Speaker 1: I'm Karen Heinder Bloomberg's world headquarters in New York, and
Speaker 1: I made Ludlow in San Francisco. This is Bloomberg Technology
Speaker 1: coming up. Yet more layoffs, this time at Google's parent
Speaker 1: That means more than a hundred thousand tech workers have
Speaker 1: been laid off since the start of two and Elon
Speaker 1: Musk is testifying under oath right now in a multibillion
Speaker 1: dollar trial where the claims he misled shareholders in tight
Speaker 1: tweets about taking the company private. And we asked the
Speaker 1: FTC Commissioner Christie Goldsmith Romero, how she suggests the government
Speaker 1: regulate digital assets, but first a check in on those
Speaker 1: markets will get to digital markets in just a moment.
Speaker 1: Let's have a little look what's happening in terms of
Speaker 1: your nastack. What a day, what a risk on trade?
Speaker 1: What a desire to get into technology stocks? Helped of
Speaker 1: course by some single names and or point out and
Speaker 1: then as that crushing it up two points seven and
Speaker 1: really managing to shirk off some of those red screens
Speaker 1: that we were used to in the rest of the week,
Speaker 1: so actually ends on a high note and brings the
Speaker 1: weekly move as four days. Of course, the shortened holiday
Speaker 1: trading week into the green. The MSCI or Country World
Speaker 1: Index was also up on the day, so we saw
Speaker 1: risk assets rally over in Europe and indeed over in
Speaker 1: Asia as well. Interesting move that we've seen such lockstep
Speaker 1: moves in terms of bonds and stocks in fact, all
Speaker 1: country world innext and your overall global and bond indext
Speaker 1: they are basically working together. We haven't seen such correlations
Speaker 1: going back to the nineties. Today they split direction. Will
Speaker 1: this be more of a turn of events or the
Speaker 1: sixty work once again with bonds actually falling, yields higher
Speaker 1: up almost nine basis points, while of course stocks they
Speaker 1: lift on the highest side too. It's all about the
Speaker 1: Federal Reserve, it's all about macro picture, it's all about
Speaker 1: hoping that they won't be quite so hawkish. Let's look
Speaker 1: it on because well, what has managed to stay in
Speaker 1: the risk on rally throughout this week and actually now
Speaker 1: hitting the highest in September is bitcoin. We're currently up
Speaker 1: once again about seven percent on the week, We're up
Speaker 1: about seven percent on the day, and bitcoin longer the
Speaker 1: course of the six months. What a torrid time we've been,
Speaker 1: but we're about more than of those lows hit back
Speaker 1: in November. Yeah, it's interesting. Over on my side, earning
Speaker 1: is a big part of the story, and the feel
Speaker 1: good in public markets. Actually layoffs a big part of
Speaker 1: the equity feel good story as well. Bear with me
Speaker 1: on that one. Going to start with Netflix biggest jumps
Speaker 1: since November April high Why, well, they really reacted positively,
Speaker 1: not just to the management changes in read Hastings going
Speaker 1: upstairs to executive chair Greg Peters becoming co CEO, but
Speaker 1: a lot of the streets seeing a path forward when
Speaker 1: it comes to profitability and liking what they're hearing from
Speaker 1: Netflix about the story for this year despite that change
Speaker 1: changes and always positive. You see f B Financial my screen.
Speaker 1: Carry It's not one you and I talked about often,
Speaker 1: but this is the parent company of Silicon Valley Bank,
Speaker 1: and name that lends to a lot of startups important
Speaker 1: in our world. But it forecast net income of nine
Speaker 1: hundred to nine fifty five million dollars to the fiscal
Speaker 1: first quarter, which in this just really cheered. I think
Speaker 1: it was the biggest jump on the stock since two
Speaker 1: thousand eighteen, Tesla up five pc. I only point that
Speaker 1: there because Elon Musk is testifying here in San Francisco
Speaker 1: in that take Tesla private tweet trial. Gosh, that was
Speaker 1: a mouthful. The stock really not trading on that, but
Speaker 1: interesting to see upward trajectory on that shares highest level
Speaker 1: in a month. And then this is what I was
Speaker 1: talking about. Alphabet, the parent company Google, announces it's laying
Speaker 1: off six percent of staff globally. Investors cheer that. You
Speaker 1: always hear me say carry layoffs are not pleasant. But
Speaker 1: if you're an investor in this company and you look
Speaker 1: at this chart next to me about the slowing top
Speaker 1: line growth and the narrative around the tech sector protecting EPs,
Speaker 1: protecting the bottom line throughout three, that's what investors want
Speaker 1: to hear. I know it's painful, but if you're an
Speaker 1: investor in the company seeking returns, this is what you
Speaker 1: want them seeing, see them doing in a changing and
Speaker 1: difficult environment. Yeah, let's talk about, of course, the layoff
Speaker 1: that will affect six percent of Google's pair and company
Speaker 1: Alphabet twelve tho jobs. And overall, this is a global
Speaker 1: layoff from the company, and the tech giant is retrenching
Speaker 1: like many others are after let's call it, years of
Speaker 1: abundant growth of abundant hirings. Julia Love is here to
Speaker 1: talk about more of it, and Julia, we need to
Speaker 1: put it in perspective. Twelve thousand is a lot of people,
Speaker 1: and it hurts individuals, we know, but ultimately they're basically
Speaker 1: shedding jobs that only take us back to basically kind
Speaker 1: of a year ago. They just fueled up so much
Speaker 1: in terms of personnel over COVID. Absolutely, it's really quite tremendous.
Speaker 1: Google's headcount has been growing about twenty pcent a year
Speaker 1: since twenty seventeen, and so um investors have really been
Speaker 1: clamoring for them to start hitting the brakes, and they've
Speaker 1: begend to do that with these layoffs. Hey Jude, you
Speaker 1: know you do such an amazing job covering the Google
Speaker 1: alphabet beat because it's such a diverse company. Now you
Speaker 1: know it's not just Google Search. And what was interesting
Speaker 1: about your reporting is some of the specific areas where
Speaker 1: Google is cutting back which teams are mo impacted. Absolutely,
Speaker 1: we're still trying to get to the bottom of that.
