Genesis Global Capital, the crypto lending company that shut off withdrawals in November, may be very close to filing bankruptcy, The Block and Bloomberg reported on Wednesday.
Why it matters: With recession fears swirling, crypto's winter has lingered, and continues to take down high-profile companies. Genesis, one of the digital asset market's marquee names, has been the subject of bad press and negative speculation for a number of weeks.
According to a report by The Block, Genesis has been negotiating a prepackaged deal with its creditors in order to go into a bankruptcy process that resolves more quickly.
Details: Citing sources with knowledge of the situation, Bloomberg reported that the unit may file for bankruptcy as early as this week.
Genesis's trading operation is also now under scrutiny by the Securities and Exchange Commission (SEC), who brought action against it (along with its business partners) for offering an unregistered securities offering.
Genesis is a part of the Digital Currency Group, the conglomerate of crypto firms led by Barry Silbert.
Gemini, a business partner in the venture now under scrutiny by the SEC, has accused Genesis of failing to accurately state its financial health as it continued to allow Gemini's users to lend funds to Genesis as part of the "Earn" program.
Flashback: Customers have been unable to withdraw funds from Genesis since Nov. 16.
Genesis did not immediately reply to a request for comment from Axios.
The bottom line: Downturns always take down some companies and leads to a lot of layoffs. The crypto industry is very much waiting for the day when the last one has fallen.
The founder of Bitzlato, a Hong Kong-registered crypto exchange that has allegedly processed more than $700 million worth of illicit funds, was arrested in Miami Tuesday night, part of a sweeping, international effort to crack down on darknet markets.
Driving the news: The Department of Justice during a press conference on Wednesday announced charges against Anatoly Legkodymov, a Russian national. French authorities and the U.S. Treasury department's Financial Crimes Enforcement Network (FinCEN) are taking concurrent enforcement action.
The Federal Aviation Administration said Wednesday it is investigating a collision between a JetBlue plane and the tail of another parked aircraft at John F. Kennedy International Airport (JFK) in New York City.
Why it matters: The collision is the second incident at JFK in less than a week, after there was a near-miss on Jan. 13 between a passenger airplane operated by Delta and another operated by American Airlines. The FAA is also investigating that incident.
Embattled awards shows are increasingly turning to streaming services as they fight dwindling TV audiences.
Why it matters: Major shows like the Oscars and Emmys have long been big business for broadcast TV networks, which have been able to use giant ratings to charge premium ad rates.
Marvel movies are officially returning to theaters in China, a Disney representative confirmed to Axios.
Why it matters: This is the first time in three years theatergoers in China will be able to see films from Disney's biggest franchise, after the country apparently blocked releases of Marvel Cinematic Universe movies.
The releases could be a boon for Disney, which will now potentially net millions of dollars at the international box office as the next phase of MCU films is about to begin.
There's a fresh FTX conflict — one about its bankruptcy lawyers Sullivan & Cromwell and whether the firm's legal guidance of the crypto exchange prior to its unwinding could pose a potential conflict of interest.
Why it matters: FTX's accounting shenanigans conjures up comparisons to Enron, which ended up in a battle with its own lawyers. The large, prestigious Houston law firm Vinson & Elkins drew scrutiny for its role in Enron's collapse, for not blowing the whistle, and ended up settling with the energy company.
The latest slate of U.S. economic data tells a story about the economy that’s sure to please monetary policymakers: more signs of fading inflation, with consumers dialing back on spending.
Why it matters: The data is the latest to suggest the Fed may have cover to pull back on interest rate increases, with inflation pressures appearing to dissipate.
A change in where inflation is coming from has caused a change in which groups face the highest price pressures.
In 2021, middle-income Americans were hit hardest by inflation, according to new research from the New York Fed. Now, those pressures have shifted to low-income families.
Why it matters: The details of who bears the brunt of higher prices shapes the political and economic dynamics of inflation.
The data suggest that inflation is shifting from an annoyance for middle-class earners to a more severe burden on poorer families that can least afford higher prices.
Details: Different groups of people — rich vs. poor, urban vs. rural, and so on — tend to spend their money differently. Researchers Rajashri Chakrabarti, Dan Garcia, and Maxim Pinkovskiy examined how, given those different spending patterns, inflation rates vary by group.
State of play: As inflation surged in 2021, middle-income families — those making between roughly $50,000 and $150,000 — bore the brunt of price hikes: 0.2 to 0.3 percentage points higher than average.
That reflects that they spend a larger share of their income on used cars and fuel than either the poor (who might be more likely to use public transportation than to drive) or the rich (who may be more likely to buy new cars and for whom gasoline is a smaller share of spending).
But in recent months, gasoline and used car prices have fallen. Meanwhile, the cost of rent and groceries, which poor Americans spend on disproportionately, have risen.
As a result, U.S. consumers in the bottom 40% of the income distribution now have the highest inflation rate, about 0.3 percentage points higher than average.
A similar pattern has played out with other groups. The shift of inflation that took place over the course of 2022 — from energy and used cars to food and rent — has changed who is hit hardest.
For example, for the year ending in February 2022, people living in rural areas experienced inflation 2 percentage points higher than Americans as a whole. Now, they're below average.
Early last year, both Black and Hispanic households faced inflation about 1 percentage point higher than the overall inflation rate. Those without a college education, along with households led by a person 25 or younger, also faced higher inflation rates. Now, those groups have converged to average.
The bottom line: Inflation may be fading overall, but the families who face the highest price increases in recent months are those least able to afford it.
Retail sales for the month of December rose nearly 5.2% year over year, to about $749 billion on an unadjusted basis, according to data provided by the U.S. Census Bureau.
Driving the news: On a seasonally adjusted basis, December retail sales grew 6% year over year but fell 1.1% month over month to about $677 billion.
Party City has filed for bankruptcy protection in an attempt to restructure the company's debt, becoming the latest national retailer to confirm its financial struggles as consumer spending tightens.
Driving the news: The company announced it filed for Chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of Texas and entered into a restructuring agreement late Tuesday.
China's economy posted its slowest annual growth since 1976, another indication the post-COVID world economy could be vastly different from the decades that preceded the pandemic.
Why it matters: Since it burst onto the world economic stage in the early 1990s, China's economy has been a central driver of business decisions in virtually every part of the world economy.
As Elon Musk has thrown himself into running Twitter day-to-day and rebuilding the platform in his vision, his other companies have struggled with challenges of their own.
Why it matters: Musk's acquisition of Twitter could mark a major milestone in his career — the moment his cross-industry empire became too big and too complicated for him to run every company.
Tech's downturn is shining a spotlight on the industry's vulnerability to fast-moving trends and conflicts beyond its own boundaries.
Why it matters: Silicon Valley leaders and thinkers paint their companies and products as magical innovations that emerge from the inner logic of tech's disruptive dynamics. But the industry's cycles are usually driven by external forces.
Overall consumer spending fell 4.3% in December from the previous month, according to a Morning Consult survey released Wednesday morning, with an increasing share of Americans spending more money than they're earning.
Why it matters: Inflation may be easing, but high prices are still a big problem for individuals, particularly after a year of spending down savings. It's not a great sign for economic growth.
Driving the news: The Filipino American journalist was cleared of four counts of tax violations, charges filed by former President Rodrigo Duterte's government that Ressa said were politically motivated.
