405 million in Series G funding at a $7 billion valuation, up 7% from the valuation from its pre-Series F funding round in June 2021.
Crypto trading firm Amber Group raised $300 million in Series C funding.
Southeast Asian banking and digital finance platform Akulaku raised $200 million in a strategic investment from MUFG.
Money View, the Indian online credit platform offering personalized credit products, raised $75 million in a new funding round at a $900 million valuation.
Indian micro loan provider KreditBee raised an additional $100 million as part of a larger Series D funding round.
Chilean business lending startup Kredito raised $6 million in new funding.