Speaker 1: It does seem that the cats have been broad based. However,
Speaker 1: it seems that Area one twenty, the famous New Idea incubator,
Speaker 1: has been all but shattered um. There are three projects
Speaker 1: that are graduating that will be folded into Doodle. But
Speaker 1: it seems that virtually all other employees, with the exception
Speaker 1: of the managing director, have been laid us. Of course,
Speaker 1: investors had in some ways been asking for this, but
Speaker 1: previous earnings have been talking about needing a focus on
Speaker 1: on margins and having to look more share buy backs
Speaker 1: and laying people off. But Julia, what was interesting for
Speaker 1: me and I think Edwards sort of hinting in this too,
Speaker 1: is well, actually they're laying off all reorganizing, shall we say,
Speaker 1: the AI part of the business. That's quite notable, given
Speaker 1: everyone SEMs to be so excited about that focus on
Speaker 1: artificial intelligence. Absolutely, you know, it's a really interesting storyline
Speaker 1: because Google has given the world, you know, much of
Speaker 1: the cutting edge technology and artificial intelligence. But the release
Speaker 1: of chat GPT has really has really cast a lot
Speaker 1: of concern or really that Google might be left behind
Speaker 1: in this technological waves that it helped start. And so
Speaker 1: the company does really appear to be doing everything it
Speaker 1: can to droll down and make sure it's not left behind.
Speaker 1: You heard me at the top of the shows. You
Speaker 1: you're talking about the reaction, right, Why are these tech
Speaker 1: companies doing this? And part of it is a changing environment.
Speaker 1: You've gone very quickly from mega growth to a little
Speaker 1: bit slower growth. I'm bringing back up that chart from
Speaker 1: the Bloomberg terminal year on year revenue gains hit by
Speaker 1: that advertising slowdown, in particular, the stock rose. What is
Speaker 1: it that investors like about this? How does this help
Speaker 1: protect or impact earnings for Alphabet? M hm, Well, it's
Speaker 1: interesting because Google's search advertising business is pretty resilient, but
Speaker 1: the last quarters showed that they were no longer immune.
Speaker 1: They had disappointing results, and so if the top line
Speaker 1: is no longer growing, as you said, then the only
Speaker 1: way for them to give investors the members they want
Speaker 1: to see is to cut casts. Julia Love, thank you
Speaker 1: so much keeping us up to speen what's happening over
Speaker 1: at Alphabet. And it was interesting, wasn't it? Overall? As well?
Speaker 1: The ways in which companies to protect their own data.
Speaker 1: When we spoke about this earlier in the week, Some
Speaker 1: ways have to act really abruptly, and there was so
Speaker 1: much on Twitter, in particular about people not having seen
Speaker 1: the email that was sent earlier this morning. Maybe trying
Speaker 1: to badge in suddenly realizing they couldn't. It's a really
Speaker 1: tough navigation, isn't it. But it felt like sin a
Speaker 1: picture at least really tried to own and take responsibility
Speaker 1: for the layoffs. Yeah, I mean, as you know, carried.
Speaker 1: The question I've had is the timing around all of
Speaker 1: this in the space of a single week, and it's
Speaker 1: as if various peers in the sector were waiting and
Speaker 1: that the other players to go first. You know, it
Speaker 1: was a strange week in that respect that you take
Speaker 1: it on aggregate, it's forty odd thousand obbs, you know,
Speaker 1: confirmed in the space of five days. Pretty astonishing, it
Speaker 1: really is, in the numbers they rack up. Meanwhile, what's
Speaker 1: also racking up is what's happening with Elon Mask. We've
Speaker 1: just been understanding that he's wrapped up testifying and a
Speaker 1: multibillion dollar securities forward trial. Of course, it all stems
Speaker 1: from the claim that he misled shareholders in tweets about
Speaker 1: taking the company private at four twenty per share. Musk
Speaker 1: told the jury that he's aware that after heat tweets
Speaker 1: the stock price move up or down, but that there
Speaker 1: is no causal relationship. He then advocated for the value
Speaker 1: of being a private company, stating that being private doesn't
Speaker 1: prevent you from raising money. We'll have more on that
Speaker 1: later this hour. And this is one I know that
Speaker 1: you keep on following, and the fact that he was
Speaker 1: there in being examined by his own side. We're going
Speaker 1: to have to wait for the weekend to see what
Speaker 1: cross the examination looks like. Yeah, I find this fascinating
Speaker 1: because of his character. You know, you and I weren't
Speaker 1: in the courtroom in San Francisco, but we have colleagues
Speaker 1: that were. And I cannot wait to hear about st
Speaker 1: to g because Elon Musk often can't help himself in
Speaker 1: going to broader issues talking about short sellers, you know,
Speaker 1: talking about regulators, and that was part of what you know,
Speaker 1: leagual academics thought would be the strategy to get him
Speaker 1: rolled up on the stand. I guess we'll find out
Speaker 1: Amazon's cloud unit AWS will spend thirty five billion dollars
Speaker 1: on new data centers in Virginia by wanting to stay
Speaker 1: ahead of rivals Microsoft and Alphabet, a big win for
Speaker 1: the state of Virginia. Here's what Governor Glenn Allen youn
Speaker 1: Kin had to say about that earlier today in an
Speaker 1: exclusive conversation, m this is big and thirty five billion
Speaker 1: dollar financial commitments, the largest ever made to the Commonwealth
Speaker 1: of Virginia. Our partnership with AWS started back in two
Speaker 1: thousand and six and has only grown. You know, Virginia
Speaker 1: is the largest market for data centers in the world.
Speaker 1: And what's most exciting about this is the long term
Speaker 1: nature of this commitment. Not only is it thirty five
Speaker 1: billion dollars, but they're going They're going to expand their
Speaker 1: footprint across the Commonwealth of Virginia. It's gonna bring the
Speaker 1: benefits that come with these jobs, the the multiplier effects
Speaker 1: that with these jobs, to the ecosystem that's created, the
Speaker 1: over a hundred businesses that will support the construction of
Speaker 1: these data centers to localities outside of Northern Virginia directly,
Speaker 1: and that's great for the Commonwealth of Virginia to see
Speaker 1: it expand our footprint and data centers and maintain our
Speaker 1: market leading position. AWS saying a thousand new jobs created
Speaker 1: directly from this. What I find fascinating, Governor is if
Speaker 1: you look at the history of the state's relationship with
Speaker 1: a WS, as you say, I think between two thousand
Speaker 1: and eleven, and they had already invested thirty five billion
Speaker 1: into your state. And yet in end tips through the
Speaker 1: form of grants and tax exemptions is still at play.
