Anomalous fraud in FTX: Why Bankman-Fried is not the only one who has a lot of hope and responsibility

For the crypto industry, the lesson here is to stop looking for saviors. Bankman-Fried’s meteoric rise was not simply based on his own doing – he was buoyed by many others. He raised millions of dollars from high-profile investors, was showered with media attention, and with few exceptions just wasn’t questioned all that much. The bottom line is that so much hope and responsibility should not rest in one individual. It goes against everything that crypto is supposed to represent.

The CFTC claims that Bankman-Fried, his parents, and his employees at FTX and Alameda used customers’ funds for personal benefit: luxury real estate, private jets, personal loans, and political donations. The customer funds were also used for a Super Bowl commercial starring Larry David and the sponsorship of FTX Arena in Miami. These advertisements were paid for by the customers and stated that FTX was the safest way to buy and sell coins.

It will take months to untangle the details of Bankman-Fried’s alleged fraud. But the broader story is relatively straightforward, and familiar: He allegedly spent years defrauding unsuspecting investors of gargantuan sums of money, and then allegedly used that money to not only bankroll his lavish lifestyle, but to set up tens of millions of dollars in illegal campaign contributions.

Just one month ago, FTX, a $32 billion behemoth in virtual currencies, filed for bankruptcy after suspicions rose that it was insolvent and also moving money around illegally.

What has happened at FTX.com? Explaining what happened, when did things start to unravel? A source with knowledge of the SEC investigation

They said that a large portion of the total has vanished. One source put the missing amount at about $1.7 billion. The other said the gap was between $1 billion and $2 billion.

FTX’s downfall makes many wondering what parts of the market will survive. The collapse has exposed how closely connected many of the biggest players are.

Bankman- Fried said on Friday that he was figuring out what had happened at FTX. He was surprised to see things unraveling the way they were earlier this week. “I will, soon, write up a more complete post on the play by play.”

Between the overall lack of regulation and the influx of billions of dollars into the crypto industry over the past year, the only thing surprising about the FTX collapse is that it didn’t happen sooner.

The people with knowledge of FTXs finances said that Bankman-Fried met with executives in Nassau to calculate how much outside funding he needed to cover the shortfall.

Alameda is accused of using money sent to it’s own bank accounts. According to the SEC, it had the ability to make unlimited withdrawals from its FTX trading account and could tap digital assets there, too.

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.

The U.S. Securities and Exchange Commission is investigating FTX.com’s handling of customer funds, as well as its crypto-lending activities, a source with knowledge of the inquiry told Reuters on Wednesday. The Commodity Futures Trading Commission is investigating, as is the Department of Justice.

The bad news is that the market is largely unregulated, making it the Wild West of the financial world. When something breaks, investors are vulnerable.

FTX Restructuring: After the Enron Corp Closure, Emily MacDonald Reports on the Wall Street Inside Out

On Friday, FTX said it had turned over control of the company to John J. Ray III, the restructuring specialist who handled the liquidation of Enron Corp – one of the largest bankruptcies in history.

Emily is currently the Executive Director of Global Content at CoinDesk and was previously a policy advisor to the US State Department and a writer/editor at The Wall Street Journal. She is the author of “Now I Know Who? My Comrades Are: Voices From the Internet Underground.” The opinions in this commentary are her own. You can read more opinions at CNN.

Source: https://www.cnn.com/2022/11/12/opinions/crypto-white-knight-problem-sam-bankman-fried-ftx-parker/index.html

An apology to SBF for not acting in a transparent and decentralized way in the crypto-currency industry during the 2008 financial crisis

No one can answer that, because there should be no need for a savior. The whole point of crypto is that it is supposed to be decentralized and 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. There is perhaps no better example than FTX and its leader.

It wasn’t supposed to be this way. The 2008 financial crisis was a real disappointment in bankers and politicians, who were dismayed at the emergence of a new currency. The idea was that this new system didn’t require you to trust anyone at all in light of the distrust in financial institutions. A good actor shouldn’t be able to alter the transactions on the blockchain because everyone can see them.

