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The logo of Crypto.com is seen at a stand during the Bitcoin Conference 2022 in Miami Beach, Florida, April 6, 2022.

Marco Bello | Reuters

As the crypto universe reckons with the fallout of FTX’s rapid collapse last week and tries to figure out where the contagion may head next, questions have been swirling around Crypto.com, a rival exchange that’s taken a similarly flashy approach to marketing and celebrity endorsements.

Like FTX, which filed for bankruptcy protection on Friday, Crypto.com is privately held, based outside the U.S. and offers a range of products for buying, selling, trading and storing crypto. The company is headquartered in Singapore, and CEO Kris Marszalek is based in Hong Kong.

Crypto.com is smaller than FTX but still ranks among the top 15 global exchanges, according to CoinGecko. FTX spooked the market not just by its speedy downfall but also because the company was unable to honor withdrawal requests, to the tune of billions of dollars, from users who wanted to retrieve their funds during the run on the firm. When it became clear that FTX didn’t have the liquidity necessary to give users their money, concern mounted that rivals may be next.

Twitter lit up over the weekend with speculation that Crypto.com was facing problems, and crypto experts held Twitter Spaces sessions to discuss the matter. Meanwhile, revelations landed on Sunday that, in October, Crypto.com mistakenly sent more than 80% of its ether holdings, or about $400 million worth of the cryptocurrency, to Gate.io, another crypto exchange. It was only after the transaction was exposed through public blockchain data that Marszalek acknowledged the mishap.

Kris Marszalek, CEO of Crypto.com, speaking at a 2018 Bloomberg event in Hong Kong, China.

Paul Yeung | Bloomberg | Getty Images

Changpeng Zhao, CEO of rival exchange Binance, fanned the flames of speculation, tweeting on Sunday that if an exchange has to move large amounts of crypto before or after it demonstrates the wallet addresses, “it is a clear sign of problems.” He added, “Stay away.”

Confidence is clearly shaken. Crypto.com’s native Cronos (CRO) token has dropped nearly 40% in the last week. The crumbling of FTX’s FTT token was one sign of the crisis that company faced.

“I would just get your money out of Crypto .com now,” said Adam Cochran, an investor in blockchain projects and founder of Cinneamhain Ventures, in a tweet over the weekend. “If they are full reserves they shouldn’t care if you sit on the sidelines for a week, but their handling of this hasn’t met the bar.”

Marszalek has spent the early part of the week trying to reassure users and regulators that the business is fine. On Monday, he said on YouTube that the company had a “tremendously strong balance sheet” and that it’s “business as usual” with deposits, withdrawals and trading activity. He followed up with a tweet Monday evening, indicating that “the withdrawal queue is down 98% within the last 24 hours.”

He spoke to CNBC’s “Squawk Box” on Tuesday morning, answering questions about the state of his company, the market and how he’s differently positioned than FTX. He said in the interview that the company has engaged with over 10 regulators about the “shocking events” surrounding FTX and how to keep them from happening again.

“I understand that right now in the market, you’ve got a situation where everyone is done taking people’s word for anything,” Marszalek said. “We focused on demonstrating our strength and stability through our actions.”

Marszalek acknowledged that Crypto.com, like other exchanges, has faced increased withdrawals since the FTX news broke, but he said his platform has since stabilized.

A familiar refrain

The exterior of Crypto.com Arena on January 26, 2022 in Los Angeles, California.

Rich Fury | Getty Images

There are other similarities, too.

Just as FTX signed a massive deal last year with the NBA’s Miami Heat for naming rights to the team’s arena, Crypto.com agreed to pay $700 million last November to put its name and logo on the arena that hosts the Los Angeles Lakers, among other teams in L.A. FTX had Tom Brady and Steph Curry promoting its products. Crypto.com reeled in Matt Damon as a pitchman. Both companies bought Super Bowl ads and partnered with Formula One.

Marszalek has personal issues from his past that may also be concerning. The Daily Beast reported in November 2021 that Marszalek departed his last job “amid accusations from customers and business partners that they had been ripped off.” The Australian company was called Ensogo, and it offered online coupons. It abruptly shut down in 2016.

According to documents filed with the Australian Securities Exchange, Ensogo requested its stock be suspended from trading in June 2016. The board accepted Marszalek’s resignation at that time and the company said in a filing that it “is yet to announce the appointment of a new CEO.”