Speaker 1: Here was this a difficult negotiation, But there's there's a negotiation.
Speaker 1: It's never difficult or or easy. There's just a negotiation
Speaker 1: to represent the taxpayers of Virginia adequately and appropriately. That's
Speaker 1: my job. And I think I think we have struck
Speaker 1: a very good deal. UM. I think that the Virginia
Speaker 1: will benefit mightily. You know, the ecosystems that develop around
Speaker 1: the data center infrastructure are enormous. UH. There are thousands
Speaker 1: and thousands of jobs that will be that will be created.
Speaker 1: In addition to the direct jobs for aws. UH, there
Speaker 1: are contractors and and supportive companies UM that will that
Speaker 1: will be developed in order to support the construction but
Speaker 1: the operation. UH. And this will add to the locality
Speaker 1: substantial funding for schools and services and infrastructure. UH. This
Speaker 1: is this is really important to the long term economic
Speaker 1: development of the commonwealth. It's big, as I said, But
Speaker 1: on top of that, it continues Virginia's leading position in
Speaker 1: this industry of the future, and it's one that we
Speaker 1: continue to want to not only lead in but expand
Speaker 1: our lead in you know, Caro Virginia becoming a real
Speaker 1: data center, server powerhouse in the East coast. It has
Speaker 1: been for some time interesting person as well, potential presidential candidate,
Speaker 1: you know, it's background Carlisle Group. And I was asking
Speaker 1: about we'll hold on, why are you doing all these incentives,
Speaker 1: why jet to work so hard for that deal? And
Speaker 1: his point is net net great win for the state
Speaker 1: of Virginia and why they've been having them since two
Speaker 1: thousand and six. It's a great win, but also what's enticing, Yes,
Speaker 1: some of the tax breaks, but also the cheap electricity, right,
Speaker 1: and these things are just so hungry for that sort
Speaker 1: of power to be able to keep us all connected.
Speaker 1: And I think it details nicely with the conversation we're
Speaker 1: having in terms of layoffs, because of course Amazon's one
Speaker 1: of them. Of course they having to of eighteen tho,
Speaker 1: but they're still having to double down on where it
Speaker 1: makes sense to where to invest. And clearly Bank of
Speaker 1: America and Story wrote really making clear that this is
Speaker 1: an area that they're going to continue to spend on
Speaker 1: in terms of R and D. Yeah, and I asked
Speaker 1: about the layoffs, and he said, look, I'm always concerned
Speaker 1: about any layofs. My understanding is that Amazon did make
Speaker 1: some small cuts broadly in the state of Virginia, but
Speaker 1: AWS as a unit, continues to grow. That was the
Speaker 1: story of the day. The story longer term has been
Speaker 1: about the governor walking away from a potential deal with
Speaker 1: Ford and c A t L because essentially he felt
Speaker 1: that it was not in the best interests of the state.
Speaker 1: But he went further than that in the interview, carry
Speaker 1: take a lesson. We have a great site in in
Speaker 1: that part of Virginia, and I look forward to bringing
Speaker 1: a great company there, but it won't be one that
Speaker 1: it won't be one that uses a kind of a
Speaker 1: trojan horse relationship with the Chinese Communist Party in order
Speaker 1: in order to gain m That was kind of fascinating
Speaker 1: what he was saying about what ultimately this is a
Speaker 1: Chinese come any that he said, what was it a
Speaker 1: trojan horse? Was the turn of phrases. Yes, so you
Speaker 1: know his logic is that Ford partnering with c at L,
Speaker 1: the biggest maker of battery cells in the world, is
Speaker 1: contrary to the spirit of the Inflation Reduction Acts, which
Speaker 1: looks to establish the US supply chain, and he you know,
Speaker 1: he called c at L, you know, a puppet of
Speaker 1: the Chinese Communist Party, a front for the Chinese Communist Party,
Speaker 1: and that was his whole logic for saying, no, Ford
Speaker 1: cannot do this deal for the site in our state.
Speaker 1: And he said they had many other interested parties. He'd
Speaker 1: rather do it with something that was not embroadened controversy
Speaker 1: was the way we put it. It It was a wide
Speaker 1: ranging but intense but interesting conversation with Governor Young Can. Yeah,
Speaker 1: fascinating all the ways in which we weave it together
Speaker 1: with your focus on evs and cars head as well
Speaker 1: as your love of all things to do with data centers. Mean,
Speaker 1: while coming up what we've got to return to a
Speaker 1: I right with the story of the day. But Google's
Speaker 1: ARE unit is actually being swept up in the company's
Speaker 1: twelve thousand job cuts, as we mentioned, even though Pauson
Speaker 1: Pitcher himself is saying AI is still a key investment
Speaker 1: area for the company. We're going to discuss all of that,
Speaker 1: how it's impacting AI research and much more with an expert,
Speaker 1: an AI expert, Wendy Hall. This is Bloomberg now at
Speaker 1: a time where AI research is booming. Alphabet's Treasure to
Speaker 1: AI unit is actually not escaping the wave of laos. Indeed,
Speaker 1: it will be reorganized, the company said, as part of
Speaker 1: the company's swooping job cuts that are announced today. According
Speaker 1: to a memo scene by Bloomberg, let's bring in about
Speaker 1: the focus on AI, about the ethics that swept up
Speaker 1: in that, and indeed how government's oversee it all. Wendy
Speaker 1: Hall for her insight on all of this. She has,
Speaker 1: of course festeral computer Science the University of Southampton, ever
Speaker 1: in the United Kingdom, so she's staying up late for
Speaker 1: us because she was the co chair and the UK
Speaker 1: Government's AI review published back in and I think as
Speaker 1: a brit that's always what so interested me is that
Speaker 1: the UK, in many ways, due to deep mind, due
Speaker 1: to some of the real AI p r s, has
Speaker 1: thought about the way in which you need to oversee this,
Speaker 1: the ethics involved, had government relationships, academics as well such
Speaker 1: as yourself, and when it ultimately this all stems are
Speaker 1: exuberance or interest around chat GPT at the heart of
Speaker 1: it at the moment, are we are you worried or exciting?
