2024-04-05 10:11

NEW YORK, April 5 (Reuters) - A jury in Manhattan found Singapore-based Terraform Labs and its founder Do Kwon liable on civil fraud charges on Friday, agreeing with the U.S. Securities and Exchange Commission that they misled investors before their stablecoin's 2022 collapse shocked cryptocurrency markets. The jury delivered the verdict in federal court in the two-week trial after hearing closing arguments earlier in the day. The SEC accused the company and Kwon of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain a value of $1. The regulator also accused them of falsely claiming Terraform's blockchain was used in a popular Korean mobile payment app. Kwon designed TerraUSD and Luna, a more traditional token that fluctuated in value but was closely linked to TerraUSD. The SEC has estimated that investors lost more than $40 billion on the two tokens combined when the TerraUSD peg to the dollar could not be maintained in May 2022. The SEC is seeking civil financial penalties and orders barring Kwon and Terraform from the securities industry. U.S. District Judge Jed Rakoff will consider penalties in the coming weeks after hearing from the SEC and the defendants. A spokesperson for Terraform said the company is disappointed by the verdict and weighing its options. "We continue to maintain that the SEC does not have the legal authority to bring this case at all," the spokesperson added. SEC Division of Enforcement Director Gurbir Grewal said the agency is pleased with the verdict. "For all of crypto's promises, the lack of registration and compliance have very real consequences for real people," Grewal said, adding, "it is high time for the crypto markets to come into compliance." A lawyer for Kwon declined to comment. The collapse of TerraUSD and Luna dragged down the value of other cryptocurrencies, including bitcoin, and caused wider havoc in the crypto market, leading several companies to file for bankruptcy in 2022. Terraform filed for bankruptcy protection in January. Kwon, who was arrested in Montenegro in March 2023, did not attend the trial, which began on March 25. Both the United States and South Korea, where Kwon is a citizen, have sought his extradition on criminal charges. SEC attorney Laura Meehan told jurors during closing arguments that the platform's success story was "built on lies." "If you swing big and you miss, and you don't tell people that you came up short, that is fraud," Meehan said. The SEC has said Kwon and Terraform secretly arranged to have a third party purchase large amounts of TerraUSD to prop up the price when the stablecoin slipped from its peg a year earlier, in May 2021. Kwon falsely attributed the recovery to the reliability of TerraUSD's algorithms, according to the regulator. The SEC also has said Kwon and Terraform falsely touted Terraform's blockchain as being used to process and settle transactions between customers and merchants on the Chai payment app. Louis Pellegrino, an attorney for Terraform, said in closing arguments that the SEC's case relied on statements taken out of context and that Terraform and Kwon had been truthful about their products and how they worked, even when they failed. "Terraform is still out there, trying to rebuild and make purchasers whole," Pellegrino said. Earlier in the case, Terraform argued that securities laws did not apply to the cryptocurrencies it developed. Rakoff rejected that argument in December, ruling that Terraform unlawfully sold digital assets without registering them as securities. After a final judgment in the case, Terraform will be able to challenge that ruling on appeal. Jumpstart your morning with the latest legal news delivered straight to your inbox from The Daily Docket newsletter. Sign up here. https://www.reuters.com/legal/terraform-labs-make-final-pitch-jury-civil-fraud-trial-wraps-2024-04-05/

