Report: WeWork expected to cut 500 tech roles

The WeWork saga continues this week with new reports the company may slash as many as 500 tech roles.

The co-working business, whose eccentric co-founder and chief executive officer Adam Neumann stepped down two weeks ago, is expected to let go of 350 employees within its corporate division, The Information reports. Initial cuts will be within the software engineering, product management and data science teams.

Another 150 roles may be dissolved as the company looks to sell several assets, including Managed by Q, Teem, SpaceIQ, Conductor and Meetup . New York-based WeWork has roughly 15,000 employees and expects to make as many as 2,000 layoffs, per reports, as the business attempts to cut costs and rewrite its narrative ahead of an eventual debut on the public markets.

WeWork unveiled its S-1 — littered with errors and sloppy work, per The Wall Street Journal — but decided to delay its initial public offering after Neumann stepped down and the company’s former vice chairman Sebastian Gunningham and former president and chief operating officer Artie Minson stepped in to serve as co-CEOs.

Now expected to go public in 2020 at a valuation as low as $10 billion, WeWork is also in negotiations with JPMorgan for a last-minute cash infusion to replace the capital expected from the postponed IPO, per reports. The company, now a cautionary tale, has been working with bankers in recent weeks to reduce the sky-high costs of its money-losing operation. The reported layoffs are said to be a part of the bankers’ strategy.

WeWork was previously valued at $47 billion despite losses of nearly $1 billion in the six months ending June 30.

WeWork did not immediately respond to a request for comment.

PayPal is the first company to drop out of the Facebook-led Libra Association

PayPal has become the first company to walk away officially from Facebook’s Libra, a cryptocurrency and related association that it announced earlier this year with a chain of nearly 30 big names behind the effort to help build and operate services around it.

PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,” PayPal said in an emailed statement to TechCrunch. “We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”

A high-profile, would-be partner like PayPal backing out from the effort before it’s even gotten off the ground is a big blow to Facebook and the Libra Association, which has been struggling under the weight of speculation that some of the big organizations, initially interested in collaborating on Libra, are now on the fence about the project, put off by wave of negative reaction from regulators and others that might lead to problems launching and ultimately growing the service.

In response, the Libra Association has come out with an understated but scathing statement of its own in response to PayPal’s announcement. (Facebook had referred our questions to the group and did not comment directly.)

“It requires a certain boldness and fortitude to take on an endeavor as ambitious as Libra – a generational opportunity to get things right and improve financial inclusion,” said a spokesperson. “The journey will be long and challenging. The type of change that will reconfigure the financial system to be tilted towards people, not the institutions serving them, will be hard. Commitment to that mission is more important to us than anything else. We’re better off knowing about this lack of commitment now, rather than later.”

PayPal is the first firm to walk away from the Libra Association, but it comes at a difficult time for the project, even before it has launched.

Both regulators and other government bodies on both sides of the Atlantic — already scrutinizing Facebook and cryptocurrency as separate issues — have honed in on the project with concerns of how a Facebook-backed and promoted currency could lead to anti-competitive behavior.

Facebook and other members of the Libra Association are due to meet this month in Geneva to appoint its first board of directors, but ahead of that it’s been reported that the government scrutiny has started to spook some who have only nominally backed the project at this point.

The WSJ reported earlier this week that Mastercard, Visa and other companies may join PayPal in backing away from the Libra project. Mastercard has not responded to a request for comment, but Visa’s CEO Al Kelly has made public statements that underscore Visa’s provisional support for Libra — a position we understand remains unchanged as of today, provided regulatory and other issues do not get in the way.

“It’s important to understand the facts here and not any of us get out ahead of ourselves,” Kelly said in the company’s most recent earnings call. “So we have signed a nonbinding letter of intent to join Libra. We’re one of – I think it’s 27 companies that have expressed that interest. So no one has yet officially joined. We’re in discussions and our ultimate decision to join will be determined by a number of factors, including obviously the ability of the association to satisfy all the requisite regulatory requirements… It’s really, really early days and there’s just a tremendous amount to be finalized. But obviously, given that we’ve expressed interest, we actually believe we could be additive and helpful in the association.”

