Three arrows creditors include crypto giants; UK fintech investments up 24%; Consumers’ desire for a super app;

Sam Boboev
16 min readJul 27, 2022


In this edition:

1️⃣ charles raises $20M to bring conversational commerce to WhatsApp in Europe

2️⃣ Three arrows creditors include crypto giants

3️⃣ The 10 Biggest Fintech Companies In America In 2022

4️⃣ Fraud is fraud but it isn’t something new either in the crypto world or on wall street

5️⃣ UK Treasury unveils plan to regulate stablecoins in Financial Services and Markets bill

6️⃣ With $655M to invest, Portage Ventures still convinced fintech is the place to be

7️⃣ Consumers’ desire for a super app

8️⃣ Personalization as the Foundation of Trust

9️⃣ UK fintech investments up 24%

🔟 Crypto crime

charles raises $20M to bring conversational commerce to WhatsApp in Europe

I personally believe social commerce will be one of the trends of the future and the world of commerce and lifestyle becoming more integrated.

Conversational commerce isn’t exactly a new phenomenon, with countless companies using live chats, messaging apps, chatbots, voice assistants and more to encourage consumers to part with their cash. As part of that broader movement, the mighty WhatsApp, a dominant force in the messaging world, has been pushing deeper into the business arena with myriad tools to connect retailers with customers — from product catalogs and collections, to shopping carts and Instagram Shops integration.

The conversational commerce market is fairly substantial too, with China’s WeChat reportedly facilitating $250 billion in transactions in 2020 alone. But while shopping from within messaging apps is par for the course in many markets around the world, particularly in Asia and Latin America, it hasn’t quite taken off to the same level in Europe — and this is something that German startup Charles wants to change with a platform that meshes key conversational commerce components with the marketing prowess of newsletters.

How it works

Founded out of Berlin in 2019, Charles pitches itself as a full, end-to-end product spanning backend and interface, connecting the APIs from messaging services such as WhatsApp with popular ecommerce and CRM (customer relationship management) systems like Shopify and Salesforce. Then, businesses can sell products, send newsletters, and offer follow-on support.

While the sales and service aspect is to be expected from any conversational commerce software, the newsletter facet is an interesting addition. A WhatsApp newsletter might include a discount, special offer, product announcement, or video message — but importantly, it’s designed for the medium on which it’s being consumed (i.e. a messaging app) rather than traditional email-format.

Newsletters are essentially one-to-many “broadcasts,” except when accessed through the API businesses can send to an unlimited number of recipients at once — standard broadcasting in WhatsApp is limited to 256 people. On top of that, retailers can use the Charles platform to create automated opt-in flows (e.g. through clicking a button or scanning a QR code on a website), with access to performance analytics to show how a WhatsApp newsletter is growing in terms of engagement.

Conversational commerce comes to Europe

Source Techcrunch

Three arrows creditors include crypto giants

According to Bloomberg LP a creditor list of bankrupt crypto hedge fund Three Arrows Capital puts the interconnected nature of the industry on display, with lenders ranging from some of the biggest digital-asset firms to the wife of co-founder Kyle Davies.

At the top is Digital Currency Group Inc., the parent company of crypto brokerage Genesis, which filed a $1.2 billion claim against Three Arrows, according to people familiar with the matter who reviewed a court filing. Chen Kaili Kelly, the wife of Davies, also filed a claim of about $66 million, the filing shows. And co-founder Zhu Su himself submitted a $5 million claim. It’s not immediately clear how Three Arrows was structured to allow Zhu to be a creditor.

The full extent of the impact of Three Arrows’s implosion on the industry is starting to emerge as it undergoes a liquidation process ordered by a British Virgin Islands court. Celsius Network and Voyager Digital, which both filed for bankruptcy in recent weeks, are among other creditors taking a hit from Three Arrows. Deribit, a crypto derivatives exchange, has a $80 million claim filed under the entity name DRB Panama Inc.

