Not too long ago, the thought of publicly traded companies holding their cash reserves in an asset as volatile as bitcoin seemed ridiculous. Then the pandemic hit and governments cut colossal stimulus cheques, sending stock and crypto markets on the ride of their lives.  According to CoinGecko, 27 publicly traded companies own about 225,413 bitcoin, or 1.18% of the total supply. They are worth around $4.6 billion at current prices. Public companies The first public firm to sense the opportunity at the start of the pandemic was Galaxy Digital Holdings, a Canadian crypto-focused merchant bank founded in January 2018.Founder Michael Novogratz said in an interview in April 2020, just after the US announced additional stimulus measures: “Bitcoin has this moment right now. Just today we had another trillion dollar stimulus — money growing on trees, and my mother taught me when I was younger that money doesn’t grow on trees.”Because it acted quickly, Galaxy Digital is still up on its investment even though bitcoin, which was a hair’s breadth from $70,000 in late 2021, is back around $20,000.The company paid $134 million for its 16,402 bitcoins, which are now worth around $340 million.The second company to jump on board in 2020 was cloud software firm MicroStrategy, which bought $425 million worth of the crypto asset in August and September. After continuing its buying spree throughout 2021, the company adopted bitcoin as its primary reserve asset, effectively turning its stock into a mock bitcoin ETF. Microstrategy is currently the largest owner of bitcoin with 129,218, or 0.615% of the total supply. Its $4 billion investment in the crypto asset is now worth about $2.7 billion.Earlier this week, CEO Michael Saylor denied rumours that the company would have to liquidate some of its bitcoin holdings to meet a margin call for a bitcoin-backed loan if the cryptocurrency’s price fell below $21,000. Jack Dorsey’s payments company Square (now called Block) took the plunge in October 2020 with a $50 million purchase of bitcoin. Its Q4 2020 earnings revealed it had picked up another $170 million worth. Dorsey, an enthusiastic advocate for bitcoin, stepped down as Twitter CEO in December 2021 to focus on the payments company. A week later he changed its name from Square to Block, a reference to the blockchain technology underpins crypto.The 8,027 bitcoin it paid $220 million for are currently worth about $165 million. Four months later, Elon Musk’s Tesla announced it had bought $1.5 billion worth of bitcoin, splashing a significant portion of the $19 billion cash on hand it reported at the end of 2020.Tesla sold 10% of its Bitcoin holdings in Q1 2021. Musk said this was "to prove liquidity of bitcoin as an alternative to holding cash” on Tesla’s balance sheet.The company now owns 48,000 bitcoin, or 0.229% of the total supply, putting it second behind MicroStrategy.Marathon Patent Group rounds up the top five with 4,813 bitcoin. Its $150 million investment is currently worth just under $100 million. Private companies and governments Private firms own roughly 174,068 bitcoin, or about 0.829% of the total supply, according to River.com. Chinese firm Block.one is the largest private owner with 140,000 bitcoin, or 0.667% of the total supply – more than any public company.Governments across the world own an estimated 259,870 bitcoin, representing 1.237% of the total supply. Written by Zaheer Merchant Top Stories By Our Reporters Sequoia closes largest India and SEA startup fund at $2.85 billion Sequoia Capital has raised $2.85 billion to deploy across startups in India and Southeast Asia, the largest dedicated corpus for the region by a risk investor. It will invest $2 billion across its India venture and growth investments, while the remaining will go to Southeast Asian companies. The development comes after Sequoia recently told its Limited Partners (LPs), or sponsors in the fund, that it had decided to postpone the close of its latest fund amid an investigation at one of its portfolio firms, as we reported on May 18. Earlier, Sequoia Capital had shot off a note to its portfolio companies, saying it has stopped working with law firm Algo Legal post an investigation at one of its investee firms, multiple people who have received the email told us. Digital payments RBI shoots down proposal on digital-only banks The Reserve Bank of India has shot down the idea of full-stack “digital-only banks” as they pose risks to the system, governor Shaktikanta Das hinted on Friday. Das, who was speaking at an event in the financial capital, said that there was no proposal at the moment to regulate so-called neobanks. Banks, payment aggregators press ahead with tokenisation but concerns remain: Indian banks and payment aggregators are pressing ahead with plans to tokenise cards, and are exploring ways to route digital transactions through these tokens so that card-based transactions are not affected from July 1, multiple sources told us. RBI lifts Mastercard curbs: Meanwhile, the RBI lifted business restrictions it imposed on Mastercard almost a year ago, saying the firm had achieved “satisfactory compliance”. In July 2021, the regulator had barred Mastercard from onboarding new customers for not complying with its circular on the storage of payments data. Extend tokenisation deadline to June 2023: former RBI panel member: Aruna Sharma, a former member of the Reserve Bank of India’s digitisation committee, has called for extending the deadline to implement the central bank’s new card storage guidelines to June 2023. The rules are set to come into effect by the end of this month. Ecommerce corner Amazon India bets on local stores, social commerce The Indian arm of US ecommerce major Amazon will increase its focus on local stores and social commerce to tap the “next 500 million consumers” in India, Manish Tiwary, country manager, India consumer business at Amazon India, said. Ecomm policy should apply equally to Indian, foreign firms, says parliamentary panel: The Indian government should address ecommerce concerns related to antitrust, deep discounting and preferential treatment of sellers regardless of whether the platform in question is Indian or foreign-owned, a parliamentary panel on ecommerce has said. Udaan on track to hit positive unit economics, CEO tells staff: Vaibhav Gupta, CEO of business-to-business (B2B) ecommerce firm Udaan, has told his staff in an internal note that the company was able to hit a positive contribution margin in the last quarter of FY21 and was on track to become unit economics-positive in the June quarter of 2022. Cryptoverse Coinbase, the