Connect with us

News

Reasons Supporting Netanyahu Is the US’s Big Middle Eastern Mistake

Published

on

Netanyahu (1)

At least one thing is now obvious in the Middle East: The Biden administration has failed abjectly in its objectives there, leaving the region in dangerous disarray. Its primary foreign policy goal has been to rally its regional partners to cooperate with Israeli Prime Minister Benjamin Netanyahu’s extremist government. Simultaneously, it would uphold a “rules-based” international order and block Iran and its allies in their policies. Clearly, such goals have had all the coherence of a chimera and have failed for one obvious reason.

US President Joe Biden’s Achilles’ heel has been his “bear hug” of Netanyahu, who allied himself with the Israeli equivalent of neo-Nazis and launched a ruinous total war on the people of Gaza. He did this in the wake of the horrific October 7 Hamas terrorist attack Israel suffered in 2023.

Biden also signed on to the Abraham Accords, a project initiated in 2020 by Jared Kushner, the son-in-law and special Middle East envoy of then-President Donald Trump. Through them the United Arab Emirates, Bahrain and Morocco all agreed to recognize Israel’s statehood. In return, Israel granted them investment and trade opportunities, as well as access to American weaponry and a US security umbrella.

Washington, however, failed to incorporate Saudi Arabia into that framework. It has also faced increasing difficulty keeping the accords themselves in place, given the region’s increasing anger and revulsion over the ongoing civilian death toll in Gaza. Typically, just the docking of an Israeli ship at the Moroccan port of Tangier this summer set off popular protests that spread to dozens of cities in that country. And that was just a taste of what could be coming.

Advertisement

Breathtaking hypocrisy

Washington’s efforts in the Middle East have been profoundly undermined by its breathtaking hypocrisy. After all, the Biden team has gone blue in the face decrying the Russian occupation of parts of Ukraine and its violations of international humanitarian law in killing so many innocent civilians there. In contrast, the administration let Netanyahu’s government completely disregard international law when it comes to its treatment of the Palestinians.

This summer, the International Court of Justice ruled that the entire Israeli occupation of Palestinian territories is illegal in international law. In response, the US and Israel both thumbed their noses at the finding. In part as a response to Washington’s Israeli policy, no country in the Middle East and very few nations in the global South have joined its attempt to ostracize President Vladimir Putin’s Russia.

Worse yet for the Biden administration, the most significant divide in the Arab world between secular nationalist governments and those that favor political Islam has begun to heal in the face of the perceived Israeli threat. Turkey and Egypt have long had their daggers drawn over their differing views of the Muslim Brotherhood, the fundamentalist movement that briefly came to power in Cairo in 2012–2013. Now they have begun repairing their relationship, specifically citing the menace posed by Israeli expansionism.

US Secretary of State Antony Blinken has been persistently pressing Saudi Arabia, a key US security partner, to recognize Israel’s statehood at a moment when the Arab public is boiling over what they see as a genocide campaign in Gaza. This is the closest thing since the Trump administration to pure idiocracy. Washington’s pressure on Riyadh elicited the pitiful plea from Saudi Crown Prince Mohammed Bin Salman that he fears being assassinated were he to normalize relations with Tel Aviv now. And consider that ironic given his own past role in ordering the assassination of Saudi journalist Jamal Khashoggi.

Advertisement

In short, the ongoing inside-the-Beltway ambition to secure further Arab recognition of Israel amid the annihilation of Gaza has the US’s security partners wondering if Washington is trying to get them killed. This is anything but a promising basis for a long-term alliance.

Global delegitimization

The science-fiction-style nature of US policy in the Middle East is starkly revealed when you consider the position of Jordan, which has a peace treaty with Israel. In early September, its foreign minister, Ayman Safadi, issued a warning: Any attempt by the Israeli military or its squatter-settlers to expel indigenous West Bank Palestinians to Jordan would be considered an “act of war.” Such anxieties might once have seemed overblown, but the recent stunning (and stunningly destructive) Israeli military campaign on the Palestinian West Bank, including bombings of populated areas by fighter jets, has tactically begun to resemble the campaign in Gaza. And keep in mind that, as August ended, Foreign Minister Israel Katz even urged the Israeli army to compel Palestinians to engage in a “voluntary evacuation” of the northern West Bank.