Speaker 1: What can you balance that is one more than the
Speaker 1: other academic answer, hello, and thank you for inviting me
Speaker 1: on tonight. It's fine, it's both. Has shown people who
Speaker 1: don't understand anything about AI what the possibilities are and
Speaker 1: what the potentially negative consequences are. So I think it's
Speaker 1: open a lot of people's eyes to what the issues
Speaker 1: are around the AI that we, you know, many of
Speaker 1: us have been talking about for a number of years.
Speaker 1: We have to get governments to think about how best
Speaker 1: to regulate this new, very vast, emerging industry. Ultimately, that
Speaker 1: review that you published back in ten has it turned
Speaker 1: into anything tangible? Do have to say? The UK political
Speaker 1: situation has been well, tumultuous at best, but has there
Speaker 1: in any movements towards ensuring there is the right overseeing? Well, yes,
Speaker 1: we actually are about to produce a regulation paper, a
Speaker 1: white paper will be coming out in this roll. This
Speaker 1: this spring from the Office Rail which all happen that
Speaker 1: that was created as a result of the review we
Speaker 1: did in twenty seventeen. I'm on the A Council which
Speaker 1: was created as a result of the review seventeen. We've
Speaker 1: had a lot of money put into AI. You know,
Speaker 1: a small country, our size. We hit way above our weight.
Speaker 1: We can't ever be Google or Stamford or m I T.
Speaker 1: But you know we we we have found has a
Speaker 1: university's doing amaintenance and training. We put a lot of
Speaker 1: money into training people for this new industry. And the
Speaker 1: AI regulation papers I said, is due out this this quarter,
Speaker 1: which will be the government's the UK governments take on
Speaker 1: how we begin to regulate AI. UM. It will be
Speaker 1: different to the EU Act. We won't go distattory law straightaway,
Speaker 1: and it will be sector based as well to start with.
Speaker 1: Because this well, but it's all very early, you know.
Speaker 1: We have just GtC has shown people the complexity of
Speaker 1: what you've got to break it. And it's not just
Speaker 1: about what governments do, it's what industry does itself. It's
Speaker 1: very interesting to hear the news from Google because I
Speaker 1: imagine their open A eyes quite a threat to Google,
Speaker 1: and I imagine the restructuring big time in that they
Speaker 1: want different types of people because they're going to have
Speaker 1: to take that open AI threat very seriously. And because
Speaker 1: it's Microsoft that's back in open AY. I now very
Speaker 1: interesting a I was coming up between the tech companies
Speaker 1: UM and of course the UK and Europe that we
Speaker 1: don't want all everything happening outside of our countries. You know,
Speaker 1: we have all sorts of issues, which would be we
Speaker 1: need to worry about data sovereignary sovereignty, we need to
Speaker 1: worry about digital ideas. Um. You know, there's so many
Speaker 1: things to think about. Well, Wendy, I wanted to ask
Speaker 1: you about that point because essentially what the current tools do,
Speaker 1: if you think about chat, GPT or DALLY, is they
Speaker 1: take existing content texts or commands. In the case of
Speaker 1: chat GPT, images and his DALLY. I don't know if
Speaker 1: you saw it, but there was a deep dive by
Speaker 1: my colleagues at Bloomberg Law about the first U S
Speaker 1: copyright lawsuit, and I guess the inference is, how does
Speaker 1: that limit what you can put in to the language
Speaker 1: models in order to get something out? What's your key
Speaker 1: to that that piece that your your team sent me
Speaker 1: about an hour ago. It's fascinating because we're going to
Speaker 1: see a lot more of those types of legal challenges
Speaker 1: because if you take chat GPT, it is effectively effectively
Speaker 1: trained on any text that is available on the Internet.
Speaker 1: So that's anything that you get from Google, from Wikipedia,
Speaker 1: from anything people have put up on their own sites
Speaker 1: and dally in the same in images. Now with what
Speaker 1: it shows us is that these a I tools at
Speaker 1: the moment don't create right. They copy, they predict, They
Speaker 1: very cleverly merge ideas, integrate ideas somatically, which is one
Speaker 1: of the things I've been interested in. They don't create right.
Speaker 1: So I think it's absolutely when you think about the
Speaker 1: effect on the music industry, which has had a lot
Speaker 1: of bashing from technology generally. Anyway, let to learn the poets,
Speaker 1: I mean, lots of people have got chat GPT to
Speaker 1: write poetry. Well a lot of that is based on
Speaker 1: styles of poetry that that Jack Gputy has been trained on.
Speaker 1: And the Internet and the other thing to remember also
Speaker 1: with things like chap Upoty and Daddy, they are dally
Speaker 1: very very very expensive to run. They have huge supercomputers
Speaker 1: and that produced this, um you know, do the the
Speaker 1: looking over the Internet and do the harvesting of the
Speaker 1: information on the Internet and doing the natural average personsing
Speaker 1: and all the work they have to do. This won't
Speaker 1: stay free forever. It can't do. It cannot stay free forever.
Speaker 1: And the really interesting thing I think the chat GBT
Speaker 1: they were very clever because they've probably driven the prices
Speaker 1: of the company up with that doesn't make any sense
Speaker 1: to do. So Microsoft is looking to invest money into it,
Speaker 1: and I, you know, I sort of like to say
Speaker 1: there was a time where Mikeson was the bad guy.
Speaker 1: Laws might trust Microsoft to be careful with what they're doing.
Speaker 1: They're investing huge amounts of money, um, and it worked
Speaker 1: free forever. Wendy Hall, Professor of Computer Science, University of Southampton.
Speaker 1: We are going to have to get you back on
Speaker 1: the program. We did need descript to surface this time around.
