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Business

Trump SPAC deal in danger as merger deadline approaches

Former US President Donald Trump on Oct. 20 announced plans to launch his own social networking platform, dubbed “TRUTH Social,” which is expected to begin beta launch for “invited guests” next month.

Chris Delmas | AFP | Getty Images

The fate of the proposed merger between former President Donald Trump’s media company and the shell company that aims to take it public — and give it a cash injection — has grown murkier as a crucial deadline approaches.

The Digital World Acquisition Corp. is due to merge with Trump Media and Technology Group, owner of Truth Social, on Thursday. DWAC, a special purpose acquisition company, has spent the past week collecting enough shareholder votes to extend the deadline for the transaction. The companies have not completed the merger, and federal investigations related to the deal and Trump have mounted.

The result of the shareholder vote will be announced Thursday at 12:00 p.m. ET.

DWAC was scheduled to publicly announce the result in a special meeting Tuesday, but CEO Patrick Orlando adjourned the meeting within two minutes to allow additional voting time. Earlier in the day, Reuters reported that the vote had failed, citing sources familiar with the matter.

DWAC has previously warned that failure to approve the extension could result in its liquidation, which would pay out roughly at its original share price of $10 per share. DWAC was trading around $22 on Wednesday; the stock was around $97 in March.

Trump Media and Technology Group is also facing obstacles. His Truth Social app, created by the former president after he was banned from Twitter following the January 6, 2021 uprising, has been banned from the Google Play Store.

The company signaled that they are still working on the deal.

“TMTG will continue to work with all stakeholders in connection with its proposed merger and hopes SEC officials will complete their review in a timely manner and free from political interference,” the company told CNBC on Tuesday.

But Trump indicated in a Truth Social post on Saturday that the issue will be resolved and that he doesn’t need DWAC or the cash injection from the deal to keep the platform going.

“Google is making good progress (I think?). SEC seeks to harm companies providing financing (SPAC),” the former president wrote to his 4 million Truth Social followers on Saturday. “Who knows? Anyway, I don’t need funding, ‘I’m really rich!’ Anyone private company???”

The failure of the DWAC merger could sear retail investors attempting SPAC investing because of the President.

Orlando may be able to delay DWAC’s liquidation, according to an SEC filing Wednesday. Orlando’s corporation and SPAC sponsor, ARC Global Investments II, plans to contribute $2.8 million of its own funds to initiate a three-month extension.

However, DWAC may not be out of the woods. The company faces federal investigations into possible securities violations by DWAC and Trump Media and Technology Group. Trump also faces multiple investigations related to the removal of sensitive documents from the White House and his role in the Jan. 6 Capitol riots.

DWAC has also warned in an SEC filing that Trump’s waning popularity could pose a risk to the deal.

Representatives from DWAC and Trump Media did not immediately respond to requests for comment Wednesday.

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World News

Renewed Shelling Places Ukraine’s Zaporizhzhia Nuclear Plant at Threat

Even as hopes grew that a permanent presence of United Nations inspectors would help reduce the risk of a disaster at Ukraine’s Zaporizhia nuclear power plant, the war once again threatened the plant’s safe operation.

After Friday night’s shelling, the plant lost connection to its only remaining primary external power line, forcing it to use a lower-voltage backup line to power the cooling equipment needed to prevent core meltdowns, the International Atomic Energy Agency said in a statement on Saturday.

Still, the agency’s director, Rafael Mariano Grossi, expressed cautious optimism that a plan to indefinitely station two nuclear experts at the facility would help reduce the risk of a disaster.

“We think it was important for the agency to be there permanently,” he said. “The difference between being there and not being there is like night and day.”

The decision to monitor the facility despite the obvious risks underscored what Mr. Grossi described as the “unprecedented” danger of the moment. He added that having independent nuclear experts at the plant will allow for real-time, unbiased reports on conditions.

“Now if there is a claim that something happened at the plant, you can contact us,” he said, rather than weighing the conflicting claims of Russia and Ukraine.

Mr Grossi, who has avoided blaming either the Russians or the Ukrainians for the shelling, said on Friday that it appeared the power plant’s power supply was being deliberately attacked.

