Société
En images. La Loire dans le rétro : en avril 1973 aussi, beaucoup de neige à Saint-Etienne
1:00 p.m. ▪
3
min read ▪ by
Two members of the US Congress sent a letter to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel. She carried their concerns about tax compliance practices in the cryptocurrency industry. They also demanded the implementation of fiscal regulations.
The need for regulation is urgent according to these members of the American congress
Brad Sherman and Stephen Lynch are both members of the United States Congress. They sent a letter to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel. The purpose was to notify them of their concerns about crypto compliance practices. In this document, we can read:
” For years, this industry (crypto) has been a major source of tax evasion and a significant part of the country’s (US) tax gap. »
First, in a September 2020 audit report, the Treasury Inspector General for Tax Administration (TIGTA) pointed out the IRS’ inability to identify pro-crypto taxpayers due to lack of reporting. Both members of the US Congress relied on this report for their criticisms. Then, the Infrastructure Investment and Jobs Act (Bipartisan Infrastructure Bill) which had been signed into law by President Joe Biden in November 2021, was to require taxpayers to report crypto transactions as early as 2023. But members of Congress remark that “ Proposed regulations have yet to be enacted “.
Serious crypto regulation in sight in the United States?
It has been quite a while now that different players in the crypto industry claim regulation in the crypto industry. Several authorities have tried tricks to put an end to cryptocurrencies. But Sherman and Lynch, called for prompt publication of proposed regulations. Thus, the objective would be to reduce the tax gap and bring the cryptocurrency industry to full tax compliance“.
Meanwhile, the Biden administration continues to back a demand for a 30% digital asset mining energy tax on cryptocurrency miners.
In sum, the text of a crypto tax bill proposed by the US Congress contains no mention of the Biden tax. This is reminiscent of its shelving by some observers. Does this mean the anti-crypto Biden camp is losing the battle?
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SEO web editor specializing in crypto-currencies, decentralized finance and Web 3, I produce engaging and topical texts. My goal is to democratize the world of crypto and inform readers of news in the sector.
DISCLAIMER
The comments and opinions expressed in this article are the sole responsibility of their author, and should not be considered as investment advice. Do your own research before making any investment decision.
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11:00 a.m. ▪
4
min read ▪ by
According to investigations conducted by the Elliptic Group, crypto assets stolen from Atomic Wallet users were transferred to a crypto mixer. The North Korean group Lazarus is implicated.
Tracing funds stolen from Atomic Wallet users
On June 3, the decentralized exchange Atomic Wallet was the target of a cyberattack that allowed the hacker to steal nearly $35 million in crypto assets belonging to users of the platform.
On June 5, blockchain analytics agency Elliptic posted a tweet claiming that its team’s investigations have traced the destination of funds stolen from Atomic Wallet.
According to Elliptic, the hijacked assets on the exchange were sent to Sinbad.io, a crypto mixer known to be used by North Korean hacker group Lazarus.
This is not a first for this mixer, which has already been implicated in previous cases of money laundering. The Lazarus hacker group has used it regularly to cover the trail of the $100 million worth of crypto they have stolen from various platforms.
Separately, the analytics firm did not provide details on how much the crypto mixer received. However, she indicated that the funds were converted into bitcoins before being routed to other wallets.
Atomic Wallet is trying to recover the stolen funds
According to Atomic Wallet, the losses recorded during the hack affected less than 1¨% of the platform’s regular users.
Nevertheless, the exchange’s marketing manager, Roland Säde revealed that his team is “currently working to recover these funds”. He also added that he is waiting for the investigation to be completed to create a concrete recovery plan.
” Of course, the team is devastated, because we are very proud of our security protocol. We are working around the clock to solve this problem and come out of this crisis stronger than before.”did he declare.
In order to optimize the chances of recovering stolen funds, Richard Säde advises victims to track down fraudulent transfers and report them to the most popular crypto exchanges, which “could prevent scammers from exchanging their funds”.
” Of course, we also report them directly, but the more eyes there are on the hackers, the more difficult it is for them to move the funds”he specified.