Speaker 1: Thank you so much. Welcome back to bloom Bag Technology
Speaker 1: and Caroline Hide in New York. And let's turn to
Speaker 1: the crypto world, because not only is bitcoin on a tear,
Speaker 1: there's so much more news, in particular Genesis, the lender
Speaker 1: back by Barry Silbert's Digital Currency Group, of course, while
Speaker 1: it finally filed for bankruptcy, becoming yet the latest firm
Speaker 1: to collapse in the aftermath of ft X is Swift Downfall. Now. Meanwhile,
Speaker 1: former ft x US president Brett Harrison has just raised money,
Speaker 1: five million dollars of it for a new startup from
Speaker 1: some pretty notable names. You know, the notable names across
Speaker 1: all of this is Snelli Bassek, and she's here to
Speaker 1: explain staying late for us. We appreciate it after what
Speaker 1: a week of bank earnings and everything else for you
Speaker 1: talk to us about Genesis. How important is this that
Speaker 1: they've finally filed bankruptcy. It's very important because it's another
Speaker 1: way to get forward in terms of getting people their
Speaker 1: money back at the end of the day, at least
Speaker 1: to some degree in a bankruptcy pricess. Very typically, what's
Speaker 1: just sit here, as you might not get at all
Speaker 1: their earlier discussions as you've seen reported in multiple outlets
Speaker 1: as well as through some of the credit or committee communications,
Speaker 1: is that maybe there would be a sense of getting
Speaker 1: seventy cents on the dollar or so. But listen as
Speaker 1: you go through this process where you're really gonna want
Speaker 1: to see some sense of agreement among each of the
Speaker 1: different creditor groups which have a different set of standings
Speaker 1: with the company in this process. Now, importantly, three point
Speaker 1: five billion dollars nearly is owed to the top fifty creditors.
Speaker 1: Seven hundred sixty million of that is tied to Gemini
Speaker 1: and Gemini end that Gemini earned business that halted withdrawals
Speaker 1: those more than three customers that are owed money. While
Speaker 1: you watch this progress progress, the relationship with jem and
Speaker 1: I will be very, very important, especially as you watch
Speaker 1: them kind of turn the page on this. Lastly, I
Speaker 1: would say interestingly, and why this is so important is
Speaker 1: because there's some sense of containment here. If you look
Speaker 1: at the bankruptcy filings, it definitely alludes to the relationship
Speaker 1: between Digital Currency Group, the parent company here run by
Speaker 1: Barry Sober, as well as its relationship and intercompany loans
Speaker 1: here intercompany loans to Gemini Genesis I'm sorry, Genesis and
Speaker 1: Genesis Global Capital in particular. But the fact that this
Speaker 1: is contained in a bankruptcy to Genesis Global Capital and
Speaker 1: doesn't involve, say, the Genesis Trading business shows you that
Speaker 1: this is contained. Three point five billion dollars is certainly
Speaker 1: a lot of money. But at the same time, we
Speaker 1: know where a lot of those creditors are, who they are,
Speaker 1: and how much they're owed, unlike the st X bankruptcy,
Speaker 1: which doesn't feel contained. And what's interesting is actually talk
Speaker 1: this week of US Space st X becoming in exchange again.
Speaker 1: I mean, how are people reacting to that there's a
Speaker 1: lot of mixed feelings about that because the brand itselfs
Speaker 1: carries a lot of uh toxicity. Yeah, toxic, that's a
Speaker 1: better word for it. At this point to the point
Speaker 1: that I think this struck me. This is a story
Speaker 1: that came out late last night out of the court
Speaker 1: papers that have been coming through the lawyers here for
Speaker 1: Sam Bankman Fried, a car drove into a barricade at
Speaker 1: his parents home. I thought that was pretty striking. And
Speaker 1: when the security guard at the home confronted the three
Speaker 1: men in the car, the men said something to the
Speaker 1: effect of you will not you won't be able to
Speaker 1: keep us out. The reason that this was in filings
Speaker 1: for Sam big Midfreed was because, uh, there's been a
Speaker 1: lot of notoriety behind the case, and they're trying to
Speaker 1: keep the names private of the people who are helping
Speaker 1: back this bail package. Let's talk about names involved in
Speaker 1: f t X of old because one has come back
Speaker 1: to the full. You brought the news with Brett Harrison
Speaker 1: raising money, and what was striking to me is who
Speaker 1: he's raising money from. Their thing about how interesting this is.
Speaker 1: This story has been so highly anticipated, it's been drips
Speaker 1: and drips of leaks about his conversations with venture capitalists.
Speaker 1: Remember he left f t X US months before the implosion.
Speaker 1: A lot of information has come out between his kind
Speaker 1: of difficult relationship here between Sam big Midfried and him.
Speaker 1: He had a Twitter threat over the weekend. We had
Speaker 1: a conversation with him about what he's trying to accomplish. Here,
Speaker 1: he says he wants to hire He's five million dollars
Speaker 1: through coin based ventures circle Anthony Scaramucci. Remember a lot
Speaker 1: of these parties here are kind of ft X adversaries,
Speaker 1: if you will, remember the solved businesses. The Skybridge business
Speaker 1: that it's associated with had had an investment from the
Speaker 1: ft X Ventures unit, and I remember being there myself,
Speaker 1: and it's really bread with the relationship with Scaramucci. So
Speaker 1: he tried to during the page, he's trying to hire
Speaker 1: former ft X employees and trying to build trading infrastructure
Speaker 1: for institutions. He says he wants to reinstall confidence in
Speaker 1: the industry. Let's see if you can do it. Well,
Speaker 1: there's some other people who want to reinstare some confidence
Speaker 1: in the industry and how it's gonna be regulated. Shannon
Speaker 1: is gonna be sticking around for this next conversation because
Speaker 1: our next guest plays a key role in the policy
Speaker 1: making decisions over digital assets. CFTC Commissioner Christie Goldsmith Romero
Speaker 1: says that, look, the ft X implosion must lead to
Speaker 1: more strutiny of US based crypto companies. Earlier this week
Speaker 1: said quote, I urged Congress to avoid permitting newly regulated
Speaker 1: crypto exchanges to self certified products for listing under the
Speaker 1: current process that limits the FDC oversight. She also said
Speaker 1: that CFTC would benefit from greater authority to access certain
Speaker 1: information on unregulated affiliates of regulated exchanges with appropriate conditions,
Speaker 1: please to say Commissioner Goldsmith Romero joins us now from
Speaker 1: d C Commissioner fascinating that ultimately what you're calling for
Speaker 1: here is your institution to have a bit more power,
Speaker 1: to be able to have more control. What is it?
