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The Morning Risk Report: Crypto Giant Binance Offers Little Transparency After FTX Collapse
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Good morning. The collapse of the crypto exchange FTX has triggered calls for transparency in the industry. To many investors, its biggest player, Binance, remains a black box.
Crypto exchange Binance processes more transactions than most of its rivals combined, accounting for roughly half of crypto spot trading and two-thirds of derivatives trading, according to the research firm CryptoCompare.
Like FTX, Binance discloses limited financial information. It doesn’t say where the company is based. And its founder, Changpeng Zhao, is affiliated with market makers providing liquidity on its own platform, an arrangement some market observers say leads to a potential conflict of interest.
“Does the exchange give preferential treatment to an affiliate? Is the exchange supporting an affiliate with customer money? These questions concern customers and the regulators who try to protect them,” said Larry Harris, a finance professor at the University of Southern California’s Marshall School of Business and former Securities and Exchange Commission chief economist. “When a business is not transparent and not regulated, we have no true understanding of what is happening inside.”
Meanwhile, FTX founder Sam Bankman-Fried was transferred to U.S. custody Wednesday to face criminal charges connected to the collapse of the crypto exchange, after a judge here approved his extradition.
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Amazon said that it disagrees with several of the EU’s allegations about its business practices, but has engaged in a settlement to preserve its ability to serve customers in Europe.
PHOTO: JONAS ROOSENS/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Amazon.com Inc. agreed to settle two European Union antitrust cases related to allegations about its treatment of third-party sellers on its platform, ending some of the bloc’s most advanced cases targeting a U.S. tech company.
The online retailer won’t pay a fine as part of the settlement, something it first proposed in July, but it will be forced for up to seven years to adhere to commitments to change certain business practices that EU regulators had alleged were harmful to third-party sellers on its platform.
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New federal drinking water standards could ratchet up legal pressure on 3M Co., DuPont and other companies that manufactured or used so-called forever chemicals.
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Companies are stepping up efforts to collect on their bills and get cash in the door, aiming to limit future write-offs ahead of a potential downturn.
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Donald and Melania Trump reported negative income in four of the six years from 2015 through 2020 and little or no income-tax liability for several years, according to tax documents released by a House committee.
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New York State Department of Financial Services head Adrienne Harris said the regulator is committed to working with stakeholders to refine expectations and finalize guidance.
PHOTO: JEENAH MOON/BLOOMBERG NEWS
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Banks both big and small should pore over how climate change could impact their business, New York’s influential state banking regulator said in a proposal that would heighten risk management expectations for financial institutions.
Financial institutions of all sizes—including foreign-based banks with operations in New York—would be expected to evaluate climate risks throughout their business under guidance released Wednesday by the New York State Department of Financial Services. Banks would be called upon to look at climate-related risks when bringing on new clients and when extending credit.
NYDFS, though it is a state-level regulator, holds outsize sway because of its power over both Wall Street institutions and the myriad foreign banks that operate in New York City.
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Europe’s economy looks set to avoid the severe shock that the region feared amid the energy crisis resulting from Russia’s invasion of Ukraine. But the region’s medium-term problems look harder to fix, and leave Europe facing a struggle to retain its industrial core.
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China has reported just a handful of Covid-19 deaths as a wave of Omicron infections has swept the country’s biggest cities, stoking suspicion among public-health experts and relatives of deceased patients that the government isn’t accurately accounting for the impact of the virus.
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French President Emmanuel Macron said Europe needs to take a more assertive role within the North Atlantic Treaty Organization, reducing its reliance on the U.S. and developing its own defense capabilities, to secure peace in a region rocked by the war in Ukraine.
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The Biden administration announced a nearly $2 billion arms package for Ukraine that for the first time includes a Patriot air-defense system to help Kyiv protect itself against the barrage of ballistic missiles and cruise missiles Russia has unleashed on the country’s electrical grid and other infrastructure.
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Elon Musk said he expects Twitter will be roughly cash-flow break-even next year.
PHOTO: DAVID ODISHO/GETTY IMAGES
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Elon Musk said Twitter Inc. was on track to post negative cash flow of $3 billion a year before the company slashed costs in part by cutting thousands of jobs. With the changes recently implemented at the company, including the cost-cutting efforts and the building of subscriber revenue, Mr. Musk said he expects the company will be roughly cash-flow break-even next year. “I now think that Twitter will, in fact, be OK next year,” he said.
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Cryptocurrency miner Core Scientific Inc. filed for chapter 11 bankruptcy to hand control to creditors, a further indication of the squeeze on mining companies from declining bitcoin prices and rising electricity costs.
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AMC Entertainment Holdings Inc. held discussions regarding a potential strategic acquisition of theaters from its rival, the bankrupt Cineworld Group PLC, according to a securities filing by AMC on Wednesday.
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Justin Bieber said he didn’t approve H&M merchandise with his face on it.
PHOTO: ANGELA WEISS/AGENCE FRANCE-PRESSE/GETTY IMAGES
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