BITCOIN’S SILVER LINING  | The apparent collapse of Mt. Gox, the most prominent Bitcoin exchange, late Monday night naturally stirred outrage and panic. After all, a document circulating widely in the Bitcoin world said the company had lost 744,000 Bitcoins â€" about 6 percent of Bitcoins in circulation â€" worth more than $300 million at current exchange rates. But Bitcoin’s latest troubles did little to shake the confidence of many, and indeed, the virtual currency’s stumble may provide just the spark it needs to become a more mature part of the financial system, Nathaniel Popper and Rachel Abrams write in DealBook.
One champion of the virtual currency, Cameron Winklevoss (of Facebook fame), said Mt. Gox’s closing “underscores just how far the Bitcoin ecosystem has come,†adding that “the brightest minds in the room are hard at work building a responsible and secure future.†One of these new, more experienced companies entering the void left by Mt. Gox is SecondMarket, which runs an exchange for the buying and selling of shares of private companies. As Mt. Gox was preparing to go offline on Monday, SecondMarket announced plans to start a new, regulated Bitcoin exchange for large banks.
From Quartz: “Confidence â€" that Bitcoin is a reliable store of value, and that it can be used without fear of getting totally ripped off â€" is just the problem for Bitcoin. Mt. Gox is by far the largest in a long string of collapses and thefts that have plagued the upstart currency. The exchange had its humble roots as an online marketplace for wizard-themed playing cards (its full name derives from ‘Magic: the Gathering Digital Exchange’), but in the end it made a fortune in Bitcoins disappear into thin air. The question now is whether Bitcoin will follow suit.â€
From The Economist: “But as ever, much of the Bitcoin community continues to act as if nothing has happened. Six Bitcoin businesses issued a statement saying that recent events don’t ‘reflect the resilience or value of Bitcoin.’ And today’s entry on the Bitcoin Foundation’s blog is an invitation to ‘Bitcoin 2014’ in Amsterdam (‘Bitcoin is a game changer on a global scale â€" don’t miss out!’). It’s hard not to think that the real problem in Bitcoinland isn’t denial-of-service attacks. It’s denial.â€
From the venture capitalist Marc Andreessen, on CNBC: “Mt. Gox has been obviously broken and possibly outright crooked for months. As seen in trading spreads. This is like MF Global. Not some huge breakdown of the underlying technology or other exchanges. Bitcoin protocol is unchanged and other Bitcoin exchanges and companies are doing fine.â€
Mr. Andreessen, from the DealBook archives (Jan. 21, 2014): “Far from a mere libertarian fairy tale or a simple Silicon Valley exercise in hype, Bitcoin offers a sweeping vista of opportunity to reimagine how the financial system can and should work in the Internet era, and a catalyst to reshape that system in ways that are more powerful for individuals and businesses alike.â€
From The New Yorker’s John Cassidy: “Is this the end of Bitcoin? Almost certainly not. Many people operating in the black economy will willingly take a few risks to conduct their business. And, for everybody else, the promise of a cheap and ubiquitous electronic-payment system remains. But in the very week that the first Bitcoin A.T.M. opened in Boston, the notion that hundreds of millions of people are going to trust their wages and savings to an unregulated and opaque electronic currency just suffered a big blow.â€
SENATE SAYS CREDIT SUISSE HELPED U.S. CLIENTS HIDE BILLIONS  | “At times, a Senate report into how Credit Suisse, a bank based in Zurich, helped its American customers hide billions of dollars of assets from the United States Treasury reads more like a John Grisham novel than a white paper,†Annie Lowrey writes in DealBook. The 176-page report, released on Tuesday by the Senate Permanent Subcommittee on Investigations, contends that from at least 2001 through 2008, the Swiss bank actively helped thousands of Americans conceal their wealth offshore.