Speaker 1: Can you explain about the self certification? What is it? So?
Speaker 1: Where as you what situations you've seen already that that's
Speaker 1: led to some problems. Yeah, So ultimately what I'm calling
Speaker 1: for is really like more comprehensive whole of government regulation,
Speaker 1: very similar to what we have with like traditional finance
Speaker 1: trad fire right, So it's gonna be multiple government agencies involved.
Speaker 1: That's gonna have greater customer protections and stronger federal oversight.
Speaker 1: So if you know, we have this additional authority that's
Speaker 1: provided to the CFTC, like over the over the regular
Speaker 1: bitcoin market or over the spot market, I don't think
Speaker 1: we could just poured over the rules that we have
Speaker 1: now that relates to the the futures market that we have,
Speaker 1: like the bitcoin futures market that we regulate. So I think,
Speaker 1: you know, we don't. We don't want to fast track
Speaker 1: assets that are going to be listed on exchanges. The
Speaker 1: CFTC should have more authority over that. We want to
Speaker 1: make sure that someone's not trying to do an end
Speaker 1: run around the SEC with their jurisdiction. We want to
Speaker 1: make sure that we can protect the market against manipulation.
Speaker 1: And you know, at this point, it's going to be very,
Speaker 1: very difficult for some exchange to self certify that what
Speaker 1: they put on is not readily susceptible to manipulation, and
Speaker 1: there's a lot of issues with that. So it's really
Speaker 1: kind of coming up with a new process because it
Speaker 1: would be a new market and it would need strong oversight.
Speaker 1: What was so interesting was perhaps a lack of oversight
Speaker 1: and due diligence from some internal players within the system.
Speaker 1: As this new urgeoning area of crypto evolved, there was
Speaker 1: a lot of money, a fomo feel, people pouring investment
Speaker 1: into now well failed companies, and many of us in
Speaker 1: the media now somewhere asked, what about those institutional players,
Speaker 1: what about the due diligence that completely was lacking at
Speaker 1: certain vcs people have been around for years, for decades
Speaker 1: that just seemed to lose their head in the situation.
Speaker 1: Are enough questions being asked of those institutional players about
Speaker 1: their accountability? Do you think yeah, I think you hit
Speaker 1: the nail on the head. There are serious, serious questions
Speaker 1: about whether they fulfilled there for duce sherry duties to
Speaker 1: their clients. What kind of due diligence did they did
Speaker 1: they conduct. Let's just start with the fact that if
Speaker 1: you are investing hundreds of millions of dollars or tens
Speaker 1: of millions dollars that in a company a year later
Speaker 1: or so you have to write it down to zero
Speaker 1: or close to zero. That's already going to raise questions
Speaker 1: about the due diligence here are conducting. But when the
Speaker 1: new f t X CEO John Ray says in Courton
Speaker 1: and the bankruptcy filings, there's absolutely no record keeping, right,
Speaker 1: there's absolutely no controls. We've got an order no one's
Speaker 1: ever heard of. Then you say, well, how how is
Speaker 1: that possible? So do they turn a blind eye to it?
Speaker 1: Were they just distracted by like this promise of innovation?
Speaker 1: You know, we know that f t X and it's
Speaker 1: and it's founder Sam Bankman fried really change East trying
Speaker 1: to get the public trust. Everything they did, the messaging
Speaker 1: was worred trustworthy, you can trust in us. We know
Speaker 1: now that that's not true, right, that they violated the trust.
Speaker 1: But you know, we have this situation where you know,
Speaker 1: the market was hot, there was a lot of competition,
Speaker 1: and there are a lot of a lot of equity
Speaker 1: to be had, and you know, why did they turn
Speaker 1: a blind eye to what should have been really flashing
Speaker 1: red lights when it comes to due diligence? So I
Speaker 1: do think there are serious questions there. There might actually
Speaker 1: be conflicts too. You see this highly interconnected nature. So
Speaker 1: was there some conflicts that prevented them from really paying
Speaker 1: attention to the due diligence and the facts that they
Speaker 1: were uncovering self certifications. Something that's interesting to me too,
Speaker 1: that whether it's self certifying certain assets that are being
Speaker 1: listed or just going ahead and providing certain products to clients,
Speaker 1: lending products other products. I mean, how much now, whether
Speaker 1: it's a CEEFTC, the SEC, or the Department of Justice,
Speaker 1: how much clean up work is there to do? It
Speaker 1: seems like based on the velocity of cases that are
Speaker 1: being brought forward, even above and beyond f t X,
Speaker 1: that there's a lot of enforcement by regulation and there's
Speaker 1: a lot more conviction in regulators and authorities saying hey,
Speaker 1: these are new products with the same classifications as some
Speaker 1: of the old financial products we've seen. Yeah, I mean
Speaker 1: I think I think a lot of the products have
Speaker 1: very similar features and there's a lot of the same
Speaker 1: risk that you see in that you see in crypto
Speaker 1: that you saw in traditional finance. First of all, we've
Speaker 1: been regulating in the futures space and allowing um trading
Speaker 1: to happen in bitcoin futures and ether futures as long
Speaker 1: as it's registered with US, and fd X actually had
Speaker 1: ledger x, which was one of their entities registered with US,
Speaker 1: which is not part of the bankruptcy but the fact
Speaker 1: the matter is, we also have to do enforcement. We
Speaker 1: have to bring uh you know, trust and confidence to
Speaker 1: the American people that we are doing our job. We
Speaker 1: have this police authority to go in and to bring
Speaker 1: enforcement actions. We have to do that. That helps keep
Speaker 1: the market clean and that an important part of our job.
Speaker 1: And I'm a twenty year federal law enforcement official, so
Speaker 1: to me, enforcement is part of regulation. But we're doing
Speaker 1: both at the CFTC, both trying to supervise it the
Speaker 1: trading that we can where we have authority and bringing
Speaker 1: enforcement cases even though we don't have regulatory authority, but
Speaker 1: we have enforcement authority in the in the cash market
Speaker 1: commission a sensitive one for you because you talk about confidence.
