Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Your friendly neighbourhood crypto hustler

Written by Maria Julia Pieraccioni, associate
Edited by Scott Reid,  associate partner
13 August 2021 

Good morning,

“Each theft is completely different and unique”, quips a gauche inspector Clouseau in The Pink Panther, “classic in its conception”. From Danny Ocean’s Eleven to a team of magicians, con artists and burglars have taken different forms in pop culture. But, heists, as with many pop culture items, seem to have gone digital as well.

On Tuesday, an unidentified hacker pulled off the largest cryptocurrency heist in recent months, only to return all $600 million worth of assets in less than 48 hours. Poly Network, the firm affected, sounded the alarm on Twitter, asking the hacker to come forward and work with them towards a solution. The hacker responded to the firm’s request quite spectacularly, saying he wasn’t “very interested in money”. By Wednesday, he returned $260 million to Poly Network, and by 4am this morning, the hacker seems to have returned the remaining tokens, as reported by Reuters.

The most bizarre aspect of this episode – besides a con artist not interested in money, or that the funds were returned without much fuss – must be the three-page-long Q&A the hacker published on one of the blockchains he returned. In it, he detailed just how he stole the assets and the vulnerabilities in Poly Network’s security systems. “I know it hurts when people are attacked, but shouldn’t they learn something from those hacks?”, he wrote.

This is far from the first cryptocurrency heist, but it certainly is the most unique. Bithumb, Conrail, BitGrail, Yearn Finance, Alpha Finance and Meerkat Finance, have all experienced thefts, with Coincheck having topped the list at $534 million never recovered.

The power of decentralised finance lies in the ability of regular people to trade without unfair government intervention on pricing. However, its lack of accountability – and traceability – are two weaknesses that are regular grist of the mill for critics of cryptocurrencies. For those trading, lost passwords have locked out potential millionaires out of their fortunes, with no known recourse.  

Dan Morehead, founder and CEO of Pantera Capital Management LP, an asset management firm, was one of the first to realise this potential. In May, he published on Twitter that both Bitcoin and Ethereum, at the height of their trading value, were worth more than any centralised bank.

Chancellor of the Exchequer Rishi Sunak has not dispelled rumours that the UK might be putting out their own form of digital currency. Back in April, Sunak announced a joint HM Treasury and Bank of England taskforce into the issue and, according to the Atlantic Council Central Bank Digital Currency Tracker, five countries have already launched their own centrally backed cryptocurrency; 14 have launched a pilot program and a further 16 are in development.

Rumour has it, that government pilots are a way to curb cryptocurrencies’ growing underbellies of money laundering and tax evasion. While the intention is clear, the execution is still fraught with questions as your friendly neighbourhood crypto hustler is only wont to point out.

News

As the Taliban advance towards Kabul, the UK and the US are sending troops to Afghanistan to help evacuate remaining diplomats, soldiers and citizens. Defence secretary Ben Wallace announced it would send 600 troops amidst plans to relocate the embassy from the outskirts of the Green Zone to a location closer to the centre of the capital.

Emergency services were called to Plymouth to respond to a tragic incident, in which several people have been killed, sources report. The incident warranted a public safety announcement from local MPs for residents to remain indoors, and although the attack is not thought to be “terror-related”, police have yet to release more information. (£)

Nicola Sturgeon has written to the prime minister urging him to reassess the development of a new North Atlantic oil field west of Shetland. The first minister wrote that the Cambo field should be re-examined over “the severity of the climate emergency”. She also asked the prime minister to reassess licences already issued but which have not yet seen oil fields developed.

Business and economy

After 15 years, Adidas is selling Reebok for €2.1 billion to US-based clothing licensing group Authentic Brands. The sale will be roughly €325 million lower than the original purchase price yet, according to analysts, reflects years of Reebok’s lacklustre sales and annual losses. (£)

Philip Morris’ bid for UK-based asthma inhaler developer Vectura has emerged victorious, after the cigarette manufacturer offered a £1.1 billion purchase price. Philip Morris beat US private equity firm Carlyle, although the sale is facing potential backlash from shareholders and campaigners over its sale to one of the world’s largest tobacco companies.

UK antitrust regulators have warned Facebook that its purchase of Giphy, the company responsible for animated images, risks reducing competition in advertising and social media. The UK is the latest country to scrutinise Facebook against antitrust laws. The UK’s Competition Market Authority is currently holding a public consultation, the outcome of which will be issued by 6 October.