Highlights from the report include an instance in which a Credit Suisse banker “traveled to the United States to meet with the customer at the Mandarin Oriental Hotel and, over breakfast, handed the customer bank statements hidden in a Sports Illustrated magazine,†and another in which a client recalled visiting a Credit Suisse office and taking an elevator with “no buttons†that was “controlled remotely.â€
2 NEW INVESTIGATIONS FOR BANK OF AMERICA  | Bank of America is facing two new investigations, one related to its activities in foreign currency exchange markets and the other over its handling of government-backed mortgages in the United States. Alas, these fresh legal inquiries could add to the bank’s mounting litigation costs, which could total $6 billion, up from the previous estimate of $5 billion, Michael Corkery writes in DealBook.
The bank also said it had reached an agreement with Warren E. Buffett’s Berkshire Hathaway to amend the terms of his $5 billion stake in Bank of America. The bank now cannot call Berkshire’s preferred shares for five years, and, in return, Mr. Buffett has agreed not to require the bank to pay him any dividends on those shares if times are tough.
ON THE AGENDA  | New home sales for January are out at 10 a.m. Eric S. Rosengren, the president of the Boston Fed, speaks on the economic outlook at noon. Sandra Pianalto, the president of the Cleveland Fed, discusses the Fed’s history at 7:30 p.m. The Senate Permanent Subcommittee on Investigations holds a hearing on offshore tax evasion at 9:30 a.m., and the Senate Subcommittee on Social Security, Pensions and Family Policy holds a hearing to examine retirement savings for low-income workers at 10 a.m. The House Committee on Capital Markets and Government Sponsored Enterprises holds a hearing on Dodd-Frank’s impact on asset-backed securities at 2 p.m. William S. Cohen, the former defense secretary, is on Bloomberg TV at 5:30 p.m.
DON’T CRY, ARGENTINA  | It’s not often that a foreign country asks the United States Supreme Court to hear a case, but that’s exactly what Argentina is doing. The South American country, which defaulted on $80 billion of government bonds in 2001, wants the highest court in the United States to throw out a lower-court ruling forcing the country to pay up on these bonds. If you’re asking how this happened, you’re not alone.
In 2005 and 2010, Argentina forced its debt holders into a deal offering them new bonds at 25 to 29 cents on the dollar, which was accepted by more than 90 percent of the bondholders. But there were holdouts, including hedge funds, which have sued to force Argentina to pay the bonds in full, Steven M. Davidoff writes in the Deal Professor column. “Normally, sovereign immunity would protect Argentina. In fact, in the United States, there is also a statute, the Foreign Sovereign Immunities Act, that would prevent the hedge funds from seizing Argentine property to collect on the bonds,†he writes. But, rather cleverly, the hedge funds have argued in court that they are not, in fact, seeking to seize Argentine property.
Instead, these hedge funds argue, when Argentina pays money through the United States financial system on its new bonds, the agents transferring that money can be ordered to pay the holdouts first. The lower courts have ruled in favor of the hedge funds, holding that if Argentina tried to pay its old bondholders first, the banks in the United States that were transferring that money would have an obligation to pay the hedge funds first. Naturally, Argentina reacted with fury. Now, Mr. Davidoff writes, if the Supreme Court denies Argentina’s request to hear the case, it “would effectively turn the United States federal courts into collection agents for the hedge funds.“
BlackBerry Chief Demurs on Sale of Messenger Service, for Now  | The prospect of selling or spinning off BlackBerry’s messaging service has helped buoy the company’s fortunes, though John S. Chen, its chief executive, hinted that may not happen quite yet.
DealBook »
A Buyout Offer That Raises Questions of Board Fairness and Duty  | American Financial’s actions as it tries to buy out minority shareholders of one of its insurance subsidiaries appear deeply flawed, Steven M. Davidoff writes in the Deal Professor column.
DealBook »
Justice Department to Review Comcast Deal  | The Department of Justice, rather than the Federal Trade Commission, will review Comcast’s $45 billion deal for Time Warner Cable, The Financial Times reports. The Department of Justice led the review of Comcast’s acquisition of NBCUniversal.
FINANCIAL TIMES
Cooper-Standard Considers Merger With TI Automotive  | Cooper-Standard Holdings is weighing a merger with its rival TI Automotive in a move that would combine the world’s two biggest suppliers of fluid systems for cars and trucks, Reuters reports. Cooper-Standard has a market value of about $750 million and an enterprise value of about $1.4 billion including debt, while TI Automotive has an estimated enterprise value of more than $2 billion.
