David Bankman-Fried, the Failover of FTX, and the Death of its Balance Sheet: A Life in the Life of a Fool

David learned at the end of the ad that FTX is an easy way to enter the world of cryptocurrencies. A person says that he doesn’t think so. And I’m never wrong about this stuff — never.”

There are serious questions about the accuracy and strength of FTX’s balance sheet given the speed of its demise. FTX’s bankruptcy filing indicates it had liabilities of $10 billion to $50 billion at the time of the filing.

Binance was sitting on a lot of FTT because it had been an early investor in FTX — and publicly posting the trade was tantamount to an assassination. Zhao has denied this but didn’t say so explicitly. Zhao later signed a letter of intent to buy FTX but backed out after revealing an enormous hole in FTX’s balance sheet. FTX and all its related entities, including Alameda, filed for bankruptcy, and Bankman-Fried stepped down from his position as FTX’s CEO.

The allegations against SBF focus on his statement to investors that FTX was a safe place to invest because of an automated risk engine that would sell off assets to make sure their collateral remained at the required levels.

The 30-year-old entrepreneur’s net worth, which was largely tied up in digital assets, peaked at around $26 billion this spring. Bankman- Fried used his FTX exchange and his hedge fund, Alameda, to secure lines of credit to companies that were at threat of collapsing during the height of the bull market.

Bankman-Fried was seen as a white knight by the industry up until last week. Bankman-Fried was likely to go to the aid of the industry when it had a crisis. Bankman-Fried bought a stake in the company to show support, after it was hit by damage from the decline in stock and prices of cryptocurrencies.

The details of Bankman-Fried’s alleged fraud will likely take months, and potentially even longer, to disentangle. The overarching story is that he spent years bilking gullible investors of huge amounts of money, and then used those huge sums to fund a lavish lifestyle, including illegal campaign contributions.

The Collapse of Cryptocurrency Exchange FTX: A High-Fidelity, High-Dimensional Investigation

A large portion of that total has since disappeared, they said. One source put the missing amount at about $1.7 billion. The other said the gap was between $1 billion and $2 billion.

In an interview at The New York Times’ DealBook Summit, Bankman-Fried said, “I didn’t knowingly commingle funds” between FTX and Alameda. The government doesn’t think so.

Changpeng had been one of the critics. The feud between the two billionaires spilled out onto Twitter, where Zhao and Bankman-Fried collectively commanded millions of followers. Zhao helped kickstart the withdrawals that doomed FTX when he said Binance would sell its holdings in FTX’s crypto token FTT.

Two people with knowledge of FTX’s finances said that Bankman-Fried held a meeting with executives in Nassau to calculate how much outside funding he needed to cover the shortfall.

Alameda isn’t just accused of using money sent to its own bank accounts. It had the ability to make unlimited withdrawals from its FTX trading account and use its digital assets there as well.

They said the “backdoor” allowed Bankman-Fried to execute commands that could alter the company’s financial records without alerting other people, including external auditors. This set-up meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said.

On Wednesday, two senior executives associated with collapsed crypto exchange FTX have pleaded guilty to multiple criminal charges and are cooperating with federal prosecutors, according to unsealed court records. Additionally, the pair face civil fraud charges from the Securities and Exchange Commission that were announced Wednesday night.

The stunning collapse of one of crypto’s most prominent firms has quickly morphed into a legal battle pitting former executives and ex-romantic partners against one another.

A former policy advisor to the US State Department, Emily is executive director of global content at CoinDesk and a media, event, trends and data company. She is the author of a book. Who? My Comrades Are: Voices From the Internet Underground.” The opinions in this commentary are of her own. Read more opinion at CNN.

Why does Bankman-Fried have a Problem with Cryptocurrency? The Case of FTX, the Clo lite and Blockchain

The answer is no one, because crypto shouldn’t need a savior. The goal of the company is to be transparent. Bankman-Fried’s rise and fall shows how far the industry has strayed from that ideal. Today’s crypto world is one of opaque entities run by larger-than-life personalities. FTX and its leader show that there is no better example.

