Alternative Investing Report - August 16, 2024

_{*as of market close August 15}

A judge refused to dismiss copyright infringement and trademark claims in a lawsuit filed by a group of visual artists against a number of AI companies. At issue in the case is whether a data set used to create the AI-image generation tool Stable Diffusion was built on copyrighted works scraped off the internet. This is one of a number of lawsuits filed against AI companies for copyright infringement. Meanwhile, Grok, the AI model backed by Elon Musk, released its own image generator, which immediately made headlines as users created countless images of public figures and existing IP in compromising situations, like Bill Gates snorting illicit substances.

➨ TAKEAWAY: This was a win for creatives and a loss for all AI companies, even those not implicated in this lawsuit. But it’s just the first battle in what will prove to be a lengthy fight. If any of these lawsuits end with a ruling that training AI models on copyrighted material is equivalent to copyright infringement, that could open up companies to significant liability, or at least force a settlement that will hold back their economics. It is an existential threat to the nascent GenAI industry and should be carefully monitored going forward.

Bankrupt crypto exchange Celsius, whose founder Alex Mashinsky is facing jail time for fraud, is suing stablecoin company Tether (USDT) for $3.5 billion worth of Bitcoin. Celsius claims that Tether unlawfully liquidated over 57,000 Bitcoin that was collateral for a loan Tether made during its bankruptcy proceedings.

➨ TAKEAWAY: Stablecoins are essential for the ecosystem to function, as they facilitate conversion from fiat money to cryptocurrency. Tether, which has a market capitalization of over $116 billion, has long faced questions about its claim that each of the USDT tokens it issues is backed 1:1 by an actual U.S. dollar. This lawsuit could not only put a dent in the company’s reserves but could force Tether to make financial disclosures. Any potential collapse of Tether would have a profoundly negative effect on the crypto market, though the company has made it through past crises unscathed and with its coin still stable.

Republic is launching the Founder Edition VC Files, with the first event next Monday, August 19 at 3 PM ET featuring Republic founder Kendrick Nguyen. Listen to Republic’s founder talk about the dark side of VC and insider tales from the boardroom. Open to Republic Note holders only.

🏈 Bucs reject $6B bid: The Glazer family, owners of the NFL’s Tampa Bay Buccaneers, reportedly turned down a record-breaking offer of more than $6.05 billion to sell the club. They bought the franchise in 1995 for a frugal $192 million, and this offer is another data point illustrating the rise in franchise values in the past few decades.

🏡 Midyear RE forecast: The experts at Realtor.com see the second half of 2024 bringing lower mortgage rates, rising home prices, sluggish house sales, and steady rents, among other predictions.

🚀 Insight’s $10B raise: The venture and private equity firm, which invests primarily in software companies, has raised more than $10B for its thirteenth fund, which is expected to close in early 2025. It is less than its previous fund’s $17.2B size, but impressive nevertheless given the slower fundraising environment.

🪙 Wall Street + crypto: Major banks such as Goldman Sachs upped their exposure to crypto, as institutional demand rose significantly in the second quarter, particularly for Bitcoin ETFs.

🏡 Real estate boosts Millennials: Thanks in large part to rising home prices, Millennials and older members of Gen Z are wealthier on average than previous generations, though the wealth gap within the generation is also higher as the divide between homeowners and non-homeowners is wide.

🚘 Barrett-Jackson preview: While Monterey Car Week is ongoing, the next major car auction is starting October 10 in Scottsdale, AZ, and will include several multi-million dollar lots.

Monday: 📉 VC down rounds up, ⚾ Collectable’s struggles
Tuesday: 🪙 Crypto in Russia, 🎨 Art auction guarantees
Wednesday: 🚀 Climate Tech heating up, 🏡 Private REIT redemptions
Thursday: 📊 CPI below 3%, 🏢 Apartment supply grows

Have a great weekend!