“It is clear that those who have these military targets know very well that the way to cripple or do more damage is not to look inside the reactors, which are enormously robust and robust,” he said . Instead, the rig gets hit where it hurts — the power lines that are essential to its operation.

On Saturday, Mr Grossi said the presence of the agency’s inspectors, who were able to confirm the damage to the external power line, had already proved valuable.

“Our on-site team received direct, fast and reliable information on the latest significant developments affecting the power plant’s external power supply and the operational status of the reactors,” he said.

One of the plant’s six reactors is currently operational, the agency said, producing electricity for both cooling and other vital safety functions at the site, as well as for Ukrainian homes and factories.

The UN’s move to keep two inspectors at the facility comes as fighting rages on in southern and eastern Ukraine. The facility is perilously close to some of the most intense combat.

Late last month, the Ukrainian military launched a counter-offensive in the south, including the area directly opposite the nuclear power plant in the western Kherson region. On Saturday, British military intelligence said Ukraine’s advance on three fronts was likely “to have generated a degree of tactical surprise; Exploitation of poor logistics, administration and leadership in the Russian Armed Forces.”

But military analysts have dampened expectations for Ukraine’s push, saying between 15,000 and 25,000 Russian troops are stationed in fortified defenses west of the Dnieper.

Jack Watling, a research fellow and specialist in land warfare at the Royal United Services Institute in Britain, wrote that unless Russian forces collapse from abysmal morale – which he says is “possible, but not something assumed in the planning can be” – then anything Success on the battlefield for the Ukrainians would take time.

On another front in the Ukraine war, German officials expressed cautious confidence their country could survive a winter without Russian energy after Russia indefinitely postponed gas supplies to the country.

Aware of President Vladimir V. Putin’s history of using energy supplies as a foreign policy tool, Berlin has been bracing for months for the possibility that Russia could cut gas supplies in retaliation for European resistance to Moscow’s invasion of Ukraine.

The German government has imposed tough energy-saving measures, and the ministry responsible for gas supplies found that Germany’s gas storage facilities are already nearly 85 percent full, a target set for early October.

And while Germany got 55 percent of its natural gas from Russia in February when Russia invaded Ukraine, Russian gas made up only about 10 percent of Germany’s on Tuesday — the last full day that gas flowed through the Nord Stream 1 pipeline gas mixes. thanks to months of gas procurement from other countries.

Gazprom, the Russian-owned energy giant, was scheduled to resume gas flow through the Nord Stream 1 pipeline on Saturday after three days of maintenance. But hours earlier, on what a European Union official called “false pretexts,” it said it found oil leaks around a turbine used to pressurize the pipeline, forcing it to restart cancel. There was no schedule for the reboot.

In Washington on Friday, the Biden administration asked Congress for $13.7 billion in additional aid to Ukraine, underscoring its commitment to supporting the war-torn country even as the conflict shows little sign of abating .

As part of Ukraine’s funding request, $7.2 billion would be used to give the country new weapons and military equipment, replenish US stockpiles and provide other defense-related support, government officials said. Another $4.5 billion would support the Ukrainian government and $2 billion would be used to offset the impact of the Russian invasion on energy supplies.

Marc Santora reported from Kyiv and Andrew E. Kramer from Zaporizhzhia, Ukraine. Reporting was provided by Christopher F. Schuetze from Berlin, Michael D. Shear from Washington and Dan Bilefsky from Montreal.

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World News

Stagflation is the best danger to Europe’s restoration

Former Italian Prime Minister Mario Monti told CNBC on Saturday that he believed the greatest threat to Europe’s economic recovery from the coronavirus pandemic was “stagflation”.

Monti, now president of Bocconi University in Italy, said the “huge bulk” of central banks’ expansionary monetary policies and government fiscal incentives put in place to support economies amid the coronavirus pandemic “could well trigger more inflation.”

At the same time, Monti said there were “a number of restrictions on the flexibility of production” that needed to be increased.

Generally speaking, stagflation is when the rate of inflation is high, but economic growth is slowing and unemployment continues to rise.

The IHS Markit Flash Composite purchasing managers’ index for the euro zone, which tracks activity in manufacturing and services, hit a two-month low of 59.5 in August, compared with 60.2 in July. A value above 50 still means that economic activity is expanding, but many economists have suggested that dynamism in the region may slow down.