The whole fiasco is unsurprising, and in some ways it could have been foreseen. After all, this is hardly the first case of alleged fraud we’ve seen from a figure like Bankman-Fried. And, as opposed to what any lawyer would advise, SBF, as he is commonly known, didn’t remain silent. He went on an apology tour, tweeting, speaking to reporters and even virtually participating in the yearly DealBook Summit in New York last month where he said he “didn’t ever try to commit fraud on anyone.”

Why Did Bankman-Fried Get What You Want? The CEO of Sequoia Capital and the S.E.C. Observational Study of FTX

The cult of personality problem is not limited to crypto. It is also seen in social media as another leaderless and decentralization technology. The richest man in the world, Musk, controls the way in which a company is run.

In the case of crypto, many have long pointed out the risk of powerful centralized exchanges like FTX, with some people preferring to hold their own coins instead of storing them in an exchange. Another option is to actually use blockchain technology to provide greater visibility, something that Bankman-Fried is now promising to do. He said his priority would be “radical transparency” or giving as close to transparency as it can, so that people know exactly what is happening to it. It probably is too late in the case of FTX.

These uses weren’t authorized by customers, as the CFTC suit makes clear. The SEC suit’s allegations about how customer funds were used are similar to that of Alameda. Indeed, FTX’s terms of service explicitly forbid this kind of thing, the CFTC 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.

Why was Mr. Bankman-Fried arrested? FTX’s collapse kicked off investigations by the Justice Department and the Securities and Exchange Commission focused on whether FTX improperly used customer funds to prop up Alameda Research, a crypto trading platform that Mr. Bankman-Fried had helped start. Mr. Bankman- Fried was arrested in the Bahamas for lying to investors and committing fraud. The S.E.C. charged with civil fraud the day after.

“It’s retail investors who suffer the most, and I care about that because a lot of people wrongly associatecryptocurrencies with scammy space,” said the CEO of SwanBitcoin, who had raised some 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.

In a statement, Sequoia Capital described their meeting with Bankman- Fried as likely to be “talk to the world’s first trillionaire.” Several of Sequoia’s partners became enthusiastic about Bankman-Fried following a Zoom meeting in 2021. After several more meetings, Sequoia decided to invest in the company.

I just do, I’m not sure how I know. Adam Fisher wrote a profile of Bankman-Fried, also known as SBF, and referred to the firm as a winner. The article, published in late September, was removed from Sequoia’s website.

What Bankman-Fried bought up to Voyager Digital: How a Crypto Millionaire Built a Wall Street Mansion Before the World Bankrupted

The Ontario Teachers’ Pension Fund said in a terse statement that not all of the 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.

As king of crypto, his influence was starting to pour into political and popular culture. The naming rights of an arena in Miami were bought by FTX. 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. FTX was invested in by Tom Brady.

“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 felt like a lot of what was going on in the financial sector.

Bair notes that Bankman-Fried was able to lure sophisticated investors into missing red flags, thanks to his connections and reputation.

Before his Ponzi scheme collapsed, he was referred to as a wizard on Wall Street. He was a Securities and Exchange Commission advisory panelist, and he also managed money for the rich and famous.

Better Markets CEO Dennis Kelleher: “The J. P. Morgan of Crypto,” he told CNBC on the failed FTX digital currency exchange

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.”

If all of your peers and marquee names in venture capital are investing, then you need to as well. 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).

A track record that was unbelievable and consistent, as well as an elaborate scheme that involved repaying clients with new client deposits helped to make up for the disastrous returns that they had received in the previous years.

The FTX chief executive was featured in a segment on CNBC about the industry downturn and his recent acquisitions. “They call him the J.P. Morgan of crypto, right?” the host asked, comparing Bankman-Fried to a financier with so much money he backstopped myriad failing banks in order to stabilize the entire financial sector. The message was found at the bottom of the screen.

