Cryptogpt News, December 7: Saylor and CZ attack SBF – and pull no punches

Even today, is Ledger's new hardware wallet the silver bullet that will encourage crypto investors to take custody of their coins?

‘Diabolical’ Bankman Freud Kinds Three Groups, Michael Saylor Claims

MicroStrategy’s Bitcoin Maximist Executive Chairman explains how he believes FTX founder Sam Bankman Freud manipulated “air tokens” to borrow $10 billion of users’ money.

Describing Sam Banksman Freud as the “poster child” of crypto “shitcoinery,” bitcoin expert Michael Seiler argues that the parts of the digital asset world that should be known better, unsophisticated investors. Helped carry him off a cliff.

According to the restructuring expert brought in as its new CEO, about $8 billion has allegedly been lost by Bankmann-Fried’s now-bankrupt FTX exchange’s one million customers.

Enron bankruptcy veteran John Ray III told the bankruptcy court that in 40 years, he had never seen “such a complete failure of corporate controls and such a complete absence of reliable financial information.”

Which led to Siler, who as CEO turned business software firm MicroStrategy into a major bitcoin investor and ran the “I told you so” bitcoin as digital gold. Given the opportunity.

Speaking on Patrick Bet-David’s Valuetainment podcast, Saylor called out the crypto industry as “greedy, arrogant or stupid” for accepting and rewarding people who pump tokens out of thin air. .

He said the marks that everyone, including the Securities and Exchange Commission (SEC) and politicians, know are almost entirely unregistered securities.

‘They should have known better’

“There are three constituencies that have taken in billions of dollars,” Siler said.

“Sam took billions from unsuspecting investors in Silicon Valley. They should have known better. He took billions from crypto hedge funds and crypto banks like BlockFi and Voyager – they should have known better. His exchange – these has the best argument. He was staring at terms and conditions that said he wasn’t going to reuse or use his assets. And he just promised them cheap trades, high leverage. Tempted.”

The first group is the venture capital community, which invested $2 billion in offshore exchanges without asking for a board seat or due diligence because “they were chasing what they thought was crazy,” Siler said. said

“FTX is showing a company that went from $50 million to $500 million in revenue to $1 billion and they thought they had the next big thing right now. So Sam’s lying — is that a lie? I think I’m getting one. The deal is too good to be true, and the person is lying to me.”

That second group are the crypto-lenders who gave banker Freud billions in loans on poor collateral — just like they did to hedge fund Three Arrow Capital (3AC), whose collapse drove many into bankruptcy. Near or bankrupt. FTX has done the same with at least BlockFi and possibly several others.

Seiler said the FTX house of cards explains why it bailed out BlockFi and tried to do the same for Voyager Digital earlier this year. He added that by taking over the companies, he could avoid repaying the loans, allowing him to “perpetuate the whole fraud”.

A third are retail traders who are attracted to FTX by the much lower trading fees and looser margins than their competitors, Seiler said.

‘Satanic’ twist

But that’s what Sayor alleges is that tokens like FTX’s exchange tokens FTT and SRM tokens are created and manipulated by the decentralized exchange Serum — founded by FTX and its sister company, Bankman-Fried Trading. firm Alameda Research, and he said the Solana Foundation, which Bankman Freud also supported – that the worst part comes.

“The diabolical twist in the FTX story that none of us saw coming,” he said, is that Bankman-Fried used these cryptocurrencies — which Siler calls “air tokens” as in “out of thin air.” out” – to create collateral on Alameda’s balance sheet. A sheet that can be used to secure a loan.

But a mainstream bank would pay only a small fraction of the value of the traditional stock used as collateral, he said — as long as putting it on the market wouldn’t cause the price to fall.

But, Siler alleges, what Bankman Freud did was lend himself to FTX at a much, much higher margin than he would have ever gotten from a conventional lender.

“What he did was, in essence, $10 billion of real stuff — dollars, bitcoin, tradable assets — and he promised $10 billion worth of AirTokens.”