Former Italian Prime Minister Mario Monti will perform on “Porta a Porta” on October 11, 2018 in Rome, Italy.

Massimo Di Vita | Massimo Di Vita Archive | Mondadori portfolio | Getty Images

There are also concerns about the impact of supply chain problems from Asia affecting manufacturing in Europe, as well as the fact that higher wages could lead to inflationary pressures.

Speaking to CNBC’s Steve Sedgwick at the European House Ambrosetti Forum on Saturday, Monti said that economies, not just in the EU, may begin to experience elements of “stagflation”, similar to what happened in many countries in the 1970s.

As a result, Monti said it was “very important to manage this transition from a needed abundance of financial and financial support to a simpler situation with caution and in a coordinated manner.”

Preliminary data released on Tuesday showed that inflation in the eurozone hit a 10-year high in August, with consumer prices up 3% year over year.

The European Central Bank will hold its next policy meeting on September 9th to discuss the way forward for its asset purchase program. However, analysts told CNBC earlier this week that they expect the ECB to suspend its announcement of tapering its Covid stimulus measures until December.

– CNBC’s Silvia Amaro contributed to this report.

Categories
Health

CDC recommends vacationers with excessive danger of Covid problems keep away from cruises

The Royal Caribbean cruise ship will be seen on the Hudson River in New York City, United States, on August 18, 2021 as the region’s first cruise ship docks back in New York Harbor.

Tayfun Coskun | Anadolu Agency | Getty Images

The Centers for Disease Control and Prevention said Friday that travelers at high risk of serious complications from Covid-19 should avoid cruises regardless of their vaccination status.

The updated guidelines also recommended that travelers who are not fully vaccinated should not cruise.

The new council follows several coronavirus outbreaks reported on board cruise lines, according to the CDC.

While the agency doesn’t introduce the same masking requirements that apply to planes, trains, and other public transportation, it suggested that face-covering be worn for cruise passengers in common areas.

“The virus that causes Covid-19 spreads easily between people in close proximity on board ships, and the likelihood of getting Covid-19 on cruise lines is high,” the CDC said in its updated guidance.

The agency advised all travelers, regardless of their vaccination status, to get tested one to three days before a cruise and three to five days after their return. Anyone taking a cruise should be in quarantine for seven days after returning, even if they tested negative for the virus.

The new policy comes just a week after the Belize Tourism Board announced that 27 people on board a Carnival cruise tested positive for Covid.

During Friday’s extended trading, Carnival Cruises shares fell more than 2%, Norwegian Cruise Line shares fell nearly 3%, and Royal Caribbean Cruises shares fell more than 2%.

After the industry closed at the beginning of the pandemic due to multiple outbreaks on board ships, the CDC has enforced strict guidelines to prevent similar events from occurring.

Of the three cruise lines, Royal Caribbean was the first to return to operations and had few cases on board ships, which was the target, according to CEO and Chairman Richard Fain.

Royal Caribbean and Carnival have allowed some unvaccinated passengers on board ships, but Norwegian has not.

Norwegian even filed a lawsuit against Florida surgeon general to halt a state ban that prevented companies from requiring customers to provide proof of Covid vaccination. The cruise company was granted a temporary stay in enforcement, but Florida has filed an appeal.

Categories
Health

WHO says some information suggests elevated danger of hospitalization

Maria Van Kerkhove, Head of the Emerging Diseases and Zoonosis Division of the World Health Organization, speaks during a press conference following a meeting of the Emergency Committee on the new coronavirus in Geneva on January 22, 2020.

Pierre Albouy | AFP | Getty Images

A senior World Health Organization official said Tuesday that data from some countries may suggest that the Delta variant puts those infected at increased risk of hospitalization, but doesn’t necessarily kill more people than other strains.

“In terms of severity, we’ve seen some countries suggest an increased risk of hospitalization for people with a Delta variant. We haven’t seen this lead to an increased death rate, ”said Maria Van Kerkhove, WHO technical director on Covid-19. People infected with the Delta variant “didn’t die more often than the other strains,” she said.