The Office for National Statistics reported that the UK economy grew 4.8% in the second quarter, thanks to the progress of the country’s vaccination rollout and buoyant consumer spending. Although lower than Bank of England forecasts, at five per cent growth, the rate is still in line with market expectations. (£)

Columns of note

This long read by Josh Cohen in The Economist is a fresh and light-hearted take on society’s historical cultivation of perfectionism. Striving to be perfect is an attitude Cohen degrades as “childish”: the conviction that “life ends when we give up hope of becoming the best version of ourselves”. From a generation crippled by anxiety and mental health issues to Renaissance sculptures, Cohen draws from history to comment that every decade has had to carry the burden of perfectionism at different times in history. He posits that “perfectionism might be a deep-rooted and persistent element of the human condition”, one we crave but want to escape from all at the same time. (£)

Joel Wertheimer, a former employee of Governor Andrew Cuomo, pens a scathing review of his former boss in this opinion piece in The Guardian. He details that during his service, he witnessed first-hand the effects of Cuomo’s grandiose delusions. From staff more worried with fuelling Cuomo’s cult of personality than dealing with New York’s problems, to blatant sexism and promotions based on looks, Wertheimer paints an unflattering picture. A politician is as good as his workplace, and despite Cuomo being gone, there is still a long list of politicians to comb out, Wertheimer warns.

Cartoon source: The New Yorker

Markets

What happened yesterday?

London’s FTSE 100 ended the session in negative territory yesterday, down 0.37% from the previous session, due to underperformance of shares in Rio Tinto, Shell, and BP. Sterling also fell 0.29% against the dollar, trading at $1.3832, and slid 0.22% against the euro, trading at €1.1788. However, the UK economy continues to rebound strongly, as highlighted by the data released during the day by the Office for National Statistics, showing the economy grew by 4.8% between April and June.

Meanwhile, the pan-European Stoxx 600 index closed up 0.11% yesterday, led by the German Dax, which ended trading 0.70% higher than the previous session. Investors were reassured by strong corporate news from insurers, which offset the fall in stocks going ex-dividend.

The American market similarly closed in positive territory, with the S&P 500 ending the day up 0.30% stronger than the previous session. The Dow Jones followed suit, closing up by 0.04%, as did the Nasdaq Composite, up 0.35%. Investor confidence was fuelled by this week’s jobless report and July’s producer price index. Nevertheless, market participants will also be wary of inflation in the coming weeks, which continues to be eyed closely by the Federal Reserve.

In company news

Rio Tinto equities hampered the FTSE 100 yesterday, sliding down 1.05%. This negative traction was followed by Royal Dutch Shell, which lost 1.8%.

Conversely, Deliveroo topped the Stoxx 600 index performance, rising six per cent after German Delivery Hero backed down from buying its London-listed rival.

Dutch insurer Aegon gained seven per cent as did its UK rival, Aviva, which rose 3.47% after the company announced it would return £4 billion to its shareholders.

What’s happening today?

Interims

Romgaz S

Thungela Res

AGMs

Ienergizer

Sysem1 Group

Final Dividend Payment Date

Cake Box Holdi.

Circle Prop

Elixirr Int.

Samuel Heath

Next Fifteen

Octopus Aim

Stenprop Limit.

Interim Dividend Payment Date

Finncap Group

Gore Street En.

New Cent.2

Persimmon

Premier Miton

Safestore

Schroder Real

Quarterly Payment Date

Jpm Jap Sml G&i

Marsh&mclennan

Nb Global

Tufton Oceanic.

Special Dividend Payment Date

CML Microcircuits

Octopus Aim

Int. Economic Announcements

(10:00) Balance of Trade (EU)

(13:30) Import and Export Price Indices (US)

(15:00) U. of Michigan Confidence (US)

Source: Financial Times

did you know?

Japanese parents have recently started commissioning bags of rice that weigh the same as their newborn children so that their relatives, who are unable to visit them due to the pandemic, can have the experience of hugging the baby.

(Source: Qikipedia)

Parliamentary highlights

House of Commons

The House of Commons is in recess. The House will next sit on 6 September 2021.

House of Lords 

The House of Lords is in recess. The House will next sit on 6 September 2021.

Scottish parliament 

The Scottish parliament is in recess until 30 August.

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