Market stories

Binance

Binance’s crypto dominance is under threat after the loss of founder and CEO Zhao. Changpeng Zhao pleaded guilty to breaking US anti-money laundering laws and resigned as the chief executive of Binance. He will pay a $50 million fine and faces a possible prison term. As part of a $4.3 billion deal to resolve a years-long US investigation, Binance has agreed to pay a settlement to stop the criminal investigation against the company.

The US compliance squeeze means new chief executive Richard Teng will be hard-pressed to keep the exchange competitive. Hedge funds are also reducing their exposure to the exchange.

New leader in the world’s market cap competition

Apple was the first firm to reach USD 1 trillion benchmark in August 2018 becoming the largest company based on the market capitalisation. However, as of November 26th, 2023, the market capitalization of Microsoft has claimed the crown reaching $2.57 trillion with Apple currently having the market cap of $2.49 trillion.

Focus market story: OpenAI coup

In case you never heard of OpenAI

OpenAI is an American artificial intelligence (AI) research organization consisting of the non-profit OpenAI, Inc. registered in Delaware and its for-profit subsidiary OpenAI Global, LLC.

OpenAI researches artificial intelligence with the declared intention of developing “safe and beneficial” artificial general intelligence, which it defines as “highly autonomous systems that outperform humans at most economically valuable work”. OpenAI has developed several AI models, including GPT-3, DALL·E, and Codex, which have been used in various applications such as natural language processing, image generation, and code generation. OpenAI has also partnered with several companies, including Microsoft, to develop AI technologies and applications.

Setting the stage for the story

The Open AI has consistently been making it the top of news stories since the launch of ChatGPT. However, this week’s developments can lead to an outstanding Hollywood movie scenario with lots of twists.

Staff revolt

The announcement led to an extensive advocacy for Sam Altman, which included the CEO of the largest stakeholder in OpenAI – Microsoft, who has not been informed on this decision. On top of that, a couple of senior researchers has followed Sam and announced that they are leaving the firm. They are important stakeholders; however, it was not enough to overturn the decision. In an unexpected turn of events, the employees of OpenAI (770 employees including Mira Murati) have threatened to leave the firm en masse unless Brockman is reinstated. The letter has specifically stated the following, extremely painful message to the board (signed by Sutskever and three more board members in addition to the employees):

We are unable to work for or with people that lack competence, judgment and care for our mission and employees.

Letter to the board from the OpenAI employees

In respect to overall support to Altman, the following reasons were supporting the staff’s decision to revolt:

• Loyalty and respect: The staff admired Altman and Brockman for their vision, leadership, and achievements in advancing AI research and development. They felt betrayed by the board’s decision to oust them without proper explanation or consultation.
• Mission and values: The staff believed that Altman and Brockman were committed to OpenAI’s mission of creating and ensuring the safe and beneficial use of artificial general intelligence. They accused the board of jeopardizing the company’s work and undermining its mission and values.
• Competence and judgment: The staff questioned the board’s competence and judgment in overseeing OpenAI. They claimed that the board lacked transparency, accountability, and care for the employees and the AI community. They also alleged that the board had hidden motives and conflicts of interest.
• Opportunity and innovation: The staff saw an opportunity to join Altman and Brockman at Microsoft, where they would have more resources, support, and freedom to pursue their AI research and innovation. They also hoped that Altman and Brockman would continue to collaborate with OpenAI and advance the AI field.

How it ended if it did

Prior to the layoff of Altman OpenAI is rumoured to work on the new, “Q*” model that would be able to solve complex computational problems with the unprecedented precision that would represent a breakthrough in the technology. This could be an additional reason for the way staff and senior employees have reacted this way.

Eventually, it was announced that Sam Altman is to be back to the firm in his CEO role and the entire ‘coup’ by the board has led to the board members who voted for Sam’s removal are to be gone and the new board is to be re-elected. Quite a sudden turn in the career for some of the board members.

Market moves

• US Dollar: Investors have been dumping the dollar in a bet that US rates have peaked. The asset managers sold the greenback at the fastest pace in a year as the market prices in more rate cuts next year, which should not be surprising as we are at the peak rates for some while. Overall US Dollar Index (DXY) has slid 0.5% down this week, which make it a second consecutive week of losses.
• Stock Market: The stock market has been volatile this week. The Dow Jones Industrial Average (DJIA) and the S&P 500 both hit record highs on Tuesday, but then fell on Wednesday. Overall, for the week, US equities have performed strongly with 0.33% gain for DJIA and 1.13% for S&P. If we look at the European markets the markets were also volatile and experienced slightly lower gains of 0.19% for FTSE and 0.23% for German stock constituents of DAX.
• Bitcoin: Bitcoin’s price has been fluctuating this week but has not been hit by the Binance story that hard. By the end of week, it has outperformed the public markets gaining almost USD 1,500 or 3.91% closing at 37,850 this Friday.
• Oil: Oil prices have been trending lower this week with Brent Oil hitting USD 80.58 this week, 1.03% lower, and WTI Crude ending the week at USD 75.54, down 2.02% for the week.

Conclusion

That is all for this week’s market events. We hope you enjoyed this post and learned something new and valuable. Stay tuned for more updates, and do not forget to subscribe for more insights and news on the markets. Until then, happy trading!

Please note, none of the information on this blog represents the opinion of my employer and all information does not represent a financial advice.