The founder of the failed FTX digital currency exchange must appear before a senate committee next week over unanswered questions about his companies collapsing.

What happened in the Cryptocurrency Conflagration: How the Value of the FTT Coin was viewed by Investors and Financiers

Hilary Allen, a professor at the American University Washington College of Law, says that there is no reason to not create token if you are in the industry. “You can do it with thin air.”

“I think of it like airline miles,” says Ariel Zetlin-Jones, who teaches economics at Carnegie Mellon University. “Like loyalty points for using the exchange.”

Customers who bought FTT were able to execute trades on the company’s exchange at a discount. They could also use the tokens as collateral. The company thought token holders to be very special.

This inappropriate and unseemly practice evaded scrutiny in the largely unregulated world of crypto, which Securities and Exchange Commission Chair Gary Gensler, the top cop of Wall Street, has compared to the “Wild West.”

It was a murky set of financial practices with no transparency, investor protection or financial guardrails.

“The moment there is the slightest whiff of concern about the token, the value of that token can vanish to practically nothing a flash,” Prasad said. “Which is what happened here?”

“I think there is the expectation that once one sifts away all the embers from this conflagration, there will be some value left in the exchange,” Prasad says. “There will be some assets that will still be left over that will have marginal value, and the token can be used in order to derive value from those assets.”

But, he added, he expects FTT’s value will fall even more in the coming days, as we learn more about how a company that had been valued at more than $30 billion imploded so spectacularly.

“People buy up Zimbabwean trillion-dollar bills because it’s an anecdote and they might like these as collectibles,” Zeitland-Jones says. “Perhaps FTT is the new collectible that we’ll marvel at 100 years from now.”

Sens. Warren and Smith Sensitivity to Cryptocurrencies and Banks’ Mismanagement: Sam Bankman-Fried in the Bahamas

“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.

On Wednesday, the chair of the Senate Banking Committee threatened to subpoena Bankman- Fried if he did not cooperate with the committee by the end of Thursday. He did not say if he would testify before the Senate panel.

“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.”

Separately, Sens. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, both Democrats, sent letters to three regulators – the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – asking them to assess the traditional banking system’s exposure to turmoil in the crypto space, a largely unregulated, parallel financial system.

“Crypto firms may have closer ties to the banking system than previously understood,” Warren and Smith wrote. Questions about the safety and soundness of our banking system have been raised by banks’ relationships withcrypto firms.

Waters told Bankman-Fried that he was clear that the information he had so far was sufficient for testimony.

The charges were unsealed as Sam Bankman-Fried was enroute to the United States from the Bahamas, where he was arrested last week on an eight-count indictment for what Williams called one of the largest financial frauds in American history. Bankman-Fried boarded a plane in the evening to head to the U.S. after waiving his rights to contest his deportation.

In a hearing Wednesday morning, his lawyer in the Bahamas told the court that Bankman-Fried had agreed to extradition to the US, where federal prosecutors have charged him with orchestrating “one of the biggest financial frauds in American history.”

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 insisted he didn’t know how to code a house of cards on a foundation of deception

He told the radio station over the weekend he didn’t know he was committing fraud. “I didn’t want any of this to happen. I wasn’t as competent as I thought I was.

Waters said in a statement Monday night that they were committed to getting to the bottom of what happened and that they would not be able to hear from Bankman-Fried tomorrow.

Bankman-Fried told DealBook that there was not a single person in charge of the risk of customers. That feels pretty embarrassing in retrospect.

Bankman-Fried has denied knowledge of such a back door. “I don’t even know how to code,” he told cryptocurrency vlogger Tiffany Fong in an interview last month.

The arrest was made at the request of the U.S. government, based on a sealed indictment filed by the Southern District of New York, U.S. Attorney Damian Williams said in a tweet also on Monday night.

In a statement, the prime minister of the Bahamas stressed the country is cooperating with law enforcement and regulators in the United States, but its own “regulatory and criminal investigations into the collapse of FTX continue.”

