Fintech Highlights - 2/28/2023

Cash App is growing. Robhinhood is subpoenaed. Spade raises a round. Here's what we're watching this week.. 👇

Pinned to the Top

Block’s Cash App, the payment company’s consumer-facing unit, ended the year with 51 million active users, a 16% increase from 2021.

Gross profit for Block’s Cash App unit rose 64% in the fourth quarter to $848 million from the same period a year earlier, helped by more revenue from consumers using cards and other financial products beyond Cash App’s peer-to-peer payments offering. It was the first time since early 2021 that Cash App’s gross profit has been greater than that of the company’s Square unit, which helps businesses accept payments from customers.

Payments volume growth through the company’s Square business slowed to 14% in the quarter, versus growth of 20% in the prior period. The Square unit saw a 22% increase in gross profit to $801 million. (The gross profit figure strips out Block’s bitcoin trading and installment loan businesses.)

THE BFD

Robinhood said in its annual report published on Monday that the Securities and Exchange Commission had subpoenaed the trading platform in December regarding its “cryptocurrency listings, custody of cryptocurrencies, and platform operations.” The company also disclosed subpoenas from the California Attorney General’s Office about the firm’s cryptocurrency business, including its coin listings, though it did not say when those subpoenas were received.

Why this is the BFD: Since the FTXbankruptcy in November, the SEC has increasingly ramped up allegations that crypto companies have sold unregistered securities. It charged crypto exchange Gemini and crypto lender Genesis in January with alleged sales of unregistered securities, and it settled with another crypto lending company Nexo that same month. The agency also settled with crypto exchange Kraken in February over similar charges related to its cryptocurrency staking product.

The big picture: Activity on Robinhood’s crypto trading platform plummeted in 2022 as trading volume for digital assets sank, though it rebounded slightly this year. In January, the company processed $3.7 billion in crypto trading volume, which was up 95% from the month prior, but still down 59% year over year.

M&A

Toronto-Dominion Bank received all regulatory approvals for its $1.3b purchase of Cowen with the deal to close Wednesday. More here →

Apollo Global Management is in talks to invest $750m as part of Credit Suisse's spinoff of First Boston, with the bank potentially matching it for a total of $1.5b in capital, per Bloomberg. More here →

Repair Pricer, a propery repair estimate technology, reached a definitive agreement to be acquired by InspectionGo for an undisclosed amount. Previously the company raised approx. $1.5M.  More here →

Canadian FinTech Nuvei’s $1.3 billion acquisition of payment platform Paya is complete. The all-cash deal, first announced in January, gives Nuvei ownership of a payment and frictionless commerce business that processed $50 billion in payment volume last year.  More here →

Fintech

🫶🏻 Spade, a credit card transaction data API, raised $5m in seed funding. Andreessen Horowitz led. The company is developing a data-backed transaction enrichment API that turns that bad data into merchant, category and geolocation details in real time.  More here →

Trust & Will has secured $15M after doubling revenue, bringing the San Diego-based company’s total funding to $48 million since its 2017 inception. Amex Ventures, USAA are among the digital estate planning startup’s new backers. More here →

Scrut Automation, a Milpitas, Calif.-based compliance automation startup, raised $7.5m in funding led by MassMutual Ventures, with Lightspeed Venture Partners and Endiya Partners also participating. The company currently works with customers in India, Singapore, and the US, providing them with a unified view of an organization's compliance posture.
More here →

Workpay raises $2.7M. The Kenyan HR payroll startup will soon roll out its services in 40 countries in Africa, nearly double its current reach, the pre-Series A funding round. More here →

Carmoola, a British car financing company, raised £8.5m in Series A funding led by QED Investors, with InMotion Ventures also participating. www.carmoola.co.ukMore here →

DataMesh, an Australian payments processing software company, raised $30m in Series A funding round led by NAB Ventures, with Deutsche Bank and 1835i Ventures also participating.  More here →

Insuretech

Flock, a British drone insurance startup, raised $38m in Series B funding. Octopus Ventures led, and was joined by CommerzVentures and insiders Social Capital, Dig Ventures and Foresight Ventures. https://axios.link/3Z0HZUy More here →

Proptech

Nestment, has raised $3.5M to help friends and family buy homes together. Nestment forms an LLC to help groups fractionalize and purchase listings. It helps analyze properties, set the groups up with lenders and connect them with agents. Once a home purchase is closed, Nestment will help groups manage their fractionalized listing by coordinating a group calendar, managing the P&L (profit and loss) of a property and tracking equity of ownership and return. If at any point one of the parties decides they want out, Nestment will then help with the selling and buying of their shares by helping list it for sale and providing liquidity to that party. More here →

DEN Outdoors, a Hudson Valley, N.Y.-based home design and construction management startup, raised $3m in seed funding.  Known as provider of modern cabin architecture and availability of digital plans for such, the company is launching BuiltBy Den - enabling customers to pick a plan, while Den does the building. More here →

From the Stash

Varo Bank announced the appointment of Wook Chung as chief product officer.A statement from a spokesperson said that Chung will lead Varo’s product vision and strategy initiatives and will play a key role in the expansion of Varo Tech, the innovation arm of the company, “which meets at the intersection of product, technology, data, and design.” According to Varo, Chung has an “extensive background” in product management through roles at Facebook, Twitter, Google, and most recently SoFi. More here →

JPMorgan Chase & Co. has curbed its staff’s use of the ChatGPT chatbot - According to a person familiar with the matter. The artificial intelligence software is currently restricted, the person said, who asked not to be identified because the information is private. The move, which impacts employees across the firm, wasn’t triggered by any specific incident.” More here →

Coinbase to Suspend Trading of Binance USD - Coinbase will not allow its customers to trade stablecoin Binance USD on its exchange starting March 13th. The decision was based on Coinbase’s own reviews, which found that the stablecoin did not meet Coinbase’s listing standards, the exchange  said in a tweet. More here →

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