Uncle Sean's Update - 2/18/22

Happy Friday!!!
 
FinTech, Banking, Data – it’s what we do!!!  Here is the Uncle Sean Update for 2/18/22:
 

• Special shout out to John Lingvall and the California Community Banking Network as the next community bank state association to offer access to the Bankers Helping Bankers platform for their member banks in California!!!  Continuing to make a difference in community banking and technology – I am extremely proud to be a part of this movement!!!!   

 

• BlockFI to pay $100M in settlement with SEC and 32 states over charges related to its crypto lending product (BlockFI Interest Accounts) being an unregistered security.  BlockFI is now applying with the SEC via confidential S-1 registration to offer BlockFI Yield product which is expected to be “the first SEC registered crypto interest-bearing security” – effectively replacing the old BlockFI Interest Accounts.  Here is the actual SEC Press Release regarding crypto lending platforms. 
  • Additionally, the SEC issued an Investor Bulletin on Crypto Asset Interest-bearing Accounts clarifying that these are not the same as bank or CU interest-bearing accounts, are not as safe, and are not insured by the FDIC, NCUA, or SIPC.
  • This is all pretty big news related to crypto companies that promise consumers higher interest rates by lending out their tokens.  1. The SEC has clearly drawn a line in the sand with an intent to protect investors; and 2. They are providing a roadmap for success (register as a security) - hopefully.  
    • Recall a few months back when Coinbase decided to ditch their Coinbase Lend product (in the US only anyway) after a rather public SEC disagreement with the SEC threatening to litigate on the basis of an unregistered security offering.  Allegedly the SEC is also looking at Celsius, Gemini, and Voyager regarding the same.

 

• Yotta joins the list of fintech challengers to offer crypto savings account touting 4% APY.  By now you know how this works – they transfer the funds to a qualified custodian and convert US dollars to USDC stablecoin issued by Circle and loan out the crypto-assets to generate yield.  Hmmm…  I wonder if Yotta and Circle are paying attention to the SEC / BlockFI scenario above???

 

• FIS continues to make headlines.  This week it’s their acquisition of Payrix which continues their strategy of expanding in the payments space.  Payrix is an embedded payments company specifically in the SaaS sector and also provides onboarding, compliance, billing and settlement – thus giving FIS instant market penetration in the SaaS / SMB embedded finance arena.

 

• Mastercard selects 16 companies to participate in the Mastercard Send Partner Program for secure real-time digital payments.  Participants include Adyen, AptPay, Checkout.com, Cognizant, Fenige, Green Dot, Ingo Money, KyckGlobal, Opentech, OpenText, Oracle, PayPal, Stripe, TabaPay, Transcard, and Verestro – spanning the U.S., Europe, and Asia Pacific with more to be announced throughout 2022.  More on Mastercard Send here.

 

• MOCA Financial teams up with Atomic to provide automated direct deposit acquisition to MOCA clients.  Uncle Sean loves seeing this as both of these FI FinTech firms are doing great things to support community banking.  NICE!!!!

 

• Piermont Bank (rapidly rising sponsor bank) partners with Unit giving Piermont access to Unit’s Banking-as-a-Service infrastructure support while Unit gains access to a bank charter as a sponsor institution.

 

• GreenBox POS (Nasdaq: GBOX) partners up with Cross River to accelerate GreenBox’s Banking-as-a-Service initiative allowing GreenBox to “open custodial, reserve, and operating accounts for their customers, who can manage their accounts with a full suite of tools, all powered by Cross River.”  This gets really cool considering GreenBox blockchain payment solutions for business and Cross River Crypto solutions.

 

• Unifimoney inks a deal with Shop Your Way (SYW) to allow SYW members to redeem points to “purchase investable assets, including over 70 cryptocurrencies, thousands of equities, exchange-traded funds (ETFs) and precious metals” on the Unifimoney platform.  Unifimoney also gains an undisclosed amount of growth capital as part of the announcement to further innovation of the Unifimoney digital wealth management solution for Community Banks and Credit Unions.
  • Check out these numbers – millions of SYW members “spend more than $9 billion and earn $50 million of rewards annually.”  WOWZA!!!

 

• Klarna’s debit card finally opens up in the U.S. in "waitlist" mode.  Uncle Sean has been tracking this since they announced the “pay now” option and debit card initiative back in November – we now know this is a Visa debit card issued by WebBank.
  • Also worth noting in the press release, Klarna states, “over the past year, Klarna’s US customer base has grown by over 70%, reaching 25 million consumers.”  That’s stout.