largest US crypto exchange, has sacked about 8% of its India workforce just two months after announcing plans to triple its team in the country. Pankaj Gupta, the company’s vice president of engineering, said on Twitter on Wednesday,WazirX, CoinSwitch Kuber, CoinDCX urge NPCI to restore UPI services: Top cryptocurrency exchanges including CoinSwitch Kuber, WazirX and CoinDCX have asked the National Payments Corporation of India (NPCI) to restore Unified Payments Interface (UPI) services for crypto companies. Tech policy India seeks global action to counter VPNs, encrypted messaging and crypto India is seeking global action to counter the use of a slew of technologies including virtual private networks, end-to-end encrypted messaging services, and cryptocurrency by terrorists, sources told us, mirroring its domestic stance on these issues. In their suggestions to members of an Ad Hoc committee of the United Nations, Indian officials said, “the anonymity, scale, speed and scope offered to (terrorists) and the increasing possibility of their remaining untraceable to law enforcement agencies” by using these technologies remains one of the major challenges before the world. Govt bans VPN for employees: The government has barred its employees from using third-party virtual private networks (VPN) services offered by companies such as Nord VPN and ExpressVPN. Govt plans to expand Aadhaar’s ambit from birth to death: The Unique Identification Authority of India, which has enrolled nearly all of India’s adult population in Aadhaar since its launch in 2010, is now looking to expand its ambit to cover a person’s entire lifecycle from birth to death. ETtech Done Deals ■ Mohalla Tech, which owns Indian-language social media network ShareChat and short-video platform Moj, has raised $255 million (Rs 1,990 crore) in a fresh round of funding from Google and the Times group. ■ South Korean game developer Krafton Inc, creator of the popular PlayersUnknown Battlegrounds (PUBG), plans to invest $100 million or more in Indian startups this year, its chief executive told us. ■ Logistics aggregator Shiprocket said it has acquired a majority stake in direct commerce-focused logistics player Pickrr in a cash-and-stock deal, valuing it at around $200 million. ■ Early-stage venture capital firm 8i Ventures said on Monday it has made a partial exit from its seed investment in financial infrastructure startup M2P Fintech for a more than 36-fold return on its investment. The IT corner Record US inflation to drive more business for top Indian IT firms Top software services firms such as Tata Consultancy Services (TCS), Infosys and Wipro are expected to gain from a cost optimisation-led increase in outsourcing work to India, analysts told us, as inflation concerns loom large in the United States. Fancy avatars and hot-desking: hybrid work is playground for modern tech: Startups developing future work models have been getting rather creative of late. Video chat platform Gather has imagined a work life where employees’ digital avatars become an extension of their identities as they sit out of a virtual cubicle in a virtual office setting. Middle East presents next big opportunity to Indian IT firms: The Middle East is emerging as an important destination for Indian IT companies as countries in the region step up digitisation initiatives. Saudi Arabia alone presents a potential $500 billion opportunity, according to industry estimates. Infosys setting up four new offices in tier II cities: Infosys is setting up four new offices in tier II cities to be closer to the available talent pool, Krishnamurthy Shankar, group head of human resource development, told us. Startup Inc The boards of Indian companies are getting younger as startup culture catches on. More than a third of people who got a director identification number (DIN) in the last fiscal year were aged 30 or younger, data from the Ministry of Corporate Affairs (MCA) showed.Startups look to accelerate hiring of women in product, tech roles: Even as the war for talent continues and roles in technology and product command a premium, a host of new-age companies are prioritising moving the needle on their diversity numbers. According to Nasscom data, women constitute 35% of India's technology industry. Google launches accelerator for women-led Indian startups: Google has launched a cohort-based accelerator programme for women-led startups in India. Called the Google for Startups Accelerator Women Founders Programme, it aims to boost female entrepreneurship in the country. That’s all from us this week. Stay safe. Page 2In May, a so-called stablecoin, terraUSD, lost all its value in a matter of days. What is tether? Tether, like terraUSD, belongs to the breed of cryptocurrencies called stablecoins. Unlike regular cryptocurrencies such as bitcoin, a stablecoin is designed to have a fixed value, which is most commonly done by pegging its price to a traditional currency.Tether was launched in 2014 by iFinex, which is also the parent company of cryptocurrency exchange Bitfinex.It is pegged to the US dollar, and iFinex claims it holds actual dollars, bonds, treasury bills and other assets in reserve to serve as collateral. This means in theory, anyone who wants to exchange tethers for US dollars can do so quickly and easily.Indeed, tether can only hold its value so long as it continues to redeem its tokens for $1 each, and investors have faith that the tokens are fully backed by liquid assets. If that faith were to vanish, it would take down not just tether but arguably all of crypto.Tether, after all, is not just any stablecoin – it’s THE stablecoin, and the third most-traded cryptocurrency in the world after bitcoin and ether.And because stablecoins are used mainly to buy other cryptocurrencies, tether’s tentacles touch most – if not all – other digital coins. Tether in fact doesn’t have its own blockchain. Instead, users can transact with it on some of the bigger blockchain platforms, such as Ethereum, Tron, Algorand, Solana, Avalanche and Polygon.There are currently 70 billion tethers in circulation, making it three times the size of terraUSD before it collapsed.