FTX's distraught founder also confirmed that he was ignoring advice from lawyers to keep quiet - telling him to "go away on his own."
SBF denies creating a secret FTX backdoor.
When asked about infamous FTX CEO Sam Bankman Fried, billionaire Dallas Mavericks owner and crypto investor Mark Cuban said on Tuesday that while he did not know all the details of the case: “If I were him, I would be afraid to go to prison for a long time.”
In a street interview with TMZ, saying that the fundamental value of crypto hasn’t changed “despite a lot of people making a lot of mistakes,” Cuban added:
“I talked to the guy and thought he was smart. I had no idea he would take other people’s money and use it for his own personal use. It sure seems like it.”
Then again, if Bankman-Fried were smart, they might not have given the interview themselves.
What do lawyers know?
That’s certainly the advice her lawyers gave, Bankman-Fried told blogger and crypto-lender Celsius bankruptcy victim Tiffany Fong on Nov. 16 and 20 during a couple meetings about the events that took place. This led to the termination of FTX. and FTX US exchanges and trading firm Alameda Research after heavy trading losses.
The reported reason was Bankman-Fried allegedly loaned $10 billion of FTX’s customer funds to Alameda as collateral against a highly illegal token created by FTX. Initial reports from the restructuring management team after the bankruptcy filing stated that there is an $8 billion hole after the liquidation of this FTT token.
After some earlier Twitter mea culpas — for “f up” with the controls he thought $13 billion in leverage was only $5 billion, not doing anything illegal — his lawyers, Bankman- Fried said, telling him to stop. Speaking he warned him:
“You have to promise you’ll never say, never say you’ll never speak again.”
To which Bankman Freud reported that he replied:
“I told them to go off on their own. I don’t think they know what they’re talking about. I mean, they know what they’re talking about in the very narrow circle of litigation. have been. [But] they don’t understand the wider context of the world. Like, if you’re a total d*** about everything, even if it avoids making the slightest embarrassing statement, So it’s not helping anything.”
The mentality of other people’s trial lawyers and prosecutors.
In the first of two sets of audio excerpts posted on YouTube, Bankman-Fried denied allegations by FTX restructuring CEO John Ray III that there were backdoors in the coding that allowed him to send funds to Alameda. used to hide
After telling Fong that he wasn’t aware of the allegations that had been widely reported, Bankman-Fried said it was “definitely not true” — adding that he didn’t even know how to code. . Which doesn’t really solve the problem as well as it could, and if true, would require someone else to do the actual coding of such a backdoor.
What happened, he said, was this:
“I was wrong on the Alameda balance on FTX by a pretty big number, an embarrassingly big one.”
How did this happen, he asked:
“It was due to a very mislabeled accounting thing… Basically there was a time when people would send money to Alameda and then ask for a credit to FTX. Which basically never happened. It It was a beautiful thing. It is greatly missed, and in this way the Alameda benefited more than I thought.”
After a long and involved explanation of why the FTT token was more risky than it seemed and how it led to users making $4 billion a day on FTX, the conversation turned to the bankruptcy of FTX US. The American exchange is much smaller than FTX International, which was the No. 2 crypto exchange globally as of last month.
When Fong asked her why FTX US filed for bankruptcy when she said it was solvent, Bankman-Fried called herself a “f idiot” for getting herself into it. Allowed to be “forced”.
He added:
“I’d give anything to end it now.”
Overall, Bankman-Fried paints a picture of herself that is either shockingly incompetent, dishonest or out of touch with reality. He said:
“I honestly believe to God that if I hadn’t filed for bankruptcy, all the customers would be done and the refunds [available] on FTX at this point. And not just [FTX] US — [FTX] International too.”
Claiming that he is still trying to raise funds to restore FTX and make customers whole, Bankman-Fried said:
“I might still get there, we’ll see, I don’t know. It might happen, it might not.”
But, he added, “eight minutes after I filed for bankruptcy, $4 billion more liquidity came in.”
This claim he returned later, when asked if the post-bankruptcy accounting reports that FTX International clients would receive were almost entirely inaccurate. he replied:
“Eventually [FTX US clients] will get a penny on the dollar, a dollar on the dollar … and international will get, I don’t know, 20 to 25 cents on the dollar. Something like that.”
The reason, he said, “is because they have $4 billion sitting here waiting to be injected.”
Lawyers, Pitchforks and Money
The biggest US bankruptcy battle of FTX Group (which includes Alameda and about 130 other Bankman-Fried companies) is about to take place between the US and Bahamas courts, which seized a lot of money. After a Delaware bankruptcy court ordered a global asset freeze from one of the companies under its jurisdiction.