A spokesperson for Crypto.com told the Daily Beast that the board decided to shutter Ensogo, and “there was never a finding of wrongdoing under Kris’s leadership.”

How many coins?

Then there are Crypto.com’s books.

Last week, Crypto.com released unaudited information about its assets to blockhain analytics firm Nansen, who used the information to create a chart showing where those assets were held. One startling revelation: Crypto.com had 20% of its assets in wallets in shiba inu, a so-called “meme token” that exists purely for speculation, building off the shiba-inu dog image of the similarly popular joke token, dogecoin.

Marszalek said on Monday that this was just a reflection of the assets Crypto.com customers were buying. He said in a tweet that it was a popular purchase in 2021, along with dogecoin.

When asked by CNBC on Tuesday if Crypto.com holds tokens on its balance sheet, Marszalek said it’s a “very conservatively run business” that holds “mostly fiat and stablecoins as our source of capital.”

“Yeah but how much?” asked CNBC’s Becky Quick, reminding Marszalek that FTX had “billions of dollars” in its self-created FTT token before it declared bankruptcy.

Marszalek declined to say.

“We’re a privately held company,” he said, adding that he’s not going to provide specifics “about our balance sheet.”

He was quick to say that the company is “very well capitalized,” and reiterated comments from his YouTube session on Monday, telling CNBC that the company has “a very strong balance sheet” with “zero debt and zero leverage in the business, and we are cash flow positive.”

The company has already been hammered during the crypto winter, which has pushed bitcoin and ether down by two-thirds this year. In recent months, Crypto.com reportedly slashed over one-quarter of its workforce. Daily trading volume in CRO is down to about $365 million, according to data from Nomics. Last year, that figure was above $4 billion.

Marszalek’s main goal now is evident: avoid an FTX-type run that could see the company lose a boatload of customers. But he also wants to make it abundantly clear that all the reserves are available to honor any withdrawal requests, and that there’s no hedge fund activity taking place with user deposits.

“We run a very simple business,” he said. “We give 70 million users globally access to digital currencies and take a fee for that.”

Coinbase and Binance have similarly been on media tours trying to assuage customer concerns.

FTX saga means people will increasingly hold their own crypto, says Blockchain.com CEO

Blockchain.com CEO Peter Smith expects the whole way that crypto enthusiasts hold their investments to change dramatically. Smith, whose company operates an exchange and offers a crypto wallet, told CNBC last week that consumers don’t need to trust third parties to hold their crypto funds, and are increasingly doing it themselves.

“You’re going to see people shift toward crypto on their own private keys,” Smith said, adding that the company has about 85 million users who already do it that way. “The ultimate reality and coolest part of crypto is you can store your funds on your own private key where you have no counterparty exposure.”

From a governance standpoint, FTX was uniquely troubled. The company had no board, no finance chief and no head of compliance, despite raising billions of dollars, some from top firms like Sequoia and Tiger Global, and racing to a $32 billion valuation.

Marszalek has a more traditional corporate structure. Crypto.com has a four-person advisory board as well as a CFO, a head of legal and a senior vice president of risk and operations. That doesn’t mean there can’t be fraud (see: Theranos) or bad behavior (read: WeWork), but it’s at least a sign that some controls are in place as Crypto.com and other players try to weather a crypto winter that keeps getting colder.

“We feel quite good about where we are as a company and our operations,” said Marszalek, pointing out that the company generated over $1 billion in revenue last year and has topped that number this year. “What worries me is the impact of this collapse on the whole industry. It sets us back a good couple of years in terms of the industry’s reputation.”

WATCH: CNBC’s full interview with Crypto.com CEO Kris Marszalek

Watch CNBC's full interview with Crypto.com CEO Kris Marszalek

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Inside one of the first all-female hacker houses in San Francisco

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Inside one of the first all-female hacker houses in San Francisco

For Molly Cantillon, living in a hacker house wasn’t just a dream, but a necessity.

“I had lived in a few hacker houses before and wanted to replicate that energy,” said Cantillon, 20, co-founder of HackHer House and founder of the startup NOX. “A place where really energetic, hardcore people came together to solve problems. But every house I lived in was mostly male. It was obvious to me that I wanted to do the inverse and build an all-female hacker house that created the same dynamic but with women.”