As we reported when Libra first launched, Facebook doesn’t control the Libra organization or currency, but gets a single vote alongside the remaining partners. Those that have endorsed the association currently include, alongside Mastercard and Visa, Stripe, Uber and the VC firm Andreessen Horowitz. Each Libra Association partner invests at least $10 million in the project and the association will promote the open-sourced Libra Blockchain.

The partners would not only pitch the Libra Blockchain and developer platform with its own Move programming language, but sign up businesses to accept Libra for payment and even give customers discounts or rewards.

Facebook has a lot riding on the success of the Association beyond just its Libra stake. The company has also launched a subsidiary company called Calibra that handles crypto transactions on its platform that would use the Libra blockchain. (It’s been quietly developing this alongside the Libra effort, including making acquisitions to expand the functionality around how it will work.)

Governments around the world have been up in arms because they are concerned that, with Libra, Facebook and its partners will try to make an end run around existing financial services and their corresponding regulations.

Perhaps in response to these pressures and how they might play out, earlier this month, Facebook chief executive Mark Zuckerberg indicated that the company would be willing to delay the launch of the cryptocurrency — it is currently planned for 2020 — in an interview with the Japanese Nikkei news service. “Move fast and break things” won’t be getting applied here.

Brex wants to replace startup bank accounts with Brex Cash

Brex, a Silicon Valley fintech darling, has lofty plans to battle big banks —and Stripe.

Code-named “Gemini,” Brex today announced a new product designed to replace and improve the functionality of traditional bank accounts. Brex Cash, as it will be known publicly, is a business cash management account integrated with the Brex Card, a corporate card for startups launched in 2018.

Brex tells us they’ve built the core banking infrastructure from scratch, allowing the company to forgo third-party processing fees and provide a much-needed tech infusion to antiquated banking systems. In partnership with Boston’s Radius Bank, Brex Cash will allow customers to send payments quickly and easily with no transaction fees attached. Rather, Brex plans to reward its users for making or receiving payments using Brex Cash with points redeemable for cash back, travel and air miles. Customers will also receive 1.6% yield on deposits.

It’s not a bank, but in practice, it can replace a bank, says Brex co-founder and co-chief executive officer Henrique Dubugras .

“Our idea is that new businesses —the new Y Combinator companies we hope a big percent of them never open a bank account,” Dubugras tells TechCrunch.

Brex now has many similarities to a bank. What differentiates it is its lack of physical branches — it’s exclusively digital — and it’s insurance. Traditional banks are insured by the Federal Deposit Insurance Corporation (FDIC), which protects up to $250,000 per depositor. Brex Cash users are protected by the Securities Investor Protection Corporation (SIPC), a nonprofit agency overseen by the U.S. Securities and Exchange Commission that protects up to $500,000 and specializes in protecting customers of brokerage firms from the loss of cash and securities.

We think we’ve won a lot of credibility. Before, who was going to give their money to a random-ass startup called Brex? -Brex co-CEO Henrique Dubugras

Additionally, Brex invests its customers’ money in a money market mutual fund of U.S. treasury bonds. “If Brex goes out of business, customers’ money will be safe,” the company writes in a press statement. “The only scenario where money could be lost is if the U.S. government defaults.” [Update 10/2/2019: Brex says this quote alone is taken out of context, rather, the company was trying to communicate that it would take something like the U.S. government defaulting in order for Brex customers’ money to become unsafe.]

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Brex Cash user interface

“It’s not that we are inventing this — this model exists with Fidelity,” says Dubugras. “Fidelity isn’t necessarily a bank — we are bringing that concept to businesses to give lower fees, better interest rates, better experiences and more security.”

Brex, a graduate of the winter 2017 Y Combinator cohort, has quickly become a Silicon Valley success story for the ages. The rapid adoption of its startup credit card, which doesn’t require a personal guarantee, and its ability to issue cards instantly and provide higher limits than other options on the market has attracted thousands of customers and venture capitalists. The business, led by a pair of young Brazilian repeat entrepreneurs, including Dubugras and co-CEO Pedro Franceschi, has collected more than $300 million in equity funding, including a $100 million C-2 financing that valued the company at $2.6 billion earlier this year.