Three Arrows has become emblematic of the industry’s excesses during last year’s bull run, when firms built up leverage that hobbled them as the market turned. Its downfall has rippled through the digital asset industry, leading to some, such as BlockFi Inc, seeking rescue finding, while others filed for bankruptcy protections. The whereabouts of co-founders Su and Davies are still unknown, liquidators have said. Davies told the Wall Street Journal earlier that the fund had roughly $3 billion in assets under management in April before crypto markets crashed.

Genesis had earlier disclosed that it was exposed to Three Arrows, and a July 9 filing in Singapore high court lists a $2.36 billion loan to the fund from Genesis Asia Pacific Pte Ltd. Genesis sold collateral and hedged its downside once Three Arrows failed to meet a margin call, Michael Moro, chief executive officer of Genesis, said in a series of tweets this month, without specifying the hedging strategy it employed. The loans to Three Arrows had a weighted-average margin requirement of over 80%, he said, without disclosing the total loan amount or the economic loss. Digital Currency Group has since assumed some of these liabilities.

Source Bloomberg

Sam Bankman-Fried on Crypto Downturn & Acquisition Landscape

Sam Bankman-Fried, Founder & CEO, FTX in conversation with Bloomberg LP’s Matt Levine at the Bloomberg Crypto Summit discusses the latest downturn, crypto’s market structure, and potential acquisition targets.

Fraud is fraud but it isn’t something new either in the crypto world or on wall street

Federal prosecutors in Manhattan brought their first ever case for insider-trading in digital coins, charging a former Coinbase product manager with leaking information to help his brother and a friend buy tokens just before they were listed on the exchange.

The Thursday arrest of Ishan Wahi, who helped oversee listings for a Coinbase unit focused on investment products, follows a sweeping probe involving the Southern District of New York and the U.S. Securities and Exchange Commission. The SEC also alleged Wahi violated the agency’s anti-fraud rules.

Manhattan prosecutors launched their investigation in April, after complaints surfaced on social media about unusually well-timed investments in tokens that were listed on Coinbase. The probe gained steam in mid-May, when authorities prevented Wahi from leaving the country.

Prosecutors charged the three men with wire fraud conspiracy and wire fraud and the SEC accused them of insider trading.

Coinbase lets Americans trade more than 150 tokens, including many that have been added in recent months. Because of the platform’s status as the US’s largest crypto exchange, coins can often see a rush of interest — and a surge in price — immediately after being included.

The SEC’s complaint, filed Thursday in federal court in Seattle, alleges that Ishan Wahi violated securities laws by repeatedly providing material, non-public information to his brother and friend by text and phone calls using a foreign phone.

The SEC said that it was deeming nine of the digital tokens the men traded in to be “securities” — an important designation for the agency as it continues to exert its authority over the volatile digital asset market.

“We are not concerned with labels, but rather the economic realities of an offering,” SEC Enforcement Director Gurbir Grewal said in a statement. “In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase,” he said

Source Bloomberg

UK Treasury unveils plan to regulate stablecoins in Financial Services and Markets bill

According to The Block the UK unveiled its Financial Services and Markets bill in Parliament on Wednesday — a set of legislation that includes guidelines on the safe adoption of cryptoassets.

Nadhim Zahawi, who stepped into the role of chancellor earlier this month following Rishi Sunak’s resignation, said that, under the bill, stablecoins and so-called “digital settlement assets” would be regulated as a form of payment in the UK.

“In fostering these new innovations, the Bill will also enable the creation of Financial Markets Infrastructure Sandboxes — allowing firms to test the use of new technologies and practices in financial markets, increasing efficiency, transparency and resilience of new products,” the Treasury said in a press release.

The bill states that the government will have to consult the Bank of England, the PRA and the FCA before changes are made.

The bill, which repeals hundreds of pieces of EU retained law, is controversial in the UK as it paves the way for ministers to “call in” regulatory decisions made by the Bank of England. Zahawi has taken Sunak’s mantle in this regard while also pushing for an approach to City regulation focused on growth.

The bill will have to be passed by lawmakers in both the House of Parliament and the House of Lords to be written into UK law.

Sunak’s approach while in office had included an open stance on cryptoassets. In April, he had started the process of looking at how stablecoins would be regulated and commissioned NFTs to be released by the Royal Mint this summer.