“Tether is really the lifeblood of the crypto ecosystem,” Hilary Allen, a finance expert at American University, told The New York Times. “If it imploded, then the entire facade falls down.”Controversies You might think such a vital cog of the crypto machine would be trusted and widely respected, but you’d be wrong. iFiniex, rightly one of the most scrutinised companies in all of crypto, hasn’t always inspired trust, to put it mildly. In January 2018, the company dismissed an accounting firm it had hired for an audit, citing "the excruciatingly detailed procedures [the auditor] was undertaking for the relatively simple balance sheet of Tether."In 2019, the New York Attorney General’s office initiated a probe into whether Bitfinex sought to cover up the loss of $850 million funds held by Tether.Almost two years later, Tether and Bitfinex reached a settlement with the attorney general’s office in February 2021, under which it would pay $18.5 million in fines and release a quarterly report detailing the reserve’s composition for the next two years.The company started to publish reports on its assets in 2021, but still does not specify exactly where its reserves are held.Tether may also have been used from time to time to artificially inflate the price of bitcoin and other cryptocurrencies.In 2018, an academic study looking at the 2017 crypto bull run found that a particular player on the Bitfinex exchange would use newly minted tether to buy bitcoin and support the price of the world’s largest cryptocurrency when it fell. Since the start of the crypto crash, investors have pulled more than $10 billion out of tether, in what has been described as a slow bank run. This was accelerated by the crash of the terraUSD stablecoin in May and the freezing of withdrawals on the Celsius Network – another crypto ‘bank’ – in June.Is this the crumbling edifice of crypto, as tether’s critics claim, or much ado about nothing? Only time will time.Written by Zaheer Merchant Top Stories By Our Reporters Zomato board approves Blinkit buy for Rs 4,447 crore Zomato’s board of directors approved the acquisition of Blinkit (formerly Grofers), a quick commerce startup, in an all-stock deal at a board meeting held today, according to a BSE filing. The deal - valued at Rs 4,447 crore or close to $570 million - is close to 43% lower than Blinkit’s last valuation of just over $1 billion. Blinkit turned into a unicorn last year following a $120- million funding from Zomato and Tiger Global. Blinkit acquisition to add significant addressable market for Zomato, says CEO Goyal: Zomato’s acquisition of quick commerce company Blinkit for Rs 4,447 crore in an all-stock deal on Friday will add a significant addressable market for the firm, wrote the company’s cofounder and CEO Deepinder Goyal in a letter to his shareholders. Also read: Why nobody is talking about 10-minute deliveries anymore RBI and Fintechs Fintechs seek six months to comply with RBI credit rule At a meeting on Thursday evening, fintech companies decided to seek an extension of at least six months for Reserve Bank of India's latest mandate, which has sent credit card challengers and other card-based fintechs into a tizzy. Two people who attended the meeting, arranged by Digital Lenders Association of India (DLAI), told us they see the extension request as the “most critical” part of the ongoing issue. Fintechs to ping govt, RBI governor on central bank note: Top fintech companies are uniting to petition the union government and the Reserve Bank of India for clarity on the central bank’s recent directive, sources told us. In a one-page circular, issued on Monday, RBI had directed all non-bank pre-paid payment instruments (PPIs) to stop loading credit lines onto their products. RBI’s stance on fintech has government’s backing: The Reserve Bank of India’s latest move barring non-bank prepaid payment issuers from loading credit lines onto their products has the support of the government, which also wants a comprehensive regulatory framework soon for the fintech sector. Some fintech firms freeze prepaid cards after RBI order: Fintech firms such as Jupiter, EarlySalary and KreditBee have temporarily stopped customers from using their prepaid cards, multiple sources told us, after RBI banned the non-banks from loading credit lines on prepaid payment instruments (PPIs). RBI circular leaves fintech firms dazed and confused: The central bank’s latest communication to fintechs, which bars non-bank wallets and prepaid cards from loading their credit lines into these products, has caused widespread confusion in this segment of the payments industry, although the order came after many new-age companies reportedly assumed the lender’s role without building sufficient safeguards. Non-banks can't load credit lines on prepaid payment instruments, says RBI: The Reserve Bank of India on Monday disallowed non-bank wallets and pre-paid cards from loading their credit lines onto these platforms. The regulator, in a one-page circular addressed to non-bank pre-paid payment instruments (PPIs), directed them to stop the practice immediately. Startup report card PhonePe's loss drops marginally to Rs 1,728 crore: Digital payments firm PhonePe’s consolidated loss has fallen marginally to Rs 1,728 crore in FY21, the latest filings with the Ministry of Corporate Affairs (MCA) showed. Its consolidated loss in FY20 was Rs 1,771.6 crore. Revenue from operations was Rs 690 crore in FY21, from Rs 371.7 crore in the previous fiscal year. Vedantu’s consolidated net loss widens to Rs 604.28 crore in FY21: Edtech unicorn Vedantu’s consolidated net loss widened to Rs 604.28 crore in financial year 2020-2021 (FY21), against a net loss of Rs 150 crore in FY20, as total expenses jumped sharply. The Tiger Global-backed startup’s employee benefit expenses increased by 4.6 times to Rs 407.4 crore in FY21 against Rs 88.3 crore in FY20, according to filings sourced from business intelligence platform Tofler. Unacademy’s consolidated loss widens to Rs 1,474 crore in FY21: Edtech unicorn Unacademy’s consolidated loss has widened to Rs 1,474 crore in FY21 from a loss of Rs 259 crore in FY20. Revenue from operations rose to Rs 337 crore in FY21 from Rs 65 crore in the previous fiscal year, according to regulatory documents sourced from business intelligence platform Tofler. RBI extends June 30 deadline for card tokenisation by 3 months The Reserve Bank of India has extended the deadline for tokenisation of cards by three months. The RBI had earlier set a deadline of June 30, whereby merchants and payment aggregators had to delete all card details and replace it with tokens. Sale of Ola Electric scooters slumps to 130-200 a day Electric vehicle maker Ola Electric has been selling only 130-200 of its S1 and S1 Pro scooters a day for the past two weeks, after it moved away from the multiple-payment-window model and started accepting full payments for its scooters at one go, two sources told us. Cashback drives surge in WhatsApp Pay UPI transactions WhatsApp Pay's move to kickstart its cashback campaign has boosted its digital