REUTERS
@GSElevator’s Unmasking Won’t Stop Book  | The revelation that the writer behind the popular Twitter feed @GSElevator had never worked for Goldman appeared to undermine his credibility, if not the premise of his planned book, Julie Bosman writes in The New York Times. But the book’s publisher, Simon & Schuster, is standing by the author.
NEW YORK TIMES
JPMorgan Estimating $30 Billion of Excess Capital  | JPMorgan Chase said at its annual investor day on Tuesday that it should have $30 billion of excess capital next year to be distributed to shareholders, The Financial Times reports.
FINANCIAL TIMES
Goldman Poaches Bank of America’s Co-Head of Leveraged Finance  | Goldman Sachs has hired Alice Murphy, the co-head of global leveraged finance at Bank of America Merrill Lynch, as the bank’s global head of leveraged finance origination, The Wall Street Journal reports. Ms. Murphy will be only one of a handful of female partners at the bank.
WALL STREET JOURNAL
Barclays to Close Power Trading Unit  | Barclays has decided to close its United States and European power trading operations as it aims to overhaul its commodities business amid tighter regulation and falling profits, The Financial Times reports.
FINANCIAL TIMES
Bonderman Says TPG Is Considering Going Public  | David Bonderman, the co-founder of the private equity firm TPG Capital, said his firm was considering going public like many of its rivals.
DealBook »
At Private Equity Conference, a Debate Over the Benefits of Going Public  | TPG Capital let slip that it was contemplating an initial public offering, but other industry leaders said they weren’t convinced a public offering was necessary for them at this stage of the game.
DealBook »
Apollo’s Co-Founder Sees Opportunities to Invest in Distressed Debt  | Private equity firms don’t have to have a “global recession to have good distressed opportunities,†Leon Black, co-founder of Apollo Global Management, said at the SuperReturn International conference in Berlin.
DealBook »
Kravis Says Private Equity Does Poor Job of Discussing Its Benefits  | Leaders in the private equity industry, including Henry Kravis of Kohlberg Kravis Roberts, say the business needs to do a better job of communicating its merits.
DealBook »
Carlyle Selected as Preferred Bidder in Tyco Sale  | The private equity firm Carlyle Group has been selected as the preferred bidder for the $1.6 billion sale of Tyco International’s South Korean security systems unit, Reuters reports.
REUTERS
Top 10 Private Equity Deal Makers Rake in $1.7 Billion  | The top 10 deal makers at publicly traded private equity firms collected $1.7 billion in dividends in 2013, Bloomberg News writes. Leon Black, the founder of Apollo Global Management, was among the highest earners, receiving about $369 million in distributions from his stock ownership of the firm.
BLOOMBERG NEWS
After Inquiry, SAC Capital Says It Intends to Hire a Trading Monitor  | Steven A. Cohen, the billionaire hedge fund owner, is looking to hire a former prosecutor or securities regulator to monitor trading at his investment firm after the federal government’s insider trading investigation.
DealBook »
Elliott Raises Bid for Riverbed to $3.3 Billion  | The hedge fund Elliott Management raised its bid for Riverbed Technology and continued to criticize the networking equipment company for failing to begin a process to sell itself.
DealBook »
Paulson’s Hedge Fund Seeks Puerto Rico Resort  | The hedge fund Paulson & Company, founded by the billionaire John A. Paulson, is in talks to buy a resort complex in Puerto Rico as it seeks to expand its investments on the beleaguered island, Bloomberg News writes.
BLOOMBERG NEWS
J. Crew Said to Be Considering 2014 I.P.O. Â |Â J. Crew, the retailer owned by the private equity firms TPG Capital and Leonard Green & Partners, is said to be in talks with banks over a possible initial public offering in 2014, Bloomberg News writes, citing unidentified people familiar with the situation.
BLOOMBERG NEWS
Lawsuit Against Zynga I.P.O. Dismissed  | A federal court in San Francisco on Tuesday dismissed a lawsuit against Zynga in which shareholders claimed that Zynga misled them and inflated the value of its stock price ahead of and after its 2011 initial public offering, ReCode writes.