“There will always be customers that are skeptical, but I think by starting out with a card, we built a lot of trust,” Dubugras said. “It was us giving them money instead of them giving us money. A few years in … We think we’ve won a lot of credibility. Before, who was going to give their money to a random-ass startup called Brex?”

In the weeks ahead of TechCrunch Disrupt San Francisco, where Dubugras announced Brex Cash on Wednesday, the CEO told TechCrunch that Brex had no immediate fundraising plans and that they were “waiting for the right time” to raise again. As for what’s next, he said the company is discussing the launch of a debit card and plans to add another 100 employees in the next year, bringing the Brex headcount to 400.

The Brex news follows the launch of Stripe Capital, a new offering from payments behemoth Stripe that will make instant loan offers to customers on its platform, and the announcement of the Stripe Corporate Card. Akin to Brex, Stripe will issue a no-fee, no interest rate credit card intended for Stripe customers. Brex and Stripe, two Y Combinator grads, will go head-to-head in a battle for customers, particularly YC grads looking for friendly financial tools.

Immediately following Stripe’s announcements, the business announced a $250 million funding at a $35 billion valuation. Brex may be following a similar playbook, announcing a major product on the heels of a large capital infusion.

Brex Cash represents a new era for the company. Though the product may be costly for Brex, it opens the business up to thousands more potential customers. Now, any startup, regardless of funding, can create a Brex account to store cash, explains Dubugras, and all companies using Brex Cash will be immediately issued a Brex corporate credit card.

“If you’re starting out, if you don’t have funding yet, you can still receive your payments using Brex,” Dubugras said. “That’s a super big deal for us.”

Brex Cash was built under product lead Ritik Malhotra, who joined the team as part of an acquisition of his startup, Elph. Brex poached the company, which was focused on blockchain infrastructure, right out of YC for an undisclosed amount. In retrospect, the deal looks much more like an acqui-hire of Malhotra, who had the digital payments infrastructure acumen necessary to complete this project.

“It’s an easy way to move money, which is the lifeblood of a business,” Malhotra tells TechCrunch of the new product.

Brex Cash is itself not a cash cow for Brex; rather, the startup makes money on purchases made on its corporate card, in which it charges the merchant, not the customer. This model is particularly beneficial when its customers are spending a lot of money, growing quickly and raising capital. In a downturn, however, this model isn’t as attractive.

Brex seems unconcerned with the possibility of an impending recession. Brex writes that even in downturns, entrepreneurs will start companies and attempt to raise money. The Brex Cash product, regardless of the economy, will help Brex better underwrite Brex Cards, as it gives them better access to a customer’s financial health.

In a battle against Stripe, Brex is at a disadvantage. At only two years old, the company may have garnered a lot of credibility in a short time but it doesn’t have the decade of experience building fintech products that Stripe has and, more importantly, it doesn’t have 10 years of customer loyalty.

Plaid announces strategic investment from Mastercard and Visa

When Plaid announced its $250 million Series C investment, last year, it left out a couple of key investors. Today it revealed that Mastercard and Visa had also quietly participated in the round.

For a company like Plaid, which builds APIs to enable customers to access their bank accounts inside applications in a seamless way, having the blessing of two of the major credit companies in the world is a big deal. It could signal that the startup intends to move more broadly into payments, although it didn’t make any specific assertion it was doing that in the announcement.

CEO and co-founder Zach Perret, writing in a blog post this morning, addressed the broad implications of having these companies on board. “We’re particularly excited about what this means for our customers and consumers. As an industry when we come together with a shared vision for an ecosystem that is open, secure and encouraging of innovation the possibilities are limitless,” he wrote.

Screenshot 2019 09 16 07.44.17

Plaid tools

Plaid helps developers connect to financial services in a similar way that Stripe helps them to connect to payments or Trello to communications tools. By having access to a set of tools from Plaid, developers can build access to bank information and other financial data into their applications without having to have knowledge about how to connect to thousands of different banking systems.

Former CTO and co-founder William Hockey explained to TechCrunch what this meant in an announcement earlier this year:

“Everybody in the U.S. can actually use this product now. And some of those [connections] are super quick and instant, and some of those maybe take a day to verify, but what we’re doing is we’re wrapping all of that in the product. And so you as a developer, you don’t have to worry about all of the different authentication methods at some of these banks,” Hockey explained.