payments ambitions on the Unified Payments Interface (UPI) network after a sluggish start. While WhatsApp Pay has been active on UPI for some time, it started aggressively giving cashbacks after it was allowed to scale the service to 100 million users, they said. Sequoia’s Surge to raise ceiling for seed-stage investments Sequoia Capital's accelerator programme Surge will invest more in seed-stage startups so it can back a wider range of companies and stay with them longer as they achieve a product-market fit, said Rajan Anandan, MD, Surge and Sequoia India. ETtech Done Deals ■ Sales and marketing automation platform LeadSquared said it has raised $153 million in a funding round led by WestBridge Capital. We first reported on April 12 that the SaaS firm was in talks with WestBridge Capital for a new round of funding at a unicorn valuation. ■ Xpressbees, a leading logistics service provider, has decided to extend its services to direct-to-consumer (D2C) brands just days after rival Shiprocket acquired Pickrr to bolster its direct commerce business. ■ Matrix Partners India, an early investor in companies such as Ola, Razorpay and Dailyhunt, among others, will raise a $450 million India fund, according to a regulatory filing with the US Securities and Exchange Commission. ■ Early-stage venture capital firm Fundamental VC has launched its maiden fund with a target corpus of $130 million. The sector-agnostic fund will invest in pre-seed and seed rounds across consumer internet, healthcare, insurance, financial services, Software-as-a-Service (SaaS), gaming, and artificial intelligence, a senior executive told ET. ■ Milky Mist, a direct-to-consumer dairy and fresh foods brand, is in talks with private equity funds such as Kedaara, True North, TA, Temasek and others to raise $100-120 million in a funding round. This will be the bootstrapped company’s first institutional funding round, four people with direct knowledge of the development told us. ■ Edtech startup BrightChamps is planning to close mergers and acquisitions worth $100 million through stock and cash deals in the ongoing fiscal year (FY23), cofounder and chief executive Ravi Bhushan told us. ■ Digital payments service provider Pine Labs has acquired application programming interface (API)-based infrastructure company Setu in a cash-and-equity deal for about $70-75 million. Pine Labs chief executive Amrish Rau said the deal was significant but refused to disclose its exact size. Cryptoverse DeFi bubble bursts, spooking VCs and retail investors in India Shashank Bhardwaj from Delhi is writing off his entire investment in US-based crypto lending platform Celsius Network. The 28-year-old Bhardwaj had pumped in 30-40% of his entire crypto portfolio into the platform to earn interest on “crypto that was lying around in his wallet.” Celsius drops: Celsius, which had almost $12 billion under management as of May, lent out the deposits of customers – who were treated as unsecured creditors – to other users and invested in decentralised finance (DeFi) protocols. Bhardwaj, like other retail investors, was attracted to the platform because of the returns it promised. However, Celsius told customers on June 12 that it was pausing all withdrawals, swaps and transfers between accounts because of extreme market volatility. Indian crypto investors who succumbed to FOMO are being tested: Indian crypto investors remain under stress, anticipating that the worst may be yet to come. The crypto market has recorded one of the worst crashes in its short history over the past fortnight, wiping off a few hundred crores of Indian investors’ money. CoinDCX halts crypto withdrawals, sparks anger on social media: Crypto exchange CoinDCX had paused all crypto withdrawals without informing its users in advance, causing a furore on social media. The recent liquidity crises at several institutions, including Celsius Network, which paused crypto withdrawals and transfers, has stirred fear among Indian retail, we reported on June 21. The IT corner TCS case puts spotlight on job terminations in IT industry The spotlight is on unlawful terminations in the country, experts said, after a Chennai labour court recently asked Tata Consultancy Services (TCS) to reinstate with back wages an employee who was asked to leave over seven years ago. TCS may roll out chip-based e-passports this year: Tata Consultancy Services (TCS) could roll out chip-based e-passports by the end of the year, a senior executive told us. TCS is also setting up a new command and control centre with the Ministry of External Affairs (MEA), and a new data centre to support the project’s backend requirements, said Tej Bhatla, head of its public sector business unit.Curated by Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi. That’s all from us this week. Stay safe. Page 3In September 2016 an app called A.me was launched in China. Built in a mere 200 days, it was rebranded to Douyin just three months after its launch.Within a year it had 100 million users and was clocking more than a billion views a day.The company that built it quickly decided to release an international version, which it did in 2017.Five years later, this app is rapidly closing in on the world’s biggest social networks on popularity and influence, having already surpassed them in terms of controversy.We’re talking, of course, about TikTok. Under fireTikTok, like any large social network, has had its share of controversies. The Indian government banned it along with 58 other apps with Chinese links, including WeChat, UC Browser and PUBG, on June 29, 2020. The Ministry of Electronics and Information Technology said the apps were "prejudicial to sovereignty and integrity of India, defence of India, security of state and public order." When it was banned, TikTok had 190 million users in India, making it the app’s second largest market behind China at the time.The ban was made permanent in January 2021 and the following month TikTok said it would be forced to lay off over 2,000 employees in India.In 2020, the US government also announced it was considering banning TikTok on a request from then President Donald Trump. ByteDance initially planned to sell a small portion of TikTok to an American company but eventually agreed to divest TikTok to prevent a US ban.But the following June, President Joe Biden signed an executive order revoking Trump’s TikTok ban. He instead ordered the secretary of commerce to investigate whether the app posed a threat to US national security.In a letter to Apple and Google that was disclosed this week, US Federal Communications Commission (FCC) chief Brendan Carr