RECODE
Westfield Group May List in the U.S.  | The Westfield Group, one of the world’s biggest owners of shopping malls, said that it may list in the United States or in London after a planned breakup of its global mall empire, The Wall Street Journal writes.
WALL STREET JOURNAL
Spain’s Abengoa to Spin Off Assets in U.S. I.P.O.  | Abengoa, one of Spain’s largest engineering and energy companies, is planning to spin off its solar and electricity transmission assets into a new company in an initial public offering in the United States, The Wall Street Journal writes, citing unidentified people familiar with the situation. The company could be valued at up to $1 billion.
WALL STREET JOURNAL
Brazil Real Estate Start-Up Draws U.S. Investment  | Amid continuing concerns about Brazil’s sputtering economy, the Dragoneer Investment Group of San Francisco has made its first investment in an Internet company in the country, leading a $12.75 million round in VivaReal, an online real estate classifieds start-up.
DealBook »
Andreessen on the Future of the News Business  | The venture capitalist Marc Andreessen says on his firm’s blog that he is bullish about the future of the news industry over the next 20 years.
A16Z
Alibaba-Backed Quixey Hired Developers to Challenge Google  | Quixey, a mobile app search start-up backed by the Chinese e-commerce giant Alibaba, is hiring developers to help build applications that could make it easier for users to search for information buried deep within other mobile apps, The Wall Street Journal reports.
WALL STREET JOURNAL
Security Start-Up Shape Raises $40 Million  | Shape Security, a start-up that aims to protect websites from automated attacks, announced on Tuesday that it had raised $40 million in Series C funding, increasing its total to $66 million, ReCode reports.
RECODE
London Start-Up Accelerator Aims to Attract Britain’s Best  | The Entrepreneur First program, a technology start-up accelerator based in London, is helping to attract Britain’s best engineers to technology company founders, Fortune reports.
FORTUNE
17 Brokerage Firms Agree to End Analysis Previews  | Seventeen brokerage firms, including Citigroup, Goldman Sachs, JPMorgan Chase and Merrill Lynch, have agreed to stop participating in money management surveys aimed at tapping into research analysts’ changing views on companies before those opinions are publicly issued, Gretchen Morgenson writes in The New York Times.
NEW YORK TIMES
S.&P., in Lawsuit Defense, Seeks Documents About Obama-Geithner Meetings  | Standard & Poor’s is seeking information about certain meetings between President Obama and Timothy F. Geithner in 2011, hoping the details will help show that a lawsuit filed by the government in 2013 against the company was done in retaliation for a ratings downgrade of American debt.
DealBook »
Geithner’s Book Has a Title: ‘Stress Test’  | The title gives a flavor of the coming memoir by Timothy F. Geithner, who, as president of the Federal Reserve Bank of New York and then as Treasury secretary, was a central player in the government’s effort to fight the financial crisis and economic recession.
DealBook »
No Bailout for Bitcoin Holders  | The distance from the official world is great enough that Mt. Gox customers are almost totally on their own, writes Edward Hadas of Reuters Breakingviews.
DealBook »
Former British Broker Faces Second Round of Criminal Charges  | Graeme Shelley, a former broker at Novum Securities, will face a second round of criminal charges as part of Britain’s Financial Conduct Authority’s biggest investigation into insider trading, The Financial Times writes.
FINANCIAL TIMES
Details Emerge on Bernanke’s Life After Fed  | Ben S. Bernanke, the former chairman of the Federal Reserve, “has been spotted wearing polo shirts and the quintessential Washington accessory: a lanyard with an I.D. card identifying him as an employee of the Brookings Institution,†The Washington Post writes. Along with giving speeches and reviewing at least one paper, Mr. Bernanke is said to be working on a memoir about his eight years at the Federal Reserve.
WASHINGTON POST
U.S. Fair Housing Group Files Complaint Against Deutsche Bank  | The National Fair Housing Alliance has filed a complaint with the United States Department of Housing and Urban Development against Deutsche Bank, claiming that the bank took better care of foreclosed homes in white neighborhoods, and also marketed them more effectively, than in black or Latino neighborhoods.
NEW YORK TIMES