Cantillon, who has lived in several hacker houses over the years, saw a need for a space dedicated exclusively to women. That’s why she co-founded HackHer House, the first all-female hacker house in the San Francisco Bay Area.

“A hacker house is a shared living space where builders and innovators come together to work on their own projects while collaborating with others,” said Jennifer Li, General Partner at Andreessen Horowitz and sponsor of the HackHer House. “It’s a community that thrives on creativity and resource sharing, making it a cost-effective solution for those in high-rent areas like Silicon Valley, where talented founders and engineers can easily connect and support each other.”

Founded by Cantillon, Zoya Garg, Anna Monaco and Anne Brandes, this house was designed to empower women in a tech world traditionally dominated by men. 

“We’re trying to break stereotypes here,” said Garg, 21, a rising senior at Stanford University. “This house isn’t just about living together; it’s about creating a community where women can thrive in tech.”

Located in North Beach, HackHer House was home this summer to seven women, all of whom share the goal of launching successful ventures in tech. 

Venture capital played a key role in making HackHer House possible. With financial backing, the house offered subsidized rent, allowing the women to focus on their projects instead of struggling with the Bay Area’s notoriously high living costs.

“New grad students face daunting living expenses, with campus costs reaching the high hundreds to over a thousand dollars a month,” said Li. “In the Bay Area, finding a comfortable room typically starts at $2,000, and while prices may have eased slightly, they remain significantly higher than the rest of the U.S. This reality forces many, including founders, to share rooms or crash on friends’ couches just to make ends meet.” 

Hacker houses aren’t new to the Bay Area or cities like New York and London. These live-in incubators serve as homes and workspaces, offering a collaborative environment where tech founders and innovators can share ideas and resources. In a city renowned for tech advancements, hacker houses are viewed as critical for driving the next wave of innovation. By providing affordable housing and a vibrant community, these spaces enable entrepreneurs to thrive in an otherwise cutthroat and expensive market.

Watch this video to see how Hacker House is shaping the future of women in tech.

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Elon Musk’s X will be allowed back online in Brazil after paying one more fine

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Elon Musk's X will be allowed back online in Brazil after paying one more fine

The Federal Supreme Court (STF) in Brazil suspends Elon Musk’s social network after it fails to comply with orders from Minister Alexandre de Moraes to block accounts of those being investigated by the Brazilian justice system. 

Cris Faga | Nurphoto | Getty Images

X has to pay one last fine before the social network owned by Elon Musk is allowed back online in Brazil, according to a decision out Friday from the country’s top justice, Alexandre de Moraes.

The platform was suspended nationwide at the end of August, a decision upheld by a panel of judges on Sept. 2. Earlier this month, X filed paperwork informing Brazil’s supreme court that it is now in compliance with orders, which it previously defied.

As Brazil’s G1 Globo reported, X must now pay a new fine of 10 million reals (about $2 million) for two additional days of non-compliance with the court’s orders. X’s legal representative in Brazil, Rachel de Oliveira, is also required to pay a fine of 300,000 reals.

The case dates back to April, when de Moraes, the minister of Brazil’s supreme court, known as Supremo Tribunal Federal (STF), initiated a probe into Musk and X over alleged obstruction of justice.

Musk had vowed to defy the court’s orders to take down certain accounts in Brazil. He called the court’s actions “censorship,” and railed online against de Moraes, describing the judge as a “criminal” and encouraging the U.S. to end foreign aid to Brazil.

In mid-August, Musk closed down X offices in Brazil. That left his company without a legal representative in the country, a federal requirement for all tech platforms to do business there.

By Aug. 28, de Moraes’ court threatened a ban and fines if X didn’t appoint a legal representative within 24 hours, and if it didn’t comply with takedown requests for accounts the court said had engaged in plots to dox or harm federal agents, among other things.

Earlier this month, the STF froze the business assets of Musk companies, including both X and satellite internet business Starlink, operating in Brazil. The STF said in court filings that it viewed Starlink parent SpaceX and X as companies that worked together as related parties.

Musk wrote in a post on X at that time that, “Unless the Brazilian government returns the illegally seized property of and SpaceX, we will seek reciprocal seizure of government assets too.”

