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Curatia Analysis for Fri, Feb 8

News Dirt: Fortunes...and Misfortunes

After a long week working to stack cheddar, it’s time to get the straight dope about other people’s loot — and, in some cases, how they’re losing it.

Our saga of fortunes and misfortunes begins with the mysterious yet overlooked tale of Quadriga (32 popularity). The Canadian crypto exchange filed for bankruptcy protection last week after the sudden death of 30-year old founder Gerald Cotten.

Mr. Cotten’s passing left $136M in customer holdings locked in an electronic vault for which only he knew the password, the company says.

Crypto researchers and Kraken CEO Jesse Powell have publicly questioned that claim (25 popularity). They’ve suggested the money could have instead been moved to other accounts, although they say it’s impossible to know for sure.

Twelve days before his death, Mr. Cotten filed a will bequeathing the company’s assets as well as his Lexus, airplane, yacht, and pet chihuahuas Nitro and Gully to his wife.

Quadriga isn’t the only firm taking heat for alleged transgressions against clients. Readers showed keen interest in the changing payment-for-order-flow patterns of trading app Robinhood (99 popularity).

The firm, which is amassing its own fortune from PFOF comprising 40% of revenues, slashed the proportion of client orders it sends to Citadel Securities for execution from 60% in Q3 to 33% in Q4 — a figure more in line with those of competitors.

The change may signal Robinhood’s intention to placate critics or, alternatively, intensifying competition among HFT firms for Robinhood’s coveted retail order flow.

Others in financial markets have seen their fortunes ebb with the passage of time, that invincible mercenary of fate. Pimco founder, bond king, and self-proclaimed “‘70-year old Justin Bieber’” Bill Gross, whose colorful commentary once moved financial markets, announced his retirement this week (0 popularity).

That readers cared not a whit for that news was further evidence bond markets have moved on from Mr. Gross and more generally “‘evolved past the lone-wolf guru model’” he exemplified in favor of a team orientation underpinned by data and technology.

Market forces have likewise precipitated the well-documented misfortunes of hedge funds, whose managers have stooped to the ignominy of flying coach and staying in hostels (93 popularity).

But with misfortune come stories of resiliency and redemption. And also swimming pools full of loot. Billionaire Citadel boss Ken Griffin, whose firm has rebounded from a “near-wipeout” during the financial crisis to become a $28B behemoth, recently bought a 24,000-square foot penthouse on Central Park South for $238M — the “most expensive home purchase ever in America” (94 popularity).

Michael Bloomberg is meanwhile seeking to parlay the business acumen that brought him a $48B fortune into a viable presidential candidacy (90 popularity). Ironically, a recent II piece argues, the pragmatism and compromise of the “doer” that brought Mr. Bloomberg business success create a “vanishingly thin” path to the presidency in a partisan era.

Perhaps the most inspiring story of resiliency in recent financial news is that of Jason Spindler, a former Salomon Smith Barney analyst who worked at 7 World Trade and joined first-responders to help the injured during the 9/11 attacks — an event that changed his life forever, as it did for so many of us.

Mr. Spindler subsequently joined the Peace Corps in Peru and became CEO of i-Dev International, an early backer of developing-market ventures including Kenyan food distributor Twiga Foods. On January 15, Mr. Spindler was gunned down along with 20 other victims in a terror attack on a hotel-and-offices complex in Nairobi.

Rest in peace, Mr. Spindler. You did good.

We’ll end on a lighter note, with our most popular piece of the last several weeks: a sneak peek at the HFT “thriller” The Hummingbird Project, due in box offices in March (100 popularity).

The film’s plot — two cousins who aiming to lay a fiber optic cable between Kansas and New Jersey to juice HFT trading speeds — bears a striking resemblance to the opening pages of Flash Boys.

With Netflix set to release a Flash Boys film in the near future, The Hummingbird Project is trusting to its (ironical) frontrunning position in theaters and to Salma Hayek’s aesthetic superiority to Brad Katsuyama to carry the day.

Happy weekend, folks! We’ll catch you on the flip side next week.