Health officials have been grappling with the question for months, waiting for real data in countries where the delta variant is widespread. Van Kerkhove said WHO officials meet daily to discuss the rapidly spreading variant.

Like other strains, the Delta variant is especially dangerous for people with underlying conditions like obesity, diabetes, or heart disease, say WHO officials. However, it is far more contagious than other varieties, so it infects more people and puts a strain on global health systems.

“The risk factors for serious illness and death are the same,” said Van Kerkhove. “If you have underlying illnesses, regardless of your age, you have an increased risk of hospitalization.”

The Delta variant also quickly overtakes all other variants wherever it is recognized, she said.

“The prevalence of the lambda variant is falling … and the delta variant is increasing,” said Van Kerhove. “The delta variant quickly replaces other variants that are in circulation wherever it is identified.”

It is spreading in Central and South American countries and is quickly overtaking the lambda variant that is currently predominant there.

“We still don’t know exactly what impact the delta will have on Latin American countries,” said Dr. Sylvain Aldighieri, Incident Manager for the Pan American Health Organization, at a briefing last week.

The delta variant, first discovered by scientists in India in October, has so far spread to at least 142 countries. Found only a few months ago in the US, it now accounts for more than 90% of all sequenced cases, according to the CDC.

The most at risk in the US have been fully vaccinated, with booster doses approved on Friday for people with compromised immune systems and available immediately for administration.

There are currently discussions about opening booster doses to the general population, a move that would violate WHO’s strict recommendations to share doses with the rest of the world before booster doses are given to people who have already received their first vaccinations .

More than 200 million people worldwide have contracted Covid since the pandemic began, doubling from 100 million cases in the past six months. With the more transferable Delta variant spreading rapidly, the number could easily hit 300 million early next year, WHO officials said last week.

“Whether we reach 300 million and how quickly we get there depends on all of us,” WHO Director General Tedros Adhanom Ghebreyesus said last week.

– CNBC’s Robert Towey contributed to this report.

Categories
Health

Respiration Machine Recall Over Potential Most cancers Threat Leaves Thousands and thousands Scrambling for Substitutes

Jayme Rubenstein, a spokesperson for ResMed, said the company is prioritizing the manufacture of devices for patients with immediate ventilation needs, including Covid patients, followed by machines for those with central and obstructive sleep apnea.

In a survey of home medical device providers conducted in April 2020, more than half reported interruptions in the supply chain for CPAP devices and 62 percent reported delays of up to 60 days. The Philips recall “certainly exacerbated the situation,” said Thomas Ryan, chairman of the American Association for Homecare, which commissioned the study and represents the suppliers. (Philips is on his board.)

“Given the shortage of materials to make these devices, such as resins and computer chip modules, and transportation bottlenecks, I expect supply will continue to lag behind demand through 2022,” he said. “It will be a crisis”

Amy Sloane, who learned she had sleep apnea in 2017, began using a DreamStation BiPAP Auto SV device the following year. Overall, she said, her sleep improved. However, after reading about the recall, she became concerned to learn that the sonic cleaning device she was using could break the foam barrier.

“Even more annoying,” she said, “when I manually wiped my DreamStation water tank, there were black particles on the wipe.”

Ms. Sloane, 57, a Baltimore-based attorney, early registered her device with Philips for recall. But she said the company’s only response was to tell her to consult her doctor, who advised her to stop using it immediately. Within a few days, her doctor was able to prescribe a self-adjusting CPAP device from another manufacturer.

As of June, around 40 lawsuits have been filed against Philips on behalf of patients in more than 20 states. Steven Bloch, an attorney for Silver Golub & Teitell in Stamford, Connecticut, said his law firm has filed four lawsuits in Massachusetts, where Philips’ US headquarters are located.

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World News

10% London places of work susceptible to turning into out of date underneath new power guidelines

A view of the City of London on a clear day.

Vuk Valcic | SOPA pictures | LightRocket via Getty Images

LONDON – According to an analysis by a leading real estate company, around 10% of London offices could soon become unusable if new energy efficiency rules are introduced.