Not only is the expulsion of Palestinians now the stated policy of cabinet members like Jewish Power extremist Itamar Ben-Gvir; it’s the preference of 65% of Israelis polled. When Israel and Jordan begin talking about war, you know something serious is going on — the last time those two countries actively fought was in the 1973 October War, during the administration of US President Richard Nixon.

In short, Netanyahu and his extremist companions are in the process of undoing all the diplomatic progress their country achieved in the past half-century. Ronen Bar, head of Israel’s domestic Shin Bet intelligence agency, warned in August that the brutal policies the extremists in the government were pursuing are “a stain on Judaism” and will lead to “global delegitimization, even among our greatest allies.”

Advertisement

Turkey, a NATO ally with which the US has mutual defense obligations, has become vociferous in its discontent with Biden’s Middle Eastern policy. Although Turkey recognized Israel in 1949, under Turkish President Recep Tayyip Erdogan of the pro-Islam Justice and Development Party, interactions had grown rocky even before the Gaza nightmare. Until then, their trade and military ties had survived occasional shouting matches between their politicians. The Gaza genocide, however, has changed all that. Erdogan even compared Netanyahu to Adolf Hitler and then went further still, claiming that, in the Rafah offensive in southern Gaza in May, “Netanyahu has reached a level with his genocidal methods that would make Hitler jealous.”

Worse yet, the Turkish president, referred to by friend and foe as the “sultan” because of his vast power, has now gone beyond angry words. Since last October, he’s used Turkey’s position in NATO to prohibit that organization from cooperating in any way with Israel. This is on the grounds that it’s violating the NATO principle that harm to civilians in war must be carefully minimized. The Justice and Development Party leader also imposed an economic boycott on Israel. It has interrupted bilateral trade that previously reached $7 billion a year and sent the price of produce in Israel soaring, while leading to a shortage of automobiles on the Israeli market.

Erdogan’s Justice and Development Party represents the country’s small towns, rural areas, Muslim businesses and entrepreneurs, constituencies that care deeply about the fate of Muslim Palestinians in Gaza. And while Erdogan’s high dudgeon has undoubtedly been sincere, he’s also pleasing his party’s stalwarts in the face of an increasing domestic challenge from the secular Republican People’s Party. Additionally, he’s long played to a larger Arab public, which is apoplectic over the unending carnage in Gaza.

The alliance of Muslim countries

Although it was undoubtedly mere bluster, Erdogan even threatened a direct intervention on behalf of the beleaguered Palestinians. In early August, he said, “Just as we intervened in Karabakh [disputed territory between Azerbaijan and Armenia], just as we intervened in Libya, we will do the same to them.” In early September, the Turkish president called for an Islamic alliance in the region to counter what he characterized as Israeli expansionism:

Advertisement

“Yesterday, one of our own children, [Turkish-American human rights advocate] Ayşenur Ezgi Eygi, was vilely slaughtered [on the West Bank]. Israel will not stop in Gaza. After occupying Ramallah [the de facto capital of that territory], they will look around elsewhere. They’ll fix their eyes on our homeland. They openly proclaim it with a map. We say Hamas is resisting for the Muslims. Standing against Israel’s state terror is an issue of importance to the nation and the country. Islamic countries must wake up as soon as possible and increase their cooperation. The only step that can be taken against Israel’s genocide is the alliance of Muslim countries.”

In fact, the present nightmare in Gaza and the West Bank may indeed be changing political relationships in the region. After all, the Turkish president pointed to his rapprochement with Egypt as a building block in a new security edifice he envisions. Egyptian President Abdel Fattah al-Sisi made his first visit to Ankara on September 4, following an Erdogan trip to Cairo in February. And those visits represented the end of a more than decade-long cold war in the Sunni Muslim world over al-Sisi’s 2013 coup against elected Muslim Brotherhood Egyptian President Mohamed Morsi, whom Erdogan had backed.