Siler claimed that the “sinister twist” was that Bankman Freud “didn’t just create $10 billion of unregistered securities to dump on unsuspecting retail” because that would have taken too long.

“What he did is he created a $10 billion unregistered security and then just secretly borrowed $10 billion from his depositors, and then went and gambled, traded it, spent it, lost it.”

Binance CEO Says ‘SBF Among Biggest Fraudsters In History’

In a Twitter thread, Binance’s CZ took aim at the narrative that it killed rival FTX Exchange by announcing plans to dump its FTT exchange token.

Binance CEO Changpeng “CZ” Zhao set out to debunk some of the narrative surrounding the demise of rival cryptocurrency exchange FTX, particularly one that says it killed it on purpose.

After taking a quick swipe at the idea that he “wants to be the savior of crypto” — Zhao said he “doesn’t need to be saved” — he gets into the meat of it.

The second of his five false narratives, that FTX was killed by a third party, led him to say:

“No, FTX killed themselves (and their customers) because they stole billions of dollars of customer funds. Period.”

The third was that Bankman-Fried had good intentions.

He then addressed “CZ’s tweet destroyed FTX” by saying that first of all, “no healthy business can be destroyed by a tweet.”

A narrative of sabotage

It’s a narrative that began on its own, after Zhao started a short Twitter thread on Nov. 6 at 10:47 a.m. ET.

In it, he said that due to “revelations” in a CoinDesk story that FTX’s sister company, trading firm Alameda Research, had a $5.8 billion stack of FTX-issued exchange token FTT on its books, Binance FTT will close its store. in the next few months.

At more than one-third of its $14.6 billion in assets, the story revealed how shockingly the financial affairs of the independent trading firm were tied to Bankman-Freud’s exchange and supposedly independent trading firm.

It was the first indication that a massive fraud was allegedly perpetrated by Bankman Freud and his associates, who “loaned” about $10 billion to Alameda from FTX customer funds. had given, due to which they were lost in the market.

Binance reportedly still had more than $500 million in FTT when it was bought by Sam Bankman Freud from his investment in the exchange. While Zhao said it would move slowly so as not to affect the price of an asset with limited liquidity, traders started selling, FTT began to fall and users started pulling billions out of FTX. Five days later, FTT crashed and the world’s second-largest cryptocurrency exchange went bankrupt.

It’s hard not to see the connection between the two events, especially given Zhao’s enormous influence in the crypto community.

It’s a narrative Bankman-Fried didn’t try to perpetuate with a tweet at the end of a long thread that would be the first of many self-serving mea culpas. It read:

“At some point I’ll have more to say about a certain sparring partner, so to speak. But you know, glass houses. So for now I’ll just say: Well played; you win. “

Which certainly suggests that FTX was killed by a competitor attack rather than a situation caused by John Ray III, the Enron bankruptcy veteran who took over the FTX Group’s 130 companies after the Chapter 11 filing. took over as CEO, saying he had never seen “such a complete failure of corporate controls and a complete absence of reliable financial information as occurred here.”

As for Zhao, he added that Bankman-Freud “perpetuated the narrative that painted me and other people as ‘bad people’.” he said:

“This was important in maintaining the illusion that he was a ‘hero.'” The SBF is one of the biggest frauds in history, a master manipulator when it comes to the media and key voters. Is.”

There is no way back

While it may or may not be possible for a healthy business to be destroyed by a tweet, there is little evidence that an unhealthy FTX was removed by a tweet.

But, as Bloomberg’s story linked to Zhao, it wasn’t his tweet.

That story, “FTX’s Point of No Return Can Be Traced Back to This Tweet, Data Shows,” followed Zhao’s tweet about Binance’s sale of FTT to Alameda Research CEO Carolyn Ellison. Cited answer. Posted at 11:03 am ET, it said:

“@cz_binance If you want to reduce the market impact on your FTT sales, Alameda will gladly buy it all from you today for $22!”

Which, as Bloomberg noted, was below market value. “At the time when market liquidity evaporated in FTX, an asset it was worth about $5 billion a week ago,” it said.

After that, there were four FTT sell orders for each buy order.

Sam Bankman Freud hires Ghislaine Maxwell’s defense attorney: Reuters

The former CEO of the bankrupt FTX crypto exchange may be abandoning the “I’m an idiot, not a bully” defense he’s been advancing with little success in several recent interviews.

According to Reuters, Sam Bankman Freud has hired the prominent New York defense attorney who defended Jeffrey Epstein’s confidant and convicted sex trafficker Ghislaine Maxwell.

Citing a spokesperson for the former CEO of cryptocurrency exchange FTX and trading firm Alameda Research, the news service reported that Bankman-Fried has hired Mark S. Cohen, a civil and criminal defense attorney at Cohen & Gresser.

A former federal prosecutor, Cohen specializes in white-collar crime and civil litigation, including securities litigation, as well as federal and state regulatory proceedings.

He also defended Ghislaine Maxwell, who was sentenced to 20 years in prison for trafficking underage girls for Jeffrey Epstein.

Meanwhile, former Alameda CEO Carolyn Ellison has reportedly hired Wilmer Cutler Pickering Hale & Dorr, a Washington, D.C.-based law firm, Reuters said, citing confidential sources.

Cohen may have ended up working with Bankman Freud, who, despite having a father who taught at Stanford Law School, by his own admission used his lawyers’ advice for high-profile interviews with outlets including New York. was ignored. The Times, Good Morning America and The Wall Street Journal.

In an interview, he said he told his lawyers to “go away on their own” when told to “never, never, never say you go up again”.

Whether or not he will listen to Cohen remains to be seen, but it is very likely that this bank will mark the end of Freud’s self-serving and increasingly far-fetched claims that, while he fabricated large-scale, He did nothing illegal.

These are claims that are being met with increasing levels of anger in the crypto community.

On the exchange side, Coinbase CEO Brian Armstrong said:

“This is stolen client money used in his hedge fund, plain and simple” as well as “It’s a wonder to me why he’s not in custody already.”

Galaxy Digital CEO Mike Novogratz said:

“He stole money from people, people should go to jail.”

And the Blockchain Association’s head of policy, Jack Chironsky, said:

“FTX didn’t ‘fall’. What it was revealed to be: a criminal enterprise in the business of stealing money.”

Then, of course, there’s Bankman Freud’s recent claim that he has $100,000 left to his name — which, if he can keep paying top lawyers, starts to look questionable for a whole new set of reasons. .

iPod creator helps Ledger design sleek new hardware wallet, as demand for self-possession grows

Ledger Stacks uses a book-style design with an electronic ink touchscreen front cover to make the best-selling hardware crypto wallet attractive and user-friendly as well as secure.

Crypto hardware wallet maker Ledger has unveiled its new flagship Ledger Stacks, built in partnership with Tony Fidell, the creator of the original Apple iPod.

The new cold storage device takes the technology of the best-selling digital wallet, Ledger Nano, and wraps it in what the company promises will be the most user-friendly package in the industry.

The goal, he said, was to create a “user-pleasing” tool to bring digital asset protection to the rest of us, not just geeks.

Eschewing the flash drive look of its predecessors, LedgerStacks has the elegance of a book with a wraparound electronic ink screen.

The front cover can host an NFT or other image when off, and switch to a large and easy-to-use touch control interface when in use. The screen continues to the “spine” where it can be personalized with a book-style title.

Not your keys, not your coins.

The timing could hardly be better.

The alleged looting of nearly one million FTX customer accounts by sister company Alameda Research — coupled with a series of unfortunate hacks and several crypto firms freezing withdrawals — has prompted a new generation of crypto owners to turn to non-custodial wallets. It has led to familiarity. The phrase “not your keys, not your coins.”

To this end, Ledger is offering Stax as a Web2 interface – the Web3 answer for the smartphone.

Laptops and smartphones “were not built for Web3,” he said.

“They stand no chance of securing your digital value. With Web2 hardware as the key entry point into the crypto world, the number of consumers who will see their digital assets stolen in 2022 will reach a new high.” Gone. It’s not. Web 3 should be developed.”

Form and function

“Security will always be at the heart of our products,” said Ledger Chairman and CEO Pascal Gauthier, “We also needed a new look to revolutionize your Web3 experience.”

The credit-card-sized (but thicker) device “is the result of Ledger’s security culture and Tony Fidell’s unmatched expertise in creating extremely user-friendly products,” he said — adding that it “will make your crypto journey limitless.” Designed to be more intuitive.”

Paired with the LedgerLive app, LedgerStacks supports over 500 cryptocurrencies and tokens, as well as Ethereum and Polygon-based NFTs. Over 5,000 are supported when paired with third-party wallets.

It uses Bluetooth connectivity and USB-C, and can be charged wirelessly.

Like other ledger products, a user-generated recovery phrase will allow owners to recover their crypto even if the device itself is destroyed or lost.

The Stax name comes from the embedded magnets, designed to allow users to stack multiple devices, such as books, on a shelf.

As for why you need more than one, Gauthier said:

“Many of our customers already have different ledger devices, each serving different crypto or NFT purposes, and it’s the same with Ledger Stax. You can have one device for your NFT collections. May be, for other Ethereum-based assets, etc.”

Nike’s new NFT drop will connect virtual sneakers to real shoes.

Cryptokicks iRL combines an avatar-ready NFT sneaker paired with an auto-lacing physical sneaker that connects to its digital counterpart with haptic feedback and gesture control.

Nike already dominates big brand NFT sales, and now it’s teaming up with its virtual collectible design studio RTFKT to connect the virtual sneaker to the real shoe.

The Cryptokicks iRL collection will feature a limited edition of 19,000 shoes in four styles in what Nike is calling the “first native Web3 sneaker” line.

They can only be purchased by burning a special “forging” NFT—purchasable on the secondary market—that will mint the NFT version of the shoe and allow the user to order an iRL in their choice of size and style. will

Registration for drawings for the public mint will take place on from December 7th to December 9th, while existing Lis Engine NFT holders will be able to start minting on December 12th. Prices range from $450 to $1,333, payable in ETH. .

The physical sneakers will ship in May and only to US addresses, causing some grief in the fairly intense collectible sneaker market.

The shoes will feature the auto-lacing technology the firm designed for Air Mag more than 30 years ago for the film Back to the Future 2, as well as “the next evolution of smart sneaker technology” — including improvements and upgrades. Go lighting packages, haptic feedback with artificial intelligence/machine learning (AI/ML) algorithms, gesture control, walk detection, app connectivity and wireless charging.

While Nike didn’t go into much detail about how the physical and digital versions of the NFC-connected shoe will communicate, the technology strongly suggests it hopes to at least connect them in the Metaverse and in-game settings. .

Haptic force feedback, gesture control and gait detection will all be useful in connecting people and avatars in virtual and augmented reality. And AI/ML seems to offer scope to improve it and add functionality.

The physical shoes will have an RTFKT NFC chip that connects the physical and digital Cryptokicks iRL via an app. The digital version of the shoe will be an NFT compatible with RTFKT’s line of CloneX high-end Metaverse Avatar NFTs.

According to Dune Analytics, Nike’s NFT sales far outpace other mainstream consumer and fashion brands, it’s not even a race.

In October, Nike had $185 million in NFT sales—10 times more than the rest of the top 10 brands combined, and 14 times more than the No. 2 brand on the list, Dolce & Gabbana. Even more, Nike did it on 67,000 sales, while Adidas’ 50,000 sales brought in only $11 million.

Nike bought RTFKT last December.

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