Plaid has raised over $310 million since it launched, and that Series C investment last year carried with it a fat $2.65 billion valuation. Strategic investments of this sort show that the industry as a whole is behind a startup, and having Mastercard and Visa involved, gives the company additional credibility in the marketplace.

America’s largest companies push for federal online privacy laws to circumvent state regulatory efforts

As California moves ahead with what would be the most restrictive online privacy laws in the nation, the chief executives of some of the nation’s largest companies are taking their case to the nation’s capitol to plead for federal regulation.

Chief executives at Amazon, AT&T, Dell, Ford, IBM, Qualcomm, Walmart and other leading financial services, manufacturing and technology companies have issued an open letter to congressional leadership pleading with them to take action on online privacy, through the pro-industry organization, The Business Roundtable.

“Now is the time for Congress to act and ensure that consumers are not faced with confusion about their rights and protections based on a patchwork of inconsistent state laws. Further, as the regulatory landscape becomes increasingly fragmented and more complex, U.S. innovation and global competitiveness in the digital economy are threatened,” the letter says.

The subtext to this call to action is the California privacy regulations that are set to take effect by the end of this year.

As we noted when the bill was passed last year there are a few key components of the California legislation, including the following requirements:

  • Businesses must disclose what information they collect, what business purpose they do so for and any third parties they share that data with.

  • Businesses would be required to comply with official consumer requests to delete that data.

  • Consumers can opt out of their data being sold, and businesses can’t retaliate by changing the price or level of service.

  • Businesses can, however, offer “financial incentives” for being allowed to collect data.

  • California authorities are empowered to fine companies for violations.

There’s a reason why companies would push for federal regulation to supersede any initiatives from the states. It is more of a challenge for companies to adhere to a patchwork of different regulatory regimes at the state level. But it’s also true that companies, following the lead of automakers in California, could just adhere to the most stringent requirements, which would clarify any confusion.

Indeed, many of these companies are already complying with strict privacy regulations thanks to the passage of the GDPR in Europe.

Accion Venture Lab launches $23M inclusive fintech startup fund

Accion Venture Lab—the seed-stage investment arm of non-profit Accion—has raised $23 million for a new inclusive fintech startup fund.

The Accion Venture Lab Limited Partnership, as its called, will make seed-stage investments in inclusive fintech startups, defined as ventures that “that leverage technology to increase the reach, quality, and affordability of financial services for the under-served at scale,” per a company release.

The new fund was raised with capital contributions from a number of participants, including the Ford Foundation, Visa Inc. and Proparco—the development finance institution of the French government.

The additional $23 million brings Accion Venture Lab‘s total capital under management to $42 million.

The new LP fund will consider startups from any geography, as along as they meet specific criteria. Overall, Accion Venture Lab doesn’t have regional investment quotas, but does look to allocate roughly 25 to 30 percent of its funds to Africa, Accion Venture Lab Managing Director Tahira Dosani told TechCrunch on a call.

“We want to continue to focus on Latin-America, on Sub-Saharan Africa, on Southeast Asia as well as in the U.S. It really is about…where we see the need and the opportunity across the markets that we’re in,” she said.

In line with Accion’s mandate to boost financial inclusion globally, Accion Venture Lab already has a portfolio of 36 fintech startup investments across 5 continents—including 9 in the U.S., 8 in Latin America, and 8 in India.

“Our goal is to really be the that first institutional investor in the companies we invest in. That’s were we see the biggest capital gap. And it’s where we build capability and expertise,” Dosani said. In 2018, Accion Venture Lab successfully exited Indian fintech company Aye Finance, following exits in 2017 and 2016.

Tahira Dosani Accion Venture Lab I

This year Accion Venture Lab supported a $6.5 million Series A investment in Lulalend, a South African startup that uses internal credit metrics to provide short-term loans to SMEs that are often unable to obtain working capital.

Accion’s new LP fund will follow past practice and make investments typically in the $500,000 range. It will start sourcing startups immediately through its investment leads around the world and already made its first seed financing to U.S. venture Joust—a fintech platform for gig economy workers.

Accion Venture Lab’s LP fund is the first time the organization has pooled third-party investment capital, according to a spokesperson.