called TikTok “a sophisticated surveillance tool that harvests extensive amounts of personal and sensitive data.” He called on the companies to remove the app from their stores.And last week, BuzzFeed News reported that ByteDance's employees have repeatedly accessed the data of US TikTok users. Bulletproof Despite being banned in a country of more than a billion people and becoming a geopolitical pawn twice over, TikTok remains one of the world's fastest growing apps, rapidly closing in on social media giants Instagram, WhatsApp, YouTube and Facebook in terms of users.Where will it stand at the end of this decade? Written by Zaheer Merchant Top Stories By Our Reporters Private-market correction just getting started: Alpha Wave’s Navroz Udwadia It has been a meteoric rise for Falcon Edge (now Alpha Wave Global), which has been catapulted into the top league of technology investors locally in a short time. After a hyper-busy two years of dealmaking and with a $10-billion corpus at its disposal, Alpha Wave has emerged among the biggest propellants of the latest technology bull run in India, which is now coming to an end. “We do think the private market correction is still in its infancy – (there is) much more to come, and so, patience is critical,” Navroz Udwadia, cofounder and partner at Alpha Wave Global, told ET in an interview. Meanwhile, Global venture capital firm Insight Partners is likely to increase its pace of investments in India, a top executive told ET. The firm has so far deployed nearly $1 billion in the country, with 78% of that flowing in during the last 18 months, said Nikhil Sachdev, managing director, Insight Partners. Smear campaigns are rampant on Startup Twitter What’s common on Political Twitter has spilled over to Startup Twitter, one of the most active communities on the microblogging platform in India. Over the past few weeks, the chatter has been about how startups in India are using paid marketing tools to defame competitors. It all started when ecommerce platform Meesho sent out legal notices to some social media accounts and certain people, according to sources, for allegedly running smear campaigns against the company. These include Jaymin Shah, who runs influencer marketing digital agency SocialGrid. RBI and fintech Bank-led PPI issuers onboarding only full KYC users after RBI rap Bank-led prepaid card issuers such as Slice and Uni Card are onboarding only full-KYC customers on their platforms after the Reserve Bank of India (RBI) diktat disallowed non-banks from loading credit lines on such instruments, two people aware of the development said. Banks rethink fintech partnerships after RBI’s new rule: Indian banks are rethinking partnerships with credit-card based fintech firms following recent directives by the Reserve Bank of India (RBI) with respect to the co-branded card segment. Several banks have reached out to RBI to understand the regulator’s thinking after it issued orders for debit, credit and co-branded cards in April. Payments Council of India seeks govt’s help: The Payments Council of India (PCI) and several fintech firms have urged the government to step in to resolve the fallout from a recent directive by the Reserve Bank of India (RBI), which barred payment companies from loading credit lines onto wallets and prepaid payment instruments (PPIs). LazyPay updates terms to comply with RBI order: LazyPay, the lending arm of PayU India, has updated its terms and conditions to comply with a recent directive by the Reserve Bank of India (RBI) that barred prepaid payment instruments (PPIs) from being loaded with credit lines. Startups and layoffs Byju’s may rebrand WhiteHat Jr, fires another 300 at Toppr Edtech major Byju's is in active discussions to rebrand its code-teaching unit WhiteHat Jr, which it acquired in a $300 million deal in 2020, multiple sources told us. WhiteHat Jr, which teaches coding to children, has run into trouble in the past for allegedly misleading advertisements and promises on the outcomes of their courses. WhiteHat Jr challenged its critics in court but eventually withdrew its petition last year. Byju's pushes back payments for billion-dollar Aakash deal: Byju’s sought a two-month extension from Blackstone and other shareholders of test-preparation provider Aakash Educational Services on payments that were due this month, sources told us. The payment deadline has been extended to August, they said. Udaan fires 180-200 staff, 5% of its workforce, to cut costs: Business-to-business (B2B) ecommerce unicorn Udaan has laid off around 180-200 employees, or 5% of its workforce, according to a person briefed on the matter. In a town hall with employees on Monday, the company termed the move “unusual”. Some influencers say Trell hasn’t paid them for months; 100 more staff leave: Influencer-led video commerce platform Trell has not paid its dues to a section of content creators for the past six to seven months, three creators told us. About 100 employees of Trell have also voluntarily left the company over the last two months, a source said. Web3 and online gaming Govt to cover a lot of ground in final eGaming framework The union government is drawing up an extensive framework to regulate online gaming companies including proposals for time-bound retention of specific user data and robust grievance redressal mechanisms, senior government officials told us. Indian gaming companies plan to leverage Web3, play-to-earn: Indian game publishers are looking to leverage the metaverse and play-to-earn (p2e) elements of web3, influenced by blockchain-based games such as The Sandbox in the US and Axie Infinity in Southeast Asian nations. MPL forays into web3 gaming, in talks to raise $10-$15 million: Mobile Premier League (MPL) is launching a new web3 gaming venture, GGX, multiple sources privy to the development said, as the gaming unicorn taps the play-to-earn (P2E) gaming sector. GGX is expected to be an in-game non fungible token (NFT) marketplace that will offer a platform for owning and trading in-game assets, like an exchange. Cryptocurrencies a ‘clear danger’ to financial systems: RBI governor Reiterating his long-held stance on cryptocurrencies, the Reserve Bank of India (RBI) governor Shaktikanta Das said in the 25th issue of the RBI’s Financial Stability Report (FSR) that “we must be mindful of the emerging risks on the horizon”. “Cryptocurrencies are a clear danger. Anything that derives value based on make-believe, without any underlying, is just speculation under a sophisticated name,” Das said in the foreword of the report, released on Thursday. Swiggy, Byju’s, PayU drive ‘strong