Alternative Investing Report - August 27, 2024

_{*as of market close August 26}

Pavel Durov, the Russian-born billionaire founder of the encrypted messaging service Telegram, was arrested in France over the weekend. He is being accused of being complicit in all manner of illegal activities, including drug trafficking, child pornography and money laundering, for not properly policing the platform. He could face up to 20 years in prison, and the story is still developing.

➨ TAKEAWAY: For starters, don’t expect a Telegram IPO anytime soon. Durov has claimed that the company was on track to be profitable next year and that it had received offers of investment at or above a $30 billion valuation. The future of the platform, which has 1 billion users worldwide, is now in question. The arrest adds one more dispute to the increasingly complex questions about free speech, social media and geopolitics that have come to the forefront in recent years.

A new study of Norwegian tax returns, which are public information, found that 88% of crypto owners in the country fail to declare their assets to tax authorities. The paper also estimated that the average amount of tax evasion is only between $200 and $1,087, meaning that tax enforcement would need to be cheap and well-targeted to be worth it.

➨ TAKEAWAY: While it is hard to extrapolate the data to the U.S. and the rest of the world, it is easy to imagine numbers of tax avoiders would be relatively similar everywhere. Because of its anonymous nature and the nuances a new category of assets created for an already-labyrinthine tax code, crypto has always been hard to tax. The IRS did pass a new rule in June requiring crypto exchanges and and brokers to report information on sales and trades of digital assets. Crypto investors should be prepared for the 2025 tax year, when those rules go into effect.

💵 Private credit + student loans: Carlyle Group and KKR’s acquisition of more than $10 billion in student loan debt in July highlights the trend of private firms stepping in when traditional lenders try to get rid of riskier assets. Student loan debt is a an almost $2 trillion market, providing significant surface area for the asset class to continue its expansion.

🚀 WeRide IPO delays: The Chinese self-driving car startup was expected to have its market debut last week, but the offering was put on hold due to document delays, and may not happen anytime soon. The new issue promised to test the otherwise stagnant IPO market, and with it on hold there don’t look to be any major offerings on the horizon.

🏡 DOJ suing RealPage: The property management platform has been accused of a price-fixing scheme because its algorithm and feature set implicitly allows landlords to collude when setting rental rates.

⚾ Jackie Robinson uniform: Somewhat overshadowed by the record-breaking Babe Ruth jersey, a game-worn Jackie Robinson jersey and pair of pants from the 1950s also sold last weekend at Heritage Auctions for a record $5.52 million.

🪙 Bitcoin inflows rise: Crypto-related ETFs saw weekly net inflows of $533 million last week, the most in the past five weeks, but Bitcoin made up $543 million of the inflows, meaning the rest of the market - led by ETH - actually saw negative flows.

⌚ Rolex’s “Rainbow” at auction: The first ever “Rainbow” Daytona model, which was custom-built in 1993 - almost two decades before Rolex released the line to the public - will be sold off in November at Phillips, with an opening bid of $3.5 million.

Originally built by Animal Planet’s “Treehouse Masters”, this luxury 1,700 square-foot treehouse has 4 bedrooms, 2 bathrooms and sits on 20 acres of land. Owned by NFL legend Drew Brees, it is located in the Homestead, a private gated community just north of Whitefish, Montana. It had been listed for $7.5 million, but it will now be up for auction starting September 13 with the starting bid expected to be between $2 million and $4 million.