It wasn’t supposed to be this way. The 2008 financial crisis caused a lot of disappointment among bankers and politicians, which resulted in the creation of the world’s first major cripto lite. In light of the distrust in financial institutions, the basic idea was that this new system didn’t require you to trust anyone at all. Bitcoin transactions are recorded on a decentralized ledger known as a blockchain, which everyone can see and no bad actor should be able to fraudulently alter.

Still, Bankman-Fried wanted the world to think there was a strong separation between the two entities, the complaint says. That was what made him quit as the CEO of Alameda.

The cult of personality problem is much more than one problem. We see it in social media as well, another supposedly leaderless and decentralized technology. Twitter is now subject to the whims of owner Elon Musk, the richest man in the world.

Many have long pointed out the risk of centralized exchanges such as FTX with some people preferring to hold their own coins. Bankman- Fried is now promising to useBlockchain to give greater visibility, an option that is now being considered. In his long Twitter thread on Thursday, he said his priority would be “radical transparency,” or “giving as close to on-chain transparency as it can: so that people know exactly what is happening on it.” It is probably too late in the case of FTX.

The Lehman Moment of the Global Cryptocurrency Market, and Implications for Blockchain and Bitcoin Information Technology, as observed by CoinDesk

The price of digital currencies fell for the fourth time as the crisis deepened over the weekend. This year, the world’s biggest Cryptocurrencies has plummeted. The price was about $16,500 on Monday. It is thought that it could fall below $10,000.

Even though it is the second most valuable coin, ether is not faring much better. It was trading at about $1,230 on Monday, having sunk over 20% over the last week, CoinDesk data showed.

Some industry insiders have said the company’s downfall had triggered a “Lehman moment,” referring to the 2008 collapse of the investment bank that sent shockwaves around the world.

The episode has not just destroyed confidence in the crypto industry, but will also embolden global regulators to tighten the screws. Some of the biggest names in the business said they will welcome the scrutiny, if it helps restore faith in the industry.

Authorities’ “natural response is to borrow regulations from traditional banking systems … but crypto exchanges operate very, very differently from banks,” he said.

FTX moved its headquarters to The Bahamas from Hong Kong last year, and it was one of the few places that set up a comprehensive framework for Cryptocurrencies.

FTX General Counsel Ryne Miller said Saturday that the company moved all of it’s digital assets offline. The process was expedited Friday evening “to mitigate damage upon observing unauthorized transactions.”

Source: https://www.cnn.com/2022/11/14/business/ftx-crypto-collapse-updates-hnk-intl/index.html

The Coincryptical Bankman-Fried: What is the world’s first trillionaire? An investigation of the incident that Gate.io sent $400 million in ether to the wrong account

With scrutiny of big players increasing, Singapore-based Cryptocurrency.com accidentally sent more than $400 million in ether to the wrong account.

CEO Kris Marszalek said Sunday that the transfer of 320,000 ETH was made three weeks ago to a corporate account at competing exchange Gate.io, instead of to one of its offline, or “cold,” wallets.

The process and systems were strengthened to better manage internal transfers. The platform’s native token has fallen over 20% in the last 24 hours, according to CoinDesk.

Marszalek said Monday that his firm has acted as a “responsible, regulated player since inception” and will soon “prove all the naysayers …wrong with our actions.”

“It is very, very normal for a bank to move user assets for investments and try to make returns,” he explained. He said that if the exchange operates that way it’s almost certain to go down. The industry has a role to play in protecting consumers.

Prosecutors allege that Bankman-Fried orchestrated “one of the biggest financial frauds in American history,” stealing billions of dollars from FTX customers to cover losses at Alameda and to enrich himself. He could face a life sentence if he is found guilty.

“I care because it’s retail investors who suffer the most, and because too many people still wrongly associate bitcoin with the scammy ‘crypto’ space,” said Cory Klippsten, CEO of Swan Bitcoin, who for months raised concerns about FTX’s business model. Klippsten is publicly enthusiastic about bitcoin but has long had deep skepticism about other parts of the crypto universe.