Lawmakers have also been courting crypto companies and VCs in recent months. UK Treasury disclosures for the first quarter of 2022, unearthed by The Block, revealed Sunak and former economic secretary John Glen took a number of meetings between top officials and crypto companies.

The HMT Ministers’ Meetings log, published on the UK government website, shows that Glen had meetings in February and March with crypto firms including Binance, Paxos, Coinbase and Circle, with the intention to “discuss cryptoassets.”

Meanwhile, Sunak met with Sequoia managing partner Douglas Leone to “discuss the UK’s Venture Capital sector.”

Source The Block

With $655M to invest, Portage Ventures still convinced fintech Is the place to be

With fintech startups logging some of the steepest valuation cuts of any major sector, now might seem an unusual time to scale up investment.

Portage Ventures, however, is barreling ahead.

The Toronto-headquartered firm announced today that it has closed on $655 million for its third flagship fund, its largest to date. Partners plan to invest in seed through Series C stage fintech in the United States, Europe and Canada.

So far this year, Portage is on track to exceed its 2021 deal pace, with 15 known rounds since January, compared to 19 in all of last year, per Crunchbase. Partners in the firm said they held back on some dealmaking last year as valuations surged.

“We did deploy in 2021, but I wouldn’t say significantly because it was quite frothy,” said Adam Felesky, the firm’s co-founder and CEO. “2022 is looking a lot more interesting.”

Portage’s largest lead investment this year was a $50 million Series C for TheGuarantors, a New York startup that offers rent guarantees and security deposit alternatives for prospective tenants in competitive rental markets. Most recently, the firm backed early rounds for Orus, a French insurtech startup, and Sanlo,a fintech focused on game and app developers.

As valuations come down from peaks, Portage partners said they will be more focused on adding new names to the portfolio. Last year, by contrast, Felesky said, a core focus was on seeing existing portfolio companies raise capital in the up cycle, with the result that most have at least a couple years’ runway.

Growing portfolio

Looking at Portage’s existing portfolio, the firm appears to have gone along with bullish calls in some hot areas of the fintech universe. There is a fair amount of insurtech in the portfolio, for instance, as well as a bit of crypto and blockchain, including a January lead round for DeFi startup Conduit.

However, the firm also stayed away from some of the formerly frothiest corners of fintech. In particular, its portfolio doesn’t lean to consumer lending or mortgage finance upstarts. Portage Partner Stephanie Choo said this was a deliberate decision based on the historical risks associated with lending at the top of a market cycle.

Going forward, Choo said the expectation is that Portage will invest close to two-thirds of its new fund in North America and another third in Europe. Given that they are going at relatively early stages, there’s not too much worry for the moment about the lackluster late-stage and pre-IPO funding market, nor the near-term paucity of public market fintech exits.

Even at the later stages of fintech, Felesky observes: “There isn’t panic.” At least not yet.

Source Crunchbase

Consumers’ desire for a super app

- Global consumers already want a super app: Approximately seven in 10 respondents report interest in such a solution.

Driven by a desire for convenience and financial wellness — the latter especially among Generation Z consumers — most survey respondents have at least some interest in a solution that would allow them to manage payments and other everyday activities through a centralized tool. Overall, approximately one-quarter are “very” or “extremely” interested in a super app, and consumers who have fully integrated connective technology into their lives are approximately twice as likely as other respondents to exhibit this high interest.

- Consumers desire a super app, particularly for convenience and security.

A core advantage of a super app is its elegance: such a solution takes what once was a tangled thread pile of apps, websites and channels and spools it into a single, centralized experience. Nearly four in 10 consumers who are “slightly” or “somewhat” interested in a super app highly value the benefit of minimizing the risk of losing sensitive information, and among highly interested consumers, that share rises to 57%.

- A potential impediment to super app adoption globally is that respondents have concerns about a super app’s role in their future data security and privacy.

While consumers are very interested in the convenience a super app offers, they are concerned about data security and their ability to limit data sharing with third parties according to their preferences. We found that 45% of respondents report being “very worried” about their data security in case of hacking. Nearly 40% of consumers also have concerns about the amount of data they might have to share with a super app.

