Former FTX CEO Bankman-Fried hit with eight count indictment

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About Time

Former FTX CEO Bankman-Fried hit with eight count indictment

NEW YORK (AP) — U.S. prosecutors charged Sam Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes and campaign finance violations on Tuesday, alleging he played a central role in the rapid collapse of FTX and hid its problems from the public and investors.

The indictment says Bankman-Fried allegedly committed a years-long fraud by diverting investors’ funds to his private hedge fund and using the money to make venture investments, lavish real estate purchases and large political donations.

Bankman-Fried, who arrested Monday by Bahamian authorities at the request of the U.S. government, was charged with eight counts, ranging from wire fraud to money laundering to conspiracy to commit fraud on the United States. He was also charged with making more than $25,000 in illegal campaign contributions, a notable charge as Bankman-Fried was one of the largest political donors this year.

The indictment is on top of civil charges announced earlier Tuesday by the Securities and Exchange Commission, which also alleged Bankman-Fried defrauded investors and used proceeds from investors to buy real estate on behalf of himself and family.

Along with the charges, U.S. authorities will seek to have Bankman-Fried forfeit all financial gains he might have received as part of the scheme. They are expected to request his extradition to the U.S., although the timing of that request is unclear. FTX filed for bankruptcy on Nov. 11, when it ran out of money after the cryptocurrency equivalent of a bank run.

The maximum potential prison exposure from these charges is 115 years, according to Nicholas Biase, a prosecutors spokesperson.

Since FTX collapsed, Bankman-Fried has been holed up in his Bahamian luxury compound in Nassau. A spokesman for Bankman-Fried had no immediate comment on the charges Tuesday. He has a right to contest his extradition, which could delay but probably not stop his transfer to the U.S.

Bankman-Fried was one of the world’s wealthiest people on paper; at one point his net worth reached $26.5 billion, according to Forbes. He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns, though he also gave money to Republicans. FTX grew to become the second-largest cryptocurrency exchange in the world.

That all unraveled quickly last month, when reports called into question the strength of FTX’s balance sheet. Customers moved to withdraw billions of dollars, but FTX could not meet all the requests because it apparently had used its customers’ deposits to fund investments at Bankman-Fried’s trading arm, Alameda Research.

https://finance.yahoo.com/news/sec-charges-former-ftx-ceo-113905816.html

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Not looking good for the industry

Crypto Founder Drowned Four Days After Tweeting the ‘CIA Was Out to Get Him’

Nikolai Mushegian was found dead in the ocean of Puerto Rico on Friday after tweeting that he was being set up by the CIA and Mossad. Mushegian was a long-time crypto developer and the co-founder of Balancer Labs a cryptocurrency investment portfolio company. . .

Mushegian was an important figure in the crypto world and a talented “Dia architect”, best known for his work with MakerDAO and proof-of-stakes blockchain network BitShares. Many people who knew the young developer say that he did important work with Maker and played a crucial role in the early days of
Ethereum.

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Crypto CEOs’ and Founders’ ‘Sudden Deaths’—What We Do Know, What We Don’t

News of the deaths of two major cryptocurrency CEOs in one week has fueled a spate of conspiratorial claims and narratives, purporting sinister links between their passing and that of other billionaires and multi-millionaires from the industry over the years.

Tiantian Kullander and Vyacheslav Taran, who both died within the past fortnight, had fortunes estimated to be worth billions of dollars and are now at the center of new conspiracy narratives on social media, despite limited-to-no evidence that either died as the result of a plot against them or other foul play.

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US Prosecutors Look to Charge Binance, Executives on Possible Money Laundering Violations: Reuters

U.S prosecutors are considering criminal charges against crypto exchange Binance and individual executives, including founder and CEO Changpeng Zhao, Reuters reported, citing two people.

The Department of Justice has also discussed possible plea deals with Binance’s lawyers, the report added.

Prosecutors in the U.S. Attorney’s Office in Seattle began investigating Binance in 2018 after a spate of cases that saw criminals use Binance to transfer illicit funds, according to Reuters.

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I read this one the other day, pretty eerie. But also heartbreaking because it’s the holidays.

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The inmates in cellblock 7 are shining their zippers

Sam Bankman-Fried and other FTX staff allegedly had ‘Wirefraud’ chat group

Sam Bankman-Fried and other members of the inner circle of the collapsed cryptocurrency exchange FTX allegedly formed a chat group on the encrypted platform Signal under the name “Wirefraud”.

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Do not stress about these people. We do have to feel sorry for their loved ones who lost what were probably very nice, sincere family or friends.

But there is no limit to the bad decisions that clever people can make.