A meeting with Bankman- Fried is likely to be “the world’s first trillionaire.” That’s what Sequoia Capital said about their meeting with the billionaire. Several of Sequoia’s partners became enthusiastic about Bankman-Fried following a Zoom meeting in 2021. The company was going to be investing in it after more meetings.

Known as “SBF,” Bankman-Fried is the 30-year-old crypto celebrity who became a pariah overnight last month as his company suffered a liquidity crisis and filed for bankruptcy, leaving at least a million depositors unable to access their funds. He was arrested at his apartment complex around 6 pm Monday and will appear in a Nassau court Tuesday, according to the police force.

A 30-Year-Old Wall Street Wizard on Wall Street: Don’t Forget to Look Inside the Coins! A Conversation with Bernard Bair

In a terse statement, the Ontario Teachers’ Pension Fund said that not all investments in this early stage asset class perform to expectations.

When Bankman-Fried bought up the assets of bankrupt crypto firm Voyager Digital for $1.4 billion this summer, it brought a sense of relief to Voyager account holders, whose assets has been frozen since its own failure. That rescue is now in question.

His influence was starting to pour into politics and popular culture when he was king. FTX bought prominent sports sponsorships with Formula Racing and bought the naming rights to an arena in Miami. He pledged to donate $1 billion toward Democrats this election cycle — his actual donations were in the tens of millions — and prominent politicians like Bill Clinton were invited to speak at FTX conferences. Tom Brady invested in FTX.

“Charming regulators and investors can distract [them] from digging in and seeing what’s really going on,” Bair, who chaired the Federal Deposit Insurance Corp. from 2006 to 2011, said in a phone interview on Monday. It was very similar to the man of the moment, Bernard Madoff.

Bair notes that 30-year-old Bankman-Fried, like Madoff, proved adept at using his pedigree and connections to seduce sophisticated investors and regulators into missing “red flags” hiding in plain sight.

Long before his Ponzi scheme collapsed, Madoff was known as a wizard on Wall Street. He was the former chairman of the Nasdaq Stock Market, served on Securities and Exchange Commission advisory panels and managed money for the rich and the famous.

The Story of CoinDesk, Inc. and Better Markets: Why the FTX Implosion is Breaking the Containment Wall

Better Markets CEO Dennis Kelleher said in a statement on Monday that FTX had a strategy of “revolving door hires” from the Commodities Futures Trading Commission (CFTC) and elsewhere “to use their knowledge, influence and access at the agency and in Washington to move FTX’s agenda.”

“You get this herd mentality where if all your peers and marquee names in venture capital are investing, you’ve got to, too. And that adds credibility with Washington policymakers. It all feeds on itself,” said Bair, who sits on the board of directors at Paxos, a blockchain infrastructure company (Bair said she was speaking for herself, not Paxos).

Madoff offered investors marvelous returns that were remarkably consistent and an improbable track record that later proved to be made possible by an elaborate scheme that involved repaying existing clients with new client deposits.

The good news is the former FDIC chair is not worried about the FTX implosion threatening the entire financial system the way Lehman Brothers did in 2008. Crypto is still a relatively small part of the broader economy and financial market.

Depending on how you look at it, this is either a cautionary tale about how small and entwined the crypto world is or a cautionary tale about employing journalists.

When CoinDesk published a blockbuster scoop on Alameda Research’s balance sheet, it also shot its own parent company in the foot. After that story, there were events that led to FTX filing for bankruptcy. The story of missing money was so large that it broke the containment wall around the shenanigans and became a mainstream news story. The problem for CoinDesk is that some of the money that’s locked in FTX belongs to their sister company, and that’s just adding to their parent company’s woes.

I found the defensiveness surprising because I am a fan of CoinDesk. I am a huge fan of the journalists at other outlets that use them, but I go to the front page just to see what’s going on. Which is why I’m anxious about the specter of a buyout since there’s no guarantee new owners will continue to let it thrive as DCG has done. If the monsters at the company buy it, what would it look like?