Bankman-Fried quit shortly before the bankruptcy filing, and spent the last month on a charm offensive, trying to convince people that he’s not a bad guy.

As of late Monday night, the committee still had a notice of the hearing posted that listed Bankman-Fried as a witness and also included the written testimony of the hearing’s other witness, FTX’s CEO John Ray.

SEC Chair Gary Gensler is quoted in the statement saying, “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.”

“Look, I screwed up,” Bankman-Fried said during a virtual appearance at the New York Times’ DealBook Summit. I would do anything to do what I could over there.

Sam Bankman-Fried, FTX CEO, is a Risk Engine, not a Fraud: The S.E.C. has ruled that Alameda was a common enterprise

The S.E.C. now asserts that S.B.F. was more involved in Alameda’s operations than he let on. The agency says he directed $8 billion in customer deposits into a different account to avoid getting charged interest, a move that could be indicative of intent. From the complaint:

The allegations against SBF also focus on his statements to investors that FTX was a safe place to invest because of an automated “risk engine” that would sell off a customer’s assets to make sure their collateral stayed at the required levels.

The SEC charges are the ones he is facing at the moment, as other charges are being filed today by the US Attorney for the Southern District of New York and the Commodity futures trading Commission.

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. The hearing is scheduled to begin with testimony from FTX’s 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.

A preview of Ray’s testimony, published in advance of the hearing, indicated thatBankman-Fried was in for a rough ride. “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 government said it was a fraud. If it is true, the complaint made public today by the Commodity futures Trading Commission could be the beginning of Sam Bankman-Fried telling the truth. According to the complaint, Bankman-Fried operated Alameda Research and FTX as a common enterprise, for instance. This complaint is civil.

The hedge fund’s balance sheet was overstated according to regulators, as well as the risk exposure of the fund to investors.

The CFTC makes a strong argument that this could also be false, since Ellison stated that the two companies are quite separate in terms of day-to-day operations.

Both teams shared office spaces, as well as “key personnel, technology and hardware, intellectual property, and other 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 was not sophisticated at all.

An Indictment of FTX, a Ponzi Scheme that Makes Money: An Attorney’s Note on a Case in New York

Bankman-Fried, 30, appeared Thursday in a US courtroom in New York, where a federal judge released him on a $250 million bond. He is required to surrender his passport and remain under house arrest at his parents’ home in Palo Alto, California.

There’s still a ton we don’t know about the case. But the fact that prosecutors put together an eight-count, 14-page indictment just four weeks after FTX filed for bankruptcy suggests prosecutors may have an ace in the hole, and/or a preponderance of evidence against the company. (The SDNY are an aggressive people, but they are not sloppy, and they don’t indict without a solid case.)

According to several lawyers who are not involved in the case, the arrest of Bankman-Fried signals that former FTX employees may be helping prosecutors.

Howard A. Fischer is a former SEC lawyer and he said that the former employees would be smart to rush to become a cooperator in exchange for more favorable treatment. He added: “The fact that only one person has been charged so far would seem to indicate this as well.”

Editor’s Note: Casey Michel is a writer and investigative journalist covering kleptocracy and dark money networks across the globe. He has written a book about the creation of the world’s greatest money-laundering scheme in history, and is currently researching a book about foreign lobbying in Washington, DC. The opinions expressed in this article are his own. CNN has more opinion.

In some ways, these kinds of cases, many of which resemble traditional Ponzi schemes, are as old as American capitalism itself. They almost always make the mistake of combining a lack of oversight with a promise of easy wealth schemes that rely on proprietary technology to make money.

A half-century later in the late 1920s, the crash of the stock market — which more Americans had poured funds into, without any kind of oversight — propelled a series of bank runs that led to the actual Great Depression. In 2008, faulty loans that were repackaged as unique financial products caused the Great Recession and led to a foreclosure crisis, which is still being felt.