2024-04-05 10:04

A look at the day ahead in U.S. and global markets by Alun John. It is an unusual start to a first Friday of the month as, with Brent crude oil above $90 a barrel and driving a risk-off tone in markets around the world, investors are not solely thinking about U.S. non-farm payrolls. Let's not overstate it. They still are thinking a lot about the always-crucial jobs data, due at 0830 ET (1330 GMT), but after all three main U.S. stock indexes fell by over 1% on Thursday, while Treasuries rallied, it is not the only thing on their minds. Overnight chin-stroking has pinned the blame for the risk-off tone on Brent crude, which settled at over $90 dollars a barrel on Thursday for the first time since October on developments in the Middle East. It is holding above that level in the European morning. Israel is bracing for the possibility of a retaliatory attack for Monday's presumed Israeli air strike on an Iranian embassy. Israel has not claimed responsibility for the attack on Iran's embassy compound in Syria, which killed high-ranking Iranian military personnel. Asian and European shares both traded around 1% lower on Friday. S&P 500, Nasdaq and Dow Jones futures are all up about 0.2% suggesting a more stable open, though the S&P 500 is still down 2% on the week, which, if sustained, would be its biggest drop since October. Also taking some blame for Thursday's fall were hawkish remarks from policymakers including Minneapolis Federal Reserve Bank President Neel Kashkari who said that at the Fed's meeting last month he penciled in two interest rate cuts this year but if inflation continues to stall, none may be required by year end. High oil prices won't help the inflation fight. Nonetheless, the 10-year Treasury yield dropped nearly 5 basis points on the day, as the geopolitical jitters sent investors to the safe-haven asset. PAYROLLS And then there are non-farm payrolls, which are expected to show U.S. jobs growth slowed moderately in March to 200,000 new jobs, while wage gains remained elevated. As well as March's number, investors are also watching out for revisions to previous month's data, as past changes have been significant - Treasury yields fell a month ago after February's jobs report, partly because it revised down January's stonking figure of 353,000 jobs to 229,000. Friday's data is also expected to show the unemployment rate remaining below 4% for 26 straight months, the longest such stretch since the late 1960s. The data will be important as it comes at a time when investors getting a bit jittery about whether the Federal Reserve will cut rates in June. We've seen this movie before, as both March and May were once seen as the Fed's start date. Friday's data and next week's U.S. CPI will help decide whether June will go the same way. This could cause some ructions in markets, particularly in Japan where authorities' threats to intervene directly in currency markets to prop up the weak yen have left the dollar unable to break past the 152-yen level, which traders see as something of a line in the sand. "The risk is that today’s U.S. payrolls report pushes USD/JPY sharply higher which in turn triggers an actual intervention from Japan’s Ministry of Finance," said currency analysts at Commonwealth Bank of Australia in a note. Key developments that should provide more direction to U.S. markets later on Friday: * U.S. March non-farm payrolls * Canada March jobs data Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-04-05/

2024-04-05 08:48

April 5 (Reuters) - Asian stocks saw robust demand from overseas investors in March, marking their best quarter for foreign inflows in over three years, amid prospects of accommodative monetary policies from major central banks and positive Chinese economic indicators. Data from stock exchanges across India, South Korea, Taiwan, Indonesia, the Philippines, Thailand, and Vietnam showed that foreigners bought a net $8.53 billion of regional equities last month. For the quarter, inflows totalled $18.57 billion – the highest since December 2020. Last month, the Swiss National Bank surprised markets with an early rate cut, while the Federal Reserve maintained the outlook of three cuts in 2024, bolstering investor appetite. Meanwhile, China reported strong factory output and exports for the January-February period, signalling a revival in regional trade. India stood out, drawing about $4.24 billion in foreign capital, the largest in three months. However, Indian equities received a cumulative foreign inflows of only $1.3 billion in the first quarter of the year, lower than the average $3.08 billion recorded in the first quarters of the past three election years. "India is the darling of EM markets with its weight in the MSCI global index continuing to increase (only second to China now)," said Alicia Garcia Herrero, chief economist for the Asia Pacific at Natixis. "This situation is likely to continue in April as Narendra Modi is expected to win India’s elections without major issues." Overseas investors also pumped in about $3.82 billion, $1.61 billion and $505 million, respectively, into South Korean, Taiwanese and Indonesian stocks last month. "The traction towards AI-related companies continued to play out in March, which paved the way for net foreign inflows to sustain," said Yeap Jun Rong, market strategist at IG. Jason Lui, head of APAC equity and derivative strategy at BNP Paribas, pointed to the ongoing memory recovery cycle and new AI-related opportunities following Nvidia's (NVDA.O) , opens new tab latest chip launch as key factors driving foreign investment, especially in Korean tech. Meanwhile, equity markets in Thai, Vietnam and the Philippines witnessed outflows, amounting to $1.15 billion, $452 million and $46 million, respectively. Get a look at the day ahead in Asian and global markets with the Morning Bid Asia newsletter. Sign up here. https://www.reuters.com/markets/asia/foreign-inflows-asian-stocks-surge-march-rate-cut-prospects-china-data-2024-04-05/