It is possible to be conservative in cryptocurrencies with DCG’s investments and portfolio. There is no capitalism in this case, and it is possible to invest through Grayscale Investments. Grayscale has a ticker and trades like a stock. William Cai, co-founding and managing partner of Wilshire Phoenix, says they are not negotiating by text. You feel like you have real adults in the room.

There was a time when shares of the Grayscale Bitcoin Trust, or GBTC, traded for more than the worth of the underlying Bitcoin. There was an opportunity for 3AC to deliver $1 million worth ofBTC to Grayscale and give back shares of GBTC that were worth over one million dollars on the market. There is a catch, though, as 3ac wouldn’t get those shares for a year. Since 2020, the time has decreased to six months. So 3AC was basically making a bet that the Grayscale premium would exist a year (or, near the end, six months) from their initial investment.

For a crypto true believer, this is nonsense — just buy Bitcoin and put it in your cold wallet and call it a day. But for a family office, a hedge fund, or an endowment, that may not make sense, Cai says. Those types of investors may want something that’s more plug-and-play, that integrates with the tech they already have to manage their conventional investments.

Three Axisymmetric Cryptocurrencies: Genesis after Babel Finance (and Babel / Tom Moro) and the Birth of Skyrmion

Genesis was also doing business with 3AC. It was hit by the collapse of Babel Finance and Michael Moro resigned as CEO. 1 in 5 workers at Genesis lost their jobs.

The Grayscale premium was gone in January 2021. 3AC owned more than five percent of the shares of GBTC by December 2020. Even bigger trouble? It had bet big on the success of failed algorithmic stablecoins Luna / Terra, which blew up in May. As the market crashed, it was found that 3AC hadn’t been short in money, so they wouldn’t recover.

Source: https://www.theverge.com/2022/12/8/23498823/coindesk-ftx-dcg-barry-silbert-grayscale-genesis

CoinDesk vs. Bloomberg: A Crypto Information-Technical Perspective on Do Kwon’s Miscellacies in 3AC

Consensus conference is a major profit center and may struggle in winter, but it could rebound if the sector continues to rebound. (Associated with that is the Desk coin, which is meant to reward people who attend the conference. It can be user for, , among other things, free drinks.) CoinDesk has a crypto information business, which is used by The Wall Street Journal among others. In some ways, the publication closely resembles Bloomberg but for crypto: a data and information business where news is a component of the information. CoinDesk’s editor-in-chief Kevin Reynolds was a colleague of mine at Bloomberg, so the resemblance does not strike me as especially coincidental.

CoinDesk’s philosophy is also the community norm, notes Casey, the company’s editorial director. Plus, crypto gets hacked a lot. The need to allow people to protect their privacy in that context is what we think it is, regardless of what the community thinks. Pseudonyms can have long-term reputations.

It seems reasonable. Do Kwon was involved with Basis Cash, a failed stable coin, before doing Terra/ Luna, which involved another failed stable coin. The authors of the novel were almost apologetic that they did not take violating anonymity lightly; they reported his involvement after the Luna crash. Casey told me he didn’t know if identifying Kwon earlier would have changed anything. He’s right, of course — the crypto community has an irritating habit of responding to news they don’t like by calling it “FUD,” slang for “fear, uncertainty, and doubt,” and then ignoring it. But I do wonder: would knowing Kwon’s track record have changed anything for 3AC?

Besides, people who cover currency often own, for instance, dollars. Is it a conflict of interest? In Casey’s estimation, Bitcoin and Ethereum are no different.

Journalists will usually include stock options, stock appreciation rights and other bonuses tied to their parent company in their compensation plans. Most of us do not work for conglomerates, because the other arms are financial companies we also cover.

The SARs are a retention strategy, Casey says — not just because Bloomberg has been poaching, though Bloomberg has also been poaching, but because places such as Coinbase and Kraken were luring talent last year for in-house publications. Journalists were offered large distributions of what were then high-flying token as part of their high-level salaries. It was difficult to keep people who were already in a small pool of talent.

CoinDesk began offering SARs in 2022. Essentially, SARs are profitable when DCG’s stock price goes up. The bonus cannot be given until 2023 at the earliest, and anyone who was granted a SAR in 2022 can only get it a year later.

