<<creative writer on leave today>>
Few more weeks b/w Byju’s & Deloitte
India’s most-valued startup Byju’s is yet to get its 2020-21 (FY21) financial results signed from its auditor Deloitte and could take another few weeks for the company to file them with the ministry of corporate affairs (MCA).
Deloitte had raised 44 concerns and Byju’s had resolved nearly 40 of them. “But there were about four concerns that Deloitte still had and so the company wasn’t ready to sign off the results. As a regulatory requirement, private companies have to file their annual results with the corporate affairs ministry.
No silver lining, darker clouds
The comments came after a news report by the business website The Ken said that Deloitte had refused to sign on Byju’s results and raised concerns around refunds, loan guarantees and unusual revenue recognition practices.
Company is struggling to manage cash for its operations and is resorting to cutting costs aggressively as well as looking at various ways to raise funds.
Byju’s has already announced an $800-million equity fundraise and is also reportedly in talks for $1 billion in acquisition debt financing.
Rising complications
The Morning Context reported that Byju’s has been offloading significant chunks of its trade receivables through pass through certificates, or PTCs, since 2019 and has sold as many as eight tranches of PTCs so far.
A pass through certificate is given to an investor against certain mortgaged-backed securities that lie with the issuer. It can be compared to securities (like bonds and debentures) that may be issued by banks and other companies to investors.
India’s edtech companies have had two successive exceptional years of hypergrowth but are finding it hard to sustain the momentum this year, with schools, colleges and physical tuition centres resuming work.
Source: Moneycontrol
Coinbase enters the crowded derivates market
Coinbase just launched a derivatives product, its latest attempt to move into a new field and offset weakness in its core spot-trading business. It had acquired a U.S.-regulated derivatives exchange called FairX in February for $330M, according to research firm PitchBook.
Launching pad- in 3,2,1!
This past week, it relaunched it with a focus on cryptocurrencies. Its first product is a “nano bitcoin” futures contract that will be offered through brokers while Coinbase awaits regulatory approval to offer them directly.
Derivatives are financial instruments that are based on and allow traders to bet on the price of an underlying asset, like bitcoin.
Coinbase could use a new source of revenue as its highly publicized launch of an NFT exchange hasn’t driven much activity.
Fun days are over
Coinbase’s first few quarters as a public company were wildly profitable, but since the crypto selloff began in November, the company has struggled.
In the first quarter of 2022, it reported a loss of $429.7 million, or $1.98 a share, and said users were fleeing.
Modus operandi of derivates
Crypto exchanges called decentralized exchanges are becoming larger players in the derivatives market. Decentralized exchanges, or DEXes, basically automate the functions of traditional exchanges and allow traders to invest without an intermediary. Most of this activity is offshore, and largely unregulated.
The differences between decentralized and centralized exchanges are mainly below the surface.
Centralized crypto exchanges are essentially brokering trades, matching orders, and executing and settling the orders. They are the central intermediary, and if something goes wrong, they are the party responsible.
Decentralized exchanges aren’t actually brokering trades on behalf of their customers or facilitating the execution or settlement of the trades. All of those functions are handled through software automation. The liquidity to ensure trades get executed comes from the users, too, collected into large “liquidity pools.”
The arrangement also means that even the companies that created the exchanges don’t assume legal responsibility for them.
Source: WSJ