A strategy that seems to work! Because according to some tweeters, Atomic Wallet was able to recover part of the funds in question, even though sending the assets to a crypto mixer could considerably complicate the monitoring of transactions!
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A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of the blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand the blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of the news, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal challenges of this revolution in motion.
The prices businesses pay for materials and components have a major impact on the prices we pay for essential goods and therefore the wider economy. So to help you make better investments and other financial decisions we will keep you in the loop on major developments in this market (Get a free issue of The Kiplinger Letter or subscribe). You will get them first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
One silver lining of the slowing economy: manufacturing costs are finally easing after years of snarled supply chains, shipping delays and spikes in the prices of many key materials.
Inflation is far from vanquished, but the slowdown in commodities and capital goods prices is welcome.
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Orders for capital equipment have peaked following the pandemic surge. Adjusted for inflation, new orders are down 6% from last year. Unfilled orders are back to the pre-pandemic average. Some equipment shortages remain, especially for electrical gear and HVAC systems. Autos and aerospace are still humming and fueling orders for precision machining equipment.
Most manufacturing sectors are pulling back owing to concerns about demand and tightening credit; the result of banks growing more cautious on lending. That means less competition and smaller price hikes for the companies that do purchase new equipment.
Most materials prices have dipped, or will, cooling the cost of manufacturing and construction.
Energy costs may be poised for diverging paths
Oil is up and natural gas is down. Oil prices have fallen lately, but demand is outrunning supply. Stocks of crude oil and gasoline in the U.S. are low, and oil use is rising briskly in Asia, especially China. Several disruptions to supply, from the Middle East to Canada, could push up prices later this year unless the global economy really stumbles. Russia is exporting more oil than initially expected, despite stiff Western sanctions. But OPEC is cutting back.
Meanwhile, natural gas prices have pulled back from last year’s peak. A mild winter in the U.S. and Europe kept demand in check, and now U.S. stockpiles of stored gas are well above normal. Extreme heat this summer could fire up demand for electricity, and thus gas, since the U.S. relies heavily on gas for power generation. But for now, it appears gas costs should stay modest, which is good news for the many industries that use it.
Finally, freight shipping rates have fallen significantly and are back down to their pre-pandemic levels, or lower, now that shipping demand has slackened.
The dilemma for companies: whether to go back to sourcing goods from Asia, as shipping costs are down, and risk disruptions from a future geopolitical crisis.
This forecast first appeared in The Kiplinger Letter. Since 1923, the Letter has helped millions of business executives and investors profit by providing reliable forecasts on business and the economy, as well as what to expect from Washington. Get a free issue of The Kiplinger Letter or subscribe
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10:00 a.m. ▪
3
min read ▪ by
In a recent series of tweets, longtime bitcoin (BTC) advocate and Twitter founder Jack Dorsey sparked heated controversy. According to him, Ether (ETH) is a security. This statement quickly sparked heated reactions from crypto experts, exposing the debates around ETH classification and regulations.
Debates around the security of ETH
The debate begins when Jack Dorsey responds “YES” to a question on Twitter. This claim was immediately criticized by Udi Wertheimer, a developer of Bitcoin Ordinals at Taproot Wizards. The latter goes so far as to call Dorsey a “clown” in a tweet.
In retaliation, Dorsey tweeted: “ETH is not a security? Teach me, wizard”. This exchange then led Wertheimer to share a video by Gary GenslerChairman of the SEC, dating back five years. “ETH is now sufficiently decentralized. It is no longer considered a security”he asserted.
Gabor Gurbacs also took part in the discussions. This strategy adviser for stablecoin issuer Tether and investment management firm VanEck supports Wertheimer’s comments. According to him, Ethereum’s recent switch to PoS could revive securities laws.
What impact on the crypto industry?
These online debates arise in the context of the various legal actions brought by the SEC. The US regulator accuses Binance and Coinbase of offering tokens considered unregistered securities.
The SEC has filed its complaints on June 5 and 6. This reinforces concerns about the regulation of digital assets and the classification of cryptocurrencies.
In one of his tweets, Jack Dorsey appears to approve of a screenshot of a post by Brian Armstrong, CEO of Coinbase. This one dates from 2015. In this post, Armstrong describes “distraction” altcoins. According to him, Coinbase should focus on bitcoin instead.
