Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.
Articles by Sean Murray
On The Scene With KEO in Miami
July 8, 2021Farid Shidfar is Head of US Operations at KEO, a small business finance company based in Midtown Miami. I sat down with Shidfar to ask about KEO’s recent foray into the market, what they’re seeing on the front lines, and their plans for the future. Our one-on-one interview is below:
Snapchat Acquired Mobile Shopping App Founded By Former MCA Execs
July 2, 2021
A brother and sister team formerly known throughout the merchant cash advance industry have achieved major success in another market altogether, mobile shopping.
Recently, their app was acquired by Snapchat, according to various news outlets, and the tech has since been integrated into the Snapchat app.
Molly and Meir Hurwitz, both original stalwarts of the old Pearl Capital in New York, co-founded Screenshop in 2017, an app that integrated shopping with fashion and social media. Its initial launch received added buzz thanks to Kim Kardashian’s early involvement as an advisor. Notably, Screenshop CEO Mark Fishman was previously a Risk Manager at Pearl Capital, rounding out the former MCA crew.
“We’re No. 5 on the app store category of fashion,” Meir Hurwitz told deBanked in November 2017. “We’re just getting started.”
The success continued.
“Screenshop gives shopping recommendations from hundreds of brands when you Scan a friend’s outfit,” Snapchat wrote in a published announcement this past May.
More than 170 million Snapchatters use scan features every month, the company revealed.
“Screenshop is now a part of ‘Scan’ said Snapchat CTO Bobby Murphy during the company’s annual Partner Summit broadcast on May 20. The above screenshot is of Murphy demonstrating the Screenshop technology.
Congress Tells OCC “Nope” On True Lender Rule
June 29, 2021
In October, the OCC brought clarity to the relationships that many fintech companies enjoy with banks.
So long as a national bank is named as the lender on the loan agreement on the date of origination or so long as it funds the loan, then the bank is considered the true lender, the OCC decided. It issued it as a rule that was published in the Federal Register last year.
The brief proclamation was viewed as necessary in light of lawsuits filed against fintech companies that have challenged who the true lender was on a loan.
National banks are generally exempt from state interest rate caps and licensing requirements. Fintech lenders, therefore, partner up with banks in such a way that the banks themselves actually make the loans so that those same exemptions carry over. The long-used practice has drawn litigation as well as outrage from certain corners of the economic and political spectrum. The OCC rule issued during the Trump era, for example, was not unanimously applauded.
Last week, Congress took the unusual step of nullifying the OCC’s rule.
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Office of the Comptroller of Currency relating to “National Banks and Federal Savings Associations as Lenders” (85 Fed. Reg. 68742 (October 30, 2020)), and such rule shall have no force or effect.
Short and succinct.
The invalidation of the OCC rule does not mean that banks cannot collaborate with fintechs or third parties in such a way as before, but rather that the certainty of what’s acceptable and what isn’t will be relegated to further debate for years to come.
Tether is Now So Big, Its Collapse Could Disrupt the Short-Term Credit Markets
June 26, 2021
More than $62.5 billion worth of Tethers have been printed in the last few years to facilitate liquidity in the crypto markets. The system has worked because the company behind Tether had long claimed that each unit of the digital currency was backed somewhere by a real dollar in a bank account.
That was determined false. “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie,” wrote the New York State Attorney General in February after the regulator announced a settlement with the company. “These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”
Despite the characterization, Tether has continued to be the glue that makes the global crypto market hum. And their size is now so big, that it’s no longer just a crypto problem.
According to the Federal Reserve Bank of Boston, Tether now poses a risk to all short-term credit markets. The central bank listed it as an example of “new disruptors” that pose financial stability challenges.
Eric S. Rosengren, the CEO of the Boston Fed, said “There are many reasons to think that stable coins, at least many of the stable coins are not actually particularly stable and actually have some of the same features as money market funds. The difference is prime money market funds have been losing market share but these stable coins have been growing very rapidly in part because of their use along with the cryptocurrency market.”
On Tether in particular, he said, “While [Tether talks] about being stable, if you look at the set of assets that are there, it includes corporate bonds, secured loans, commercial paper, in effect this is a very risky prime fund. Prime funds would not be able to hold all these assets.”
Tether has drawn enhanced public scrutiny in recent months after releasing the following breakdown of its assets. The digital asset company that once claimed all Tethers were backed by dollars, revealed that less than 3% of them were actually backed by dollars.
Tether’s riskiness was also the subject of a recent segment on Jim Cramer’s Mad Money show on CNBC:
deBanked first shed light on the Tether mystery more than two years ago in a story that questioned what drove the cryptocurrency bull market of 2017.
The Small Business Finance Industry is BACK
June 21, 2021
The industry is back. I say this while sitting in a Miami hotel, my third such trip to Florida since becoming fully vaccinated against Covid in May.
There’s a lot of action going on. I’ve sat down in multiple broker shops in both New York and Florida and the phones are ringing off the hook.
