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SVB, GPT-4, And Chinese Cyberspies
Silicon Valley Bank: The Good, The Bad and The Ugly
Silicon Valley Bank (SVB) collapsing has greatly impacted the tech and venture ecosystem. SVB was instrumental in making early and well-funded strategic bets on next-gen founders and entrepreneurs. Last week's events resulted from the industry's egoism and addiction to growth at all costs. The panic caused a clear prisoner's dilemma, leading to a run on SVB. However, the belief that individuals can operate above the ecosystem they inhabit was proven incorrect. The truth is that we are interconnected and interdependent, and no member of the community is immune from the impact of other stakeholders. The recent government action saved the industry from itself, and we owe it to policymakers to recognize the catastrophic risks and moving swiftly. Despite this, we cannot cast the past week away as just a learning moment with few actual victims. We need to do better and embrace more constructive thinking to continue to thrive as an ecosystem.
Silicon Valley Bank (SVB) customers in China are facing difficulties in setting up new US bank accounts after the bank failed. Chinese tech startups, backed by foreign investors and incorporated in the Cayman Islands to bypass China's restrictions on foreign ownership, face complications due to anti-money laundering regulations. SVB has also suspended international transfers, leading to Chinese VC firms advising their portfolio companies to find alternative banks to diversify where they keep their US dollar holdings. The banking crisis highlights the risks of keeping too much money at one bank, and questions remain over how China's government and regulators will react to the sale of SVB.
According to sources, JPMorgan Chase did not provide emergency lending or bid on Silicon Valley Bank (SVB) during its recent crisis. JPMorgan was purposefully absent from the situation due to lessons learned from the 2008 financial crisis, in which it acquired Bear Stearns and Washington Mutual and was accused of benefiting from taxpayer funds. Despite SVB's core business being attractive, JPMorgan was not willing to risk the political, regulatory, and perceived risks of acquiring the 16th-largest US lender. However, JPMorgan did provide extra liquidity to California lender First Republic Bank, which was experiencing stress due to concerns about its financial footing.
Apollo Global Management has approached major venture capital firms to help finance a bid for the assets of Silicon Valley Bank. General Catalyst, Andreessen Horowitz and Redpoint Ventures have reportedly discussed the possibility of a bid from Apollo. It is unclear if any firms have agreed to participate and which assets they might buy. The FDIC is running an auction process for the bank, which was previously the nation’s 16th largest, with more than $200 billion in assets.
The government-appointed CEO of Silicon Valley Bridge Bank, Tim Mayopoulos, has urged venture capitalists to keep their deposits at the bank and return them to the institution. Mayopoulos said clients with existing debt facilities would be honoured as the bank looks to rebuild its deposit base. He also said that authorities would determine in the next few weeks whether the bank can operate as an independent, new nationally chartered bank, be combined with another financial institution or other kinds of investors that would back the new bank, or be wound down. Several parties are interested in potentially buying SVB assets, he added.
ChatGPTS Latest Upgrade, "GPT-4"
OpenAI has officially announced the release of GPT-4, which is the latest version of its large language model (LLM). GPT-4 is said to be the most advanced AI system and will be the largest language model in existence. It will have multimodal capabilities, meaning it can process different kinds of input like video, sound, images, and text and output video, audio, and other types of content. GPT-4 is also expected to have improved contextual understanding, multitasking, and accuracy in its responses. Microsoft has exclusive rights to OpenAI’s GPT-3 language model technology and has already begun the full roll-out of its incorporation of ChatGPT into Bing, leading many to predict that GPT-4 will also be embedded in Microsoft products. However, the ethical concerns around AI-generated content continue to be a topic of discussion.
$200M Stolen in Euler Finance Attack
Hackers stole nearly $200 million worth of cryptocurrencies from the non-custodial DeFi protocol Euler Finance. Euler Labs, the company behind the protocol, confirmed the incident and has brought in security professionals and police to investigate the matter. The attackers exploited a poorly designed flash loan feature, allowing them to borrow a large sum of money without returning its value. The stolen cryptocurrencies include DAI, WBTC, USDC, and stETH. While the funds are being monitored, some of the stolen tokens have already been laundered through the Tornado Cash mixer. The Euler token (EUL) dropped in value from $6.2 to $3.1 following the news.
FairMoney Acquires PayForce
Nigerian fintech startup FairMoney has acquired PayForce, a CrowdForce subsidiary, as it expands into the business loans space. The deal, which was valued at between $15m and $20m, will see CrowdForce CEO Oluwatomi Ayorinde head FairMoney's payments unit. FairMoney, which launched in 2017, offering collateral-free loans, has since expanded its offering to include bank accounts, savings products, and personal loans. It raised $42m in a series B funding round in 2021 and has its sights set on becoming Nigeria's premier digital bank.
Good News For Filecoin: Smart Contracts With The Filecoin Virtual Machine
The Filecoin community has successfully launched the Filecoin Virtual Machine (FVM), making the Filecoin blockchain capable of supporting smart contracts and user programmability. This is a significant milestone in Filecoin's roadmap and opens up opportunities to create large-scale computation and power web-scale applications. The launch of FVM allows developers to monetize data on open markets and own and reward individual contributions to the data economy in previously unimaginable ways. The FVM also aims to unlock growth opportunities for storage providers on the network and allow decentralized financial services built by developers. The FVM is already being used by key players in web3 and beyond for lending, perpetual storage, cross-chain, identity, and more.
New Startup Recycling Energy To Heat Up Swimming Pools
Deep Green, a UK startup, has developed a "digital boiler" technology that recycles heat generated by cloud data centres to provide free heat for businesses with consistent heat needs, such as swimming pools, apartment blocks, distilleries, laundrettes, and bakeries. The technology involves submerging data centres in mineral oil and using surplus heat to generate hot water and has been piloted successfully at Exmouth Leisure Centre, reducing gas requirements by 62% and saving £20,000 a year. Deep Green plans to expand installations in Bristol and Manchester in the coming weeks and estimates that this technology could provide 30% of all industrial and commercial heat needs. While similar technology has been used in homes, Deep Green's digital boiler is a first for businesses in the UK.
UK Intelligence Services VS Chinese Cyberspies
The UK government is creating a new agency called the National Protective Security Agency (NPSA), which will focus on countering Chinese cyber threats and other security risks. The NPSA will work with businesses, schools, and non-profits to educate them on cybersecurity and advise them on improving their security posture. The agency will also collaborate with local law enforcement and other government bodies, such as the National Cyber Security Center and the National Counter Terrorism Security Office. The NPSA will report directly to MI5 and be part of the Integrated Review, including a new Integrated Security Fund with a budget of $1.22 billion.