growth’ for Prosus in India Prosus NV, the Dutch-listed arm of Naspers, said it has seen strong growth in its Indian portfolio, while announcing its results for the financial year 2021-2022 (FY22). It said Swiggy contributed $212 million of its almost $3 billion food tech revenues. Overall losses for Prosus’ foodtech arm stood at $724 million in FY22, on account of its portfolio companies expanding into quick commerce. ETtech Deals Digest ■ Lenskart, the Softbank-backed omni-channel eye-wear retailer, has picked up a majority stake in Owndays – a Japanese direct-to-consumer eyewear brand – the company said. The strategic partnership through this merger will build Asia’s largest omni-channel eyewear retailer, Lenskart added. ■ Bertelsmann India Investments, the VC arm of the German media giant, Bertelsmann, has raised $500 million to back more early-stage Indian startups, Pankaj Makkar, managing director, Bertelsmann India Investments, told us. ■ Early-stage venture capital firm Fundamental VC has launched its maiden fund with a target corpus of $130 million. Early-stage venture capital firm Fundamental VC has launched its maiden fund with a target corpus of $130 million. Policy update MeitY flags Twitter’s lack of response to notices The government sent several notices to Twitter India over the last six to eight months but received “no or inadequate” response in at least five such cases, sources told us. The Ministry of Electronics and Information Technology (MeitY) issued the notices to the social media platform under Section 69A of the Information Technology (IT) Act. Cert-in gives a three-month breather to VPN providers, small businesses: The Indian Computer Emergency Response Team (CERT-in) has given a three-month extension to VPN providers, small and medium businesses, and data centres to comply with its cybersecurity rules. Issued on April 28, the rules were to come into effect on June 28. They will now come into force on September 25. IT corner More than half of IT companies struggle to get employees back to the office: report Three in four employees working at IT companies in India are not coming to office even once a week despite their organisations resuming work from office (WFO) according to a survey conducted by CIEL HR. TCS eyes non-metro offices to move closer to tech talent: Tata Consultancy Services (TCS) will set up offices in small cities and non-metro regions including Guwahati, Nagpur and Goa to get employees back into offices. This is aimed at encouraging collaboration among staff members as many are reluctant to go back to their base locations after working out of home, mostly in their native towns, following the Covid-19 pandemic, executives said. Karnataka labour office summons Infosys over non-compete clause on July 4: The tussle between information technology (IT) major Infosys and Pune-based labour union Nascent IT Employees Senate regarding the non-compete clauses in the employment contracts will now be fought on a different turf - the Karnataka Labour Department. That’s all from us this week. Stay safe. Page 4It is not every day you see a US-based Big Tech company that takes the Indian government to court. According to the latest report in the Washington Post, Musk and his team are now second-guessing their bid to buy Twitter. The world’s richest man has already expressed his displeasure over the behemothic number of fake accounts and implied that he could walk out of the $44-billion deal that first surprised the world in April this year. If Twitter has had its share of misgivings, the Indian government, too, has tightened the noose on big tech firms on several occasions when it comes to content regulation.Meta conflict Written by by Gaurab Dasgupta Top Stories By Our Reporters Rajeev Misra, CEO of SB Investment Advisers, which manages SoftBank Vision Fund, will step back from his executive role at the technology fund, according to a note from SoftBank’s founder Masayoshi Son. Misra, 60, played a prominent role in raising the $100-billion Vision Fund, the largest pool of private capital which disrupted technology investing globally. Social media influencers, who helped fintech and crypto firms shore up downloads and attract users last year, are now feeling the heat of the market downturn as funding dries up. What’s going on? As the global economic scenario resets and startups focus on revenue and costs, the marketing budgets of these companies are being slashed. As a result, the deal flow and earnings of the finance creators have dropped 30-40%, according to half a dozen influencer marketing agencies and creators we spoke to. Startups and layoffs Used-car selling platform Cars24 is shifting gears to cut costs through a spate of measures as late-stage funding deals dry up, sources told us. The company, backed by SoftBank and Alpha Wave Global, is looking to reduce its burn by around 50% to extend its runway. Startup valuations fall sharply, hurting IPO plans: Valuations of several new-age companies have taken a beating in the market for unlisted shares as the craze for startups wanes, possibly delaying many companies’ plans to go public. PharmEasy, Oyo, Boat and Ixigo have seen a sharp fall in value in the past six months, according to people dealing in the unlisted equity market. Startup layoffs have triggered panic among senior professionals: The recent spate of layoffs at Indian startups has triggered panic among senior professionals, prompting them to actively look for jobs outside the industry, according to a survey commissioned by ET and conducted by staffing firm Ciel HR Services. Funding for Indian startups fell almost 40% in Q2: Venture capital funding in Indian startups dipped 37% in the second quarter of this year to $6.9 billion, according to data from Venture Intelligence. In the first quarter, overall investments in startups stood at $11 billion. For the first half of the year, the overall investments stood at $17.9 billion, a 36% increase from the same period last year. Ola starts handing pink slips, defers impending appraisal: Mobility unicorn Ola joins the long list of Indian startups that have handed the pink slip to their employees amid a tightening funding environment triggered by global macroeconomic factors, geopolitical tensions, and volatility in publicly-traded technology stocks. RBI and Fintechs Razorpay, Pine Labs, and US-based Stripe received an in-principle nod from the Reserve Bank of India (RBI) to operate as payment aggregators. Once the central bank comes out with the final list of the shortlisted firms, they will have to conduct an audit within six months to get the final approval - a process that is followed by the RBI for granting all licences. Important to understand RBI objective, we’re well-capitalised, says Slice CEO: Rajan Bajaj, the founder, and chief executive of credit card startup Slice, in an internal memo urged his team to understand the Reserve Bank of India’s (RBI’s) recent objectives as the company tries to build a platform in a highly regulated sector. Cryptoverse The Directorate of Enforcement (ED) has sought more details and documents from crypto firms as part of its ongoing probe into alleged violations of foreign exchange laws, if any, by these firms, sources told us. Crypto trading volumes crash again as 1% TDS kicks in: Spot trading volumes on crypto exchanges CoinDCX, WazirX and Zebpay fell by at least 70% from June 30 to July 3 as the 1% tax deductible at source (TDS) on all crypto transactions kicked in on July 1. Volumes on WazirX were down the most at 82%, according to data sourced from crypto research and consulting firm Crebaco. The decline was almost 70% on CoinDCX and 76% on ZebPay. Crypto-lending platform Vauld freezes withdrawals as winter bites: Crypto platform Vauld has suspended withdrawals and trading and is seeking new investors as the 2022 crypto winter takes its toll. In a blog post, Vauld CEO Darshan Bathija said it was facing “financial challenges” because of volatile market conditions, financial difficulties at its key business partners, and the current market climate. UK crypto exchange Nexo gives Vauld a lifeline: London-based crypto exchange Nexo will acquire crypto lending platform Vauld, pending due diligence — marking the latest sign of consolidation in the crypto market amidst falling prices. London-based Nexo said it would “reorganize its future operations to accelerate its deeper presence in Asia”. However, it did not say when the deal would close. FMCG sales have fallen significantly on Amazon India after brands including Nestle, Dabur, and HUL were asked to switch to new seller Rocket Kommerce from Cloudtail, two sources aware of the matter told us. Sources estimate that the fall in sales could be in the range of 30-40%. Shopsy brings in about 25% of Flipkart’s new customers: About a quarter of new customers for the entire Flipkart group have come from its one-year-old social commerce app Shopsy, a senior executive at the e-commerce firm said. The group has several apps, including the Flipkart app, Myntra, payments app PhonePe, and travel service app Cleartrip. ■ Omnichannel eyewear brand Lenskart has been valued at $4.5 billion in a new $200 million investment led by Alpha Wave Global (previously Falcon Edge), a person briefed on the matter told us. ■ In the wake of rising early-stage investments by VCs, Axilor Ventures is launching its second technology fund Axilor Technology Fund-II, worth $100 million, as it looks to double down on its Indian startup investments. ■ Financial infrastructure provider M2P Fintech acquired cloud-lending platform FinFlux for an undisclosed sum. Launched in 2010, Bengaluru-based Finflux offers loan origination, loan management, BNPL products, and credit scoring services via its cloud platform, servicing over 12 million borrowers. ■ Online tax filing service provider Clear (formerly ClearTax), has acquired company compliance automation platform CimplyFive for an undisclosed sum in an all-cash deal. This is Clear’s second acquisition this year as it continues to double down on its software platform and looks to diversify services for its 4,000 enterprise customers. Twitter will challenge 39 blocking orders issued by the centre, including some sent as far back as February 2021, on the grounds that they do not pass the test of “proportionality,” the microblogging site stated in a petition filed at the Karnataka High Court. Twitter withholds Goddess Kaali poster tweet on govt request: Twitter India withheld a tweet by filmmaker Leena Manimekalai - who has been embroiled in a controversy after a poster of her film depicted Indian Goddess Kali smoking a cigarette - on a legal request from the government, the microblogging site said in a report to Lumen Database on Wednesday. From the IT corner Tata Consultancy Services (TCS) on Friday reported a 5.21% year-on-year (YoY) rise in consolidated net profit at Rs 9,478 crore in the June quarter compared with Rs 9,008 crore in the same quarter last year. IT firms may report higher attrition in Q1: Most Indian information technology companies may report an uptick in attrition yet again as they start reporting their financials for the quarter ended June. The attrition rate, however, is expected to start falling from this quarter onwards, experts said. Top IT firms to post modest revenue growth in Q1, analysts say: India’s top IT service providers are expected to report modest revenue growth in the first quarter as supply-side pressures including wage increments, onsite wage inflation, and travel costs loom large, analysts said. Curated by Judy Franko in New Delhi. Graphics and illustrations by Rahul Awasthi. That’s all from us this week. Stay safe. Page 5The collapse of the terraUSD stablecoin and its sister token Luna in May set off a chain of events that halved the price of bitcoin in a matter of weeks and caused a handful of crypto companies to either freeze withdrawals or file for bankruptcy.Almost overnight, for millions of investors, crypto turned to kryptonite. The OG of crypto flops In 2013, when one bitcoin was worth just a few hundred dollars, Japanese exchange Mt Gox was the world’s largest crypto company by some distance, handling over 70% of all bitcoin trades at its peak.But on February 28, 2014, Mt Gox officially filed for bankruptcy after hackers stole 850,000 bitcoin – worth around $500 million at the time and about $17 billion at the current price – from the platform. Of these, 100,000 belonged to Mt Gox itself and 750,000 to its customers.The hack precipitated a 36% fall in the price of bitcoin, making it one of the first major crypto disasters.Like the terraUSD crash in May 2022, the Mt Gox hack followed a rollicking bull run in 2013, during which bitcoin crossed $1,000 for the first time, hitting a peak of $1,151 on December 4. But by April 2014, bitcoin had fallen below $500, where it would remain for years.Ghost of crypto past Will it, won’t it? But fears of bitcoin dropping to $10,000 next month may be overblown.First, this assumes that most or all of the investors who get their long-lost bitcoin back from Mt Gox will look to liquidate it at once. While possible, that’s highly unlikely, especially in a bear market where bitcoin is down 50% from May and more than 70% from