The demographic of the average customer in the post-covid recovery seems to vary. Some say the credit quality has gotten better, others have said it’s worse. Some merchants have become used to forgiveable loans and low APR financing while others appear willing to take capital at any price just to keep up with the pace of their growth. It’s one of those things where everyone is just trying to adjust to the new normal, even if there’s little consensus as to what that is.
In New York City, the return of packed bars and overflowing restaurants stands in stark contrast to the rows of abandoned stores and For Lease signs that dot the landscapes around them. And yet if one looks past all that, the only reminder that Covid was ever even there is the requirement that one still wear a mask on the subway even if they’re vaccinated.
In Florida, it’s the opposite. I recently got yelled at by a bus driver for wearing a mask in the first place.
The broker shops I’ve visited still had office space that were filled with teams that were more than happy to be occupying them in person. But at the same time, the industry has become extremely popular with the traditional work-from-home crowd.
Leo Kanell’s 7-day marathon challenge on facebook draws in more eager industry participants than I would’ve ever thought possible, an accomplishment I know to be true because I dropped in on him unannounced late one friday night while he was live.
Similarly, Oz Konar, who I did a livestream interview with in person, has trained more than 3,000 brokers in the industry, many who work for themselves from home.
We’ve also been very busy in the last couple months and have met a lot of brand new entrants on both the funding and broker side.
All this activity is setting the stage well for Broker Fair 2021 on December 6 in New York City. It is perfectly timed to discuss the new disclosure law that goes into effect in New York on Jan 1, 2022, one that is so consequential that at least one company has relocated to New Jersey.
What a time to be in the industry!
Mexican Small Business Lender Buys a Bank, Eyes United States
June 18, 2021
Change is happening south of the border. Online lenders and alternative funders are growing across Mexico much the same way as elsewhere. This week, Credijusto, an online small business lender based in Mexico City, acquired Banco Finterra, marking the first time that a fintech has acquired a bank in the country.
According to Reuters, “Credijusto aims to ramp up services for Mexican companies that sell to the United States, and build a business for U.S. companies that do cross-border trade in Mexico and beyond in Latin America.”
Mexico also has more than 6 million small businesses, a market that is effecively 4-6x larger than Canada’s.
Prior to this, Credijusto had already collectively raised $400M from Goldman Sachs, Credit Suisse, Point72 Ventures, New Residential Investment Corp., Kaszek, QED Investors, John Mack, Ignia, Promecap and LIV Capital.
“The acquisition of Banco Finterra seeks to create the first truly digital banking platform for Mexican companies in the future,” commented Allan Apoj, co-CEO of Credijusto. “This transaction marks an important milestone in Mexico and the region, and we are proud to be revolutionizing the future of banking in Latin America.”
Apoj’s partner, co-CEO David Poritz, hinted to Reuters that in a couple of years it may consider the acquisition of an American bank as well.
Earlier this year, Mexico began to allow fintech companies to obtain a Financial Technology Institution license.
Estamos muy orgullosos de revolucionar el futuro de la banca en México con la adquisición de Banco Finterra y de beneficiar así a las empresas a través de productos financieros de nueva generación. Conoce más de este gran logro: https://t.co/pbGBVyo04p pic.twitter.com/A32vaHDOB1
— Credijusto (@credijusto) June 15, 2021
LendAcademy P2P/Investor Forum is Returning
June 14, 2021Update 6/19/25: This forum has migrated to DailyFunder
The P2P Lending/Investor Forum formerly at LendAcademy.com is coming back!
In late May, the online forum at LendAcademy.com went offline. Soon after, the forum URL was redirected to a note from the company that said the server hosting the data was no longer accessible.
“Upon further investigation it seems that our web hosting company, GC Solutions, has suddenly gone out of business,” they wrote. “We can no longer access our web portal to manage the site. We have left voicemails and emails so far to no avail. We received no warning and were taken completely by surprise. The backups we have are also with the hosting company.”
With the data seemingly permanently lost, deBanked acquired the rights to it last week (just the forum), with the hope that some proprietary methods of forensic recovery would be successful. A significant portion of the forum has since been restored, hosted now at https://dailyfunder.com/forumdisplay.php/50-Peer-to-Peer-Lending-(Legacy).
It is still a work in progress. There are still formatting issues and a number of missing posts. Passwords were also lost. If you were a user on the forum and wish for your account access to be restored, you must email us at info@debanked.com.
Thank you for your patience.
The original post announcing the loss:
deBanked Celebrates 4,000 Days Since Inception
June 13, 2021
It’s been 4,000 days since deBanked first came online as a blog, originally as MerchantProcessingResource.com in 2010.
I did not anticipate on Day 1 that I would still be here more than 10 years later, but here I am!
Thanks to everyone that has been reading, watching, following along, and attending our events. It has made the journey thus far very enjoyable.
I look forward to seeing you all again in person at Broker Fair 2021 in New York City.