Speaker 1: We asked our own audience how confident they were that
Speaker 1: regulation would come to bear. We asked them a little
Speaker 1: while back in the wake of the f t X
Speaker 1: of f t X, are you confident the right cryptoregulation
Speaker 1: will come well said, don't hold your breath and actually
Speaker 1: said no, what can you do now? What can you say?
Speaker 1: What do you think you're able to get across? That
Speaker 1: gives people the confidence that it can be brought in
Speaker 1: and we're not just depending on basically self regulation. Yeah,
Speaker 1: I think that there's a lot of people in Congress
Speaker 1: on a bipartisan basis who want to do something. I mean,
Speaker 1: when I look at this, you've got a regular of
Speaker 1: regular people who are getting crushed in these bankruptcies. Think
Speaker 1: of like Celsius and now you're gonna have Genesis, You've
Speaker 1: got f t X. You've got a lot of people
Speaker 1: who need some customer protections. So I think there's a
Speaker 1: lot of goodwill and Congress to get something through. I
Speaker 1: do think it's appropriate to take a pause after f
Speaker 1: t X for Congress to say, have we made sure
Speaker 1: that any legislation we're thinking about like addresses all of
Speaker 1: the lessons learned that we have from f t X.
Speaker 1: And that's what led me to say, you know what,
Speaker 1: we shouldn't we we should really think about this idea
Speaker 1: of this fast track self certification process. I as a regulator,
Speaker 1: would want to have more oversight tools over exchanges to
Speaker 1: be able to say no that's not appropriate, to have
Speaker 1: some independence, governance, and have some control. So I think
Speaker 1: I think the possibility is there. But let me just
Speaker 1: say I understand it's going to take time to do
Speaker 1: this right in a comprehensive way. But what matters the
Speaker 1: most is that we get something right that stands the
Speaker 1: test of time. You know, it's interesting that you worked
Speaker 1: in the wake of the financial crisis with the troubled
Speaker 1: asset relief programs, so you have seen very messy on
Speaker 1: wind this time around. There is a lot of relief
Speaker 1: that it wasn't a more systemic problem, to the extent
Speaker 1: that you're still worried about systemic problems, especially with places
Speaker 1: that do intersect more seriously with the current financial systems.
Speaker 1: Stable coins, How much concern do you still have. So
Speaker 1: I have a lot of concern about financial stability risk.
Speaker 1: Let's separate that out from systemic risk. Financial stability risk
Speaker 1: is not something we take our eyes off. We have
Speaker 1: to continue to look at that when you look at
Speaker 1: all these people that are hurt, when you look at
Speaker 1: the domino effect that happens when all of these different
Speaker 1: investors come in, and we're gonna we're still seeing the
Speaker 1: impact of f t x is collapse right now. Systemic
Speaker 1: risk is going to come in my mind as you
Speaker 1: get more links between the traditional financial market and the
Speaker 1: crypto market. Over the last six months, I've heard more
Speaker 1: and more of tradfy say that they want to become interested,
Speaker 1: and that's why I've been warning, well, if you're gonna
Speaker 1: become interested, you really have to understand kind of how
Speaker 1: this operates. You really have to understand where there are
Speaker 1: some weakness. Is co mingling customer assets with company assets
Speaker 1: is a big weakness. Lots of conflicts of interest that
Speaker 1: are not resolved is a big week is a big weakness.
Speaker 1: Cybersecurity the same, You've got to really have strong cybersecurity issues.
Speaker 1: So I think you know, as as the as the
Speaker 1: traditional financial players are sort of looking into this, um,
Speaker 1: you know, there's still some interest, but hopefully this is
Speaker 1: going to take everyone make a pause and and do
Speaker 1: better due diligence. Speaking of due diligence, speaking of co mingling,
Speaker 1: I'm kind of curious about your sounds of the difference
Speaker 1: between what happened at Genesis and what happened over at
Speaker 1: f t X. Obviously, no one has been accused of
Speaker 1: anything at Genesis, but there's been a concern from the
Speaker 1: Winkle Boss twins here about the potential co mingling between
Speaker 1: the intercompany loans at Genesis now that they're going through
Speaker 1: a bankruptcy process of their own how does a regulator,
Speaker 1: how does the CFTC look at something like that, um
Speaker 1: in terms of just general corporate behavior. Yeah, so I'm
Speaker 1: gonna be careful about speaking about any particular company because
Speaker 1: we are law enforcement office, and so I want to
Speaker 1: be careful about that. But I will say we are
Speaker 1: looking across the industry. We are looking to where we're
Speaker 1: going to bring cases. We are bringing cases um constantly,
Speaker 1: you know, bringing cases against a Dow, bringing cases against
Speaker 1: an oracle manipulator, bringing cases case against Tether about how
Speaker 1: stable their stable coin is. So I think our job
Speaker 1: is to sort of look across and say, you know,
Speaker 1: where is it appropriate to bring the case in a
Speaker 1: way that not only brings you know, compliance with the law,
Speaker 1: but also sends a message to others who are in
Speaker 1: the market about, you know what, we expect good behavior. Commissioner,
Speaker 1: great to have some time with you on this Friday.
Speaker 1: CFTC Commissioner Christie Goldsmith, Rama and Shnati Basek as always,
Speaker 1: thank you so much for your time. Meanwhile, coming up,
Speaker 1: you know, Musque could lose billions for that funding secured
Speaker 1: tweet back in twenty eighteen, we have the latest on
Speaker 1: the securities CRAL trial from our reporter who is in
Speaker 1: that very courtroom. This is bring back. So in the
Speaker 1: last hour or so, Elon Musk has been testifying and
Speaker 1: part of the trial over his funding secured tweet back
Speaker 1: to take test the private at four dollars a share.
Speaker 1: That tweet could potentially cost him billions of dollars in damages.