2024-04-05 08:12

April 5 (Reuters) - Markets are looking for confirmation from the European Central Bank that a June rate cut is really coming, though oil is on the rise again, clouding the inflation picture - and giving policy makers in Canada, New Zealand and Korea food for thought. China gears up to release a deluge of key data and U.S. banks kick off the earnings season. Here's your week ahead primer in world markets from Yoruk Bahceli in Amsterdam, Lewis Krauskopf in New York, Kevin Buckland in Tokyo, and Dhara Ranasinghe and Amanda Cooper in London. 1/ SEEKING THE GREEN LIGHT The European Central Bank meets on Thursday in what is likely the final hurdle before it starts cutting interest rates. Traders see a nearly 100% chance of a 25 basis-point cut in June, so a green light is crucial to uphold market sentiment. A flurry of policymakers have explicitly signalled June as the date of a first move. Even Austria's uber-hawk governor Robert Holzmann is not opposed. Data showing inflation falling unexpectedly to 2.4% in March should give the ECB further confidence. So the ECB is very likely to signal rate cuts are coming. The question is how explicit policymakers will be about June, given they want to review first-quarter wage growth figures that will be released in May. 2/ A CRUDE CIRCLE Rising geopolitical turmoil and supply disruption in a number of production hot-spots are pushing oil prices back towards $90 a barrel for the first time in months. Central banks tend to focus on so-called core measures of inflation that strip out energy and food prices. But for businesses on the ground, there's no taking the crude price out of the equation. And the assumption that the U.S. Fed might cut rates by less than its peers has pushed the dollar up almost across the board this year. That in turn has undermined the purchasing power of big buyers in China, Japan, India and South Korea, raising their energy import bills. All this complicates life for those countries' monetary authorities, which have either intervened, or threatened to intervene, to prop up their currencies to prevent a vicious-circle type of pickup in inflation. 3/ BANK LINE UP Quarterly reports from major banks will soon kick off earnings season. Following strong fourth-quarter results to end-2023, S&P 500 companies are expected to post a 5% year-on-year rise in first-quarter earnings, according to LSEG IBES. Investors are counting on robust corporate profit this year to support rising valuations as the stock market has rallied to record highs. The S&P 500's price-to-earnings ratio is hovering at its highest in about two years. JPMorgan Chase, Citigroup and Wells Fargo all report results on April 12. Delta Air Lines and BlackRock are among other notable companies set to provide quarterly updates in the days ahead. Focus is also on Wednesday's March inflation data after numbers out on Friday showed U.S. employers hired far more workers than expected last month and lifted wages at a steady clip - potentially delaying anticipated rate cuts this year. 4/ RED SHOOTS Promising signs of a long-awaited turnaround in China's economy keep building, helping keep stocks close to multi-month highs into a two-day public holiday from Thursday. The Shanghai Composite recently enjoyed its biggest rally in a month after data showed the fastest expansion in manufacturing for more than a year. That was followed by even more hopeful numbers showing an acceleration in services activity, hinting that consumer animal spirits might finally be stirring. The coming days bring a parade of fresh indicators that could support or subvert that optimism: consumer and producer price indexes on Thursday and trade data on Friday. These will be important litmus tests of consumer appetite. The consumer price index meanwhile will be key since the first rise for six months in the previous batch of data is what helped Chinese stocks scale post-November peaks, though figures were potentially skewed by Lunar New Year holidays. 5/ DELICATE Rate setters elsewhere in the world are sandwiching the ECB: Canada and New Zealand meet on Wednesday, Singapore and South Korea on Friday. No rate changes anticipated, but traders want a sense of when rate cuts will come and how policymakers will navigate a delicate balancing act. Markets have trimmed bets for a June Canada rate cut after news the economy grew by 0.6% in January, its fastest growth rate in a year. New Zealand is in technical recession but with inflation still above 4.5%, easing is not expected until August. Singapore is grappling with sticky inflation and the risk of elevated price pressures for longer as recent Taylor Swift concerts fuelled service-sector price rises. And Korea's central bank said in February it was too early to pivot with the path for inflation, at 3.1%, uncertain. Markets only bet on it cutting rates late this year. Make sense of the latest trends in financial markets with the Global Investor newsletter. Sign up here. https://www.reuters.com/business/take-five/global-markets-themes-2024-04-05/