If Genesis’ troubles affect the valuation of DCG, it will also affect any employees who accepted grant money. DCG was valued last year at $10 billion in a secondary round by investors, which included SoftBank, as well as Ribbit Capital, who are trying to change the world of finance. If DCG is forced to raise capital to cover Genesis debts, that may result in a down round and a hit to the SARs. So, depending on when they choose to sell, it’s possible CoinDesk’s journalists may have hurt their own compensation packages when publishing their big scoop.

Bankman-Fried was arrested in the FTX debacle at the Loss of a Million Creditors in the United States

“You must answer for the failure of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors,” the senators wrote.

The first time Bankman-Fried had spoken about the FTX debacle would have been at today’s hearing. Waters said she was surprised by the arrest. The public has been waiting to get these answers under oath, and the timing of this arrest is denying the public this opportunity.

“There are still significant unanswered questions about how client funds were misappropriated, how clients were blocked from withdrawing their own money, and how you orchestrated a cover up.”

Democratic senators from Massachusetts and Minnesota wrote letters to the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, asking them to look at the traditional banking system.

He was extradited from the UK to the United States on Wednesday. A federal magistrate judge in Manhattan approved Mr. Bankman-Fried’s release on Thursday after prosecutors and his legal team negotiated a restrictive bail package that requires him to be confined to his parents’ home in Northern California and to wear an electronic monitoring bracelet.

The Royal Bahamas Police Force said in a statement that Bankman-Fried was arrested at his apartment complex without incident on Monday and will appear in court on Tuesday.

The United States’ extradition treaty with the Bahamas allows US prosecutors to return defendants to American soil if the charges would be considered punishable by imprisonment of at least a year in both jurisdictions.

Sam Bankman-Fried is the Master of Positional Risks on the Fund of Deception, but he doesn’t know what to do

He told the BBC that he didn’t know he was committing fraud. “I didn’t want any of this to happen. I was certainly not nearly as competent as I thought I was.”

Waters said in the statement that they are committed to getting to the bottom of what happened and will not be able to hear from Bankman-Fried tomorrow.

“There was no person who was chiefly in charge of positional risk of customers on FTX,” Bankman-Fried told DealBook. It feels pretty embarrassing in retrospect.

Bankman-Fried has denied knowledge of any such backdoor. Last month, he told Tiffany of his lack of expertise in coding.

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” SEC Chair Gary Gensler said in a statement.

The New York Times DealBook Summit features a virtual appearance from Bankman- Fried. There are things that I would do in order to accomplish something.

A Post-Bankruptcy-Filling Media Tour of Tweet Spaces and Zoom Calls: S.E.C., S.F.D., and the CFTC

The S.E.C claims that S.B.F. was more involved with Alameda operations than he thought. The agency says that he directed $8 billion in customer deposits to a different account so he wouldn’t have to pay interest on it. From the complaint.

Other charges may follow, but these are the ones he’s facing so far, and that’s just from the SEC — its announcement notes other charges are being filed today by the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC).

Prior to his arrest, SBF had continued an ongoing post-bankruptcy-filing media tour of Twitter Spaces chats and Zoom calls, with at least two live appearances on Monday, and he was expected to appear remotely today to testify before the House Financial Services Committee. That hearing will go forward and is scheduled to begin at 10AM ET, with testimony from FTX’s new CEO, John J. Ray III.

The arrest has sparked jubilation in crypto circles, after some nail-biting over his ostensibly generous treatment by “mainstream media” and speculation (by Twitter CEO Elon Musk, no less) that his political donations may earn him a free pass of sorts with US law enforcement.

Bankman- Fried did not want to give a series of interviews against the advice of his lawyers, but none have beenparticularly illuminating with the exception of a report that caught him off-guard. He played video games during at least one interview because he was mostly unresponsive and evaded straightforward questions.

Bankman-Fried was given the first indication that he was going to be in for a rough ride in a written preview of Ray’s testimony. “Never in my career have I seen such an utter failure of corporate controls at every level of an organization,” wrote Ray, before describing Bankman-Fried and his inner circle as “grossly inexperienced and unsophisticated.”