Changpeng Zhao’s cryptocurrency business is going through a “historic moment”: Binance, Genesis, and the Fed’s US Trustee

The company’s CEO, Changpeng Zhao, who is better known as “CZ,” dismissed the outrush of cash as “business as usual” for the world’s largest crypto exchange.

There were also signs, though, of uneasiness, when Binance halted withdrawals of a so-called “stable coin” called USDC, for about eight hours on Tuesday.

But in a memo to employees, obtained by NPR, CZ also indicated that Tuesday was not a one-off, with the industry where he also reigns as a celebrity and influencer going through an “historic moment.”

He believes that the next several months will be bumpy, but will be past this challenging period. We’ll be better off for having been through it.

As the Federal Reserve has raised interest rates to fight high inflation, investors have lost their appetite for risk and for almost anything tech. Cryptocurrencies have been falling in value this year, with the price of Bitcoin down more than 60 percent.

Another part of the crypto tangle is Genesis, which is facing the possibility of bankruptcy. It said in a tweet last month its derivatives business had about $175 million locked in an FTX account.

The Department of Justice’s US Trustee has the power to determine how FTX will pay back its debts, thanks to a unit named on Thursday.

Source: https://www.npr.org/2022/12/16/1143086648/binance-cz-ftx-crypto-bankruptcy-fallout-alameda-bitcoin

Binance, the Failed Crypto Entrepreneur, and its Implications for Election Practices: Two Indictments against Michael Bankman-Fried

The company hired the accounting form Mazars to review its numbers, and it provided an assessment of its finances to customers, which it is characterizing as a “proof of reserves.”

“As has been reportedly widely, regulators are doing a seeping review of every crypto company,” a Binance spokesperson told NPR, in an e-mail. “This nascent industry has grown quickly and Binance has shown its commitment to security and compliance.”

Bankman-Fried will appear before a judge in New York for a bail hearing. The timing of that hearing will depend on when he arrives in New York and is processed.

The 14-page indictment also alleges that Bankman-Fried conspired with others to violate federal election laws by making political donations to candidates and fundraising committees between 2020 and November 2022, in excess of federal legal limits and in the names of other people.

The 30-year-old appeared to be holding a plastic bag of personal belongings during the hearing. Bankman-Fried told the marshal that his address was a little unclear.

In the week and a half since his arrest in the Bahamas, the Bankman-Fried has been held in a prison that US officials have described overcrowded, dirty and lacking medical care. Its crowded cells often lack mattresses and are “infested with rats, maggots, and insects.”

Prosecutors and attorneys for Bankman-Fried are discussing an arrangement for his release, with conditions, that would enable the failed crypto entrepreneur to avoid spending time at the Metropolitan Detention Center. The MDC is a pre-trial holding facility that former inmates and rights advocates have described as inhumane, citing frequent lockdowns, overcrowding and power outages that have left it without heat in the middle of winter.

Williams didn’t specify the charges the two pled to but said the guilty pleas were related to their roles as insiders at FTX and its sister company Alameda Research. Wang owned 10 percent of Alameda Research and was a co-founder of the FTX currency exchange. Bankman- Fried owned the other 90 percent. Ellison was the CEO of Bankman-Fried’s company.

The charges were announced in a video message by Damian Williams, US attorney for the Southern District of New York. In a brief statement, he reiterated that the investigation is still ongoing, noting specifically that these new charges in the case are not the last.

Mr. Wang entered his plea hours before Ms. Ellison appeared in court. The transcript of the proceeding, which was also sealed on Friday, said Mr. Wang knew what he was doing was wrong.

“As I said last week this investigation is very much ongoing and it’s moving very quickly,” Williams said. “I also said last week’s announcement would not be our last and let me be clear, once again, neither is today’s.”

Left Behind: The Story of Alameda Bankman-Fried, Ms. Ellison, and Mr. Wang, the PIPPIggy Bank

“When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag,” SEC Chairman Gary Gensler said in a statement.

