WIRED: A Swatting Spree to Protect Your Privacy in the Classroom: The Case of Joe Sullivan, a Russian Corporate Executive, and Facebook Hackers

As A Swatting spree spreads across the US, in which false reports of active shooters send police charging into schools, WIRED investigated more than 90 of the incidents and found potential connections between many of them. “In speaking to a number of people who experienced it, I can tell you that the anxiety and fear—it was real to them for 15 minutes,” Amanda Klinger, director of programs and cofounder of the Educator’s School Safety Network, told WIRED. There is a period of time in these incidents where people are running for their lives and law enforcement is responding with their weapons.

Even after extensive sanctions meant to isolate Russia from the global economy amidst its ongoing war with Ukraine, investigators around the world are working to curb the ongoing influx of capital to Russian military and paramilitary groups. The tech industry is watching the trial of Joe Sullivan, a former executive at the ride share company, because he is the first corporate executive to ever be charged with a criminal offense for a data breach. The Biden administration’s new executive order addressing privacy seems like more of a Band-Aid than a panacea, as it attempts to reassure Europeans that their data is safe when stored in the US, despite government surveillance.

Meanwhile, Meta released findings on more than 400 malicious Android and iOS apps that it says were harvesting Facebook credentials to take over users’ accounts. We looked at the toll of living your life online, the risk of privacy being eroded, and ways it can impact your sense of self.

Plus, there’s more. Each week, we highlight the news we didn’t cover in-depth ourselves. Click on the headline to see the full story. And stay safe out there.

Source: https://www.wired.com/story/binance-hackers-minted-569-million/

Facing a Million Dollars from Binance, Making Millions from Its Cryptocurrencies: The Insights of Cazes and the IRS-CI

Binance revealed Friday that unidentified hackers managed to exploit a flaw in the company’s BNB Chain crypto token, allowing them to mint 2 million of the company’s decentralized tokens worth a total of $569 million. That money wasn’t actually stolen from Binance, in other words, but rather fabricated out of thin air thanks to a flaw in the security of Binance’s cryptocurrency. The hack had the potential to cause the market to flood with BNB, which could reduce its value for legitimate owners and potentially allow the hackers to walk away with half a billion dollars.

That legal request took a while to bear fruit. When Ali received a call from the FBI agent in charge of her case, she was in the middle of class at the law school.

Over the next months, Ali and Erin continued to trace more high-value addresses out of the AlphaBay cluster into one cryptocurrency exchange after another. Cazes’ attempts to cover up his ownership of the bitcoins became, in some cases, a kind of fingerprints, as they came to recognize what seemed to be Cazes’ identifying tells.

“When we saw millions of dollars in crypto flowing to him from what appeared to be AlphaBay-associated wallets, I was fairly confident that we had the right person,” Rabenn says. “When you hit that point, you start gearing up to indict.”

When investigators find Cazes’ alter ego on a pickup artist forum, they also discover a new challenge to catching him red-handed and hatch a plan for the most ambitious sting in dark-web history.

Over the past several years, IRS Criminal Investigations has usedBlockchain tracing techniques that have led to record-breaking piles of ill-gotten digital currency, and the recently revealed case is yet another example. In fact, Zhong is the second Silk Road hacker to turn over a billion-dollar cache of coins to the IRS-CI, after another unnamed individual agreed the previous year to forfeit nearly 70,000 bitcoins he’d stolen from the drug market—a record-breaking, even larger collection of coins that was worth $1 billion at Bitcoin’s lower exchange rate at the time. Both those records were again broken earlier this year by IRS-CI’s case against two alleged money launderers in New York accused of pocketing $4.5 billion in cryptocurrency stolen from the Bitfinex exchange.

On Monday, the US Department of Justice announced that a Georgia man named James Zhong has pleaded guilty to wire fraud nine years after stealing more than 50,000 bitcoins from the Silk Road. At the time of the coins’ seizure in late 2021, the largest-ever Justice Department seizure of currency of any kind would have been forfeited by Zhong, which is part of his plea agreement. The bitcoins were hidden under the floorboards of a bathroom closet, along with $600,000 in cash and precious metals, all held in a safe which was hidden in a popcorn can.

FTX’s bankruptcy marked a stunning reversal for Bankman-Fried. The 30-year-old had set up FTX in 2019 and led it to become one of the largest crypto exchanges, accumulating a personal fortune estimated at nearly $17 billion. FTX was worth $32 billion in January, with investors including SoftBank.

Industry insiders are debating whether to call the implosion of FTX, which filed for bankruptcy on Friday, a “Lehman moment,” referring to the 2008 collapse of the investment bank that sent shockwaves around the world. Many think it’s an apt comparison.

“This was one of the most trusted entities in the crypto space, so it will take some time to recover,” said Jay Jog, co-founder of the blockchain startup Sei Labs, which is based in California.

The company was valued at $32 billion in its previous funding round, and had recruited high-profile backers, including SoftBank, Tiger Global, Singapore’s Temasek, and celebrities like Tom Brady and Gisele Bndchen. Its name is on the arena where the Miami Heat play.

The situation is still evolving. But one concern is how it could ripple throughout the entire crypto sector, which was worth more than $1 trillion in August.

A Facebook Live Alert to the FTX Shortfall: A Text from the President of El Salvador Has Never Left a Bitcoin in the United States

When FTX executives found a shortfall in FTX US, according to the complaint, Bankman-Fried said he would fill the hole using Alameda Research’s assets, and on November 8th, “Bankman-Fried directed Alameda traders to prioritize meeting FTX US capital requirements and to send excess capital to FTX US.” Alameda sent more than $185 million to cover the shortfall, the complaint says.

According to strategists at JP Morgan, there are fewer entities with high leverage and low capital that can save those with low capital.

Traditional investors have also been burned, though they’re reassuring clients they can handle the fallout. The Ontario Teachers Pension Plan said that even though it was uncertain, the $95 million investment would have a minimal impact on its assets.

Changpeng Zhao, the CEO of Binance, tweeted that he had been texting with Nayib Bukele, the president of El Salvador, which has gone all in on bitcoin. “We don’t have any Bitcoin in FTX and we never had any business with them,” Zhao relayed from Bukele. Thank you, God!

On the Rise and Fall of Bitcoin: The Rescue of FTX, a Wall-Brought Cryptocurrency Exchange

Prices of digital currencies fell again as the crisis engulfing the market deepened over the weekend. The world’s largest currency,bitcoin, has plummeted 65% so far this year. It was trading at about $16,500 on Monday, according to CoinDesk. Analysts believe that it could fall below $10,000.

It is poised to get worse, especially as fears about the broader economic backdrop continue to erode the appetite for risky assets.

The episode will embolden global regulators to tighten the screws and destroyed confidence in the industry. If it helps restore the faith of the industry, some of the biggest names will welcome the scrutiny.

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

“We’ve been set back a few years,” he said. “Regulators rightfully will scrutinize this industry much, much harder, which is probably a good thing, to be honest.”

Bankman Fried, his parents, and employees at FTX and Alameda used customers’ funds for personal reasons, such as 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, which the CFTC says were paid for by customers’ funds, said that FTX was “the safest and easiest way to buy and sell crypto.”

What led to FTX’s collapse? Mr. Zhao’s announcement drove down the price and spooked investors. The company has an $8 billion shortfall after traders rushed to withdraw. Binance, FTX’s main rival, offered a loan to save the company but later pulled out, forcing FTX to file for bankruptcy on Nov. 11.

The founder of the exchange, Bankman-Fried, had a fortune of $25 billion before it vanished. He had been viewed as the crypto world’s white knight, stepping in previously to rescue companies struggling after the collapse of the TerraUSD stablecoin in May.

For the crypto industry, the lesson here is to stop looking for saviors. Bankman-Fried’s rise was not simply his own doing, he was followed 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. It is clear that hope and responsibility should not rest in one person. It goes against everything that is supposed to be seen in CRYPTO.

It is likely that the details of Bankman-Fried’s fraud will take months to untangle. 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.

Samuel, who asked to be referred to only by first name to preserve his anonymity, says he lives somewhere in Southeast Asia and is currently between jobs, which means money is tight. His FTX account held the most valuable asset in his life.

Samuel’s portfolio is made up predominantly of a cryptocurrency called XRP, the price of which is thought to have been depressed by an ongoing lawsuit between its issuer, Ripple Labs, and the US Securities and Exchange Commission. Recently, there have been signs the two-year legal battle may be coming to a close—and Samuel had been sitting tight in the hope that a favorable ruling might send the price of XRP skyward. But now, his token is locked up in FTX, he won’t be able to get rewards for his patience. “I could see the finish line, but this latest drama has me hanged by the balls,” he says. It is so much hardship.

FTX customers have stories similar to this one. It was not possible to withdraw funds from FTX International in the US when the exchange first went into trouble, as the trader that asked to remain anonymous was in the US. The withdrawal password needed to be reset for security reasons when FTX traders were able to use a Virtual Private Network to circumvent the restrictions, as a result of which money can’t be taken out of an account for 24 hours. By that time, it was already too late.

The Bankman-Fried Liquidation Charge and the FTX Corruptcy Case in the Loss of $Rm bf X_t$ Trading

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

The two people with knowledge of FTX’s finances said Bankman- Fried met with executives in Nassau to find out how much outside funding he would need to cover the shortfall.

FTX said that digital assets in a user’s account will not be lent to FTX Trading. That was a lie, according to the complaint. The complaint states that FTX customers didn’t know their funds were being used by Alameda Research.

The Times said the issue is part of a broadening inquiry into the collapse of FTX, and it’s not clear whether prosecutors have determined any wrongdoing by Bankman-Fried.

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.

What Blockchain Has Learned About the Bankman-Failed Rise and Fall of Cryptocurrencies: A Perspective from a Voice from the Underground

Emily is also a former policy advisor to the US State Department and writer/editor at The Wall Street Journal. She is the author of a book. Who? My Comrades Are: Voices From the Internet Underground.” The opinions in this commentary are her own. Read more opinion at CNN.

The answer is no one, because crypto shouldn’t need a savior. The goal of cryptocurrencies is to be distributed and transparent. The industry has deviated from that ideal, as shown in Bankman- fried rise and fall. The world ofCryptocurrencies is run by larger-than-life people. There is perhaps no better example than FTX and its leader.

It wasn’t supposed to be this way. The financial crisis of 2008 resulted in a deep disappointment in bankers and politicians, who were frustrated by the lack of progress. The idea was that this new system did not 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.

The FTX Curve of Personality: A Micro-Blogging Platform for the Protection of Coins, Cryptos and Cryptocurrencies

The complaint alleges that, in reality, Bankman-Fried orchestrated a years-long fraud to conceal from FTX’s investors (1) the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund; (2) the undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited “line of credit” funded by the platform’s customers and exempting Alameda from certain key FTX risk mitigation measures; and (3) undisclosed risk stemming from FTX’s exposure to Alameda’s significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens.

Bankman-Fried wanted people to think there was a separation between the two entities. That was a major motivator for his resignation as the CEO of Alameda.

The cult of personality problem is not limited to crypto. We see it in social media as well, another supposedly leaderless and decentralized technology. Musk, the richest man in the world, now has the power to change the course of events at the micro-blogging site.

FTX General Counsel Ryne Miller said Saturday the company “initiated precautionary steps” on Friday and moved all its digital assets offline. The process was expedited to minimize damage after observing unauthorized transactions.

The world’s second most valuable cryptocurrency isn’t faring much better. It was trading at about $1,230 on Monday, having sunk over 20% over the last week, CoinDesk data showed.

Crypto as a “Seeping Review”: An E-mail Address to Binance’s CZ and the Indonesian Crypto-Expansion

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

CZ, as he’s known, was speaking at a conference in Indonesia on Monday. He said it was “probably an accurate analogy” to compare the current situation to the 2008 financial crisis.

FTX moved its headquarters from Hong Kong to The Bahamas last year, with former CEO Sam Bankman-Fried hailing it as “one of the few places to set up a comprehensive framework for crypto” at the time.

Miller said that FTX was looking into the causes of the movements in a particular coin wallet.

As scrutiny of big players in the crypto world increases, Singapore-based Crypto.com admitted to accidentally sending more than $400 million in ether to the wrong account.

Kris Marszalewski said that the transfer of 320,000 ETH was done three weeks ago at a competing exchange called Gate.io, instead of its offline wallet.

The process and systems to better manage these internal transfers have been strengthened. The native token fell over 20% in the last 24 hours.

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.”

Swan Bitcoin: The First Twelfth Game, and Mr. Bankman-Fried’s Violations of the Securities Laws

“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 a exchange operates that way it is almost guaranteed to go down. The industry had a role to play in protecting consumers.

Meanwhile, the Securities and Exchange Commission will file its own charges in the Southern District of New York “relating to Mr. Bankman Fried’s violations of our securities laws,” its head of enforcement, Gurbir Grewal, said in an email.

“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.

Bankman-Fried, who is said to be the world’s first trillionaire, was the subject of a meeting with the investors at Sequoia Capital. Several of Sequoia’s partners became enthusiastic about Bankman-Fried after a meeting. After a number of meetings, Sequoia invested in the company.

Bankman- Fried, the thirty-six year-old star of the game, became a pariah overnight last month after his company filed for protection from its debt and left at least a million depositors unable to access their funds. He was arrested without incident at his Bahamas apartment complex shortly after 6 pm ET Monday, and is set to appear in a Nassau court Tuesday, the Royal Bahamas Police Force said Monday in a statement.

“Not all of the investments in this early-stage asset class perform to expectations,”Ontario Teachers’ Pension Fund said in a terse statement.

When Bankman-Fried, Better Markets, and Paxos merged: a herd mentality in the early financial crisis

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.

FTX achieved a $32 billion valuation by raising more than $18 billion from sophisticated investors, including the Ontario Teachers’ Pension Plan. Tom Brady and Gisele were reported to have received a stake in the company.

Bankman-Fried and FTX had dramatic rise and fall during the 2008 financial crisis, according to a top regulatory official, who spoke to CNN.

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.

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. Bair sits on the board of directors at Paxos, a company that is involved in the creation of a new type of internet called a cloud computing infrastructure.

FTX Bankruptcy, Flying on the Edge: “You can create tokens out of thin air,” explains Cornell University Economics Professor Hilary Allen

The track record was an unbelievable one that was made possible by an elaborate scheme that allowed clients to be repaid with new client deposits.

Given the speed of its demise and media reports, serious questions have been raised about the accuracy and strength of FTX’s balance sheet. FTX had up to $50 billion in liabilities at the time of it’s bankruptcy filing.

Hilary Allen is a professor at the American University Washington College of Law. “You can create tokens out of thin air.”

A week ago, Zhao announced on social media his company was selling hundreds of millions of dollars worth of FTT. An old-fashioned bank run followed, and soon, the tokens were practically useless.

“I think of it as airline miles, that’s what it is,” says the economics lecturer at Carnegie Melon University. Like loyalty points for using the exchange.

In other words, those “VIPs” handed over real money to buy a purely digital token from FTX, and all that was the basis for making risky and speculative investments.

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

“It was a very murky set of financial practices with no transparency, no investor protection, and no financial protections of any sort,” says Prasad, a professor of economics at Cornell University.

“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. “That is what happened here.”

FTT, its Misconduct and the Tax Debt: Reply to the Sensitive Brown and Smith Sens. Elizabeth Warren and Tina Smith

Today, FTT is still trading on some exchanges, even though FTX has started Chapter 11 bankruptcy proceedings, and Bankman-Fried is under legal and regulatory scrutiny in the United States and around the world.

The expectation is that once one sifts away all the embers from the conflagration, there will be some value left in the exchange. “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.”

In a letter Bankman-Fried and his lawyer, the committee’s Democrats and Republicans said the American people needed answers about Bankman- Fried’s “misconduct”.

The senators wrote that the misuse of client funds wiped out billions of dollars owed to over a million creditor.

On Wednesday, Senate Banking Committee Chair Sherrod Brown (D-OH) threatened to subpoena Bankman-Fried if he did not agree to testify before his committee for a separate hearing on December 14th by the end of Thursday. He has not said that he will testify before the Senate panel.

Brown said that there are still questions about how funds were misappropriated and how clients were blocked from withdrawing their own money.

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.

Samuel Bankman-Fried hasn’t yet been charged with a crime against money laundering in the Bahamas, which he denies

Waters replied to Bankman-Fried stating that the information he had thus far was sufficient for testimony.

Bankman-Fried was arrested in the Bahamas last Monday and remains in the country. He was arraigned Tuesday, and a Bahamian judge denied his request for bail, saying that he posed a flight risk. His arrest in the US could take weeks.

“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US government, based on a sealed indictment filed by the SDNY,” wrote US attorney Damian Williams. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”

If the charges in a case are judged to be against the US and must be punished in one of the other countries, US prosecutors can return the defendants to American soil.

He told the British Broadcasting Corporation over the weekend that he didn’t commit fraud. I did not want this to happen. I thought I was competent, but I wasn’t.

We are committed to finding out what happened and I am disappointed we will not be able to hear from Mr. Bankman-Fried tomorrow.

While the probe isn’t completed, Ray said, FTX’s collapse appears to stem from the concentration of power “in the hands of a very small group of grossly inexperienced and unsophisticated individuals” who failed to implement virtually any corporate controls.

“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 does not have knowledge of a back door. “I don’t even know how to code,” he told cryptocurrency vlogger Tiffany Fong in an interview last month.

Timing the Collapse of FTX: Sam Bankman-Fried, John Ray, and the Associated Securities and Futures Commission

Damian Williams, the U.S. attorney, said on Monday night that the arrest was based on a sealed indictment from the Southern District of New York.

The prime minister of the Bahamas emphasized in his statement that his country’s own regulatory and criminal investigations into the collapse of FTX continue.

Bankman-Fried’s lawyers advised him against giving interviews after the collapse, but they have still given him a series of ones. He has largely evaded straightforward questions, given tangential responses, and been generally inattentive—he played video games during at least one interview.

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

“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.

During a virtual appearance on the New York Times DealBook Summit, Bankman-Fried said he messed up. “There are things I would do anything to do over.”

Specifically, US attorney Damian Williams said in a Tuesday press conference that SBF’s “contributions were disguised to look like they were coming from wealthy co-conspirators when in fact the contributions were funded by Alameda Research’s stolen customer money.”

The accusations against SBF include that he told investors that FTX was safe because the risk engine would sell off assets and make sure they stayed within the required levels.

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).

The House Financial Services Committee was preparing to hear from SBF, who was going to testify in person, after he continued an ongoing media tour of his social media accounts. John J. Ray III, FTX’s new CEO, is scheduled to give evidence at the hearing.

After some gnashing of teeth over his treatment by mainstream media and speculation that his political donations might earn him a free pass from law enforcement, the arrest has sparked jubilation in the crypto community.

The High-Density Collision between FTX and Enron: A First Look at Bankman-Fried and his Inner Circle

The pre- hearing preview was the first indication that Bankman- Fried was going to get a rough ride. Ray described Bankman-Fried and his inner circle as “grossly inexperienced and unsophisticated,” after he said that he had never seen such an utter failure of corporate controls at every level of an organization.

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.

Regulators say the hedge fund overstated its balance sheet and misled investors about FTX’s risk exposure.

Although Alameda CEO Caroline Ellison previously stated that she and Bankman-Fried keep the two companies “quite separate in terms of day-to-day operations,” the CFTC makes a pretty strong argument indicating that this, too, could be false.

The teams shared the same office spaces, as well as technology and hardware, intellectual property and other resources.

On Tuesday, Ray testified before the House Financial Services Committee, relaying what he could about the company he took over just four weeks ago. Ray was quick to point out the differences between FTX and Enron when asked by a congressman.

Bankman-Fried was charged with eight counts of fraud and conspiracy by prosecutors in New York. If found guilty on all charges he could be sentenced to up to 115 years in prison.

The lawyers not involved in the case told me that Bankman- Fried’s arrest signals that former FTX employees may be helping prosecutors.

“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.”

According to the SEC, the seven Twitter users also used the messaging app Discord to promote certain stocks to “hundreds of thousands of followers,” and then quietly sold their positions after a run-up in the stocks’ prices.

The alleged scheme dated back to at least January 2020 and involved a nationwide network of participants, including four of the defendants who reside in Texas; two in California; one in New Jersey and one in Florida.

The SEC alleges that the podcaster promoted the other defendants as expert traders, as well as engaged in the illegal trading scheme.

CNN reviewed some of the older posts from one of the defendants. The account associated with the defendant tweeted frequently last May about Gamestop and AMC, two so-called “meme stocks” that saw significant public interest and trading last year.

The SEC’s complaint calls for the US District Court for the Southern District of Texas to impose fines and to require that the defendants give up their allegedly ill-gotten gains, along with a ban on future misconduct.

The alleged scheme was active until about April of this year, according to a Justice Department release, and resulted in at least $114 million in profits.

Altogether, the defendants had more than 1.5 million Twitter followers. Two of the defendants allegedly ran a group on Discord known as Atlas Trading. According to the SEC complaint, the Atlas group had over one hundred thousand members by early last year.

Several of the defendants have been charged with multiple counts of securities fraud. Each of the charges carries a maximum possible sentence of 25 years in prison.

Casey Michel: How the US Created the Greatest Money Laundering Scheme in History and why it is still going through a challenging time

Editor’s Note: Casey Michel is a writer and investigative journalist covering kleptocracy and dark money networks across the globe. He is the author of “American Kleptocracy: How the US Created the World’s Greatest Money Laundering Scheme in History,” and is at work on a book investigating foreign lobbying in Washington, DC. The opinions expressed in this article are his own. Read more opinion at CNN.

In some ways, these kinds of cases, many of which resemble traditional Ponzi schemes, are as old as American capitalism itself. They almost always combine a lack of regulation with a promise of easy wealth schemes, all predicated on some kind of proprietary technology that seems to generate returns without any oversight.

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. The Great Recession was sparked by faulty loans repackaged as unique financial products and because regulators were asleep at the wheel, they led to the foreclosure crisis, which is still being felt.

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.

In a memo to employees obtained by NPR, he said Tuesday was not the last time he’d see the industry go through an historic moment.

We will get past this challenging period, even though we expect the next several months to be bumpy. “And we’ll be stronger for having been through it.”

The Indictment of Bankman-Fried of a Crypto Exchange Company, BlockFi, to Bankruptcy, and to a Judge in the United States

A little more than two weeks after FTX fell, crypto lender BlockFi filed for bankruptcy, after halting withdrawals and asking customers not to make deposits. It was one of the companies that FTX had taken out, as the “Crypto winter” began setting in.

As the Federal Reserve has raised interest rates to fight inflation, investors have lost their appetite for risk. In the first quarter of the year, the values of cryptocurrencies are falling.

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 U.S. Trustee gave power to a committee in the FTX bankruptcy case to figure out how to repay its debts.

The company hired Mazars to review its numbers, and then provided an assessment of its finances to its customers, as a proof of reserves.

The Department of Justice is conducting an investigation into Binance, and prosecutors are not finished with it.

FTX crypto exchange founder Bankman-Fried, who oversaw his now-bankrupt empire from a luxury compound in the Bahamas, is expected to return as early as Wednesday to the United States.

According to the indictment, Bankman-Fried and her associates made political donations in excess of federal legal limits and in the names of other people in order to violate federal election laws.

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

A woman holding a bag of personal belongings appeared during the hearing. Bankman-Fried said that his address was unclear, but he gave his occupation as “entrepreneur and executive”.

The US has described the prison in which the Bankman- Fried is being held to be dirty, overcrowded, and lacking in medical care. Rats, worms, and insects can be found in the cells that lack mattresses.

Attorneys for Bankman-Fried and prosecutors are working together on an arrangement that will allow him to be released from jail without having to go to 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.

Communication to the SEC about Sam Bankman-Fried (FTX): A New US Attorney’s Investigation into a Case of Misleading Customer Funds

Damian Williams, the US attorney for the Southern District of New York, announced the charges in a video message Wednesday night. 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 also entered his plea on Monday, several hours before Ms. Ellison’s court appearance. Mr. Wang told the judge that he was doing something that was wrong, according to the transcript.

This investigation is moving very quickly, and I said last week that it was ongoing. I said that last week’s announcement wouldn’t be our last, and neither is today’s, so let me be clear again.

“Ellison and Wang were active participants in the scheme to deceive FTX’s investors and engaged in conduct that was critical to its success,” the SEC said in a release.

The two executives who worked for Sam BankmanFried have pleaded guilty to federal charges and are cooperating with prosecutors. The news was announced late Wednesday by Damian Williams, the US Attorney for the Southern District of New York.

The Washington Post said Ellison pleaded guilty to seven counts. She faces up to 110 years in prison, WaPo says. Wang will be sentenced to up to 50 years in prison.

In response to a staff question, “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’ and expressed remorse,” according to the CFTC complaint. Most of the staff left after that.

When the price of digital currency plummeted in May, the lender wanted their money back. Customer deposits were directed to the lenders by Bankman- Fried to keep them happy. Ellison used that money to pay Alameda’s debts.

These uses weren’t authorized by customers, as the CFTC suit makes clear. (It echoes the SEC suit’s allegations about how customer funds were improperly used by 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.

Bankman-Fried had a personal piggy bank that he used to purchase luxury condominiums, support political campaigns, and make private investments.

Ms. Ellison and Mr.Wang disagreed 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.

Bankman- Fried was indicted by a judge on charges of stealing billions of dollars from customers of his platform.

Bankman- Fried was dressed in a navy suit jacket and white button-down shirt as he was escorted into the courtroom. The sound of the shackles on his ankle could be heard as he walked to the defense table.

During the hearing, he said yes when the judge asked if he understood the consequences if he didn’t show up.

Other bail conditions include mental health treatment, surrender of any firearms, and prohibitions against opening any new lines of credit, businesses, or engaging in transactions over $1,000 without the government approval.

The case of Bankman-Fried and FTX: An electronic monitoring device to monitor investors and customers without a computer or the internet

Multiple cooperating witnesses, the testimony of other employees, and cipher messages are part of the evidence in the case of Bankman-Fried.

Billions of customer and investor funds are missing, and prosecutors say a small circle of FTX and Bankman- Fried’s altcoin hedge fund employees stole the money for themselves from the very beginning.

For now, the 30-year-old, whose net worth had been calculated to be in the billions until recently, will live in San Francisco with his parents, well-known law professors at Stanford, while wearing an electronic monitoring device. SBF is scheduled to appear in person at his next hearing on the afternoon of January 3rd in New York City.

We didn’t see any mention of any restriction from using computers or the internet, but now that charges have been filed, it would be even more shocking if SBF’s Zoom and Twitter Spaces-powered media tour continues.

Each charge of conspiracy to commit wire fraud carries a maximum penalty of 20 years in prison and each of the wire fraud charges carries a maximum sentence of 20 years in prison.

“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.