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Tesla owes $162 million to JPMorgan, according to the bank.

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Tesla owes $162 million to JPMorgan, according to the bank.

Tesla has been sued by JPMorgan, which claims it owes the bank $162 million in relation to a 2014 stock warrant arrangement. The disagreement revolves around changes made to the agreement as a result of Tesla CEO Elon Musk’s “[f]unding secured” tweet in 2018 and the ensuing backlash.

The complaint was filed in the Southern District of New York late Monday. 

According to the claim, JPMorgan purchased a number of warrants from Tesla in 2014, when the firm was still trying to fund the building of the initial Gigafactory, as first reported by Reuters.

Stock warrants provide the buyer (in this example, JPMorgan) the right to buy shares in a firm (in this case, Tesla) at a predetermined price within a specified time frame. JPMorgan bought warrants from Tesla in 2014 that were slated to expire in June and July 2021.

Initially, the firms agreed on a $560.6388 “strike price.” Neither firm would owe the other anything if the warrants expired and Tesla’s stock price was less than the strike price. However, JPMorgan claims that if Tesla’s stock price was higher than the strike price at expiration, Musk’s business was obligated to hand over stock equivalent to the difference in the two prices.

Because this was such a large and intricate financial transaction, JPMorgan made certain that all legal safeguards were in place. One was to protect Tesla’s stock price in the event of any major mergers or buyout announcements. If anything similar happened, the bank and the manufacturer might work out a new striking price for the warrants.

That leads us to the tweet. On August 7th, 2018, Musk famously tweeted that he was “considering taking Tesla private at $420. Funding secured.”  Tesla’s top financial officer, head of communications, and chief legal wrote an email ascribed to Musk later that day, which was published on the company’s blog and explained Musk’s announcement. “[i]nvestor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.” Tesla’s investor relations head also told some press that there was a “firm offer.”

But, as everyone discovered after the Securities and Exchange Commission sued Musk and Tesla over the announcement, none of that was true. Musk spoke briefly with Saudi Arabia’s Public Investment Fund, but that was the end of it.

JPMorgan recognised the consequent volatility in Tesla’s stock price and decided to change the strike price of its warrants before the truth was revealed. It dropped the price to $424.66 and informed Tesla of the change. According to the lawsuit, Tesla agreed to a conference call on August 24th but cancelled at the last minute.

Tesla and Musk revealed the same day that their attempt to take Tesla private had failed.

As a result, JPMorgan decided to change the strike price of the warrants once more. It recalculated based on the reaction to Tesla and Musk’s decision to reverse course, and came up with a strike price of $484.35.

According to JPMorgan’s lawsuit, Tesla “protested that no adjustment should be necessary at all because it had so quickly abandoned its going-private plans,”  The bank provided Tesla with its estimates and “held several conference calls” to explain them, according to the bank. Tesla “did not provide any specific objection” to those explanations, according to the bank. Tesla then stopped communicating with JPMorgan for six months, according to JPMorgan.

In February 2019, Tesla’s lawyers wrote to JPMorgan, stating that the bank’s revisions were “unreasonably swift and represented an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock.”  JPMorgan responded by “rejecting all of [Tesla’s] charges,” but the two parties didn’t communicate for the next two years. JPMorgan adjusted the price to $96.87 in August 2020 to account for Tesla’s stock split, but Tesla claims it never reacted.

According to the lawsuit, by the time the expiration dates came around this year, Tesla’s shares had already gone on an extraordinary run, and JPMorgan’s warrants were “much in the money.” Tesla “renewed its objections to the Adjustments” when the bank contacted them about cashing out. JPMorgan did settle some shares with Tesla — the bank did not indicate how many — but the bank alleges Tesla “refused to settle in full,” triggering a “early termination” condition.

Tesla owes JPMorgan 228,775 shares when the contract was cancelled, according to JPMorgan, and those shares are worth $162,216,628.81 based on Tesla’s stock price at the time. (To make matters worse, JPMorgan had hedged its Tesla warrant arrangement by keeping a short position in Tesla’s stock.) When Tesla failed to settle the remaining shares, the bank was forced to cover the hedged bet by purchasing the equivalent number of shares on the open market.)

Musk was still tweeting shortly after the suit was filed on Monday, in a thread he started on Sunday in response to a tweet on taxes from Senator Bernie Sanders (I-VT). Musk wrote, “I like to dig my grave real deep,”

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Auction of Wikipedia’s editor’s first computer and NFT is On

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Auction of Wikipedia's editor's first computer and NFT is On

Auction of Wikipedia’s editor’s first computer and NFT is On

The computer Jimmy Wales used to create Wikipedia is up for auction, along with an NFT commemorating his first change on the platform, auctioneers announced Friday.

