US electric car manufacturer countersues banking giant over disputed bond contract
Tesla submitted a filing in Manhattan federal court on Monday, accusing JPMorgan of “bad faith and avarice” for demanding $162.2 million after the bank had unilaterally changed the terms of warrants it received when the electric carmaker sold convertible bonds back in 2014.
Warrants allow holders to purchase company stock at a set “strike” price and date.
“JPMorgan pressed its exorbitant demand as an act of retaliation against Tesla both for it having passed over JPMorgan in major business deals and out of senior JPMorgan executives’ animus toward Mr. Musk,” Tesla said, adding that by changing the terms the banking multinational “dealt itself a pure windfall” after receiving a “multibillion-dollar payout” from Tesla’s soaring share price.
Tesla’s countersuit escalates the conflict between the US’ biggest investment bank and the world’s most valuable automaker, which have hardly done any business with each other since the disputed contract.
The legal battle began last November, when JPMorgan took Tesla to court for “flagrantly” violating a stock warrants contract. The bank alleged that the car manufacturer sold warrants to JPMorgan in 2014, which were to be paid off if their strike price, or guaranteed fixed price, was below Tesla’s share price upon the warrants’ expiration in June and July 2021.
JPMorgan claimed that the tweet shared by Tesla’s eccentric CEO Elon Musk on August 7, 2018 made the automaker’s share price more volatile. Musk tweeted that he might take Tesla private and had “funding secured,” but backtracked his comments 17 days later. Tesla’s share price had risen nearly ten-fold by the warrants’ expiration date.
Musk’s tweets led to a civil lawsuit by the US Securities and Exchange Commission. The litigation resulted in Musk giving up Tesla’s chairmanship, and he and the company each being fined $20 million.
El Salvador reportedly lost an estimated $20 million by investing in Bitcoin
El Salvador’s president, Nayib Bukele, changed his Twitter profile on Sunday, posting a photoshopped image of himself wearing a McDonald’s uniform. This comes after his country lost millions – by investing in Bitcoin – following a severe crypto market sell-off.
The two largest digital assets, Bitcoin and Ethereum, are off more than 50% from their all-time highs, trading at their lowest levels since July.
The market’s downturn has prompted jokes about new careers for crypto traders in the fast food industry. McDonald’s pay starts as low as $11 per hour in the US.
Bukele has been facing criticism since he embraced the flagship cryptocurrency. El Salvador was the world’s first nation to adopt Bitcoin as legal tender in June 2021. The country currently holds over 1,500 bitcoins and plans to issue a $1 billion, 10-year Bitcoin bond this year.
The only saving grace for El Salvador is that the price of Bitcoin dipped below $30,000 last summer, so the Central American country has only reportedly lost about $20 million by investing in the leading crypto.
The call for a more moderate approach comes days after the central bank unveiled proposal for a total ban on cryptocurrencies
Cryptocurrencies should be regulated in Russia, but not banned, according to Ivan Chebeskov, the Director of the Financial Policy Department of the Ministry of Finance.
“Technologies of this kind should get a chance to develop,” the official said during a conference organized by Russian business-focused media RBC.
“In this regard, the Finance Ministry is actively working on legislative initiatives aimed at regulating this [cryptocurrency] market. And for now, we have prepared a draft concept plan for regulatory measures that is currently discussed in the Ministry, and that has been sent to the state administration,” Chebeskov added.
According to the official, Russian authorities should protect the interests of those purchasing cryptocurrencies or using them in any technological solutions.
“I think it is necessary to regulate, not to ban; regulation will just ensure the transparency that will ensure security for citizens,” he said, stressing that Russia just cannot afford to ban a highly developed technological sector.
The official’s response came after the latest call for a complete ban of cryptocurrencies in Russia issued last week by the central bank. The regulator said that the issuance, circulation, exchange, and trade of cryptocurrencies and stablecoins should be prohibited along with the organization of these operations in the country.
Ray Dalio compares political risks in the US with recent economic growth in China
China is winning the economic competition against the United States, according to Ray Dalio, the founder of the world’s largest hedge-fund firm, Bridgewater Associates.
The US is in “relative decline,” while “China has been rising,” Dalio said on Monday during a wide-ranging interview with Bloomberg. He noted that the US Federal Reserve has been “behind the curve” on monetary policy, adding that “rising interest rates means all other assets have to adjust.”
Dalio contrasted political risks in the United States with recent economic growth in China, saying there’s a “reasonable chance” neither major US political party will accept the results of the 2024 election.
“There is a worry that one should have about the divisiveness and what it means for each other,” he said.
The billionaire has long predicted that the Chinese economy will overtake the US in size to become much more powerful.
Earlier this month, Dalio praised China’s drive for common prosperity while urging nations including the US to narrow wealth gaps.
Ukraine-related penalties may include the banning of Russian arms sales as well as curbing energy exports
The US is reportedly trying to convince its allies to impose new sanctions against Russia if a war with Ukraine breaks out. These would target arms and energy exports, costing Moscow around $50 billion, German tabloid Bild reported citing unnamed sources.
The drastic step was reportedly proposed by William Burns, the head of the CIA, during his visit to Berlin. US officials reportedly asked the German government to ban imports of Russian raw materials and block the launch of the Nord Stream 2 pipeline.
Berlin assured the US that in the event of an invasion of Ukraine, Russian gas would not go through the Nord Stream 2 pipeline, the sources told the media. However, the chancellor’s office voiced doubts over completely abandoning the vital pipeline. The remark caused irritation in Washington, Bild reported.
Over the past few months, a wide range of Western media outlets, along with multiple US officials, have been spreading speculation about an imminent Russian invasion of Ukraine. Washington and some of its allies threatened the Kremlin with a new round of ‘crippling’ sanctions if this happens, citing the movement of Russian troops within the country’s vast Western territory as evidence of the plan. Moscow has consistently rejected the accusations, saying it has a right to carry out military maneuvers as it pleases within its borders.