Despite its apparent embrace of democratic norms in 2012–2013, some Middle Eastern rulers charged the Brotherhood with having covert autocratic ambitions throughout the region and sought to crush it. For the moment, the Muslim Brotherhood and other forms of Sunni political Islam have been roundly defeated in Egypt, Syria, Tunisia and the Persian Gulf region. Erdogan, a pragmatist despite his support for the Brotherhood and its offshoot Hamas, had been in the process of getting his country the best possible deal, given such a regional defeat, even before the Israelis struck Gaza.

Netanyahu’s forever war in Gaza

For his part, Egypt’s al-Sisi is eager for greater leverage against Netanyahu’s apparent plan for a forever war in Gaza. The Gaza campaign has already inflicted substantial damage on Egypt’s economy, since Yemen’s Houthis have supported the Gazans with attacks on container ships and oil tankers in the Red Sea. In turn, that has diverted traffic away from it and from the Suez Canal, whose tolls normally earn significant foreign exchange for Egypt. In the first half of 2024, however, it took in only half the canal receipts of the previous year. Although tourism has held up reasonably well, any widening of the war could devastate that industry, too.

Advertisement

Egyptians are also reportedly furious over Netanyahu’s occupation of the Philadelphi Corridor south of the city of Rafah in Gaza. They also despise his blithe disregard of Cairo’s prerogatives to patrol that corridor, granted under the Camp David agreement. The al-Sisi government, along with Qatar’s rulers and the Biden administration, has been heavily involved in hosting (so far fruitless) peace negotiations between Hamas and Israel. The Egyptian government seems to be at the end of its tether, increasingly angered at the way the Israeli prime minister has constantly tacked new conditions onto any agreements being discussed, which have caused the talks to fail.

For months, Cairo has also been seething over Netanyahu’s charge that Egypt allowed tunnels to be built under that corridor to supply Hamas with weaponry. Cairo insists that the Egyptian army had diligently destroyed 1,500 such tunnels over the past decade. Egypt’s position was recently supported by Nadav Argaman, a former head of the Israeli Shin Bet intelligence agency, who said, “There is no connection between the weaponry found in Gaza and the Philadelphi Corridor.” Of Netanyahu, he added, “He knows very well that no smuggling takes place over the Philadelphi Corridor. So, we are now relegated to living with this imaginary figment.”

In the Turkish capital of Ankara, al-Sisi insisted that he wanted to work with Erdogan to address “the humanitarian tragedy that our Palestinian brothers in Gaza are facing in an unprecedented disaster that has been going on for nearly a year.” He underscored that there was no daylight between Egypt and Turkey “regarding the demand for an immediate ceasefire, the rejection of the current Israeli escalation in the West Bank, and the call to start down a path that achieves the aspirations of the Palestinian people to establish their independent state on the borders of June 4, 1967, with East Jerusalem as its capital.” He also pointed out that such positions are in accord with United Nations Security Council resolutions. Al-Sisi pledged to work with Turkey to ensure that humanitarian aid was delivered to Gaza despite “the ongoing obstacles imposed by Israel.”

To sum up, the ligaments of US influence in the Middle East are now dissolving before our very eyes. Washington’s closest allies, like the Jordanian and Saudi royal families, are terrified that Biden’s bear hug of Netanyahu’s war crimes, coupled with the fury of their own people, could destabilize their rule. Countries that not so long ago had correct, if not warm, relations with Israel like Egypt and Turkey are increasingly denouncing that country and its policies.

Advertisement

The alliance of US partners in the region with Israel against Iran that Washington has long worked for seems to be coming apart at the seams. Countries like Egypt and Turkey are instead exploring the possibility of forming a regional Sunni Muslim alliance against Netanyahu’s geopolitics of Jewish power that might, in the end, actually reduce tensions with Tehran.

That things have come to such a pass in the Middle East is distinctly the fault of the Biden administration and its position — or lack thereof — on Israel’s nightmare in Gaza (and now the West Bank). Today, sadly, that administration is wearing the same kind of blinkers regarding the war in Gaza that US President Lyndon B. Johnson and his top officials once sported when it came to the Vietnam War.

[TomDispatch first published this piece.]

[Lee Thompson-Kolar edited this piece.]