Under the new standards, due to be introduced in 2023, buildings in England and Wales with an energy class lower than “E” cannot conclude new leases. The upcoming measures are part of a broader government effort to be carbon neutral. The lowest energy efficiency class is set from ‘G’, the least efficient, to ‘A’, the most efficient.

In that regard, an analysis published by Colliers last week showed that around 20 million square feet of London workspace, which is nearly 10% of the total stock, does not meet these rules.

This raises questions about the future of these office buildings, especially at a time when many workers are pushing to partially work from home amid the ongoing coronavirus pandemic.

“It’s like a double blow for these buildings,” Andrew Burrell, senior real estate economist at Capital Economics, told CNBC, referring to the upcoming environmental regulations and the impact of the Covid-19 crisis.

Offices that fail to comply with energy efficiency regulations are at risk of becoming “obsolete,” he added.

That comes faster than [landlords] expected.

Tom Wildash

Co-Head of West End Leasing at Colliers

In addition, the same study found that currently only about 20% of offices in central London have an energy rating of “A” and “B”, with about 57% of jobs in the UK capital falling into “D” and “G” categories ‘Categories.

Tom Wildash, co-head of West End Leasing at Colliers, told CNBC that landlords must decide whether to upgrade their buildings to an energy rating of “E” to meet the 2023 rules, or upgrade their energy rating directly to “B” renew. Meet laws by 2030. The UK government has reportedly been deliberating on legislation that could mean that only ‘A’ or ‘B’ ratings for non-residential buildings can be rented by 2030.

“That comes faster than [landlords] expected, “said Wildash, adding,” behind the scenes they will likely tell you it’s under control. “

Landsec and British Land, two leading office developers in London, have unveiled their own plans to become carbon neutral in the coming years. However, the new energy regulations will require renovations and thus additional costs in part of the existing building.

“Refurbishment is an important tool in the race for net zero real estate. With the preservation of structures, careful selection of new materials and modern construction techniques, the embodied carbon of a refurbishment project could mean a 50% saving compared to building a new one, “said James Pay, director of sustainability at Colliers, said in a statement.

Speaking to CNBC, Pay said residents are open to renovation options rather than high quality new build.

Sales areas

“Retail space faces similar problems,” said Nicholas Hyett, senior equity analyst at Hargreaves Lansdown, a private investment platform.

Retail is also going through massive changes, compounded by the coronavirus pandemic, as more and more people buy online.

Data released by the UK’s Office for National Statistics shows that while the share of online retail spending fell in June, it is still higher than pre-pandemic levels.

Colliers’ Wildash told CNBC that around 10% of London’s retail space can be expected to need updating too to become more energy efficient.

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Health

Covid breakthrough danger could also be a lot decrease with Moderna vaccine than Pfizer

On this illustration from 19.

Given Ruvic | Reuters

The risk of developing a breakthrough COVID-19 infection with the Delta variant after being fully vaccinated with the Moderna vaccine may be much lower than that, according to a new study from the Mayo Clinic awaiting a full review Risk to those who received the Pfizer vaccine.

The study found that in July in Florida, where COVID cases have hit an all-time high and the Delta variant is widespread, the risk of a breakthrough in Moderna recipients was 60% lower compared to Pfizer recipients.

Similarly, last month in Minnesota, the authors found that the Moderna vaccine (also known as mRNA-1273) was 76% effective in preventing infection, but the Pfizer vaccine (known as BNT162b2) was 42% effective.

“Comparing infection rates between matched individuals fully vaccinated with mRNA-1273 with BNT162b2 at Mayo Clinic Health System sites in several states (Minnesota, Wisconsin, Arizona, Florida, and Iowa) found one with mRNA-1273 Twice the risk reduction compared to a breakthrough infection compared to BNT162b2 “, write the authors in their abstract.

The authors found that both vaccines “strongly protect” against serious illnesses; the difference seems to be more whether people become infected at all. The CDC has said that the risk of infection in the unvaccinated is 8 times higher than that of the vaccinated and the risk of hospitalization or death is 25 times higher.

The so-called pre-print study, which was neither peer-reviewed nor published in a scientific journal, was first published on Sunday but received more attention on Wednesday when Axios reported that the Biden administration was using the data as a “wake-up call.” . “

Pfizer told Axios that it and its partner BioNTech “can develop and produce a bespoke vaccine against this variant in about 100 days of a decision, subject to regulatory approval.”