Jack Dorsey’s statements about Ether (ETH) have fueled controversy within the crypto industry. As regulators step up efforts to enforce securities regulations, debates over the nature of cryptos and their compliance with applicable laws will continue to rage.
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My name is Ariela and I am 31 years old. I have been working in the field of web writing for 7 years now. I only discovered trading and cryptocurrency a few years ago. But it is a universe that interests me a lot. And the topics covered within the platform allow me to learn more. Singer in my spare time, I also cultivate a great passion for music and reading (and animals!)
DISCLAIMER
The comments and opinions expressed in this article are the sole responsibility of their author, and should not be considered as investment advice. Do your own research before making any investment decision.
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9:00 a.m. ▪
4
min read ▪ by
Memecoins inspired by the United States Securities Exchange Commission (SEC) and its chairman, Gary Gensler, are seeing a significant increase in value following lawsuits against the exchanges, Binance and Coinbase. Tokens such as Good Gensler (GENSLR) and Fuck Gary Gensler (FKGARY) have seen a surge in price, attracting the attention of investors hungry for quick gains.
The Memecoin Boom Inspired by the SEC and Gensler
The season of Memecoins still seems far from taking its revenge. Every crypto meme seems to have its moment to shine in the market. If Pepecoin was in the center of attention a few weeks ago, it has since given way to new players, the latest of which is Good Gensler (GENSLR).
With the announcement of SEC lawsuits against Binance and Coinbase, Memecoins inspired by Gary Gensler and the SEC are growing in popularity. Good Gensler (GENSLR), which launched on April 19, saw an impressive surge of more than 260% just hours after the lawsuits were announced against Coinbase for allegedly offering unregistered securities.
With a market capitalization of around $3.2 million and trading volume exceeding $1.25 million in the past 24 hours, Good Gensler has caught the eye of investors hungry for quick gains.
Another Gary Gensler-derived Memecoin, Fuck Gary Gensler (FKGARY), has also seen a dramatic rise of more than 530% in the past 48 hours, according to data from DEXTools, a decentralized exchange (DEX) filter.
But that’s not all. The Memecoin SEC, whose ticker stands for “Stupid Egotistical Cocksuckers,” has also seen significant volatility in reaction to recent SEC actions. Launched on June 5, this token saw an impressive gain of 15,530% in the first 24 hours. However, since then it has suffered a decline of more than 61% from its all-time high.
Caution remains in order
Faced with pressure from the SEC, which is currently making headlines, Memecoin followers have found an entertaining way to have fun: creating memes inspired by the regulatory agency and its president, Gary Gensler.
But beware, the buzz around these types of cryptos often doesn’t last long. These Memecoins, while a source of entertainment, are considered high-risk investments due to the lack of strong fundamentals.
Tokens hot during the May craze, such as PEPE and Turbo (TURBO), saw steep declines from their all-time highs, dropping 73% and 95% respectively.
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Passionate about Bitcoin, I like to explore the intricacies of blockchain and cryptos and I share my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make that possible.
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The current consolidation on Ether (ETH) may come to an end soon, suggesting an explosive move is coming. Although the direction of the price is still unclear, a bearish scenario seems likely.
Ether (ETH): a symmetrical triangle on the verge of breaking
On the ETH daily chart, a symmetrical triangle is being formed. Support from the March low forms the lower part of the triangle, while resistance from the year high forms the upper part. With a current price of around $1800, it is possible that this setup is about to be broken. Ether (ETH) price is indeed approaching the top of the triangle, suggesting an impending explosive move.
Unlike Bitcoin, ETH has yet to show a clear direction. However, a breakout of the triangle down seems more likely. Several factors support this hypothesis: first, Bitcoin could end the month in the red, and the battle of the SEC against the exchanges could also have a negative impact on the big cryptos. Additionally, the reaction of Ether (ETH) to the upper part of the triangle shows insufficient bullish momentum to initiate a bull run. In this context, a break to the downside of this pattern is possible, although a bullish scenario cannot be ruled out.