Advertisement

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Source link

Advertisement
Continue Reading
Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Money

Tycoon Mike Ashley moves to seize luxury brand Mulberry with £83million offer

Published

on

Tycoon Mike Ashley moves to seize luxury brand Mulberry with £83million offer

MULBERRY faces a handbagging from Mike Ashley after the tycoon launched an £83million offer and declared the luxury brand’s “status quo is an untenable position”.

Mr Ashley’s Frasers Group, which already owns a 37 per cent stake in Mulberry, launched its 130p-a-share bid after complaining it had been blindsided by Mulberry’s cash call on Friday night.

Tycoon Mike Ashley has launched an £83million offer for Muberry

3

Tycoon Mike Ashley has launched an £83million offer for Muberry

Mulberry, which is best known for its £1,195 Alexa handbags, wants to tap investors for £10million after slumping sales knocked it to a loss.

Advertisement

Mulberry’s shares had started the day plunging by 12 per cent on the back of its cash call, but Mr Ashley’s takeover approach sent them rebounding 5.5 per cent higher.

Frasers had briefly considered a takeover in November 2020 when Mulberry was worth £124million.

Frasers said: “We believe the status quo to be an untenable position for Frasers and the other minority holders of Mulberry shares . . . we believe Frasers to be the best steward for returning Mulberry to profitability.”

Mr Ashley will now have to go head to head with Mulberry’s biggest investor, Challice, which owns 56 per cent and is controlled by the Singaporean entrepreneur Christina Ong.

Advertisement

Mulberry’s annual report, released on Friday night, revealed it could breach its banking covenants if its sales tumbled by a worst-case scenario of 14 per cent.

It is understood that Mulberry and the Ong family will reject Mr Ashley’s approach as a lowball attempt.

Sources highlighted Ms Ong had been a long term investor and supportive of the cashcall and Mulberry’s recent hiring of new chief exec Andrea Baldo from Ganni.

Saga opens old wound

Current Mulberry saga has been a painful reminder of Mike Ashley's Debenhams car crash

3

Advertisement
Current Mulberry saga has been a painful reminder of Mike Ashley’s Debenhams car crashCredit: Alamy

THE MULBERRY saga has been a painful reminder for Mike Ashley of his car crash at Debenhams.

His £180million stake was wiped out when the store hit the wall after repeatedly turning down his overtures. Even in administration it snubbed him.

I went to a jumble sale & hit the jackpot – I left with a Mulberry bag for 30 PENCE, and two sacks of clothes for a quid

Alongside its takeover approach, Frasers Group said yesterday as it made a play for Mulberry: “Frasers will not accept another Debenhams situation where a perfectly viable business is run into administration.”

At Debenhams, Mr Ashley offered the department store a loan lifeline, but only with hefty conditions.

Advertisement

It appears Mulberry is from the same playbook.

He may just want better terms for Mulberry bags in Flannels and House of Fraser shops.

Aston on the kids

SPORTS car-maker Aston Martin shed almost a quarter of its value yesterday after issuing another profit warning.

Advertisement

The brand, favoured by James Bond, said it would make 1,000 fewer cars this year because of supply chain snags.

The warning came as its losses hit £216.7million, up from £142.2million last year.

In further woes for the car industry, Vauxhall owner Stellantis slashed its profit margin forecasts for next year.

eBay fee on sales ditched

eBay is set to scrap fees for sellers in a bid to compete with Facebook Marketplace, Vinted and Depop

3

Advertisement
eBay is set to scrap fees for sellers in a bid to compete with Facebook Marketplace, Vinted and DepopCredit: Alamy

EBAY is scrapping fees for sellers on all items from today so users keep the cash they make from flogging their unwanted goods.

Typically selling an item for £20 would cost £3 in fees and charges per sale on eBay.

The online marketplace is reacting to competition from Facebook Marketplace, Vinted and Depop in a bid to boost revenues.

Research reveals Brits have about 294million unused items lying about their homes, which could generate £9billion.

Advertisement

Half of households have between £50 and £300 of unused items ready to sell, with the most common being clothes, DVDs and tech items.