The  US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have already filed updated civil suits, including details on Wang and Ellison’s roles. “Wang, with Ellison’s knowledge and consent, exempted Alameda from the risk mitigation measures” FTX used, providing Alameda Research with a “virtually unlimited ‘line of credit,’” according to the updated SEC complaint.

In a press conference today, US attorney Damian Williams characterized Alameda Research and FTX as “one of the biggest financial frauds in American history.”

The CFTC made a pretty strong argument that this could be true, as Ellison had previously stated that she and Bankman-Fried kept the two companies separate.

The teams shared the same office spaces and resources, according to the complaint.

“The crimes that were committed [at Enron] were highly orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets,” Ray told lawmakers. FTX, on the other hand, was “not sophisticated at all.”

High-rank executives in the SEC have been charged with criminal securities fraud, and an investigation of GuruLeaks, Mystick Mac, and Knight

If he is convicted on all eight counts, Bankman- Fried could face more than 100 years in prison, according to congressional maximum sentencing guidelines.

More high-ranking FTX executives could strike plea deals in exchange for their testimony, if the moves of Ms. Ellison and Mr. Wang are any indication. Mr. Bankman- Fried could be charged in a court of law in less than 48 hours, leaving him in more legal jeopardy than ever.

“The smart move by former employees would be to rush to become a cooperator in exchange for more lenient treatment, and it would not be surprising to learn that one or more of them had done so,” said Howard A. Fischer, a former SEC lawyer. He added: “The fact that only one person has been charged so far would seem to indicate this as well.”

The US Department of Justice has charged eight online finance influencers with criminal securities fraud for running a $114 million pump-and-dump scheme on their collective 1.5 million Twitter followers.

Atlas Trading members had been identified as stock pumpers by the time of the indictment. An account called GuruLeaks, for instance, posted multiple tweets warning about the group. But the replies include defenders — “who cares … In May 2022, a person reads “I’ve been in since Feb.”

The conspirators include Edward Constantinescu who went by the name of Zack Morris, as well as others, like Gary Deel, who went by the name of Mystick Mac. Knight ran a podcast called Pennies: Going In Raw that was co-hosted by one of the alleged fraudsters and, according to the SEC, promoted the others as expert traders.

Twitter Atlas Trading Discord Pump and Dump Sec Doj Lawsuit: The Indictment of Constantinescu is a Misleading, Robust, and Criminal

The defendants’ fraud charges carry a maximum penalty of 25 years each, and Constantinescu faces an additional 10 years from a charge of engaging in unlawful monetary transactions.

The case is a still relatively rare example of legal fallout in the risky, personality-driven, and positivity-obsessed world of finance influencers, who pair unofficial trading advice with conspicuous displays of success — in the case of the eight defendants here, “pictures on Twitter of luxury residential properties, vehicles, jewelry, and other luxury items.” And the Justice Department’s indictment quotes a series of brazen text and recorded voice conversations between the alleged scheme participants.

At one point, Knight mocks an unnamed co-conspirator who frets about getting caught and says he wants to make buys “the right way”: “The fcking right way? We’re robbing fcking idiots of their money,” boasts Knight. The asterisks were reproduced from the indictment. In the same conversation, Cooperman explains how Rybarczyk pumps the stock market.

Source: https://www.theverge.com/2022/12/14/23508963/twitter-atlas-trading-discord-pump-and-dump-sec-doj-lawsuit-criminal-charges

The Case for a Realistic Ponzi Scheme from a Silicon Valley FTX Executive: A New U.S. Attorney’s Investigation

Like, what [RYBARCZYK] does is he alerts it, and then, like, five minutes later all his little minions start, like, retweeting it, and saying ‘added with him,’ so it, like, builds the hype back up. It happens every single time. They have a science. It is great.

There is a writer and investigative journalist named “Casey Michel” who covers dark money networks across the globe. He wrote a book about the history of money laundering in the US, and is working on a book about foreign lobbyists in Washington, DC. The opinions expressed in this article are his own. You can get more opinion at CNN.