On the appeal for those contributing, Dosani named Accion’s geographic reach and experience. “We think that’s our strength, because we’re able to invest in similar business models across different markets. And we’re able to bring that knowledge from one market to another,” she said.

The Ford Foundation contributed $2 million, according to an email from Christine Looney, Deputy Director, Mission Investments. Visa didn’t disclose its capital contribution, but told TechCrunch it will play a role in governance through its participation in a Limited Partners Advisory Committee for the new fund.

As a point of observation, Accion Venture Lab stands out as a fund for giving an equal pitch footing to fintech ventures across frontier, emerging, and developed markets from Lagos to London.

Accion’s new LP fund—along with the organization’s commitment to make nearly a third of its investments in Africa—means more capital to digital finance startups on the continent. By a number of estimates, Africa’s 1.2 billion people still represent the largest share of the world’s unbanked and underbanked population.

 

 

 

Elliptic banks $23M to shrink crypto risk, eyeing growth in Asia

Crypto means risk. To UK company Elliptic it also means business. The startup has just closed a $23M Series B to step up growth for a crypto risk-management play that involves selling tech and services to help others navigate the choppy darks of cryptocurrencies.

The round was led by financial services and asset management firm SBI Group, a Tokyo-based erstwhile subsidiary of SoftBank . Also joining as a new investor this round is London-based AlbionVC. Existing investors including SignalFire, Octopus Ventures and Santander Innoventures also participated. SBI Group’s Tomoyuki Nii and Ed Lascelles of AlbionVC are also joining Elliptic’s board.

Flush with a sizeable injection of Series B capital, Elliptic is especially targeting business growth at Asia — with a plan to open new offices in Japan and Singapore. It says client revenues in the region have risen 11x over the past two years.

We last spoke to Elliptic back in 2016 when it had just raised a $5M Series A.

The 2013-founded startup began by testing the crypto waters with a storage product before zeroing in on financial compliance as a pain-point worth its time. It went on to develop machine learning tech that screens transactions to identify suspicious patterns and, via them, dubious transactors.

Now it offers an integrated suite of products and services for financial institutions and crypto businesses to screen volumes of crypto-flows that sum to billions of dollars in transactions per day — analyzing them for links to illicit activity such as money laundering, terrorist financing, sanctions evasion, and other financial crimes.

It’s focused on selling anti-money laundering compliance, crypto forensics and cryptocurrency investigation services to the private sector — though has also sold tools direct to law enforcement agencies in the past.

Billions of dollars in financial services terms is of course just a tiny drop in a massive ocean of money movements. And growth in the crypto risk-management space has clearly required more than a little patience, from a startup perspective.

Three years ago Elliptic’s first blockchain analytics product had 10-20 Bitcoin companies as customers. That’s now up to 100+ crypto businesses and financial institutions using its products to shrink their risk of financial crime when dealing with crypto-assets. But the more three than year gap between Elliptic’s Series A and B is notable.

“To date, we’ve focused on product development and assembling the right team as the market has matured. This new funding will help us expand in the right way, namely by making the push into Asia without diluting our focus on the US and EMEA,” says co-founder and CEO James Smith when asked about the gap between financing rounds.

He declines to comment on how far off Elliptic is from achieving breakeven or profitability yet.

“We provide best-in-class transaction monitoring products for crypto-assets, which are trusted by crypto exchanges and financial institutions worldwide,” he adds of its product suite. “Our products are used as key components of larger compliance processes that are designed to minimise money laundering risks.”

With the addition of SBI Group to its investor roster Elliptic gains a strategic partner in Asia to help push what it dubs “bank-grade risk data” at a new wave of established financial institutions it believes are eyeing crypto with growing appetite for risk as larger players wade in.

Larger players like Facebook . Elliptic’s PR name-drops the likes of Facebook’s Libra cryptocurrency, Line Corporation’s LINK and central bank digital currencies, as markers of a rise in mainstream attention on crypto assets. And it says Series B funds will be used to accelerate product development to support “an emerging class of asset-backed crypto-assets”.

Regulatory attention on crypto — which has been rising globally for years but looks set to zip up several gears now that Facebook has ripped the curtain off of an ambitious global digital currency plan which also has buy-in from a number of other household tech and fintech names — is another claimed feed in for Elliptic’s business. More crypto implies growing risk.