its November peak.Second, as Bloomberg reported in March 2021, many of Mt Gox’s creditors have already sold their claims to crypto funds such as Fortress Investment Group, which offered to pay them up to 80% of what they were owed -- in cash. Like these funds, investors who didn’t take an early settlement aren’t likely to sell their bitcoin in a rush either. Remember, these are people who were into bitcoin long before most of today’s YOLO and FOMO crowd had even heard of it — the true believers.Prediction is a fool’s errand, of course, and doubly so in crazy crypto land. But if bitcoin does drop to $10,000 next month, you’ll at least know why.Written by Zaheer Merchant Top Stories By Our Reporters Startup jobs & layoffs Is the free lunch over at startups?: Amid a funding crunch globally, frugality and unit economics are the new buzzwords among startups as they focus more on cutting costs and making a profit. Investors, founders and recruiters we spoke to said there will be cost-cutting drives across startups amid increased investor scrutiny of money-guzzling business models. Job seekers use lip syncing, deep fakes to land tech offers: Corporate forensic experts have stumbled on job-seekers who try to deceive prospective employers during virtual interviews by hiring the services of ‘experts’ who slyly fill in for them using technology. Many startup CXOs hold multiple offers despite slowdown: The funding winter has cooled the hiring frenzy at startups and ecommerce companies, and many companies have laid off employees, but some top executives are still attracting multiple offers. Big Tech v/s the government Twitter takedown orders proportional to user base: MeitY report The Indian government’s orders for content blocking and takedowns issued to Twitter comprise just 7% of the cumulative legal demands received by the platform in the decade up to 2021, and are proportional to its expanding user base in India, according to an official review. Govt may quiz FB, Twitter over lower compliance rate on legal notices: The union government may seek an explanation from social media companies including Twitter and Meta’s Facebook on the lower rate of compliance by these platforms to legal notices served in India compared with other major countries, people directly aware of the issue told us. In edtech news Government pulls up edtech firms over glut of complaints The government has taken a serious view of alleged mis-selling of courses and other dubious practices by edtech firms. The consumer affairs department aired its concerns regarding this and various other issues during a meeting with edtech firms on June 24, sources told us. Byju’s yet to close $800 million funding round: Byju’s is yet to receive funds from Sumeru Ventures and Oxshott, which committed to investing about $250 million in the edtech firm’s latest funding round. The company attributed the delay to “macroeconomic changes” and said it expects the funds to come in by August. Unacademy gives top brass pay cuts, shuts global test prep business: Unacademy cofounder and CEO Gaurav Munjal told employees in an internal note on Monday that the firm's founders and top management will take pay cuts, and that the company will shut its global test preparation business to increase efficiency and cut costs. Fintech & crypto Card-based startups look at Plan B Card-based fintech firms have started working on alternative plans to ensure business continuity after the Reserve Bank of India (RBI) recently barred them from loading credit lines onto wallets and prepaid payment instruments (PPIs). Internet body IAMAI to dismantle Blockchain and Crypto Assets Council: The Internet and Mobile Association of India (IAMAI) has decided to dismantle the Blockchain and Crypto Assets Council (BACC), the only advocacy body representing the interests of India's crypto industry, two sources told us. Crypto firm Celsius pauses all transfers and withdrawals between accounts: Cryptocurrency lending firm Celsius Network will pause withdrawals and transfers between accounts due to "extreme market conditions", the company said on Monday, in the latest sign of pressure in the crypto industry. IT corner The restructuring of its digital business arm will help keep in check Cognizant Technology Solutions’ attrition levels and is a result of the evolving nature of digital transformation deals, analysts have said. Mindtree bullish despite Ukraine conflict, China issues: Mid-tier IT services provider Mindtree said even though some of its clients have been affected by the Russia-Ukraine conflict and supply chain issues emanating from China, the overall sentiment remains bullish. A few clients are deferring discretionary spends, as they wait for supply chain issues and market sentiment to improve, chief executive Debashis Chatterjee told ET in an interview. HCL Tech banks on margin levers: HCL Technologies is banking on several levers to maintain its margin guidance targets for the year after reporting disappointing metrics in the first quarter. Chief executive C Vijayakumar said in an interview the company will deploy measures such as increased pricing for clients, better cost of living adjustments and greater utilisation of employees. Indian IT contribution to US economy jumps: The Indian information technology industry directly generated $103 billion in revenue in the US last year, and provided direct employment to 207,000 people, a new study by IT industry association Nasscom and IHS Markit showed. This represents growth of 32% and 22%, respectively, over 2017. ETtech Done Deals ■ 5ire, a fifth-generation level 1 blockchain network, said it has raised $100 million in a funding round from UK-based conglomerate SRAM & MRAM. The company is now valued at $1.5 billion. It was founded by Indian-origin entrepreneurs Pratik Gauri and Prateek Dwivedi, along with web3 financier Vilma Mattila, in August 2021. ■ Vegrow, a business-to-business (B2B) agritech marketplace for fruits, has raised $25 million (about Rs 198 crore) in a funding round led by Prosus Ventures, said its cofounder Shobhit Jain. ■ Quick commerce startup Blinkit, which is in the process of being acquired by Zomato, promoted long-time executive Rishi Arora to cofounder level two months before it announced the acquisition, a source told us. ■ Alex Cook and Scott Shleifer, two top executives at Tiger Global, told founders of its Indian portfolio firms earlier this month that the fund will continue to invest in the best-performing companies despite the slowdown in late-stage deals, sources briefed on the matter told us. |
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