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Coinbase Rejects Corporate Social Activism



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While many companies and business groups embrace social justice as part of their missions, the cryptocurrency exchange Coinbase is moving in the other direction. This has become the talk of Silicon Valley.

Coinbase is “laser focused” on expanding the use of crypto — and on making money, Brian Armstrong, Coinbase’s co-founder and C.E.O., wrote in a blog post. “We shouldn’t ever shy away from making profit, because with more resources we can have a greater impact on the world,” Mr. Armstrong wrote, echoing principles in Milton Friedman’s influential essay on free-market capitalism that we commemorated earlier this month.

• Many business leaders — including the Business Roundtable — now consider running businesses solely for the benefit of shareholders as too narrow, instead embracing “stakeholder capitalism” that brings in broader concerns.

“We don’t engage here when issues are unrelated to our core mission,” Mr. Armstrong added, “because we believe impact only comes with focus.” He cited “strife” at other tech companies over issues like racism and politics, and asserted that employees want “refuge from the division that is increasingly present in the world.” Practically, that means employees are discouraged from debating causes or politics internally and from taking up activist causes at work. (In June, Mr. Armstrong tweeted about how he “decided to speak up” after hearing from Black employees following the killing of George Floyd, and announced that the company would donate up to $500,000 to a group of charities addressing poverty and other issues.)

• Anticipating dissatisfaction within his ranks about the blog post, Mr. Armstrong added, “I know that many people may not agree, and some employees may resign.”

The statement stirred up debate:

• Libertarian-leaning Valley figures cheered Mr. Armstrong’s post. The investor Paul Graham tweeted, “I predict most successful companies will follow Coinbase’s lead. If only because those who don’t are less likely to succeed.” The veteran executive and venture capitalist David Sacks put it more succinctly: “💪 leadership @brian_armstrong.”

• Others criticized the move. “Stating out loud that you think economic freedom and social justice can be conveniently disconnected is the epitome of why SV has a bad reputation,” tweeted Jessica Alter of Tech for Campaigns. And Matthew Green, a cryptography professor at Johns Hopkins, said that the post “genuinely makes it harder for me to recommend” that students go to work at Coinbase.

• Some jested that Mr. Armstrong may have violated his own rules. Techmeme’s Gabe Rivera tweeted, “My favorite thing about this post is their very decision to write and publish it is … taking on activism outside Coinbase’s focus!”


Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.


ImageHouse Democrats unveiled a new $2.2 trillion coronavirus aid bill as House Speaker Nancy Pelosi resumed stimulus negotiations with the White House.
Credit…Anna Moneymaker for The New York Times

The global coronavirus death toll has passed one million. More people have now died from Covid-19 than from H.I.V., dysentery or influenza. The economic cost is still mounting, too: New York City, for example, faces an extended financial crisis, while European countries are introducing new restrictions.

House Democrats unveiled a $2.2 trillion coronavirus aid bill. The legislation comes as House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin resumed negotiations on a federal stimulus package. The new bill remains more than $1 trillion above what the White House has proposed.

The Chinese Communist Party is pushing for more power over business. Officials have begun spreading a message of “United Front work,” The Financial Times reports. In return for helping the party, companies could receive more government aid and fairer treatment compared with state-owned rivals.

Apple and Epic Games took their app store fight to court. In a three-hour videoconference hearing, Epic laid out its case that Apple abuses its control of its App Store. The federal judge overseeing the hearing recommended a jury trial and is expected to rule on whether Apple must reinstate Epic’s Fortnite in its store.

LVMH countersued Tiffany over their $16 billion deal. The French luxury conglomerate argued in Delaware’s Court of Chancery that it had the right to walk away from its proposed takeover, citing both the effects of the pandemic and Tiffany’s decision to pay a dividend.

Credit…Jessica Phelps for The New York Times

AppHarvest, the indoor farming company, will announce a deal today to merge with a special purpose acquisition company, Novus Capital Corporation, at a valuation of $1 billion. The transaction includes $475 million of financing, $375 million of which will be through a private investment in the public entity, or PIPE, led by Fidelity, Inclusive Capital and Novus Capital Corporation.

The deal promises to do social good. AppHarvest will use funds from the deal to build facilities beyond its 60-acre property in Kentucky. Indoor farming’s proponents say that it can feed a growing population where outdoor farming may be insufficient and reduce reliance on exports. AppHarvest, which is registered as a B Corp, has attracted many environmentally and socially minded financiers. Its board includes Jeff Ubben, the ValueAct co-founder who invested in the company through his E.S.G. fund, Inclusive Capital, and Martha Stewart. The AOL founder Steve Case’s Rise of the Rest Seed Fund is an investor, as is James Murdoch.

• “This is a bet on a company and a bet on the future of an industry and also a bet on a region reimagined,” said Rise Fund’s Anna Mason, who sits on the board.

It’s also bet on the unknown. AppHarvest doesn’t yet generate revenue — it won’t until it harvests its first tomato crop in the first quarter of next year. As it looks to grow in a capital-intensive industry, it doesn’t expect to generate operating profits until 2023. That uncertain financial profile is shared by Nikola, the embattled electric vehicle company on whose board Mr. Ubben sits, which also went public via SPAC. Mr. Ubben said he is confident in AppHarvest and the mission that brought him to both companies. “I am trying to do something nobody else has done, which is to marry the incumbent with the start-ups,” he said. (The incumbent, in this case, means institutional investors.)

• Mr. Ubben said that venture capital investors eschew the kinds of companies he backs, in favor of asset-light software companies. For financing, then, “There are two places: There’s a legacy company balance sheet, and there’s this new model called a SPAC and PIPE,” he said.