Kirsty Keoghan, boss of ebay UK, said: “The average household is sitting on money from items they aren’t using.”

eBay has introduced AI tech to help sellers write product descriptions and remove messy backgrounds from product photos.

A tonic for LSE

Advertisement

A PROTEIN powder and vitamins business founded by a former scaffolder is giving the London Stock Exchange a much-needed boost.

Applied Nutrition, set up by Thomas Ryder in 2014, confirmed yesterday plans for a flotation that will value it at £500million.

Ordinary investors will also be able to invest in the listing via a share offer through broker Retailbook.

Last year Applied Nutrition made £86million in revenue.

Advertisement

Mr Ryder said: “We are only scratching the surface of our growth opportunity.”

REA moving on

AUSTRALIA’S REA GROUP has dropped its pursuit of Rightmove after the UK property website rejected a fourth £6.2billion offer.

REA said that it was “disappointed” that Rightmove did not give it extra time ahead of a bid deadline of yesterday, which it said “impeded our ability to make a firm offer”.

Rightmove said REA’s offer was still “unattractive”.

Advertisement

Shares in Rightmove fell by 7.6 per cent to 617.40.

REA Group is majority-owned by News Corp, which also owns The Sun.


HOUSE prices have climbed at the fastest rate in two years.

They were 3.2 per cent higher last month compared with last year, said Nationwide.

Advertisement

Prices rose by 0.7 per cent on the previous month, taking the average property value to £266,094.

Source link

Continue Reading

CryptoCurrency

Trump’s call for a bitcoin strategic reserve is a very bad idea

Published

on


Unlock the US Election Countdown newsletter for free

The writer is chief executive of Investment Management Associates and author of several books including Soul in the Game — The Art of a Meaningful Life

Advertisement

Politics in the US has turned into one of our biggest sports. Politics has also turned us tribal — we want to win at any cost. Most importantly, we get so engrossed in the sport that we don’t realise that our future — and the future of our children — is the ball we are playing with.

At the end of July, Donald Trump called for the US to be “crypto capital of the planet” and a “bitcoin superpower”. As part of that, he promised to build a bitcoin strategic reserve. I understand why Trump is doing this; he is a politician and support for cryptocurrency means endorsements from crypto bros.

Who knows whether any policy idea offered as a campaign promise would become a reality if he is re-elected to the White House? But if this one did, it would be dangerous for the US. It is not a game where tribal support should override common sense. Let me explain why.

Bitcoin promotion by the White House would chip away at the status of the dollar at a time when sentiment towards the currency is likely to be tested.

Advertisement

Money is more than just green paper with the faces of dead presidents. There are many ways to define it. One way to look at it is as a claim on a country’s productive power and assets, reflecting the value of a nation’s economic output.

Another way to look at money is as a story. It’s a narrative told through everyday actions such as going to the grocery store and trading dollar bills for milk, eggs and doughnuts. As a society, we believe in the story of the intrinsic value of currency. This mass belief is incredibly important for society’s wellbeing.

A reserve currency is a global story. Many people in many countries, who may or may not have visited the US or done business with it, bought into the story that it was a democracy and that its capitalist, free-market economy made it the strongest in the world. And hey, we were responsible with our finances — our debt was manageable, and though we ran budget deficits, they were not huge.

No longer. Today our $27tn economy has $35tn in debt. We collect $4.4tn in taxes, but we spend $6.3tn — we’re running a 5.6 per cent budget deficit. Already, our finances don’t inspire a lot of confidence in the dollar. As we print more dollars every year to finance our growing budget deficits, the dollar story of an all-mighty reserve currency is losing its lustre.

Advertisement

Anyone who is paying attention is already starting to question the trajectory of our finances as well as the state of our political system. We used to have the undisputed reserve currency because we were great on both an absolute and a relative basis. Today, for some, we are just the best alternative, not because we are so awesome but because we are a less-dirty shirt in the old laundry basket.

This brings us to Trump’s rhetoric about wanting the US to build bitcoin strategic reserves. If he’s elected, this governmental policy would change bitcoin’s story, legitimising it and boosting the case to use it as reserve currency.