Levels to watch?
It is important to watch some key levels that could indicate the future direction of ETH price. On the downside, the breakout of the May low ($1737) could trigger a bigger correction. This could bring the price of ether (ETH) towards the 200-day moving average, currently at $1620. To maintain a long-term bullish structure, it would be necessary for the price to rebound from this level.
However, the Relative Strength Index (RSI) suggests a bullish scenario. Indeed, we are seeing a breakout of a descending triangle on the 14-day RSI, indicating increasing buying pressure. From this perspective, a rise in Ether (ETH) towards $2000 seems imminent.
Admission: $1860;
Stop: $1893;
Goal: $1620.
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I am passionate about cryptocurrencies, a world that I discovered barely 3 years ago. My only goal is to inform you of this incredible universe through my articles.
DISCLAIMER
The comments and opinions expressed in this article are the sole responsibility of their author, and should not be considered as investment advice. Do your own research before making any investment decision.
ChatGPT has officially arrived on smartphones. OpenAI recently brought its artificial intelligence chatbot to the Apple App Store. The chatbot’s iPhone version is already one of the most popular free apps on the App Store.
But getting too friendly could put your privacy at risk in novel, alarming ways.
ChatGPT app is free – but carries other costs
ChatGPT’s new app may be free to download. But that doesn’t mean there aren’t hidden costs. To paraphrase pathbreaking artist Richard Serra, if something is free, then you’re the product.
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According to TechRadar, the ChatGPT app provides new users with an interesting warning that “Anonymized chats may be reviewed by our AI trainer to improve our systems.” Furthermore, OpenAI states that when users “use our services, we may collect personal information that is included in the input, file uploads, or feedback you provide.”
OpenAI promises that its system renders conversations anonymous before the human review stage, but that only removes your personal data from the metadata of the file. Anything personal like names or locations or personal attributes typed into the chat box itself remain fully accessible to human reviewers.
So to simplify, your private questions don’t live in some walled garden where only an anonymous computer algorithm ingests data and grows organically by itself. Any question you submit to the ChatGPT app about your finances, your dating troubles, your health problems and more will be sent to an OpenAI database where it could be read by a human reviewer. And once you start using the app, you have no choice to opt out of this data collection regime.
An industry rife with data protection issues
Other major tech players entrusted with safeguarding user data don’t have sterling track records either. Here are a few of the biggest privacy breaches in recent years:
Amazon
In recent years, news reports surfaced that hackers had accessed Ring home security cameras and used them to speak to and taunt their owners. Hackers even set up a forum to livestream some of the things that they were doing. It was an alarming violation of privacy, one that which could have been used for future intrusions or leverage over the victims.
On top of that, Amazon’s Alexa devices have randomly recorded private conversations and leaked them to random phone numbers in people’s contact lists.
Facebook’s dismal history of protecting users’ data is highlighted by the Cambridge Analytica incident, where a political firm paid an app designer to access personal data for 87 million Facebook users. Facebook is finalizing a whopping $725 million privacy settlement to compensate affected users who had their privacy violated.
LastPass
Beginning in August 2022, password management provider LastPass suffered a string of devastating hacks that exposed millions of users private data, as well as company secrets. In the most recent breach, cyber intruders hacked a senior engineer’s home computer to gain access to a critical corporate vault available to only four top employees.
One hacker or hacker group now has encrypted copies of at least 30 million LastPass customers’ entire password vaults, along with the company’s most sensitive internal secrets and digital access credentials.
Google has agreed to nearly $600 million in privacy settlements criss-crossing the U.S. between 2022 and 2023. Attorneys general from across the country brought consumer protection lawsuits against Google for violations ranging from using protected biometric data to train a photo algorithm, to persistent location tracking by Google programs that assured users they weren’t being tracked.
The bottom line
The takeaways from ChatGPT’s privacy questions and recent tech company data breaches are clear. Guard your privacy closely. Carefully consider which apps to download. Read the privacy policy and consult app privacy settings to increase your data safety. And as much as possible, only store things on your phone or online that you could bear to have leaked onto the wild west of the internet.