Michelle Leder is the founder of the S.E.C. filing site footnoted*. Here, she considers the prospects of a contentious regulatory proposal. You can follow her on Twitter at @footnoted.

Today is the last day people can submit comments to the Securities and Exchange Commission about its proposal to effectively reduce the public disclosure of institutional investors’ holdings.

In July, the commission said it wanted to raise the threshold for filing the 13-F form, which requires institutional investors who manage over $100 million to disclose many of their positions every quarter. The agency wants to raise that threshold to $3.5 billion, which would eliminate about 90 percent of filings.

While the overwhelming majority of the approximately 2,000 comments were from individual investors who opposed the changes, executives at big companies began weighing in as the deadline approached. They, too, are overwhelmingly opposed.

Dell Technologies’ C.F.O., Tom Sweet, wrote that increasing the filing threshold would “greatly impact our ability to effectively engage with shareholders and to identify with activist investors, the great majority of which fall well below the Commission’s proposed filing threshold.”

Leeny Oberg, the C.F.O. of Marriott, also wrote in opposition. Ms. Oberg said the filings were the “single source of information” that allowed the company to identify more than 900 institutional investors who owned its stock at the end of last quarter. “We believe that number could fall below 400 if the proposed amendments are adopted,” she added.

Lynn Antipas Tyson, Ford’s director of investor relations, urged “more holistic reforms.” She highlighted a 2013 proposal from the National Investor Relations Institute and several exchanges, including the New York Stock Exchange, that called for investors to publish 13-F forms more promptly, more often and include more information, such as short positions.

Many exchanges have come out against the S.E.C. proposal. Nasdaq included the names of over 300 member companies as cosignatories of its letter, citing particular problems for small-cap companies, “the lifeblood of the U.S. economy.”

The commission is under no obligation to take these comments into consideration. Still, few S.E.C. proposals attract this much attention from such a wide swath of the investing public, so it is hard to imagine the commission simply moving forward as initially planned.

Credit…Jonathan Ernst/Reuters

Tonight, at 9 p.m. Eastern, President Trump and former Vice President Joe Biden will spar in the first of three debates. Mr. Trump’s taxes will likely feature prominently, in addition to the topics announced last week. But Miguel Noyola, a partner at Baker McKenzie who is tuning in for the corporate clients he advises on finance and investments, is most interested in what the candidates say about trade.

Corporate advisers are looking for references to a “rules-based” global order, Mr. Noyola told DealBook. Such reassurances are more likely to come from Mr. Biden, who promoted the Trans-Pacific Partnership during the Obama administration, a 12-country deal designed to curb China’s influence. Mr. Trump nullified the T.P.P. as soon as he reached office, and adopted nationalist “America First” policies. But Mr. Biden has more recently questioned aspects of globalization, adopting more protectionist positions akin to Mr. Trump’s.

• If neither candidate pushes back against tariffs and trade wars, it will be a signal to executives and investors that cross-border business could become even riskier, putting global supply chains under pressure.

Credit…Douglas Gorenstein/NBCUniversal

In their latest report drawn from President Trump’s taxes, The Times’s Mike McIntire, Russ Buettner and Sue Craig show how reality T.V. saved Mr. Trump from financial disaster.

Mr. Trump drew about $427 million from “The Apprentice,” according to calculations from the documents. Beyond the $197 million that he received directly from the show, he struck an array of sponsorships — $500,000 to pitch Oreos, for example — hotel licensing deals and get-rich seminars. It led to the unusual situation of Mr. Trump reporting positive income on his tax returns.

• Mr. Trump plowed the proceeds into real estate investments that have proved deeply unprofitable, with a debt crunch that comes due within the next few years.

The fallout from The Times’s investigation continues. Experts said that revelations of Mr. Trump’s big debts and foreign entanglements made him a national security risk. Republican lawmakers dodged questions about the report. And Joe Biden’s presidential campaign has seized on Mr. Trump’s taxes as a political cudgel.


• Nippon Telegraph and Telephone plans to buy full control of NTT DoCoMo, its wireless affiliate and Japan’s biggest cellphone service provider, for about $40 billion. (WSJ)

• Walmart is reportedly near a deal to sell Asda, its British subsidiary, to a group led by TDR Capital and the billionaire owners of the EG Group, for more than 6.5 billion pounds, or $8.4 billion. (Sky News)

• McAfee, the cybersecurity company, has filed to go public to seize on investor demand for tech listings. (Bloomberg)

Politics and policy

• House lawmakers introduced a bipartisan bill to address the failings that led to the two crashes of Boeing 737 Max jets. (NYT)

• The first trial in Germany stemming from Volkswagen’s emissions-cheating scandal begins today, with Audi’s former chief as the defendant. (NYT)


• The judge who blocked the Trump administration’s ban on TikTok ruled that the government had appeared to overstep its national-security authority. (WSJ)

• Google banned apps from circumventing its app store’s payment system, and its 30 percent commission. (NYT)

• Two women made sexual assault allegations against Trevor Milton, the billionaire founder of Nikola who stepped down last week. He denies the accusations. (CNBC)

Best of the rest

• “Why Are There Still So Few Black C.E.O.s?” (WSJ)

• Inside the JPMorgan Chase trading desk that federal prosecutors have called a crime ring — and which is poised to cost the bank a $1 billion penalty. (Bloomberg)

• An Italian warship was deployed to Libya to combat people-smugglers. It came back with smuggled contraband, including 700,000 cigarettes. (NYT)

We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.


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The Trump campaign celebrated a growth record that Democrats downplayed.



The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.


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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.



The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.


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Ant Challenged Beijing and Prospered. Now It Toes the Line.



As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.


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