Wales “used for development and research at the time of the website’s launch on January 15, 2001,” when the website launched on January 15, 2001, according to Christie’s, which is supervising the sale.

The second lot is for an NFT generated by Wales of Wikipedia’s debut onscreen image when he uploaded the first words, “Hello world,” according to Christie’s specialist Peter Klarnet.

The NFT will be presented in JPEG format and will allow the customer to edit the page, which can be “which can be reset with a timer to revert to its original state,” to its original state.

In addition to supporting WT.Social, the proceeds from the sale of the NFT will go to a range of nonprofits working in the free culture field, according to the Christie’s website.

Christie’s hopes to sell the two lots for hundreds of thousands of dollars, Klarnet added.

NFTs have become a staple of auction houses and the art market for some collectors and investors.

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Singapore has suspended a crypto-exchange, Over a disagreement with K-pop group BTS

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Singapore has suspended a crypto-exchange, Over a disagreement with K-pop group BTS

Singapore has suspended a crypto-exchange, Over a disagreement with K-pop group BTS

Singapore’s banking watchdog has halted a popular digital currency exchange over a crypto pension programme linked to South Korean boy band BTS.

Singapore’s decision to stop Bitget’s local activities comes as the city-state strives to become a worldwide cryptocurrency hub.

BTS’s agency Hybe threatened Bitget with legal action in October for the promotion of Army Coin, named after the group’s ardent fans BTS ARMY. Who made the coin is unknown.

“so they do not have to worry about surviving but instead let them do what they desire to do” the platform advertised Army Coin. Hybe stated the coin is unrelated to BTS.

The episode shows the difficulties regulators face in controlling the crypto business as regular investors accept digital currency.

Barcelona star Andrés Iniesta was criticised last week for promoting the world’s largest crypto exchange on Instagram.

Singapore, a financial and free-trading port, has been more open to technology than regional rivals Hong Kong and Tokyo.

The Monetary Authority of Singapore has awarded Binance, Ripple, and Coinbase licences to serve retail and institutional clients.

Bitget had been exempted until July, according to a source familiar with the case. Bitget and the MAS refused to elaborate on the basis for Bitget’s exclusion.

Bitget’s services were still available in Singapore until late November, when it promoted Army Coin and claimed MAS clearance on its website.

After being notified by the Financial Times, the company removed the MAS logo from its site and prevented Singaporeans from using its app or website. Bitget still claims US, Canadian, and Australian licences.

Army Coin has since been listed on CoinTiger, another Singapore-based cryptocurrency market. The coin “exists for the good of BTS” and will “truly support them financially”, according to CoinTiger.

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Munger wishes cryptocurrencies had never been developed

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Charlie-Munger-crypto

Munger wishes cryptocurrencies had never been developed

Charlie Munger, a billionaire investor, is still not a big supporter of Bitcoin.

‘I wish they’d never been invented,’ Munger said at the Sohn conference in Sydney on Friday, according to the Australian Financial Review.

Asked if he had any admiration for China, Munger replied, “I think they made the right decision by simply banning them.”

The cryptocurrency market temporarily surpassed a market value of $3 trillion in November, and leading coins like bitcoin hit new highs this year, spurring a boom in interest in digital assets.

For the 97-year-old Berkshire Hathaway vice chairman, this position is nothing new. According to Munger, the Covid-19 pandemic made him loathe bitcoin even more in May at Berkshire’s annual shareholder meeting.

In response to the bitcoin success, he declared, “Of course I hate it.” Not only does it make kidnappers and extortionists so much easier to get their hands on your extra billions of billions of dollars, but I don’t enjoy just handing over your extra money to someone who just manufactured a new financial product out of thin air.

According to Munger, “I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.”

Munger, of course, would be opposed by bitcoin advocates. Some people feel that bitcoin can be utilised as a form of inflation protection because of its role as a store of value. According to these proponents, bitcoin is a safe and secure peer-to-peer currency.

Munger, on the other hand, has often slammed bitcoin for its volatility.

“It’s really kind of an artificial substitute for gold. And since I never buy any gold, I never buy any bitcoin,” Munger said at the annual shareholders meeting for the Daily Journal in February. “Bitcoin reminds me of what Oscar Wilde said about fox hunting. He said it was the pursuit of the uneatable by the unspeakable.”

According to Coin Metrics, Bitcoin is currently trading at $56,085, with a market value of more than $1 trillion.

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