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Your actions were well thought out, and you knew what you were doing

‘I f—ed up’: That’s how Sam Bankman-Fried intended to start his testimony to a House committee on Tuesday, before his arrest

That was how Sam Bankman-Fried, co-founder and chief executive of now-bankrupt crypto platform FTX Trading Ltd., was planning to open testimony he had agreed to give to a House Financial Services Committee hearing on Tuesday, before his arrest on fraud charges late Monday.

The 18-page-long prepared testimony, which the Wall Street Journal obtained, took firm aim at current FTX management, as well as rival exchange Binance, which has itself become the subject of a Justice Department investigation, according to a Reuters report Monday.

Bankman-Fried, commonly known as SBF, took issue with the new FTX chief executive, the restructuring expert John Ray; law firm Sullivan & Cromwell; and other longtime FTX executives for pushing the company to file for Chapter 11 bankruptcy protection, a decision Bankman-Fried now says was a mistake.

“I deeply regret giving in to pressure to sign forms that precipitated the chapter 11 filing just a few days after FTX International became potentially insolvent,” the testimony reads. “Among other things, the chapter 11 team was thrust into a very difficult situation, and I worry that they were given very misleading information by a few members of the FTX US team when they joined.”

FTX and hundreds of related entities filed for bankruptcy in November, after collapsing in spectacular fashion. The Securities and Exchange Commission on Tuesday charged SBF with securities fraud, for commingling FTX customers’ funds with those of Alameda Research LLC, a private crypto hedge fund run by him.

The Justice Department is unsealing an indictment on Tuesday, and investigations as to other securities-law violations and into other entities and persons relating to the alleged misconduct are ongoing, the SEC said.

See also: Who is Sam Bankman-Fried, the FTX ex-CEO who is now facing criminal charges?

Related: Sam Bankman-Fried’s empire of deception laid bare in SEC suit alleging massive FTX fraud

Among his many quibbles, SBF said he has reached out to Ray, who helped handle the Enron bankruptcy, in five emails, to which he has, he said, received no response.

In one, he said he told Ray, “I have potentially pertinent information concerning future opportunities and financing for FTX and its creditors. I also believe that I have relevant financial information about FTX US, and further that I have potentially relevant regulatory information concerning FTX. I would love to talk to you, whether it’s via email or phone, and to work constructively with you and the chapter 11 team to do what’s best for customers.”

SBF reiterated his long-held stance that he is prioritizing recovering and refunding the platform’s customers, and said he believes FTX US “has been and remains solvent.”

Other critiques include: that Ray and his team “significantly overstepped its mandate” and lack “the legal authority to lead the global restructuring and financing effort.”

That’s because the team does not control the core entity that runs FTX International, which is named FTX Digital Markets Ltd. and is based in the Bahamas and regulated there.

Sullivan & Cromwell, and Ryne Miller, general counsel for FTX US and a former partner at the law firm, pressured SBF into filing for Chapter 11, the testimony reads. SBF has 19 pages of screenshots purporting to show the firm, Miller and others urging him to quickly file.

“They range from adamant to mentally unbalanced,” he said, as friends and co-workers were called to help emotionally pressure SBF into action.

“It was only later that I was informed that it was very unusual for such a significant filing to be made so quickly,” he said.

Just minutes after clicking on a DocuSign link nominating Ray as CEO of various entities, SBF says he received a funding offer for billions of dollars to make customers whole. He instructed his counsel to rescind the filing but was told it was too late.

SBF saves special criticism for Binance, however, and its CEO, Changpeng “CZ” Zhao. Zhao and SBF have been engaged in a war of words in recent weeks, after the former said he would acquire FTX but then backed out after a look at the financials. Zhao has warned SBF to stop tweeting, telling him “the more damage you do now, the more jail time.”

SBF alleged that FTX suffered “a month of sustained negative PR” that was “largely driven by Binance.” That was before Zhao tweeted his intention to sell his holdings in FTX’s token. called FTT. Much of Alameda’s balance sheet was made up of FTT, which immediately lost most of its value, precipitating the current crisis.

“There is much more to say about Binance, its role in the cryptocurrency

ecosystem, and its relationship with FTX, but this is neither the place nor the time for it,” the testimony reads.

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Currently, the crypto industry is in shambles.

Binance reportedly processed over $10 billion in illegal payments this year and a DOJ investigation is looking into top executives including CEO Changpeng Zhao

  • The US Justice Department has been investigating crypto exchange Binance over money laundering violations, Reuters reported Monday.

The US Department of Justice is reportedly investigating the world’s largest cryptocurrency exchange, Binance, according to Reuters.

US prosecutors are looking into Binance on money laundering conspiracy, unlicensed money transmission, and criminal sanctions violations, four sources told the news outlet. The DOJ has also discussed potential plea deals with Binance’s legal team, the report said. A Binance spokesperson told Insider that it would be “inappropriate for us to comment” on matters related to the DOJ.