2024-04-05 08:03

LONDON, April 5 (Reuters) - Tech stocks saw inflows of $18.6 billion in the first quarter of the year, the third largest quarterly inflow on record, and also attracted funds in the past week, along with large flows to cash and bonds, Bank of America Global Research said Friday. Cash equivalent money market funds saw $81.8 billion of inflows in the week to Wednesday, the largest in 13 weeks, BofA said in its weekly roundup of flows in and out of world markets, which cites data from EPFR. The bank attributed that inflow to quarter-end effects. There were $14.2 billion of inflows to stocks in general, with $1.1 billion to tech specifically, in the week and $13.4 billion to bonds, with $9.7 billion to investment grade corporate debt BofA said. The data does not include Thursday, which saw all three major U.S. indexes fall around 1%, dragged down by elevated oil prices on the back of tensions in the Middle East, and leaving the S&P heading for its biggest weekly fall since October. (.SPX) , opens new tab That weekly milestone is, in part, a reflection of the relentlessness with which U.S. stocks rose in the first quarter, with tech names to the fore, helping major indices to repeatedly hit new record highs. As for flows to cash, BofA note that in the past five Fed rate cutting cycles, flows to money market funds rose in anticipation of the first cut, slowed meaningfully once the Fed began cutting, and outflows started 12 months into the cutting cycle. "Cash as a percentage of (assets under management) will fall into rate cuts as cash underperforms other assets," the analysts wrote. Current market pricing suggests roughly a two-thirds chance of the Fed cutting rates by its June meeting, according to CME's Fedwatch tool. The Technology Roundup newsletter brings the latest news and trends straight to your inbox. Sign up here. https://www.reuters.com/technology/global-markets-flows-bofa-urgent-2024-04-05/

2024-04-05 08:01

MUMBAI, April 5 (Reuters) - The Reserve Bank of India (RBI) plans to use non-bank payment system operators, including third-party payment app providers, to make the e-rupee more accessible to retail users, it said on Friday. The RBI piloted its central bank digital currency (CBDC), which uses distributed-ledger technology, in 2023 but only allowed banks to offer these tokens, which led to subdued transaction volumes. It has now proposed that non-bank payment system operators, which include third-party payment app providers like PhonePe, Google Pay and Paytm, offer the e-rupee through CBDC wallets. "This is expected to enhance access and expand choices available to users apart from testing the resiliency of the CBDC platform to handle multi-channel transactions," the RBI said in its Statement on Developmental and Regulatory Policies. The necessary changes will be made to the system to facilitate this, the central bank added. The RBI has made the change to help lift transaction volumes for the retail CBDC, a source familiar with the pilot said. The process is still in the early stages and the third-party apps will have to seek the RBI's approval to offer CBDC wallets, the source added. The source did not wish to be named as he was not authorised to speak with the media. The RBI did not immediately respond to an email seeking comment. Currently, there are 4.6 million retail users and 400,000 merchants using the e-rupee, RBI Deputy Governor T. Rabi Sankar said in a post-policy press conference. To boost the e-rupee's transactions, the RBI introduced new features and widened its usage, including linking it to Unified Payment Interface (UPI), the country's popular real-time payments system, and introducing programmability, which enables targeted cash transfers, such as to farmers. These alternate use cases helped boost transactions, Sankar said. Indian banks disbursed some employee benefits through the e-rupee in December, helping the RBI meet its target of one million daily transactions by end-2023, Reuters reported in January. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/india-broaden-e-rupee-distribution-beyond-banks-boost-retail-use-cenbank-says-2024-04-05/