Speaker 1: Joe Rolson Black was in the courtroom, legal reporter for
Speaker 1: Bloomberg used so what were the takeaways? This was just
Speaker 1: the early exchanges, the early part of musqus time on
Speaker 1: the stand. Yeah, it was. It was very early in
Speaker 1: the sense that we spent our day hearing from other witnesses,
Speaker 1: and there was great anticipation in the courtroom. Everybody knew
Speaker 1: that we we could hurt could hear from Elon Musk,
Speaker 1: but we weren't sure if we're going to before kind
Speaker 1: of the time ran out for the day and so
Speaker 1: he came in and and everybody was very excited. But
Speaker 1: he spoke for it. He testified for about thirty minutes,
Speaker 1: uh and meaning that he kind of came and went in,
Speaker 1: will return on Monday. How did he feel, Joe like,
Speaker 1: how did he seem how did his lawyer see, how
Speaker 1: did other people giving evidence. Seen. Yeah, he seemed nervous,
Speaker 1: really really quite nervous, I think at first, and he
Speaker 1: was very quiet, reticent and um, very hesitating in his responses,
Speaker 1: I think, very careful and calculated in in in waging
Speaker 1: what he was being asked and what he said. But
Speaker 1: he very quickly warmed up then and and got relaxed
Speaker 1: and even funny in the car room in a in
Speaker 1: a in a kind of mild way, not not overly humorous,
Speaker 1: but um, but warmed up and got kind comfortable. Um.
Speaker 1: His lawyer that the planeifts lawyer, the lawyer represented the shareholders,
Speaker 1: UM was also nervous. You could, I think he was nervous. Um,
Speaker 1: you know, uh asking Elon Musk with Elon Muscat. Understand
Speaker 1: he's he's British and as you know, that confers great
Speaker 1: kind of authority and intelligence, especially especially in a backwater
Speaker 1: San Francisco. Um, but he was. He was unsettled to
Speaker 1: and it took them a while to kind of get
Speaker 1: used to each other, is what it felt like. Yeah,
Speaker 1: I I've got no comment on that. All I would
Speaker 1: I would say is let's remind the audience that the plaintiffs,
Speaker 1: the shareholders basically argued that they lost money due to
Speaker 1: the price swings on Tesla stock in the days that
Speaker 1: followed that take private suite. Right, that's the context. What
Speaker 1: was fascinating for me is even before Muscot anywhere near
Speaker 1: that courthouse, the judge had made a pre trial uh
Speaker 1: decision of his own, a pre trial hearing decision about
Speaker 1: how those tweets could be should be interpreted. Could you
Speaker 1: talk to us about that background? Sure, I mean to
Speaker 1: to kind of cut through it. The judges ruled that
Speaker 1: the tweets were false and reckless, and those are kind
Speaker 1: of two big hurdles that the shareholders have to clear
Speaker 1: in order to win their case. And so it's unusual,
Speaker 1: if not unprecedented in a in a case like this
Speaker 1: for a judge to to find that ruling ahead of
Speaker 1: time and then furthermore instruct the jury. So the trial
Speaker 1: it's settled that these are false, these tweets are false,
Speaker 1: and that they were reckless. The question that they have
Speaker 1: to determine now is did Elon Musk know that what
Speaker 1: was his state of mind? Did he know that they
Speaker 1: were false, and did he know that they were that
Speaker 1: that what he was saying would impact shareholders and move
Speaker 1: move move the price of the stock. Still, it was
Speaker 1: interesting that he was saying he eventually warmed up, became
Speaker 1: humorous slightly, and was making an interesting point earlier in
Speaker 1: the show about perhaps whether the idea, the motivation here
Speaker 1: is to get him riled up, because we know from
Speaker 1: Twitter that you know, Musk can be outspoken as a
Speaker 1: way of politely saying it. Do you think that that's
Speaker 1: kind of a tactic at play here. I do think
Speaker 1: it's a tagic. I think the lawyers, the lawns for
Speaker 1: the shareolders are done and they're trying to provoke him,
Speaker 1: and they asked, you know, they asked questions that that
Speaker 1: I think are heading in that direction, including about I
Speaker 1: think we probably all recall his response or his tweets
Speaker 1: about the horrible cave situation with the with the children
Speaker 1: stuck kind of in a cave in Thailand, and his
Speaker 1: in his horrible kind of tweets about that, and the
Speaker 1: and the and the lawyer asked him questions about that,
Speaker 1: trying to provoke him to make the point that what
Speaker 1: he says on Twitter matters to Testla's shareholders, and he
Speaker 1: made the in that instance, tesla shares draft significantly after
Speaker 1: he made that. After he made that tweet, Musk was
Speaker 1: steadfast insisting that there's no link between what he says
Speaker 1: in Tesla's share basis. He said that repeatedly and kind
Speaker 1: of really resisted that he did a good job. I
Speaker 1: think of resisting it, but we're going to see where
Speaker 1: there's where there's girls on Monday, Joel fascinating. We thank
Speaker 1: you just jumped up a room above the court room itself.
Speaker 1: So thank you so much, Joel Rosenblack for sticking around
Speaker 1: in that court house. Going viral. The reality behind the
Speaker 1: tens of thousands of tech workers who've lost their jobs
Speaker 1: hashtag layoffs was trending on Twitter and Google. His parent company, Alphabet,
Speaker 1: of course, is shrinking its global workforce by about six percent.
Speaker 1: One tweet in particular, it caught our attention even though
Speaker 1: an email went out to Google employees overnight. We understand
Speaker 1: and some who actually missed it were allegedly waiting in
Speaker 1: line to badge into their offices, which ultimately told them
Speaker 1: whether or not they lost their jobs. I mean, we
Speaker 1: haven't corroborated this ourselves ed, but it was notable that
Speaker 1: people seem to be responding to that. People who work
Speaker 1: there a long time, and we know that it's it's
Speaker 1: really tough to get these messages across. Yeah, Google layoffs
Speaker 1: the number one trend on Google trends that I don't
Speaker 1: make light of that. That's the reality. We're in a
Speaker 1: hundred thousands so far since the beginning two. We'll keep
Speaker 1: you abreast of all that sort of news that doesn't
Speaker 1: for this addition of Blobo technology. Don't forget podcast I Heeart, Apple, Spotify,
Speaker 1: wherever you get it. This is Bloomberg