TheChek News Flow

Regional wireless carrier has been seeking buyers for its operations, spectrum licenses

T-Mobile TMUS 0.57%increase; green up pointing triangle US and Verizon VZ 0.52%increase; green up pointing triangle Communications are in discussions to carve up U.S. Cellular, one of the country’s last major regional wireless carriers, in separate transactions that would give both buyers access to valuable airwaves.

T-Mobile is closing in on a deal to buy a chunk of the regional carrier for more than $2 billion, taking over some operations and wireless spectrum licenses, according to people familiar with the matter.

The T-Mobile deal could be reached as soon as later this month, while discussions with Verizon on a separate transaction are expected to take longer or might not result in an agreement, the people said.

The split-sale structure is designed to convince antitrust authorities who will review the deal that the tie-up won’t hurt competition. U.S. authorities review wireless mergers market by market.

Verizon is the biggest U.S. cellphone carrier by subscribers, and T-Mobile became the second largest soon after it bought rival Sprint. T-Mobile gained more customers this month after it completed its purchase of Mint Mobile, an upstart brand.

U.S. Cellular offers wireless service to more than four million mostly rural customers across 21 states from Oregon to North Carolina. It also owns more than 4,000 cellular towers that weren’t part of the latest sale talks. The company has a market value of about $3 billion.

Members of the Chicago-based Carlson family control Telephone & Data Systems TDS 9.02%increase; green up pointing triangle, which in turn owns 80% of U.S. Cellular. TDS last year put the wireless company’s operations on the block as it struggled with competition from national rivals and cable-broadband providers.

The rising value of wireless licenses is a driving force behind the deal. U.S. Cellular’s spectrum portfolio touches 30 states and covers about 51 million people, according to regulatory filings.

American companies have spent more than $100 billion in recent years to secure airwaves to carry high-speed fifth-generation, or 5G, signals and are hunting for more. But the Federal Communications Commission has lacked the legal authority to auction new spectrum for more than a year. The drought has driven up the price of spectrum licenses at companies that already hold them.

The U.S. wireless business has also matured: Carriers have sold a smartphone subscription to most adults and many children, which leaves less room for expansion as the country’s population growth slows. AT&T and Verizon have meanwhile retreated from expensive bets on the media business to focus on their core cellphone and home-internet customers.

A once-crowded field of small, midsize and nationwide cellphone carriers is now split among Verizon, T-Mobile and AT&T, leaving few players left to take over. As one of the last pieces left on the board, U.S. Cellular has long been an attractive takeover target.

Italian state-controlled group expected to acquire underwater missile and sonar business from Leonardo

Italy’s Fincantieri is set to acquire the submarine unit of defence group Leonardo for around €350mn, as Europe’s largest shipbuilder seeks to build its military business.

The agreement, along with Fincantieri’s latest capital raise of up to €500mn, is set to be announced on Thursday evening, according to three people close to the deal. The funding round, backed by state investor Cassa Depositi e Prestiti, will finance the group’s acquisition.

Fincantieri’s purchase of Tuscany-based WASS, which makes underwater missiles and sonars, will strengthen the state-controlled company’s defence and security operations. The company manufactures both cruise and military vessels as well as submarines, and aims to expand its underwater business.

It comes at a time when governments are seeking to protect critical underwater infrastructure assets such as telecommunication cables and energy pipelines from rogue actors.

The war in Ukraine and the 2022 Nord Stream pipeline sabotage incident have highlighted the importance of underwater security. With more underwater drones being used in the Black Sea, the conflict has underlined the importance of underwater defences.

The Italian government is also seeking to streamline its underwater security systems, establishing a national research centre to foster business opportunities in the sector.

Leonardo, under chief executive Roberto Cingolani, has been divesting non-core assets and eyes acquisitions. The company, which is also controlled by the government, has been looking to strengthen partnerships with other defence contractors across Europe and focus on its technology platform.

Fincantieri estimates the global underwater sector, including defence, telecommunications, energy and oil and gas, to be worth up to €400bn — with defence playing a leading role — by 2030, according to an investor presentation published in March. Shares in the company have surged 30 per cent since the release.

Fincantieri and Leonardo also have a joint venture, called Orizzonte Sistemi Navali, which manufactures warship systems.

Shares in Fincantieri were down 7.5 per cent in the afternoon over concerns on the size of the recapitalisation reported earlier on Thursday by Italian media.

Fincantieri, Leonardo and CDP declined to comment.

Rowing startup Hydrow acquires a majority stake in Speede Fitness as their CEO steps down

Hydrow, the at-home rowing machine, announced Thursday that it has acquired a majority stake in Speede Fitness, the company behind the AI-enabled strength training machine.

The rowing startup also announced that CEO and founder Bruce Smith will step down, and President and CFO John Stellato will take over day-to-day operations, per CNBC. Smith is now the chairman of Hydrow’s board.

Hydrow declined to share how much of a majority stake it now has in Speed Fitness. It’s possible that the company may acquire the remainder of Speede, but it is uncertain at this time.

Founded in 2017, Hydrow’s connected rowing machines (which range from $1,695 to $3,995) simulate the feeling of rowing on water through a patented electromagnetic and computer-controlled drag mechanism. The company has raised $300 million to date and touts notable investors such as Activant Capital, Constitution Capital, L Catterton, Liberty Street, RX3, and Sandbridge Capital, as well as several professional athletes and celebrities like Travis Kelce and Justin Timberlake.

As of April, delivered unit sales were up 35% year over year, Smith told TechCrunch.

Backed by NFL athletes (Cole Kmet, Jaylon Johnson, and Justin Simmons), Speede Fitness offers a full-body home gym experience, combining isotonic, isokinetic, and eccentric training to provide more challenging and effective workouts.

As Hydrow aims to become a “whole-body health company,” the acquisition allows it to expand into strength-focused experiences, which the company will integrate into its connected fitness platform by 2025. In addition to rowing, Hydrow also offers other workouts like yoga, Pilates, and functional movement.

The fair generated $50.7 million in Media Impact Value, with China, the U.S. and Switzerland being top-performing regions.

The 2024 edition of Watches and Wonders, held between April 9 and 15 in Geneva, generated $50.7 million in Media Impact Value, according to the latest data analysis from Launchmetrics.

Rolex, Cartier, and IWC Schaffhausen were the biggest winners when measured by the Media Impact Value generated during the timepiece fair, raking in $10.2 million, $5.9 million, and $5.2 million in MIV, respectively. They were followed by Piaget, Tag Heuer, Tudor, Patek Philippe, Charriol, Jaeger-LeCoultre and Hublot.

Regarding MIV generated through the brand’s own media channel, Rolex, Tudor, Hublot, IWC Schaffhausen and Chanel were the top performers.

Veteran model Gisele Bündchen, an IWC Schaffhausen ambassador since 2022; Singaporean actor Desmond Tan; tennis player Garbiñe Muguruza, who attended the fair with Rolex, and “Dubai Bling” star Jwana Karim were among the top celebrity MIV generators. Other major stars who visited the fair included Kylian Mbappé, Apo, Lee Jun-ho, and Jackson Yee.

Under the influencer bracket, Mike Nouveau, Teddy Baldassarre, Roberta Naas, and Derek Mon stood out. A top placement came from an Instagram Reels video posted by Naas about the latest Van Cleef & Arpels Lady Arpels Brise D’Été watch, gaining more than 816,000 likes and generating $335,000 in MIV.

Looking at contribution by region, China contributed 20 percent of the total Media Impact Value, $10 million, during Watches and Wonders. It represented an 18 percent increase in placements since 2023. China was followed by the U.S. and Switzerland.

A key takeaway picked up by Launchmetrics at this year’s Watches and Wonders is that the presence of the media voice is gaining momentum.

“Leveraging the media voice helps amplify brand narratives and positions Watches and Wonders as a focal point in global industry conversations,” said Launchmetrics.

Media Impact Value is a proprietary algorithm created by Launchmetrics to measure and benchmark the impact of all media placements and mentions across owned media, partners, influencers, celebrities, and media in the fashion, luxury, and beauty industries.

Ex-DeepMind and Meta AI Researcher Raises Nearly $50 Million To Help Developers With LLMs’ Secret Sauce

For all that’s leaked about the sizes and architectures of the advanced large language models developed by OpenAI and its ilk, we still don’t know what data they were trained on.

A pessimist might say that’s because of the numerous lawsuits LLM developers would face if the amount of copyrighted content they were using was revealed, but a more generous explanation would be that it’s because the makeup of their training data is these companies’ secret sauce.

The importance of data explains why Ari Morcos, a former DeepMind and Meta Platforms AI researcher, co-founded DatologyAI in 2023 alongside ex-Twitter engineering lead Bogdan Gaza and former MosaicML head of data research Matthew Leavitt. The three aim to help researchers and developers better curate their training datasets to improve the quality of their models. Investors are responding. Just three months after announcing its $11.65 million seed round, the Redwood City-based startup has raised an additional $46 million in Series A funding led by Felicis, with participation from Radical Ventures, Amplify Partners, Elad Gil, M12 and Alexa Fund.

DatologyAI, which currently has 11 employees, aims to reduce the amount of human decision-making—which can often be biased or time-consuming—needed in data curation, Morcos told me. That’s a different strategy from the more hands-on approaches of other data curation startups, where employees manually look at their customers’ private data to see where gaps exist. That’s made them more like consultancies than software companies in many cases, VCs tell me.

Instead, DatologyAI uses algorithms to automatically determine how much data a model needs to understand a certain concept. For example, a model will need more examples of a complex concept (like dogs, which vary in appearance) than a simple one (like elephants, which look relatively similar to each other) to understand them, Morcos said. These algorithms also ensure that models see enough rarer “edge cases” and that the data is divided into more manageable chunks during the training process.

Equally important to the training data itself is the order that it’s presented to the model in. Typically, researchers will show LLMs simpler concepts and lower-quality data first, when the models “know” less and can glean more information from the weaker data, Morcos said. Later on in the training, they will show data that’s more relevant to the models’ specific purpose, like lines of software code for a code-generation model, he said.

Though not uncommon for the hot AI market, I did ask Morcos about the reason behind his startup’s back-to-back rounds. DatologyAI is in an interesting position, he explained: Though it doesn’t have the computing needs of a foundation model developer like OpenAI, it does actually need to train models to confirm that the changes it makes to training data lead to better performance. That means that it needs more computing power than other startups developing tools for developers—and therefore, more capital. (Though I’m sure most AI startups wouldn’t say no to more money regardless.)

Morcos also pointed out that, as we’ve been reporting for months, AI talent can be incredibly expensive, especially when a company is competing with the likes of Google, OpenAI and Meta. So some of that capital will also be put towards attracting AI researchers and engineers, he said.

Former company insiders say the firing of an internal investigator showed that the crypto exchange neglected evidence of market manipulation

When the U.S. accused Binance last year of maximizing profits over protecting users, the company promised “unceasing efforts to deliver a safe and trusted platform.”

This was put to the test soon after when an internal investigation found a top client—a firm run by a Lamborghini-loving crypto trader—was manipulating markets.

The result: Binance kept the client and fired its investigator.

The investigator and his colleagues on the company’s market-surveillance team had been hired from the traditional finance world to clean up Binance’s act. The world’s largest digital-currency exchange, born in an unregulated, freewheeling crypto culture, was under the microscope for allegedly failing to prevent the sort of manipulative trading that would get Wall Street traders thrown in jail.

Among the practices the surveillance team found: “VIP” clients—the largest on the exchange—engaged in pump-and-dump schemes and wash trading that were explicitly prohibited in Binance’s own terms of use, according to former company insiders and company documents. Binance also maintained a fleet of secret internal trading accounts that were used to trade large volumes of certain crypto tokens.

Crypto exchanges such as Binance are at the center of the digital-currency economy. Customers use them to trade one cryptocurrency for another, with Binance listing about 400 varieties, along with derivative products that allow users to bet on prices’ direction. The company says it has almost 190 million users and industry data shows it processed spot and derivatives trades worth over $4 trillion in March.

The ex-company insiders say the investigator’s dismissal in late 2023 showed that Binance—already in the crosshairs of the Securities and Exchange Commission—neglected evidence of market manipulation and prioritized generating trading fees from large clients over fixing its practices. A fresh boom this year in crypto trading has created lucrative new trading opportunities for both Binance and its high-rolling customers.

A Binance spokesperson said the company rejected any assertion that it has permitted market manipulation on the exchange and it was prioritizing the improvement of compliance functions.

“We have a robust surveillance framework that identifies and takes action against market abuse,” the spokesperson said. “We do not favor any individual user, no matter how big, over the safety of the platform.”

Decisions to remove users weren’t taken lightly and required sufficient evidence that they had breached the terms of use, the spokesperson said. A Binance executive said the company dismissed the investigator after a subsequent internal inquiry determined the claims against the client weren’t fully substantiated.

Last November, Binance pleaded guilty to violating U.S. anti-money-laundering requirements and agreed to pay a $4.3 billion fine. Its founder, Changpeng Zhao, stepped down and was sentenced last week to four months in jail on a related charge.

The exchange also faces civil charges in a SEC lawsuit. In a complaint last June, the SEC alleged Binance spun a “web of deception” in misleading U.S. investors about its risk controls to prevent manipulative trading. The SEC said Binance, along with its U.S. arm, put its own financial interests ahead of users.

The SEC declined to comment.

This article is based on interviews with former and current Binance employees, as well as other industry players. The Wall Street Journal also reviewed key documents and emails.

Expanding surveillance

Aware of the SEC investigation back in 2022, Binance began growing the market-surveillance team. It hired a dozen investigators from places such as Bank of America and hedge fund Citadel.

The surveillance team built new software tools to track market manipulation and detect wash trading, which is when traders act as buyer and seller in the same transactions to create the illusion of an active market.

The new tech opened investigators’ eyes to the potential scale of the problem, particularly among the VIP clients that Binance’s business relied on. Top traders—those trading more than $100 million a month—accounted for two-thirds of the platform’s total trading volume last year.

Investigators recommended booting out several hundred users through the first half of 2023 for violating the terms of use.

Their biggest action came last summer when they off-boarded the Tron Foundation, a blockchain company set up by crypto entrepreneur Justin Sun, a friend of Binance founder Zhao. The SEC in March 2023 charged the Tron Foundation and Sun with fraudulently manipulating the market for its own token through wash trading. Sun and the Tron Foundation, which have requested the case’s dismissal, didn’t respond to requests for comment.

Team members also observed that Binance’s own internal accounts were trading certain cryptocurrencies. They received no answer when they requested information inside Binance about who controlled them, the former company insiders said. The Commodity Futures Trading Commission, in a March 2023 complaint, had warned that Binance wasn’t disclosing to clients its own proprietary trading, which it said was run by a “quant desk” and kept “top secret.”

The Binance spokesperson said it doesn’t trade for profit or manipulate the market under any circumstances, adding its operations were “under close scrutiny.” Over the past three years, Binance has off-boarded nearly 355,000 users with a transaction volume of more than $2.5 trillion for violations, the spokesperson said.

New VIP trader

A new VIP trader began to turn heads at Binance.

DWF Labs, a trading-and-investment firm, vaulted into Binance’s top “VIP 9” designation, meaning it was making at least $4 billion in trades a month. Larger trading volumes on the exchange elevate clients’ VIP ranking, giving them discounted trading fees and access to private relationship managers.

DWF’s Russian managing partner, Andrei Grachev, bragged about his riches last October on social media. “Get into the DWF Lambo,” he tweeted with a photo of a DWF branded Lamborghini. Grachev, 36 years old, was formerly head of the Russian arm of crypto exchange HTX. He set up DWF in Singapore in 2022, corporate records show, and says he is based in Switzerland.

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DWF’s role was as a so-called market maker, a type of middleman firm that simultaneously buys and sells assets, usually indifferent to whether the price of the asset goes up or down.

Market makers boost liquidity, making it easier for others to trade in and out of assets. They profit by pocketing the difference between the price they buy and sell at. In traditional finance, market makers must maintain this price neutrality under the rules of the exchange on which they operate.

Binance didn’t require market makers to sign any specific agreements that would govern their trading, allowing them largely to trade as they pleased, people familiar with their operations said. The Binance spokesperson said all users of the platform must adhere to its general terms of use that prohibit market manipulation.

Instead of price neutrality, DWF offered to use its active trading position to drive up the prices of tokens and create what it called “artificial volume” on exchanges including Binance that would lure in other traders, according to proposals it sent to potential clients in 2022.

In a report prepared that year for one customer, DWF wrote that it successfully generated artificial trading volume equal to two-thirds of the client’s token and that it was working to produce a “believable trading pattern.” Other client proposals from last year said partnering with DWF would lead to “bullish sentiment” for their tokens.

DWF and Grachev didn’t respond to requests for comment. After this article was published, DWF said on X that “allegations reported in the press are unfounded and distort the facts.” DWF operates with “the highest standards of integrity, transparency, and ethics,” it said.

Grachev told a crypto podcast last year that DWF wasn’t manipulating markets and questioned whether any trader could. “Maybe it could happen once, right? But again and again, continuously, it’s not possible,” he said.

The Binance spokesperson said they were unaware of these DWF documents. “If true, it would be very concerning to us and other participants,” the spokesperson said.

A company that DWF said it invested in was Yield Guild Games. The Swiss-registered crypto startup agreed to sell $10 million worth of its token to DWF, about a quarter of its market capitalization at the time.

The value soared fivefold last August after Binance listed a highly leveraged derivative contract tied to the YGG token. Grachev had touted YGG on X just before, claiming the listing would bring the token “sustainability and power.” Its price plummeted soon after.

The crypto industry took notice of the volatility, with two other market-making firms privately raising concerns about DWF with Binance.

One of these market makers complained about DWF’s trading to Binance’s department that handled VIP clients, which in turn connected the company with the market surveillance team. Based on this referral, the team began an investigation into DWF that September.

An investigation and a firing

Binance’s investigators found that DWF manipulated the price of YGG and at least six other tokens, and made over $300 million in wash trades in 2023, concluding these were violations of the terms of use, according to some of the former company insiders.

Following Grachev’s tweet promoting YGG, DWF sold almost five million of the tokens in two batches near the peak, triggering the collapse, they said. YGG’s co-founder, Gabby Dizon, said he wasn’t aware of the investigation’s findings.

The surveillance team submitted its report recommending DWF’s removal later in September. Over the next few days, the head of Binance’s VIP client department and her staff questioned the findings and complained to the company’s leadership.

Another Binance department, tasked with assessing employees’ compliance, launched its own investigation—this time into the market surveillance team and the evidence they had compiled on DWF.

The new inquiry determined there was insufficient evidence of DWF engaging in market abuse, the Binance executive said. The wash trades identified by the surveillance team could have been accidental so-called self-trades that may not alone amount to manipulative behavior, it found.

Binance, the executive said, also felt that the surveillance team’s head had collaborated too closely on the case with the DWF competitor who made the original complaint.

Company leaders then rejected the surveillance team’s off-boarding request.

A week after the DWF report’s submission, they fired the team’s head. Binance laid off several more investigators over the following months, which the Binance executive attributed to cost-saving measures. Others quit voluntarily. The Binance executive said the team is about the same size today.