The company confirmed the effectiveness of its vaccines in a subsequent statement, saying it was also determined to develop boosters.

“Pfizer and BioNTech have put in place a robust refresher research program to ensure that our vaccine continues to offer the highest level of protection possible. Initial data from a third dose of the current vaccine shows that a booster dose at least 6 months after the second dose elicits high neutralization titers against the wild-type, beta and delta variants, “Pfizer said in a statement.

Just last week, Moderna warned that breakthrough infections were on the rise, saying those who received his vaccine would likely need a booster shot before winter. And at the end of last month, Pfizer also said that a booster that is already being tested would be effective against the Delta variant.

Data from New Jersey, where Delta now accounts for 90% of all positive COVID samples tested, underscores the key points: Breakthrough infections still make up a very small percentage of new COVID hospital admissions, but that percentage has been increasing significantly in weeks recently.

Fully vaccinated New Jerseyans accounted for 18.5% of all new COVID cases in the July 20-26, said Governor Phil Murphy. More importantly, these cases accounted for 3% of all new hospital admissions.

Murphy cited the data Monday as evidence that vaccines are working, but the fact that as many as 3% of hospitalized COVID patients have been vaccinated is a concern – and with it the direction in which the breakthrough cases are headed to develop.

The proportion of 3% of vaccinated people who were hospitalized with the virus in the period from July 20 to July 26 has increased significantly compared to the proportion of 0.004% in the period up to July 26.

Pfizer accounts for 30% of the more than 10.6 million vaccine doses given in New Jersey to date, while Moderna accounts for about 21%, state data shows.

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Health

Unvaccinated Adults Who Had Virus Face Danger of Reinfection, C.D.C. Says

According to a small study that assessed the likelihood of re-infection, unvaccinated people who have had Covid-19 are more than twice as likely to be re-infected as those who test positive and maintain their natural immunity with a vaccine have strengthened.

The study, published Friday by the Centers for Disease Control and Prevention, looked at the risk of reinfection in May and June in hundreds of Kentucky residents who tested positive for the virus in 2020.

Those who weren’t vaccinated this year were 2.34 higher risk of reinfection than those who received their vaccinations. The study, published Friday, suggests that adding a vaccine provided better protection to those who survived infection than the natural immunity created by their original battle with the virus alone.

Although the study looked at only a small number of people in Kentucky, it appears to disprove the argument made by one of its US Senators from his home state, Rand Paul, who has repeatedly claimed that vaccination for people like him who had the virus is unnecessary and developed immunity.

Dr. Rochelle P. Walensky, director of the CDC, said the data reinforces the importance of vaccination, including for those who have already had the virus.

“If you have ever had Covid-19, please get vaccinated anyway,” said Dr. Walensky on Friday. “The vaccine is the best way to protect yourself and others around you, especially as the more contagious Delta variant is spreading across the country.”

The study’s authors warned that not much is known about how long natural immunity to the virus lasts and that genome sequencing has not been performed to confirm the reinfections weren’t just flares of the remains of the initial infection of the subjects.

The CDC and the Biden government have been aggressively advocating an increase in vaccinations over the past few weeks as the number of cases and hospitalizations has risen sharply in the last month, largely due to the Delta variant and particularly in regions of the country where vaccination rates are low.

Last week, the number of new virus cases reported daily on Thursday averaged 100,200, and for the first time since mid-February the daily average exceeded 100,000, according to a database from the New York Times. On Friday, the country recorded 106,723 new cases a day.

Another study published on Friday reported that vaccinations drastically reduced hospital admissions for Covid in the elderly in February, March and April. The study looked at data from 7,280 patients from a Covid hospitalization monitoring network and used government records to check their vaccination status. The vast majority of hospital patients were not or only partially vaccinated; only 5 percent were fully vaccinated.

Although vaccination did not completely eliminate infection, the risk of hospitalization was significantly lower for people who were fully vaccinated. Among those 65 to 74, Pfizer-BioNTech and Moderna vaccines reduced the risk of hospitalization related to Covid by 96 percent, and Johnson & Johnson’s single-dose vaccine reduced hospital admissions by 84 percent. In the 75+ age group, Pfizer vaccination reduced hospital admissions by 91 percent; the Moderna vaccine by 96 percent; and the Johnson & Johnson vaccine by 85 percent.

