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Good morning readers. If you were bamboozled by Sam Bankman-Fried and the FTX collapse, we come bearing good news. The once-troubled cryptocurrency exchange, is making a phoenix-like recovery from its November 2022 collapse, poised to refund all $11 billion owed to customers and creditors with an impressive surplus of $5.3 billion. CEO John Ray calls it an "unbelievable result," promising payouts as high as 142% for some creditors. However, there's no silver lining for equity holders. With restructuring underway and crypto prices soaring, FTX’s resurgence could rival the legends, from Enron to Madoff.

Let’s jump into today’s storylines.

In today’s digest:

• The architect behind a multibillion-dollar fraud heads to trial

• Headline Hustle: TikTok sues the US government saying the ban violates First Amendment right, Reddit shares pop in debut earnings report, Elizabeth Holmes gets her prison sentence reduced…again

• Why are there are so many unexpected fees?

• Pulse Points: What’s Trending

BUSINESS

The man behind the fall of Archegos Capital Management heads to trial

Remember Archegos? No, not a character from Greek mythology, but the investment firm that vanished quicker than your pandemic sourdough starter. This week, Bill Hwang, the man behind the infamous Archegos implosion, steps into a Manhattan courtroom, facing a barrage of charges that could make even the most seasoned Wall Streeter sweat.

Looking back to 2021

Back in spring 2021, while you were probably busy scheduling your fourth vaccine appointment, Archegos was quietly orchestrating a financial meltdown that erased over $100 billion in market value in mere days. Now, Bill Hwang faces 11 counts of racketeering, conspiracy, and fraud, making this trial a must-watch event for anyone with even a cursory interest in the health of their investment portfolio.

Why does it matter? Archegos might sound like just another Wall Street scandal, but at its core, this saga touches on issues that could affect every American with a retirement fund.

• The firm used complex financial instruments called "total return swaps" to secretly build massive stakes in companies like Viacom and Discovery.

• This strategy is legal but risky, and in Archegos' case, disastrously so.

When stock prices tumbled, Archegos couldn't cover the losses. The result? A spectacular crash that led to enormous losses for banks like Credit Suisse and left a swath of financial destruction.

A look at Bill Hwang. Hwang, a devout Christian and son of a Korean pastor, reportedly infused his firm with his faith, even to the point of mandating religious devotion from his staff. This has added a personal flavor to the professional calamity, coloring the narrative of a man whose past includes a guilty plea in an insider trading scandal involving another one of his ventures, Tiger Asia Management.

The bigger picture: This trial could signal a shift in how the Justice Department handles Wall Street fraud, suggesting a more aggressive stance than seen in past decades. It's a reminder that the financial instruments trading hands in high-rise buildings can have real-world impacts on the market and, by extension, on the public.

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IN THE KNOW

Headline Hustle

📱 TikTok sues US government stating ban violates First Amendment right. TikTok has filed a lawsuit against the U.S. government challenging a recent law that mandates the app's Chinese owner, ByteDance, to either sell TikTok or face a ban. The lawsuit, filed in the D.C. Circuit Court, claims the law violates First Amendment rights by imposing a unique restriction on TikTok, citing inadequate evidence of national security risks. The law's requirement for divestiture within 270 days is argued as impractical, effectively forcing a ban. This legal battle adds to ongoing concerns over data security and the influence of foreign entities through apps.

📈 Reddit shares pop after revenue jumped by 48% in debut earnings report. Reddit shares surged 14% after hours as the company reported its first quarterly results since its March IPO, surpassing expectations. Despite a loss of $8.19 per share, revenue rose to $243 million, driven by a 39% increase in ad revenue. This performance outpaces its competitors in the digital advertising resurgence following the 2022 spending cuts. With 82.7 million daily active users, Reddit's future outlook remains robust, projecting up to $255 million in revenue next quarter, indicating continued growth and market optimism.

⚖️ Elizabeth Holmes gets her prison sentence reduced…again. Elizabeth Holmes, the former CEO of Theranos, will be released nearly two years earlier than originally scheduled from a federal prison in Texas. Initially sentenced to over 11 years for wire fraud and conspiracy, her release date has been moved up due to good behavior and participation in various rehabilitation programs. Holmes, imprisoned since May 2023, and her co-defendant Ramesh "Sunny" Balwani, who also received a reduced sentence, are both set for upcoming appeal hearings.

PERSONAL FINANCE

Fee fi fo fum, I smell the blood of a hidden sum

Surprise! No, it's not your birthday, but here’s another unexpected fee to celebrate anyway. It seems like no matter where we click or step, extra charges are popping up on our bills, from that morning coffee run to the moment we score concert tickets.

Why fees are flooding your bills

These days, it feels like every little transaction comes with a “because we can” tax. Companies, driven by the need to showcase lower sticker prices or cover rising operational costs, are increasingly unbundling costs and slapping on extra fees. This trend is not just annoying but also murky, making it hard for shoppers to compare true costs.

Retail analysts point out that this tactic allows businesses to sneak past the psychological barrier of a higher price tag. However, the Consumer Financial Protection Bureau (CFPB) warns that these sneaky fees not only obscure true pricing but also inflate overall spending, tempting consumers to cough up more than the market norms.

The fee-free rebellion

Some consumers have had enough.

• They’re now choosing services that offer straightforward, all-inclusive pricing to avoid the sting of unexpected fees.

• Their frustration echoes a growing sentiment that when it comes to pricing, transparency is king.

The bottom line? While businesses may feel these charges are necessary to cover costs, consumers are increasingly voting with their wallets against complex pricing. The era of surprise fees might just be facing its own checkout time.

SNIPPETS

Pulse Points

• Apple announced new versions of its iPad Air and iPad Pro on Tuesday, the first updates since October 2022, with CEO Tim Cook calling it "the biggest day for iPad since its introduction."

• South Korea's largest convenience store chain, CU, in collaboration with the Korea Minting and Security Printing Corporation (KOMSCO), is now selling mini gold bars, and they’re selling like hot cakes.

• Several private equity firms are exploring a buyout of Peloton as the fitness company seeks debt refinancing and a return to growth after 13 consecutive quarters of losses, according to CNBC.

• The Boy Scouts of America announced they will change their name to Scouting America next February to highlight their commitment to inclusion.

• Panera Bread is discontinuing its "Charged Sips" caffeinated beverage line, which is the subject of several lawsuits, according to a company spokesperson.

• Uber Technologies and Instacart have formed an unexpected partnership that will enable customers to order Uber Eats restaurant food through the Instacart app.

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