On August 29, 2024, in Brazil, the Minister of the Supreme Court, STF Minister Alexandre de Moraes, orders the blocking of the accounts of another company, Starlink, of Elon Musk, to guarantee the payment of fines imposed by the STF due to the lack of representatives of X in Brazil. 

Ton Molina | Nurphoto | Getty Images

As head of the STF, de Moraes has long supported federal regulations to rein in hate speech and misinformation online. His views have garnered pushback from tech companies and far-right officials in the country, along with former President Jair Bolsonaro and his supporters.

Bolsonaro is under investigation, suspected of orchestrating a coup in Brazil after losing the 2022 presidential election to current President Luiz Inacio Lula da Silva.

While Musk has called for retribution against de Moraes and Lula, he has worked with and praised Bolsonaro for years. The former president of Brazil authorized SpaceX to deliver satellite internet services commercially in Brazil in 2022.

Musk bills himself as a free speech defender, but his track record suggests otherwise. Under his management, X removed content critical of ruling parties in Turkey and India at the government’s insistence. X agreed to more than 80% of government take-down requests in 2023 over a comparable period the prior year, according to analysis by the tech news site Rest of World.

X faces increased competition in Brazil from social apps like Meta-owned Threads, and Bluesky, which have attracted users during its suspension.

Starlink also faces competition in Brazil from eSpace, a French-American firm that gained permission this year from the National Telecommunications Agency (Anatel) to deliver satellite internet services in the country.

Lukas Darien, an attorney and law professor at Brazil’s Facex University Center, told CNBC that the STF’s enforcement actions against X are likely to change the way large technology companies will view the court.

“There is no change to the law here,” Darien wrote in a message. “But specifically, big tech companies are now aware that the laws will be applied regardless of the size of a business and the magnitude of its reach in the country.”

Musk and representatives for X didn’t immediately respond to a request for comment on Friday.

Late Thursday, X Global Government Affairs posted the following statement:

“X is committed to protecting free speech within the boundaries of the law and we recognize and respect the sovereignty of the countries in which we operate. We believe that the people of Brazil having access to X is essential for a thriving democracy, and we will continue to defend freedom of expression and due process of law through legal processes.”

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OpenAI sees roughly $5 billion loss this year on $3.7 billion in revenue

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OpenAI sees roughly  billion loss this year on .7 billion in revenue

Sam Altman, CEO of OpenAI, at the Hope Global Forums annual meeting in Atlanta on Dec. 11, 2023.

Dustin Chambers | Bloomberg | Getty Images

OpenAI, the creator of ChatGPT, expects about $5 billion in losses on $3.7 billion in revenue this year, CNBC has confirmed.

The company generated $300 million in revenue last month, up 1,700% since the beginning of last year, and expects to bring in $11.6 billion in sales next year, according to a person close to OpenAI who asked not to be named because the numbers are confidential.

The New York Times was first to report on OpenAI’s financials earlier on Friday after viewing company documents. CNBC hasn’t seen the financials.

OpenAI, which is backed by Microsoft, is currently pursuing a funding round that would value the company at more than $150 billion, people familiar with the matter have told CNBC. Thrive Capital is leading the round and plans to invest $1 billion, with Tiger Global planning to join as well.

OpenAI CFO Sarah Friar told investors in an email Thursday that the funding round is oversubscribed and will close by next week. Her note followed a number of key departures, most notably technology chief Mira Murati, who announced the previous day that she was leaving OpenAI after six and a half years.

Also this week, news surfaced that OpenAI’s board is considering plans to restructure the firm to a for-profit business. The company will retain its nonprofit segment as a separate entity, a person familiar with the matter told CNBC. The structure would be more straightforward for investors and make it easier for OpenAI employees to realize liquidity, the source said.

OpenAI’s services have exploded in popularity since the company launched ChatGPT in late 2022. The company sells subscriptions to various tools and licenses its GPT family of large language models, which are powering much of the generative AI boom. Running those models requires a massive investment in Nvidia’s graphics processing units.

The Times, citing an analysis by a financial professional who reviewed OpenAI’s documents, reported that the roughly $5 billion in loses this year are tied to costs for running its services as well as employee salaries and office rent. The costs don’t include equity-based compensation, “among several large expenses not fully explained in the documents,” the paper said.

WATCH: OpenAI has a lot of challengers, says Madrona’s Matt McIlwain

OpenAI has a lot of challengers, says Madrona's Matt McIlwain

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