Categories
Politics

FTX, Cryptocurrency Chief, Strikes to Curb Excessive Threat Trades

A popular cryptocurrency exchange announced on Sunday that it was curbing some type of high-risk trading, partly due to the sharp fluctuations in the value of Bitcoin and the. is held responsible Casino-like atmosphere on such platforms worldwide.

Switching the exchange, FTX, would reduce the amount of bets investors can place by lowering the leverage offered from 101 to 20 times. Leverage multiplies the trader’s chance not only of profit, but also of loss.

“We will take the first step here,” said Sam Bankman-Fried, 29, the billionaire and founder of the platform, which operates from Hong Kong, on Twitter on Sunday. “Today we are removing the high leverage from FTX. The maximum permissible value will be 20x. “

The announcement came after the New York Times, in an article posted online on Friday, described the risky trades offered on FTX and other global exchanges such as Binance and BitMEX that accelerated a global crash in May. This month, those bets worth more than $ 20 billion were liquidated on cryptocurrency exchanges around the world.

Bankman-Fried said lowering leverage “is a step in the direction the industry has been headed and has been for a while,” adding, “Although we believe many of the arguments in favor of With high leverage, we don’t miss the mark either, believing it’s an important part of the crypto ecosystem, and in some cases it’s not a healthy part of it. “

Global platforms like FTX allow traders to borrow big when betting on price fluctuations – traders don’t buy and sell cryptocurrencies, but instead predict where the prices of the underlying assets will go. These bets, known as derivatives, mean that the exchange will grant them credit when they raise $ 1,000 so they can wager on the future price of the cryptocurrency worth up to $ 101,000 on FTX. Now, with the new cap, the maximum on this transaction would be $ 20,000.

This type of transaction should not be available to professional investors in the United States, but – at least historically – some of these investors have used workarounds to trade on the sites.

Leverage makes investors much more susceptible to their accounts being liquidated due to an automated margin call if the price of the cryptocurrency goes against their prediction and they do not have enough collateral on their accounts to support their bets.

It happened in May. When cryptocurrency prices began to fall due to market-moving events such as China’s announcement of regulatory action or Tesla’s decision to suspend Bitcoin payments, it prompted exchanges to automatically liquidate the accounts of the most leveraged investors before their collateral were no longer sufficient to cover their positions.

“These liquidations are obviously a big factor in the price crash,” said Clara Medalie, head of research at Kaiko, a provider of cryptocurrency market data in Paris, and recalled the sudden fall in value of the cryptocurrency in mid-May. “It is a doom-loop.”

Bankman-Fried said on Sunday that only a small percentage of traders are taking advantage of the maximum leverage available. He also argued that FTX had fewer liquidations than other exchanges and that he had long sought to “promote responsible trading”.

Still, he predicted in an interview last week that some investors would not welcome a move to reduce debt. “We’d get a consumer outcry if we got rid of it and we’d get very bad press,” he said. “But it could be the right thing.”

Mr Bankman-Fried also admitted that high leverage created the impression that exchanges like him were promoting risky trading, although he claimed it was not a fair conclusion.

Binance, the world’s largest cryptocurrency exchange, offers up to 125x leverage. Changpeng Zhao, the Sino-Canadian founder of Binance and a developer who traces his professional roots back to Wall Street, has said that the extreme leverage numbers were just a “marketing gimmick” and that most traders don’t use them.

Timothy Massad, the former chairman of the Commodity Futures Trading Commission, which regulates derivatives in the U.S., said he welcomed FTX’s decision and hoped other platforms like Binance would follow suit.

The change, he said, could be motivated in part by FTX’s success last week in raising $ 900 million in venture capital, the highest ever value for a cryptocurrency exchange. FTX’s high leverage offerings are more likely to damage its reputation as Mr Bankman-Fried seeks to expand the global reach of its platform, Mr Massad said.

“Sam has bigger visions, and this step removes a focus that might be in the way,” said Massad. “Take it off the table.”