Bitcoin is not controlled by anyone, including the US government. We cannot print more of it to finance student or medical debt forgiveness, help out with first-time buyer downpayments, or deliver tax cuts when we are running huge budget deficits. Nor can our politicians print more of it to finance their campaign promises that we as a country cannot afford, just to buy themselves more votes. Yet bitcoin, just like gold, looks shinier with every empty campaign promise and every trillion dollars we add to our debt. What will happen if strangers fall in love with another story that is not green and doesn’t have pictures of the US presidents?

Well, the dollar is very unlikely to be replaced as the dominant reserve currency by an alternative any time soon given its role in trade and the global financial system. But it is being increasingly challenged by both fiat and digital currencies. This is not just a question of the economic fundamentals; other countries are diversifying their reserve holdings of currencies.

In such an environment, the US president and presidential candidates should be the dollar’s biggest salespeople rather than supporting an alternative. The bitcoin story should not be promoted — it should not even be accepted as a form of donation to candidates for the position of US president. Bitcoin is not going to make America great. What will help this country continue to be great is getting our debt and deficits under our control.



Source link

Advertisement
Continue Reading

CryptoCurrency

Coinbase to add proof of reserves to Bitcoin wrapper cbBTC

Published

on

Coinbase to add proof of reserves to Bitcoin wrapper cbBTC


Adding proof of reserves will head off concerns about Coinbase’s perceived lack of transparency.



Source link

Advertisement
Continue Reading

CryptoCurrency

Debunking the 'Binance manipulator' theory: 3 reasons why the allegation falls short

Published

on

Debunking the 'Binance manipulator' theory: 3 reasons why the allegation falls short


Conspiracy theories about market manipulation run rampant in crypto social media, but the accusations of a “Binance manipulator” are pretty easy to debunk. 



Source link

Advertisement
Continue Reading

CryptoCurrency

a crypto firm with a sideline in messaging

Published

on


Unlock the Editor’s Digest for free

Pavel Durov’s arrest in France for allegedly failing to control criminal content on Telegram, the Russian-born billionaire’s messaging app, has sparked an intense debate about the limits of free speech and the responsibilities of big tech firms to moderate their platforms.

Advertisement

Financially speaking, however, cryptocurrency matters as much to Telegram’s bottom line as messaging.

FT Alphaville got its hands on the privately held company’s 2023 financials, which show crypto transactions providing a big chunk of its revenue.

Telegram Group, which is incorporated in the British Virgin Islands and has one of its main operating subsidiaries in the United Arab Emirates, booked $342.5mn of revenue last year on a hefty operating loss of $108mn. Here’s the PnL statement, signed by Durov and given a clean bill of health by PwC’s Dubai branch in April:

Eagle-eyed readers may have already spotted the “gain on revaluation of digital assets” lines, of which a modest $500,000 was booked through the PnL and a more substantial $86mn through other comprehensive income.

Turning to the breakdown of Telegram’s revenue, the “integrated wallet” and “sale of collectibles” line items will also likely trigger the spidey-sense of any crypto-conscious reader:

Advertisement

Combined, the two line items make up over 40 per cent of Telegram’s revenues.

You may also have noticed that the so-called “integrated wallet” is a new business line for Durov’s company. As the accounts also explain:

During the year ended 31 December 2023, the Group started generating revenues from enabling access to the Integrated wallet (Note 13). The Integrated wallet is a software program that allows users to store, send, receive and trade crypto assets.

Telegram gives further disclosure on what digital assets, collectible sales and its integrated wallet mean for its business, here:

Digital assets

The Group sells different collectibles and provides Integrated wallet services in exchange for non-cash consideration in the form of Toncoins (digital assets) which are accounted for under IAS 38 — Intangible assets.

These digital assets are initially recorded at cost and are subsequently measured under the revaluation model at fair value less any accumulated impairment losses at each reporting date considering the presence of an active market for the Toncoin. Any fair value movements above cost are recorded through other comprehensive income in a separate reserve called ‘Revaluation surplus’ within equity while any fair value movements below cost are first offset against existing credit balances under the revaluation surplus with any excess over and above this balance being recorded through profit or loss.