When OpenAI’s CEO Sam Altman threatens to leave the EU because of impending privacy regulation, it might be a sign to proceed cautiously with ChatGPT and its cousins in the AI chatbot space.
Related Content
“My wife, ‘Emily,’ was recently named to run an important division in her employer’s auto accessories company. She is one of the most capable people I know for any job, but is terrified of these new responsibilities and has expressed a great deal of self-doubt, which is really out of character. Do you know of a resource for someone who suddenly finds themselves in a leadership role? I know that one day she will become CEO, but right now my wife is a trembling puppy. She is a very kind person and worried if that aspect of her personality will interfere with this new position. Emily responds well when shown what not to do. Thanks, ‘Bob.’”
‘Kindness is the key to effective leadership’
In my recent chat with David Noble and Carol Kauffman, authors of the just-published Real-Time Leadership: Find Your Winning Moves When the Stakes Are High, both underscored an important and sometimes overlooked element of effective leadership: kindness.
Both authors distill their years in executive coaching and academia into a highly accessible read that provides a how-to approach for the challenges of leadership, but not only for executives. Real-Time Leadership also illuminates a dark room where family members often find themselves where one has received an important promotion or assignment.
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I asked Noble and Kauffman for their lists of the things that can lead to a leader failing. Here’s what Noble said:
1. Failing to connect with your team.
Consequences: When stepping into a new job, a guaranteed method of failure is to not connect with your team, just coming in and assuming that you know everything and there is no need to understand your people, their strengths, wants and needs and what the business is all about.
2. Failing to read the culture.
Consequences: The culture might be a highly supportive, collaborative environment, but if you come in as a leader who is going to micromanage your employees, this will prove to be highly destructive.
3. Doing nothing for months, showing no accomplishments or results.
Consequences: You will have nothing to show your ability or competence.
4. Failing to anchor your day-to-day work to a longer-term strategy.
Consequences: If you do not have a long-term game plan, you are likely to fail.
A theme in Real-Time Leadership the authors stress is being “mindfully alert — to have insight into your own goals, those of your people and not be only concerned with what you want for yourself.”
To Kauffman, a leader will fail by:
- Prejudging and not taking the time to analyze alternatives.
- Focusing exclusively on his/her own development.
- Limiting engagement to only those people who are perceived as supportive.
“These three attitudes are horribly destructive,” she underscores, adding, “The other dimensions of leadership failure include not noticing or caring about what other people need from you and just going with your reflexes, not thinking the decision over and just acting.”
Employees need to feel safe to speak up
The authors maintain, “From the smallest mom-and-pop neighbor market to Fortune 500 corporations, people need to feel psychologically safe to speak up and tell the truth.” They note that the leader who is destined to fail thinks:
- I will make it hard for employees to raise a tough issue to me or to my team.
- I am going to undermine you every chance I get as a team member.
- I am going to punish you if you take a risk that doesn’t work out.
“If you do all these things,” Noble points out, “the consequence is that people will not tell you the truth or what is on their minds. So, if you are not seeing anything — not using that information — how can you possibly win?”
Never doubt yourself or fail to validate your position
“Dennis,” Kauffman observes, “you would be surprised at the people in positions of leadership who simply believe whatever they think is correct — they fail to have their views validated — and steer their company in the wrong direction. They operate on intuition, are rigid and believe whatever it is that comes into their minds.”
“And,” Noble notes, “there are situations where you want something so much as a leader that you just don’t see the reality — you know the numbers don’t work, but you still go ahead and do it because you want it so bad. That’s one of the consequences of not seeing reality for what it is. They refuse to have a healthy dose of self-doubt, or ask themselves, ‘How might I be wrong?’”
Top personality issues that can derail a leader
The authors listed several personality issues that can derail leadership:
- Being impulsive. If you get really excited about things and then become easily disappointed, frustrated and pull out so you are not consistent, people will be unable to predict your behavior and will not believe what you say.
- Being skeptical of everything your team is telling you, not trusting or believing anything they say. Asking, “What’s in it for them?” or “What’s their agenda?” Pushing back on everything.
- Fearing being wrong and therefore refusing to make a decision.