It also points to the intergovernmental Financial Action Task Force’s global regulatory framework for crypto-assets as an example of some of the wider risk-based requirements and now wrapped around those dealing in crypto.

The focus on Asia for business expansion is a measure of relative maturity of interest in opportunities around crypto-assets and localized attention to regulation, according to Smith.

“Revenue growth is certainly very strong in this region. We have been working with customers in Asia for a number of years and have seen first-hand how vibrant their crypto-asset ecosystems are. Countries such as Singapore and Japan have developed clear crypto-asset regulatory frameworks, and businesses based in these countries are serious about meeting their compliance obligations,” he says.

“We have also found that traditional financial institutions in Asia are particularly keen to engage with crypto-assets, and we will be working with them as they take their first steps into this new asset class.”

“We believe that crypto-assets will play an increasingly important role in our everyday lives and are shaping the future of banking. Our investment in Elliptic is a further commitment to this belief and to SBI Holding’s appetite to help build the digital asset-related ecosystem,” adds Yoshitaka Kitao, CEO of the SBI Group, in a supporting statement.

“Elliptic’s pioneering approach is enabling the transparency, integrity, and trust necessary for this vision to become reality. We are seeing a growing demand for their services across our portfolio of crypto-assets related companies and view Elliptic as best-placed to meet this considerable opportunity.”

While Elliptic’s business is focused on reducing the risk for other businesses of inadvertently transacting with criminals using crypto to launder money or otherwise shift assets under the legal radar, the proportion of transactions that such illicit activity represents in the Bitcoin space represents a tiny fraction of overall transactions.

“According to our analysis, approximately $1BN in Bitcoin has been spent on the dark web, so far in 2019, on items ranging from narcotics to stolen credit cards. This represents a very small share of all Bitcoin activity — less than 0.5% of Bitcoin payments over this period,” says Smith.

Not that that diminishes the regulatory risk. Nor, therefore, the business opportunity for Elliptic to sell support services to help others avoid touching the hot stuff.

“Crypto money launderers are continually developing new techniques to cover their tracks — from the use of mixers to transacting in privacy coins such as monero,” Smith adds. “We are also constantly innovating to keep pace with this and help our clients to detect money laundering. For example our work with researchers from MIT and IBM demonstrated the application of deep learning techniques to the identification of illicit crypto-asset transactions.”

Financial services marketplace CompareAsiaGroup raises $20 million in new funding led by Experian

Experian, one of the largest credit reporting bureaus in the United States, announced today that it has invested in CompareAsiaGroup, the financial services marketplace. Experian led the initial closing of a $20 million B1 round.

In addition to new funding, the investment also gives Hong Kong-based CompareAsiaGroup access to Experian’s technology, including Experian One, a cloud-based credit scoring and risk assessment platform. CompareAsiaGroup recently opened a research and development center in Singapore to develop more tech tools and its partnership with Experian will enable it to launch new open banking services in Hong Kong that can also be adapted for other markets.

The platform currently claims 60 million users in Asian countries including Hong Kong, Singapore, Taiwan and Thailand who use it to comparison shop for bank accounts, personal loans, insurance, credit cards and other financial products.

This is the latest investment Experian has made in Asian fintech startups (the others include Jirnexu in Malaysia, C88 Financial Technologies Group, and India’s BankBazaar). It is also participated in Grab’s Series H, announced earlier this summer.

Ben Elliot, the CEO of Experian in Asia Pacific, tells TechCrunch that Experian focuses on investments that gives more people access to financial services. “Obviously we benefit from that, but I think this really shows our commitment to Southeast Asia in particular, and also in this case Hong Kong and Taiwan,” he said about the new funding in CompareAsiaGroup. “My view is that overtime we’ll see our capabilities and CompareAsiaGroup really improving the experience of customers while they are borrowing.”

CompareAsiaGroup has now raised more than $90 million to date since it was founded in 2014. Its other investors include World Bank Group member IFC, Goldman Sachs Investment Partners, ACE and Company, Jardines, Alibaba Entrepreneurs Fund, SBI Group and H&Q Utrust.