Many of the cases that resemble traditional Ponzi schemes are as old as American capitalism itself. They almost always pair a lack of regulation and oversight with promises of easy wealth schemes, all predicated on some kind of proprietary technology that seems to generate returns out of thin air.

The stock market crash in the late 1920s resulted in a number of bank runs that led to the Great Depression. The Great Recession was caused by faulty loans that were packaged into unique financial products, causing regulators to be asleep at the wheel.

The U.S. attorney for the Southern District of New York announced that Ms. Ellison and another former FTX executive, named Gary Wang, have been indicted.

Mr Wang entered his plea a few hours before Ms. Ellison showed up in court. The transcript of the proceeding was leaked on Friday, and according to it, Mr. Wang knew what he was doing was wrong.

Ellison knew that FTX created an arrangement that allowed the city of Alameda unlimited line of credit without being required to post a bond or pay interest.

Ellison said her November 6th offer of $22 per token to buy the FTT holdings was a kind of misleading thing to say.

The suit makes clear that some uses were not authorized by customers. This is similar to the allegations about how customer funds were used by Alameda. The terms of service explicitly forbid this sort of thing, the suit says. So that means the executives were aware that it was important to keep customer assets safe and segregated from other funds — important for establishing intent, which is crucial for proving fraud charges.

That made Alameda Bankman-Fried’s ”personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses.“

Ms. Ellison and Mr. Wang differed with Mr. Bankman-Fried. While Mr. Bankman-Fried has said repeatedly — including at the DealBook Summit last month — that he wasn’t aware of what was happening at Alameda, the exchange’s trading affiliate, documents filed yesterday by the authorities claim otherwise.

The judge agreed to a bail package that required Bankman-Fried to have an electronic monitoring bracelet and to stay at his parents’ house in Palo Alto. He has already surrendered his passport.

A US marshal escorted Bankman- Fried into the courtroom, wearing a navy suit jacket and white button-down shirt. The sound of his shackles clanging as he walked to the defense table could be heard in the background.

Bankman-Fried spoke once during the hearing when the judge asked if he understood the consequences if he missed out on bail.

There are a number of bail conditions, including surrender of firearms, mental health treatment, and prohibitions against engaging in transactions over $1,000 without government approval.

Sam Bankman-Fried was a billionaire before he took his first successful investment: A precrash littera of a wealthy billionaire

Roos said evidence against Bankman-Fried includes multiple cooperating witnesses, the testimony of other employees of the companies and encrypted messages.

“I agreed with others to borrow several billion dollars from FTX to repay those loans,” Ms. Ellison told Judge Ronnie Abrams of the U.S. District Court for the Southern District of New York.

According to the statement that Ellison made to the judge, she and her former associates stole billions of dollars from Bankman- Fried’s customers and sought to cover it up.

From July through October, she told the court, Ellison agreed with Bankman-Fried and others to provide “materially misleading financial statements to Alameda’s lenders,” and prepared balance sheets that concealed the extent of Alameda’s borrowing, according to transcripts from plea hearings held on December 19 and recently unsealed.

Ellison is facing seven criminal counts, including conspiracy to commit wire fraud. She and Bankman-Fried were business associates who dated briefly.

Ellison and Wang have been cooperating with federal prosecutors, which could prove to be damning witnesses for Bankman-Fried.

Following his court appearance, Bankman-Fried was spotted in a business class lounge at New York’s John F. Kennedy International Airport. Crypto reporter Tiffany Fong also tweeted a photo showing Bankman-Fried on an American Airlines flight.

Over a shot of Bankman-Fried trotting through a parking lot in the Bahamas, a reporter repeated facts I have come to think of as the Precrash Litany of Sam Bankman-Fried: He is a billionaire at 30 and drives a Toyota corolla, lives in the Bahamas with nine roommates and a golden retriever. He has gotten richer, faster, than almost anyone in history, having started his best-known company in 2019. He was talking about self-sacrifice of investments that his firm made in the interest of saving when he perched on a stool.