Advertisement

The Group holds these digital assets for its own account for investment purposes (that is, capital appreciation) over extended periods of time with subsequent sales made at management’s discretion when the market conditions are favourable. Gains and losses on disposals are determined by comparing the proceeds with the Carrying amount and are recognised in profit or loss for the year when the asset is derecognised. At the time of derecognition, the associated amounts recognised in the Revaluation surplus are transferred to Retained earnings.

And here:

Revenue from the sale of collectibles. The Group sells different collectibles (usernames, virtual phone numbers) to its users. The related revenue is recognised at a point in time when the collectible is assigned to the user. The Group also enables the sale of collectibles between users and receives the fee for facilitating the sale.

Toncoins (digital assets), a non-cash consideration is accepted as consideration for this type of sale. Toncoins are measured and recognised at fair value at the time of the Group fulfilling its performance obligation: assigning the collectible to the user or facilitating the sale between users. The Group determines the fair value of the digital assets based on quoted prices on the active exchanges.

Integrated wallet. The Integrated wallet is a software program that allows users to store, send, receive and trade crypto assets. During the year ended 31 December 2023, the Group recognised revenue from the integration of the Integrated wallet at the time of the provision of the application programming interface to The Open Network Foundation enabling Integrated wallet’s integration into Telegram App, and from providing continuous access of Telegram users to the Integrated wallet from menus inside the Telegram App on an exclusive basis over the term when the service has been provided. The Group normally provides services related to the Integrated wallet on a prepayment basis. There is no financing component, because the services are rendered within a period less than 12 months from payment.

Advertisement

Toncoins (digital assets), a non-cash consideration is accepted as consideration for this type of sale. Toncoins are measured and recognised at fair value at the time when the Group receives the consideration.

The TON blockchain that underpins Toncoins was originally developed in-house at Telegram, drawing in supporters that included prominent wealthy Russians. It is now developed independently of the company by an open-source community, however, after the project ran into regulatory troubles in the US.

Turning to the balance sheet, digital assets make up a big chunk of Telegram’s assets. Valued at nearly $400mn, tokens are far larger than its cash and cash equivalents:

Telegram further breaks down last year’s increase in its crypto holdings here:

Elsewhere in the related-party transactions section of the accounts (one of FTAV’s favourite sections in any set of financial documents), we learn that aside from purchasing $64mn of Telegram’s convertible bonds last year, Durov also purchased $300,000 worth of Telegram Premium subscriptions for a giveaway, paying the company in Toncoin:

Needless to say, Toncoin traders have not shrugged off the news of Durov’s arrest. Price chart courtesy of CoinMarketCap:

Usefully for Telegram, the events-after-the-reporting-date section of the accounts shows that it sold a big chunk of its Toncoin ahead of the price crash:

While Telegram is 100 per cent owned by Durov, the company has raised north of $2.3bn of convertible bonds from blue-chip investors such as sovereign wealth funds, hedge funds, and tech-focused investors.

Even leaving aside the heavy reliance on crypto and the substantial liabilities, one might question whether a business that had to burn through over $450mn of operating expenses to make $342.5mn of revenue is worth the “$30bn-plus” valuation Durov touted to the FT earlier this year.

Advertisement

When it comes to its founder’s arrest, however, investors in Telegram’s convertible bond that properly read the accounts can’t say they weren’t warned:

Since its founding, the Group has been firmly committed to guaranteeing the privacy of Telegram’s users. The Group’s core value of user privacy has not prevented Telegram from actively engaging in efforts and technical solutions to combat abusive, malicious or violence-inducing content online. The core values of the Group have led to Telegram’s popularity with its users. However, the Group’s operations can be affected by legal and regulatory frameworks in different countries which are subject to frequent changes and varying interpretations.



Source link

Continue Reading

CryptoCurrency

EigenLayer’s EIGEN token unlock looms, futures tip a $6.8B FDV

Published

on

EigenLayer’s EIGEN token unlock looms, futures tip a $6.8B FDV


EigenLayer’s EIGEN token is scheduled to unlock at 5:00 a.m. UTC on Oct. 1 and will start trading on exchanges such as Binance soon after. 



Source link

Advertisement
Continue Reading

Trending

Copyright © 2024 WordupNews.com