- Taking undue risks and having all the answers all the time. Thinking, “I can never make a mistake. I’m a genius.”
Real-Time Leadership has the needs of people just like my reader’s wife in mind. The authors have given readers a road map to that place called success.
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
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Gary Gensler faced the press to explain the heavy charges brought by the SEC against the exchanges Coinbase and Binance.
Security or not?
Coinbase CEO Brian Armstrong probably regrets inciting the US Congress to put pressure on Gary Gensler. The chairman of the SEC responds this week in a brutal way.
As a result, Coinbase has just been asked by 10 American states to explain themselves. The NASDAQ-listed exchange has 28 days to demonstrate why it should not be banned from continuing operations.
BinanceUS risks seeing the funds of all its customers frozen if justice gives the green light. Note that funds held on binance.com are not affected.
The SEC Chairman took to CNBC and Bloomberg to explain:
“These exchanges combine a number of functions that are not seen in traditional finance. Indeed, the New York Stock Exchange does not manage an investment fund in parallel nor does it have its own market makers. But that is precisely what Binance does through sister organizations that flood the platform with transactions. This is called wash trading. »
[Le wash trading consiste à faire croire aux investisseurs que les volumes d’échange d’un titre sont plus élevés qu’ils ne le sont réalité afin d’attirer le chaland. C’est illégal aux États-Unis.]
“Binance customers don’t even know who has custody of their funds. Are they kept here or abroad? We know that billions of dollars in customer funds have been transferred to Merit Peak. We accuse CZ of controlling Merit Peak as well as Sigma Chain, a market maker that artificially inflated volumes. »
For Gary Gensler, CZ “trade against its clients” through these companies.
“We don’t need more digital currencies”
On whether cryptos are just a gigantic ponzi, Gary Gensler did not say no:
“The SEC has decided to remain neutral, but we have to ask ourselves questions. There is a lot of debate as to whether these tokens really have any use. We don’t need more digital currency. We already have a digital currency, it’s the US dollar, the euro, the yen. They are all digital now. »
“On these exchanges, there are often hundreds of tokens. Coinbase offers around 250 tokens. Even 16,000 tokens via his wallet. Same thing for Binance. All we have to show is that one of these tokens is a security that should have been properly registered with the SEC. We have already highlighted a dozen examples for each of the Binance and Coinbase exchanges. »
[SOL, ADA, MATIC, SAND, CHZ, FLOW, ICP, NEAR, VGX, DASH, NEXO, BNB, BUSD, FIL, ATOM, MANA, ALGO, AXS et COTI]
“It’s up to the public to decide what they want to invest in, but the law says it must be based on proper registration. Without it, the public can’t tell if it’s a scam or a counterfeit. And we know that this ecosystem is filled with peddlers and scammers. »
Bitcoin is the only cryptocurrency that Garry Gensler admits is not a security. In the eyes of the SEC, bitcoin is a “commodity”, just like gold.
Finally, it should be noted that Binance also clashed with the French authorities last week. The exchange was forced to delist a dozen cryptocurrencies, including monero.
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Journalist reporting on the Bitcoin revolution. My papers deal with bitcoin through geopolitical, economic, and libertarian prisms.
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At any given time, entrepreneurs are juggling many tasks, especially in the early days of launching a business.
If you’re an entrepreneur in the startup phase of your journey, you’re busy bringing your idea to life and strategically planning to enter the market. But as you do so, it’s vital to establish the right financial structures for your venture. Managing startup finances is easier when you prioritize doing so at the beginning. What’s more, a 2023 survey by online loan marketplace company Lendio found that small business owners “are primarily facing challenges related to the economy (23%), inflation (21%) and other financial concerns (14%).” By getting a head start on your startup finances, you’ll be better prepared to navigate these challenges (such as the next recession) as they arise.
Common mistakes
When it comes to managing startup finances, Eric Kala, the CEO of Avid Wealth Partners, a San Antonio, Texas-based wealth management and financial planning firm, has often seen entrepreneurs make four common mistakes.