Additionally, Reuters reported that Binance processed over $10 billion in illegal payments this year, and sought to “evade” regulators. The crypto giant disputed the report, adding that the calculations and claims of its compliance control weren’t accurate. The exchange told Reuters that it is “driving higher industry standards” and looking to “further improve our ability to detect illegal crypto activity on our platform.”

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I’m gonna try to be subjective here. It’s easy for us to say he did a dumb thing.

But how many of us had developed a business like this? Imagine the psychological pressure of controlling billions of dollars.

I’m not trying to defend what he did, I just want to understand how susceptible any of us could be to doing the same thing.

Perhaps he made one small bad decision and he just kept going.

This could also mean that this money didn’t make him this way. Perhaps he was already this way, and the money just exposed it. Maybe he was the type to find $5 in your couch and not tell you anything.

What do you guys think?

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I think he saw an opportunity to ride the wave of irrational optimism around bitcoin to bring in a lot of capital and keep the money moving until he had had a chance to convert some of it into assets which would then make a real money profit which meant he could replace the bitcoin capital before anyone realised and definitely before anyone had been forced to crystallise their loss.

He was treating the Bitcoin market as a Ponzi scheme and while the music kept playing there would be no loss. The music stopped…

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There are two types of fraudsters, The one who is determined from the outset to take advantage of people or organizations, whereas another type is someone who starts a successful business, which has been going for a few years, and then starts defrauding people. There is no way of knowing if that was their intention from the start or if they truly were this way before they began to commit fraud.

There might be small thoughts crossing your mind when dealing with customer funds worth billions or hundreds of millions of dollars. For example, if I take one million dollars, I can have it back in one week, it doesn’t matter how he replaces that million dollars. In this way of thinking, 1 million becomes 10 million or even a billion, and before you know it, you can no longer replace the funds you have stolen, so it becomes a pozi scam.

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Best of luck to anyone that is tangled in these fad Crypto Currencies… You’re goner need it…

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Binance’s CZ Says It Is ‘Business As Usual’ After Bank Run; Resumes USDC Withdrawals

KEY POINTS

  • CZ said Binance saw around $1.14 billion in withdrawals Tuesday
  • Binance paused USDC withdrawals later in the day
  • The USDC withdrawals resumed at around noon E.T. Tuesday
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Although this is good news for the customers, we know the creditors get paid first, then if any remain, the customers get the rest based on their account size and other factors.

Good News For FTX Customers: The Bahamas Seized $3.5 billion in Assets

The Securities Commission of The Bahamas says it is holding these assets pending transfer to clients and creditors.

This is news that will no doubt please the customers and creditors of Sam Bankman-Fried’s crypto empire.

The authorities of the Bahamas, where the disgraced former emperor of the crypto space lived and where FTX was headquartered, have just announced that they have seized significant assets from the bankrupt cryptocurrency exchange.

The Securities Commission of The Bahamas says it seized these assets as soon as Bankman-Fried, known by the initials SBF in the crypto industry, filed for Chapter 11 bankruptcy for his empire on November 11.

The regulator explains having seized the assets of FTX for security reasons so that they do not disappear mysteriously.

Based on information provided by Sam Bankman-Fried to the regulator concerning the cyberattacks that took place on the systems of FTX, “the Commission determined that there was a significant risk of imminent dissipation as to the digital assets under the custody or control of FTXDM to the prejudice of its customers and creditors,” the authority said in a press release.

$3.5 Billion

https://www.thestreet.com/investing/cryptocurrency/good-news-for-ftx-customers-the-bahamas-seized-3-5-billion-in-assets?puc=yahoo&cm_ven=YAHOO

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FTX was spending other people’s money like it was the last days of the earth.

FTX spent nearly $7 million on food and over $15 million on luxury Bahamian hotels in just 9 months, court documents show

FTX’s Bahamian entity spent nearly $40 million on hotels, food, and travel in just nine months.

That’s according to documents filed in the Delaware bankruptcy court.

They show the company spent almost $6 million at a single hotel and $1 million on one caterer.

https://www.yahoo.com/finance/news/ftx-spent-nearly-7-million-122619430.html

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All sounds very familiar. Didn’t I mention Enron? Anyone remember them buying designer office chairs and fittings? Just before they went belly-up.

Bitcoin is a scheme by which greedy people think they will make easy money from stupid people. Turns out some of the greedy people were just stupider and some of the stupid people were just greedier.

Sometimes you eat the bear, and sometimes the bear eats you.

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That’s the history of financial markets, and no one has done it better than Bernie Madoff.

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The beauty of a Ponzi scheme is that even if the people sucked in recognise it for what it is, their best interests are to keep quiet and see (or get) more people being introduced. As long as fresh money is being brought in by new clients, the scheme continues to pay out.

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Agree, however in the end the cash stops coming and a Ponzi scheme is discovered.

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