Libra, Facebook’s global digital currency plan, is fuzzy on privacy, watchdogs warn

Privacy commissioners from the Americas, Europe, Africa and Australasia have put their names to a joint statement raising concerns about a lack of clarity from Facebook over how data protection safeguards will be baked into its planned cryptocurrency project, Libra.

Facebook officially unveiled its big bet to build a global digital currency using blockchain technology in June, steered by a Libra Association with Facebook as a founding member. Other founding members include payment and tech giants such as Mastercard, PayPal, Uber, Lyft, eBay, VC firms including Andreessen Horowitz, Thrive Capital and Union Square Ventures, and not-for-profits such as Kiva and Mercy Corps.

At the same time Facebook announced a new subsidiary of its own business, Calibra, which it said will create financial services for the Libra network, including offering a standalone wallet app that it expects to bake into its messaging apps, Messenger and WhatsApp, next year — raising concerns it could quickly gain a monopolistic hold over what’s being couched as an ‘open’ digital currency network, given the dominance of the associated social platforms where it intends to seed its own wallet.

In its official blog post hyping Calibra Facebook avoided any talk of how much market power it might wield via its ability to promote the wallet to its existing 2.2BN+ global users, but it did touch on privacy — writing “we’ll also take steps to protect your privacy” by claiming it would not share “account information or financial data with Facebook or any third party without customer consent”.

Except for when it admitted it would; the same paragraph states there will be “limited cases” when it may share user data. These cases will “reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra”, the blog adds. (A Calibra Customer Commitment provides little more detail than a few sample instances, such as “preventing fraud and criminal activity”.)

All of that might sound reassuring enough on the surface but Facebook has used the fuzzy notion of needing to keep its users ‘safe’ as an umbrella justification for tracking non-Facebook users across the entire mainstream Internet, for example.

So the devil really is in the granular detail of anything the company claims it will and won’t do.

Hence the lack of comprehensive details about Libra’s approach to privacy and data protection is causing professional watchdogs around the world to worry.

“As representatives of the global community of data protection and privacy enforcement authorities, collectively responsible for promoting the privacy of many millions of people around the world, we are joining together to express our shared concerns about the privacy risks posed by the Libra digital currency and infrastructure,” they write. “Other authorities and democratic lawmakers have expressed concerns about this initiative. These risks are not limited to financial privacy, since the involvement of Facebook Inc., and its expansive categories of data collection on hundreds of millions of users, raises additional concerns. Data protection authorities will also work closely with other regulators.”

Among the commissioners signing the statement is the FTC’s Rohit Chopra: One of two commissioners at the US Federal Trade Commission who dissented from the $5BN settlement order that was passed by a 3:2 vote last month

Also raising concerns about Facebook’s transparency about how Libra will comply with privacy laws and expectations in multiple jurisdictions around the world are: Canada’s privacy commissioner Daniel Therrien; the European Union’s data protection supervisor, Giovanni Buttarelli; UK Information commissioner, Elizabeth Denham; Albania’s information and data protection commissioner, Besnik Dervishi; the president of the Commission for Information Technology and Civil Liberties for Burkina Faso, Marguerite Ouedraogo Bonane; and Australia’s information and privacy commissioner, Angelene Falk.

In the joint statement — on what they describe as “global privacy expectations of the Libra network” — they write:

In today’s digital age, it is critical that organisations are transparent and accountable for their personal information handling practices. Good privacy governance and privacy by design are key enablers for innovation and protecting data – they are not mutually exclusive. To date, while Facebook and Calibra have made broad public statements about privacy, they have failed to specifically address the information handling practices that will be in place to secure and protect personal information. Additionally, given the current plans for a rapid implementation of Libra and Calibra, we are surprised and concerned that this further detail is not yet available. The involvement of Facebook Inc. as a founding member of the Libra Association has the potential to drive rapid uptake by consumers around the globe, including in countries which may not yet have data protection laws in place. Once the Libra Network goes live, it may instantly become the custodian of millions of people’s personal information. This combination of vast reserves of personal information with financial information and cryptocurrency amplifies our privacy concerns about the Libra Network’s design and data sharing arrangements.

We’ve pasted the list of questions they’re putting to the Libra Network below — which they specify is “non-exhaustive”, saying individual agencies may follow up with more “as the proposals and service offering develops”.