 

• Widely speculated for a few months now, MoneyGram International, Inc. (Nasdaq: MGI) announced an agreement to be acquired by Madison Dearborn Partners, LLC in an all cash deal valued at $1.8B representing $11.00 per share.

 

• So last week we talked about the FBI issuing their Public Service Announcement regarding rapid increase in smartphone SIM swapping fraud.  This week, CNBC Investigations has a great report on fraudsters using bots to drain crypto accounts targeting customers of mobile app crypto exchanges and two-factor (2FA) authentication code. 
  • Do yourself a favor and watch this 4 minute video - CNBC 2FA and OTP bot crypto fraud report specifically calling out Coinbase.
    • “…fraudsters routinely brag on Telegram about how well the bots have worked, netting for each user thousands or hundreds of thousands of dollars in crypto. The cost of the bots ranges from $100 a month to $4,000 for a lifetime subscription.”

 

• Meanwhile, per this press release, the DOJ has tapped former prosecutor and Senior Counsel Eun Young Choi as the first Director to lead the previously announced National Cryptocurrency Enforcement Team (NCET) to tackle complex investigations and prosecutions of “criminal use of digital assets, with a particular focus on virtual currency exchanges, mixing and tumbling services, infrastructure providers, and other entities that are enabling the misuse of cryptocurrency and related technologies to commit or facilitate criminal activity.”
  • Additionally, as part of that same DOJ press release, the FBI has created a new Virtual Asset Exploitation Unit comprised of “a specialized team of cryptocurrency experts dedicated to providing analysis, support, and training across the FBI.”
  • I’m no expert in law enforcement – but it sure sounds like they are getting serious!!!

 

• Notable FinTech funding for the week:
  • Securonix (global security analytics and operations management platform for advanced cyber threats) raised a massive $1B+ in growth equity in a private fundraising round. 
  • RapidRatings (supplier, credit, and third party risk platform) raised $200M in growth equity financing.
    • Uncle Sean is an old school finance and counter-party risk superfreak – I love that stuff!!!!
  • SecureThings (automotive mobility cybersecurity) raised $3.5M in pre-Series A. 
    • This is very interesting to me when you consider the software technology and capability that is growing within automobiles and the broader connected vehicle market.  Besides the obvious driver assistance systems (forward collision / automatic braking, lane and steering assist, etc.), think cellular (don’t forget about mobile wallets and payments once connected – i.e. Apple CarPlay and iPhones as card readers), Bluetooth, GPS and potential impact to public transportation.  Then expand those risks to the commercial side involving supply chains and the rapid growth in commercial autonomous trucking / delivery (critical infrastructure anyone???)…
  • Swell Financial (challenger fintech app) raised $10M in Series A funding ahead of formal launch expected summer 2022.  Swell offers a personal line of credit and a Mastercard debit card with up to 1.25% rewards (issued by Central Pacific Bank).  Future products include Swell Crypto and Swell Compound (private market investment opportunities).
  • Rainbow (Ethereum crypto wallet) raised $18M in Series A round to simplify the user experience of mobile crypto wallets.
  • Tilled (PayFac-as-a-Service) picks up $11M in extended Series A bringing their total A round to $22M as the company looks to triple their workforce to 150 employees.
  • Paywallet (API based, payroll-linked verification and remittance ecosystem) raised $8.8M in Series A bringing total funding to $14M.

 
 
Random Uncle Sean Stuff:

• Aunt Patty and I spent a few hours at 12 Fox Beer Co. last weekend – GREAT PLACE!  If you find yourself in Dripping Springs, TX be sure to stop by for their open air venue (kid and dog friendly), craft beers, and great food.  We had pulled pork nachos from a whole hog they smoked that day; and it was nothing short of AMAZING!!!!
• Taking a break from all the Super Bowl crypto ads…..  I admit – it was cool seeing the new E*Trade Baby commercial (now from Morgan Stanley) make a comeback in the Super Bowl ad space.  For those fortunate enough to be so young as to not remember the original ads (started back in 2008), here are some of Uncle Sean’s old E-Trade Baby favorites:
  • 2008 Inaugural Spitup, 2009 Shankapotomus, 2010 Milkaholic (Lindsay Lohan actually sued over this one – LOL) , 2010 Time Out, 2010 Mellody Hobson interview, and my all-time favorite - 2011 Shocked Face.
• Be careful of recurring online scams out there – for Valentine's Day I ordered Aunt Patty some jewelry but they sent me a new fishing rod (again)!!!  😊

 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.