Wang faces a maximum of 50 years in prison under federal sentencing guidelines. Per federal sentencing guidelines, she could be sentenced to between 100 and 170 years in prison for seven counts.

According to the SEC suit, Ellison borrowed billions of dollars from banks. The loans were backed by the FTT token, issued by FTX and given to Alameda for free, according to the SEC. Ellison’s job was to buy FTT tokens on various platforms in order to increase the price, thus making the FTT that was collateral against Alameda’s loans more valuable. That, in turn, made it possible for Alameda to borrow even more.

“Ellison also acknowledged that her November 6 tweet to the Binance CEO offering to buy his FTT holdings at $22 per token was ‘kind of a misleading thing to tweet.’”

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 were against what Mr Bankman-Fried was saying. The documents filed by the authorities claim that Bankman-Fried was aware of what was happening at Alameda, the exchange’s trading affiliate.

The judge said Bankman-Fried would be arraigned on the charges that he stole billions of dollars from customers of his crypto-trading platform at a future date.

Bankman-Fried wore a navy suit jacket and white shirt as he was escorted into the courtroom. The sound of clanking from the shackles around his ankles could be heard as he walked to his seat at the defense table.

Bankman-Fried spoke once during the hearing when Magistrate Judge Gabriel Gorenstein asked him if he understood the consequences he would face if he skipped out on bail, saying, “Yes, I do.”

There are also other bail conditions that include surrender of firearms, mental health treatment, and prohibitions against opening new lines of credit or engaging in transactions over $1,000 without government approval.

XMM-Newton Observations of Bankman-Fried: Deputy General Manager of the Alameda FTX Exchange

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

Ms Ellison said she agreed with others to borrow billions of dollars from FTX to repay their loans.

The former CEO of the Alameda hedge fund apologized to a federal judge for her actions in relation to Bankman-Fried’s FTX exchange.

From July through October, she said, Ellison and others provided misleading financial statements to the lender, and prepared balance sheets that hid Alameda’s debt.

Both Ellison and Wang are cooperating with federal prosecutors, making them potentially damning witnesses against Bankman-Fried, who has repeatedly denied intentionally defrauding customers and investors.

Bankman- Fried was spotted at the John F. Kennedy International Airport after his court appearance. Tiffany Fong also posted a photo showing Bankman-Fried on the flight.

Bankman-Fried’s legal team confirmed to CNN Business that he had arrived in Palo Alto and was home with his parents. His lawyer didn’t want to comment on the guilty pleas.

Sam Bankman-Fried: A Precrash Lasso in the Bahamas and the Pitfall of the Cryptocurrency (Coinsurability) Industry

Over the course of a single shot of Sam Bankman- Fried in the Bahamas, a reporter repeated certain facts that I think are similar to a precrash tale of Bankman-Fried. He’s a multibillionaire at 30, he drives a Toyota Corolla, he lives in the Bahamas with nine roommates and a goldendoodle. He has gotten richer, faster, than almost anyone in history, having started his best-known company in 2019. He was perched on a stool and talking about how his firm made self sacrificing investments in order to save money and draw the Morgan comparison.

Since stepping down from FTX, he has repeatedly denied knowingly committing fraud; his arraignment date hasn’t been set. He was arrested earlier this month in the Bahamas, where FTX was based, and extradited to the US last week. He is under house arrest at his parents’ home in California, and scheduled to enter a plea in a federal court in Manhattan on January 3. He could face life in prison if found guilty.

BlockFi is suing Bankman-Fried for the Robinhood shares, which BlockFi claims it is owed after Alameda defaulted on $680 million in collateralized loan obligations.

“We don’t have a lot of information that you guys don’t have. We are only watching it unfold and it is most likely to go through some form of Chapter 11 reorganization in the near future.

The recent downfall of cryptocurrencies has been bad news for Robinhood. The company laid off 23% of its staff in August after cutting 9% of its employees in April. The online brokerage’s stock has been in freefall as trading has dried up.