- A provider’s reputation for trustworthiness and security is key to alleviating international consumers’ worries about sharing their data with a super app.

Consumer perception of an institution’s overall reputation and trustworthiness for data security-related issues are the two most important factors influencing consumer trust in a super app. While consumers may trust a potential super app provider, they also have concerns about their ability to manage their data once they have integrated a super app into their lives.

- Consumers are most willing to use super apps in areas of their lives in which they are most comfortable with technology: common purchasing venues and standard banking actions.

Across all demographics, respondents are most interested in using a super app for grocery, restaurant and entertainment purchases. Specific personas of consumers heavily correlate with certain super app integrations — for example, more than 90% of consumers primarily motivated by convenience would integrate a super app into any given area of their lives.


Personalization as the Foundation of Trust

While consumers want their most trusted financial providers to provide integrated experiences, trust is increasingly associated with the ability to use learned insights to create intuitive engagements and experiences. As a result, banks and credit unions will need to build the data infrastructure and analytics capabilities that can leverage the value of internal data and external data across the entire customer journey.

Personalization must go beyond the functional or channel level however. More than ever, hyper-personalization and transparency is expected based on personal needs, channel use, timing and offers. “Help customers understand what you’re going to use data for, why they’re seeing a specific ad, and why they’re getting a particular offer,” states Bruce Temkin, experience management visionary. “Give them a transparent view into what data you’re using and why you’re using it that way.”

Personalization Powers Super Apps

Firms like Amazon, Google, Apple and other digital giants like PayPal and The Block (formerly Square), have expanded their capabilities and range of offerings with a mission to capture more of a consumer’s time and attention. Each expansion of functionality — including the addition of financial services — has been done to increase the engagement potential of the platform. Instead of using multiple apps, consumers want to be able to message friends, make payments, transfer money, get credit, and invest all with a single app. Expansion of services well beyond this is also possible.

Using transaction and behavioral insights as the foundation, super apps have the ability to seamlessly integrate processes and personalize experiences more than was possible in the past. The key is to provide added value to the consumer while making banking, shopping, and communicating easier.

Beyond simplicity, the promise of a well-designed super app is to be the ‘GPS of financial services’, providing real-time offers and recommendations to help the customer reach their financial destination without leaving the app’s ecosystem. Becoming an aggregator of financial and non-financial services under one roof, however, requires data, analytics, and the creation of value that differentiates the solution compared to the competition.

There is a correlation between the potential of super-apps and the concept of open banking. Both depend on using customer insights from multiple sources to determine customer needs and deliver financial solutions. The scope of expansion provides both promise and challenges.

Source The Financial Brand

UK fintech investment up 24%

The UK’s fintech scene remains robust in spite of the global economic slowdown, with investment rising by almost a quarter from the previous year.

That’s according to new data released by Innovate Finance, the industry body representing the UK’s fintech sector. UK fintech investment grew to US$9.1bn in the first half of this year — a 24% increase from the same period in 2021 — compared to flat investment growth globally.

Across the whole of Europe, US$17.6bn was invested into European fintechs spread across more than 7,000 different deals. That represents a 10% increase compared to the same period last year, although Innovate Finance notes that this growth is being driven by the UK’s continued buoyancy. Investment in European fintech excluding the UK would have been 2% lower year-on-year, Innovate Finance says.

The data is important because the UK is the second biggest fintech destination globally, after the US, and the biggest fintech hub in Europe. The figures suggest that the sector is well-placed to fend off macroeconomic uncertainty, with inflation rates spiralling and global supply chains being interrupted.

‘Critical’ that UK fintech maintains its momentum

Janine Hirt, CEO of Innovate Finance, says: “It is fantastic to see that UK fintechs are continuing to secure outstanding levels of investment — this is a testament to the strength of our ecosystem, including our innovative entrepreneurs and founders, strong and diverse talent pool, and a supportive government and regulatory framework.