Among the details they’re seeking answers to is clarity on what users personal data will be used for and how users will be able to control what their data is used for.

The risk of dark patterns being used to weaken and undermine users’ privacy is another stated concern.

Where user data is shared the commissioners are also seeking clarity on the types of data and the de-identification techniques that will be used — on the latter researchers have demonstrated for years that just a handful of data points can be used to re-identify credit card users from an ‘anonymous’ data-set of transactions, for example.

Here’s the full list of questions being put to the Libra Network:

  • 1. How can global data protection and privacy enforcement authorities be confident that the Libra Network has robust measures to protect the personal information of network users? In particular, how will the Libra Network ensure that its participants will:

    • a. provide clear information about how personal information will be used (including the use of profiling and algorithms, and the sharing of personal information between members of the Libra Network and any third parties) to allow users to provide specific and informed consent where appropriate;
    • b. create privacy-protective default settings that do not use nudge techniques or “dark patterns” to encourage people to share personal data with third parties or weaken their privacy protections;
    • c. ensure that privacy control settings are prominent and easy to use;
    • d. collect and process only the minimum amount of personal information necessary to achieve the identified purpose of the product or service, and ensure the lawfulness of the processing;
    • e. ensure that all personal data is adequately protected; and
    • f. give people simple procedures for exercising their privacy rights, including deleting their accounts, and honouring their requests in a timely way.
  • 2. How will the Libra Network incorporate privacy by design principles in the development of its infrastructure?

  • 3. How will the Libra Association ensure that all processors of data within the Libra Network are identified, and are compliant with their respective data protection obligations?

  • 4. How does the Libra Network plan to undertake data protection impact assessments, and how will the Libra Network ensure these assessments are considered on an ongoing basis?

  • 5. How will the Libra Network ensure that its data protection and privacy policies, standards and controls apply consistently across the Libra Network’s operations in all jurisdictions?

  • 6. Where data is shared amongst Libra Network members:

    • a. what data elements will be involved?

    • b. to what extent will it be de-identified, and what method will be used to achieve de-identification?
      c. how will Libra Network ensure that data is not re-identified, including by use of enforceable contractual commitments with those with whom data is shared?

We’ve reached out to Facebook for comment.

Citizen Ray: Bridgewater’s Ray Dalio is the wise uncle you wished you had

“I don’t want more success. I don’t want more money.” When most hedge fund managers say something like that to you, you’d be justified in suspecting that they’re giving you their carefully crafted Davos riff.

Because unlike many Silicon Valley billionaires who believe (or sort of believe) in the transcendence of their mission, the motives of the Wall Street titan are often straightforward: it’s about the money, and when the money gets huge, it’s about building a legacy.

But as Ray Dalio looked me in the eyes recently and said those words, I believed in his sincerity. That’s not to say he won’t earn enormous sums more. In fact, last year, the financial press widely reported that Dalio earned in the ten figures thanks to Bridgewater’s flagship Pure Alpha fund posting stellar returns.

But when you spend some time with Dalio and broach the various topics in which he has rarefied expertise, it’s apparent that today, the world’s most famous hedge funder could care less about ascending the ranks of the world’s megarich or in achieving more glory or praise for himself.

Although Dalio has diverse philanthropic interests, he retains a very hands-on role as co-CIO of Bridgewater, where he cuts an imposing figure as a guy with little time for inefficiency or nonsense. But he also wears his heart on his sleeve as he seeks to spread the word about principles-based decision-making and the coming paradigm shift that he says will have a dramatic impact on our economy and the markets.

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Ray Dalio – American investor, hedge fund manager, and philanthropist. Dalio is the founder of investment firm Bridgewater Associates, one of the world’s largest hedge funds. Image via Bridgewater Associates

The gospel of hyperrealism

By adhering to the twin pillars of radical transparency and radical truth-telling, Dalio believes that the idea meritocracy that powers Bridgewater can be replicated by the home-gamer. Are some of the specific principles that Bridgewater abides by controversial and harsh (e.g., Beware of the impractical idealist, Don’t expect people to recognize and compensate for their own blind spots, Use “public hangings” to deter bad behavior)? Yes. Does he care if you don’t buy into them? Not really: