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U.S. issues warning to crypto, banks helping Russia bypass sanctions

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Wally Adeyemo, deputy U.S. Treasury secretary, speaks during a news conference at the Department of Justice in Washington, D.C., U.S., on Monday, Nov. 8, 2021.

Bloomberg | Bloomberg | Getty Images

The U.S. will hold accountable any actor that seeks to help Russia bypass economic sanctions amid the Kremlin’s unprovoked onslaught on Ukraine, Deputy U.S. Treasury Secretary Wally Adeyemo told CNBC on Tuesday.

The U.S. and international allies have imposed a barrage of punitive measures against Russia since the country launched its invasion of Ukraine on Feb. 24.

The conflict has triggered a devastating humanitarian crisissent shockwaves through financial markets and left Russia increasingly isolated on the global stage.

“We have not seen to date that Russia has been able to evade our sanctions in a meaningful way, but we know that they are attempting to do so and we know they are going to try and use every means possible,” Adeyemo told CNBC’s “Street Signs Europe.”

He cited cryptocurrencies and opaque shell companies as possible means that Russia may exploit to bypass the economic sanctions.

“What we want to make very clear to crypto exchanges, to financial institutions, to individuals, to anyone who may be in a position to help Russia take advantage and evade our sanctions: We will hold you accountable,” Adeyemo said.

“We will come and we will find you, and we will ensure that Russia does not have the ability to get around the sanctions that we have put in place in order to make it harder for them to prosecute the illegitimate war that they have in Ukraine.”

Crypto concerns

His comments come shortly after the G-7 major economies pledged to ensure the Russian state, elites, proxies and oligarchs would not be able to leverage digital assets to sidestep the impact of international sanctions.

The G-7 group is comprised of the U.K., U.S., Canada, Japan, Germany, France and Italy.

Digital currencies have proven useful in boosting Ukraine’s defenses, with the government raising millions of dollars in crypto donations from the public. At the same time, regulators are worried about their potential use in evading sanctions imposed on Russia.

People who transact in cryptocurrencies are kept anonymous, which has often made them a prime target for cybercriminals. However, experts say it is possible to trace the movement of funds thanks to the public nature of the blockchain, an immutable record of all digital currency transactions.

Nevertheless, crypto exchanges have come under pressure from politicians including Democratic Senator Elizabeth Warren to introduce tougher checks to ensure they can prevent sanctioned individuals and companies from moving their money into crypto.

—CNBC’s Ryan Browne contributed to this report.



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Fiji fires police commissioner and end security deal with China

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Police operate a security check point in the Fijian capital of Suva in December following general elections. The Pacific island nation has played an important regional role amid competition between China on the one side and Australia, New Zealand and the United States on the other.

Saeed Khan | Afp | Getty Images

Fiji’s president on Friday suspended the commissioner of police following a general election saw the first change in government in the Pacific island nation in 16 years, after the military earlier warned against “sweeping changes.”

President Ratu Wiliame Katonivere said Commissioner of Police Sitiveni Qiliho had been suspended on the advice of the Constitutional Offices Commission, “pending investigation and referral to and appointment of, a tribunal.”

The Supervisor of Elections Mohammed Saneem was also suspended by the commission, the statement said.

Qiliho declined to comment to local media because he said he will face a tribunal over his conduct. He was seen as being close to former prime minister Frank Bainimarama, who led Fiji for 16 years before a coalition of parties narrowly won December’s election and installed Sitiveni Rabuka as leader of the strategically important Pacific nation.

The day before a coalition agreement was struck, Qiliho and Bainimarama called on the military to maintain law and order because they said the hung election result had sparked ethnic tensions, a claim disputed by the coalition parties.

The Pacific island nation, which has a history of military coups, has been pivotal to the region’s response to competition between China and the United States, and struck a deal with Australia in October for greater defence cooperation.

No more China policing deal

On Thursday, Fiji Times reported that Rabuka said his government would end a police training and exchange agreement with China.

“Our system of democracy and justice systems are different so we will go back to those that have similar systems with us,” the prime minister was quoted as saying, referring to Australia and New Zealand.

The prime minister’s office did not immediately respond to a request for comment.

Republic of Fiji Military Forces Commander Major General Jone Kalouniwai earlier this month warned Rabuka’s government against making “sweeping changes,” and has insisted it abide by a 2013 constitution which gives the military a key role.



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Inventory glut and underused factories

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Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.

Jonathan Ernst | Reuters

Intel’s December earnings showed significant declines in the company’s sales, profit, gross margin, and outlook, both for the quarter and the full year.

Investors hated it, sending the stock over 9% lower in extended trading, despite the fact that Intel did not cut its dividend.

The earnings report, which was the eighth under CEO Pat Gelsinger’s leadership, shows a legendary technology company struggling with many factors outside of its control, including a deeply slumping PC market. It also highlights some of Intel’s current issues with weak demand for its current products and inefficient internal performance, and underscores how precarious the company’s financial health has become.

“Clearly, the financials aren’t what we would hoped,” Gelsinger told analysts.

In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.

Here are some of the most concerning bits from Intel’s earnings report and analyst call:

Weak and uncertain guidance

Intel didn’t give full-year guidance for 2023, citing economic uncertainty.

But the data points for the current quarter suggest tough times. Intel guided for about $11 billion in sales in the March quarter, which would be a 40% year-over-year decline. Gross margin will be 34.1%, a huge decrease from the 55.2% in the same quarter in 2021, Gelsinger’s first at the helm.

Read more about tech and crypto from CNBC Pro

But the biggest issue for investors is that Intel guided to a 15 cent non-GAAP loss per share, a big decline for a company that a year ago was reporting $1.13 in profit per share. It would be the first loss per share since last summer, which was the first loss for the company in decades.

An inventory glut

Dropoff in gross margin

Underpinning all of this is that Intel’s gross margin continues to decline, hurting the company’s profitability. One issue is “factory load,” or how efficiently factories run around the clock. Intel said that its gross margin would be hit by 400 basis points, or 4 percentage points, because of factories running under load because of soft demand.

Ultimately, Intel forecasts a 34.1% gross margin in the current quarter — a far cry from the 51% to 53% goal the company set at last year’s investor day. The company says it’s working on it, and the margin could get back to Intel’s goal “in the medium-term” if demand recovers.

“We have a number of initiatives under way to improve gross margins and we’re well under way. When you look at the $3 billion reduction [in costs] that we talked about for 2023, 1 billion of that is in cost of sales and we’re well on our way to getting that billion dollars,” Gelsinger said.

The not-so-bad news: Dividend and self-driving

Long-term investors have always closely watched how the company balances the near-term need to placate shareholders with the massive capital spending needed to stay competitive in the semiconductor manufacturing business.

If Intel is cutting costs and still needing to invest in chip factories to power its turnaround, analysts say it may want to reconsider its dividend. Intel spent $6 billion on dividends in 2022, but did not cut its dividend on Thursday.

Meanwhile, the company said it wants to cut $3 billion in costs for 2023 and analysts believe it wants to spend around $20 billion in capital expenditures to build out its factories.

Read more about electric vehicles from CNBC Pro

Gelsinger was asked about this dynamic on Thursday.

“I’d just say the board, management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners and we are committed to maintaining a competitive dividend,” Gelsinger replied.

There was at least one bright spot for Intel on Thursday.

Mobileye, its self-driving subsidiary that went public during the December quarter, reported earlier in the day, showing adjusted earnings per share of 27 cents and revenue growth of 59%, to $656 million. It also forecast strong 2023 revenue of between $2.19 billion and $2.28 billion. Shares rose nearly 6% during regular trading hours Thursday.



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China’s reopening will boost these retail names, Wells Fargo says

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