US remains world’s largest fintech hotspot

The robustness of the UK’s fintech sector leaves it way out ahead in the European fintech charts. The UK secured more than US$9bn’s worth of fintech investment in the first half of the year, compared to Germany, Europe’s second biggest fintech destination, on US$2.4bn. France placed third with US$2.3bn’s worth of investment, followed by Sweden and Italy with around US$600mn apiece.

Away from Europe, total fintech investment globally for the first half of the year was estimated at US$59bn, remaining relatively flat year-on-year. Major markets like the US, the Netherlands, China and South Korea all saw a material slowdown in fintech investment.

Nevertheless, the US held its position as the largest fintech destination by investment, raising US$25bn in fintech capital — almost three times as much as the UK. The US is still home to some of fintech’s largest companies, with the San Francisco Bay Area and Silicon Valley boasting the likes of Brex, Stripe and Chime.

Source Fintech Magazine & Innovate Finance

Crypto crime

The crypto security space will expand to address rising cyber crime as hackers continue to evolve in their tactics.

Though illicit activity reportedly accounts for less than 1% of crypto transactions, reports of crypto crimes have risen an average of 312% every year since 2016. These include hackers stealing coins from investors, individuals falling for crypto investing-related scams, and more.

In August 2021, for example, hackers stole over $600M worth of tokens from decentralized finance (DeFi) platform Poly Network in what was considered the biggest crypto heist to date. Though the funds were ultimately recovered, the attack demonstrates how costly vulnerabilities in crypto security can be — and it’s not the only instance.

More recently, in December 2021, cybercriminals stole $150M in cryptocurrency from exchange BitMart as a result of a security breach involving stolen private keys. Individuals with large amounts of crypto have also fallen victim to hackers. In November 2021, a teenager was arrested for the theft of $46M CAD — the largest known cryptocurrency theft from a single person.

Another way cyber criminals are taking advantage of cryptocurrency is as ransom to pay off ransomware attacks. While cash continues to be the first choice for criminals, that could change as crypto becomes more widely used and accepted. Because cryptocurrency transactions don’t involve intermediaries like banks and do not carry personally identifying information, hackers can extort millions of dollars while remaining basically anonymous.

Further, crypto payments are permanent. Like cash, once the money is sent, the sender usually can’t get it back unless the recipient returns it. Hackers can also “launder” the money by transferring it through multiple digital wallets so that it’s nearly impossible to trace. In short, it’s the perfect crime.

Companies in the cybersecurity space focusing on crypto-specific solutions include:

Base Zero, which aims to help financial institutions safely self-custody client crypto assets.

CryptoPolice, which is working to create a decentralized crypto scam verification system.

PhishFort, which provides an anti-phishing solution for crypto companies.

Crypto exchanges like Coinbase are also investing in security solutions to protect themselves and their customers. The crypto giant participated in a $23M seed round to security platform Forta in September 2021.

Financial services companies are jumping in as they increasingly embrace cryptocurrency. In 2021, for example, Mastercard purchased cryptocurrency AML compliance company CipherTrace, a Mastercard company and PayPal acquired cryptocurrency security company Curv.

But many of these security measures focus on protecting crypto exchanges, which leaves personal wallets vulnerable to theft.

Source CB Insights

The 10 Biggest Fintech Companies In America In 2022

It’s turning into a sobering year for fintech. After a carnival of new unicorns and mega-funding rounds in 2021, private fintech companies are now scrambling to cut costs and stretch out the funds they have to avoid needing to raise additional money at a lower valuation (known as a “down round”). Their fear is well grounded.

Still, it’s been a heck of a ride, fueled in part by the pandemic-accelerated shift towards so much shopping and banking online. In February 2020, just before Covid-19 hit the U.S, the average valuation of America’s ten biggest private fintech companies was $9 billion, and the cutoff to make the list was $3.7 billion.

For our 2022 list, those numbers have more than tripled–to an average value of $27.7 billion and a cutoff of $12 billion. Future funding rounds will show whether these record valuations reflect an about-to-burst bubble or are, perhaps, sustainable after a pause.

Source Forbes



Sam Boboev

Fintech fan with product and technology background. Subscribe