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(Image credit: Courtesy of Eric Kala)
First, they fail to establish the correct business entity or structure to financially and legally protect them down the line. This can limit their flexibility in the future. Regarding the specific structure or entity you should pursue, Kala recommends starting by forming an LLC. However, he stresses that you should always consult professional help catered to your unique situation before you take that step.
“It creates a clear delineation between individual and business finances,” says Kala. “We’re not filing under your name, per se. We’re setting things up as a business, which allows us to be more nimble. For the $500 to $1,000 it costs to set up an LLC, it allows the entrepreneur to file as a partnership or an S-corporation later on relatively easily.”
Additionally, according to Kala, that delineation can give entrepreneurs certain legal and creditor protections, putting them in a stronger position to weather tough circumstances. For instance, if you form an LLC and your business gets sued, your personal assets are protected in most cases.
That lack of delineation between personal and business finances ties into another of the most damaging mistakes Kala has seen some entrepreneurs make: using their business accounts as second lifestyle accounts and writing off luxury expenses such as boats and planes.
If audited, these business owners will likely face legal and financial repercussions. Separating your personal and business accounts helps you avoid these murky situations.
Kala has also noticed that some entrepreneurs often don’t audit-proof their business by keeping good books and records as they set up their finances. Some entrepreneurs don’t implement the most essential tools, such as accounting software, to help them track their expenses and spending. Without accurate records, they can’t unlock their full tax benefits when it’s time to file.
But Kala emphasizes that having the right tools is not enough. Entrepreneurs sometimes don’t classify their financials correctly, which costs them later. For instance, they will write off certain items, such as furniture and computers, as expenses rather than depreciating assets. This erroneous classification makes the company seem like it has more expenses than it actually has, which will unfavorably impact its EBITDA (earnings before interest, taxes, depreciation and amortization).
“When the company has continued growth and wants to expand and inevitably goes to a bank, those bankers aren’t going to look at backing those depreciable expenses out,” says Kala. “They’re just going to say, ‘Well, you have a lot of expenses, and your revenue isn’t really where we want it to be.’”
Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives. Learn more >
Initial steps
Once you have your business plan in place, Kala advises, you should start vetting experts to guide you, namely, a business lawyer with expertise in your industry, a CPA and a financial advisor.
“As you’re going through and vetting, it’s really about having conversations,” says Kala. “The advisors you work with on a consistent basis need to have not only knowledge based off of their academic studies, but also based off of their work experiences and previous clientele.”
Kala explains that once you have the right professionals in your corner — ones you trust and feel comfortable around — you should set up your business entity or structure. Next, open business operating and money market accounts. After those accounts are in place, work with your CPA to get reliable accounting software and start logging your expenses and depreciable items correctly.
Contingency plans
In business, things don’t always go as planned. Kala stresses that every entrepreneur should be prepared for worst-case scenarios.
“Really think about contingency planning,” says Kala. “Examine things like buy-sell agreements and your loan documents.”
Entrepreneurs, he explains, should ask detailed questions when reviewing their documents. For instance, if you’re an entrepreneur with a business partner, you should find out whether or not a loan your business partner signed would get called by the bank in the event that they pass away. If you have a family business, you should create a succession plan in the event of your passing. If you don’t have a family business, you should plan how you’d like your business to continue if you pass away (or, if you have a business partner, if they pass away).
Other worst-case scenarios to prepare for include injuries, recessions, industry disruptions and natural disasters. The better prepared you are, the better off you will be. Kala recommends that entrepreneurs speak with their trusted advisors to create action plans that can help them overcome such challenges.
Looking ahead
There’s no need to panic if you’re already well into your business and haven’t taken all or some of these steps, says Kala.
“The things that have happened in the past are in the past,” he notes. “Look forward and correct the situation.” Ultimately, Kala says, the difference between successful and unsuccessful businesses often comes down to not just hard work, but establishing the right amount of financial discipline.
Investment advice is offered through Avid Wealth Partners LLC, a registered investment adviser. Insurance products are offered through Avid Risk Management LLC. Avid Wealth Partners is the dba marketing name for Avid Wealth Partners LLC, Avid Risk Management LLC, Avid Consulting LLC, and Avid Capital LLC.
The information contained herein is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. Always seek professional advice.