On top of that, Bankman-Fried briefly re-opened returns to the Bahamas for remaining FTX customers after blocking them. Telling Fong that she had given US officials “a heads-up for a day” and received no response, Bankman-Fried gave a very practical reason for her actions. Denying that it was aimed at insiders, he said:
“That’s where I’m at right now. And you don’t want to be in a country that has a lot of angry people. And you don’t want your company to be involved in a country that has a lot of angry people.”
Bankman-Fried admitted:
“Realistically speaking it’s ****, but the way forward for FTX is that Bahamians don’t get angry about it.”
To give equally
Another issue he addressed were his eight-figure political donations — and he had originally promised nine — which Republicans have seen go almost entirely to Democrats.
“I donated about the same amount to both parties this year,” he said, adding that he took advantage of campaign finance laws — which he seemed to disapprove — of Because he donates unreported black money. Bankman-Fried added:
“All my Republican donations were dark, and that’s because if you donate to a Republican, reporters make a fool of it. They’re all super liberal and I didn’t want that fight.
One of the top Democratic donors in the 2022 election cycle, Bankman-Fried claimed she was “the second or third largest Republican donor this year as well.”
He focused on the primaries, adding that the general election “doesn’t matter” while the primaries allow them to influence the selection of good candidates over bad candidates.
‘hey’
When Bankman-Fried is cynical about his campaign donations after long making ethically-focused campaign contributions a big part of his public image, he goes on to explain how the end of FTX only There was a major accounting and oversight error, hard not to look back on. An earlier conversation with an actual journalist — Fong has been very clear that he is not one — that he claimed he thought was not on the record.
On November 16, Vox reporter Kelsey Piper asked Bankman-Freud if all his talk over the past few years about morality and giving away all his billions on “effective altruism” was “mostly a front.”
He said “yes”.
He replied by questioning:
“You were really good at talking about morality, for someone who saw it all as a game with winners and losers?”
Bankman-Freud replied:
“Yeah, hey, I had to be. That’s what fame is made of, sort of. I feel bad for the people who take advantage of it. Right shibboleth and that’s how everybody likes us.” “
When his story broke, Bankman Freud claimed he was just getting out.
Compare this to the comments he made at the end of Fong’s second interview, which mostly dealt with the details of how he lost track of how much margin FTX actually ran. had lived. He said:
“Not long ago I was going to, you know, spend my life trying to do what I could for the world. Obviously, it didn’t turn out the way I hoped. My original goals. True in terms of. I feel so bad for people who trusted me and believed in me and were trying to do great things for the world and somehow connected it to me. f * up. That’s the biggest part of it … and any apology from me right now would ring hollow.”
Bankman Freud told Fong that he was currently “mostly focused on what I can do”, adding that “there will be a time and place to speculate on my future, But right now it’s one foot ahead. Others and, you know, I try to be as helpful and constructive as I can.”
He added:
“I don’t know what the future holds for me. It’s pretty unclear and it’s certainly not the future I once imagined.”
Whether this is a foreshadowing of Mark Cuban’s future remains to be seen.
BlockFi is owed $1 billion by FTX and Alameda 💰.
Bankrupt crypto lender BlockFi has settled for more than $1 billion in the bankruptcy of Sam Bankman Friend’s FTX exchange and Alameda Research trading firm, a lawyer said.
While it borrowed $275 million from FTX US in a July deal that prevented it from bankruptcy following the failure of the Terra/LUNA stablecoin and the subsequent collapse of hedge fund Three Arrow Capital (3AC), BlockFi also “Acted as a lender. to Alameda… and they also had crypto on the FTX platform,” attorney Joshua Sisberg told a New Jersey bankruptcy court on Nov. 29, The Block reported. He added:
“Specifically, BlockFi had $671 million in outstanding loans that defaulted to Alameda and $355 million in digital assets that, unfortunately, are now frozen on the FTX platform.”
In addition, the lender said it had about $257 million in cash when it filed for bankruptcy, adding that it believes that will provide “sufficient liquidity” during the restructuring. Will do.
That said, a BlockFi attorney disclosed that it plans to lay off about two-thirds of its 292 remaining employees, Decrypt noted.
Just yesterday, he filed a motion in court seeking permission to continue paying the $6 million monthly bill for wages and benefits, as well as $2 million owed to workers.
A Web of Debt
Despite being owed much more by other parts of Bankman-Fried’s empire, the $275 million debt means that BlockFi’s second largest creditor is FTX US, a much smaller U.S. Is a crypto exchange.
While details of most of BlockFi’s 50 largest lenders have been withheld, the largest is Ancora Trust Co., which is acting on behalf of an unspecified lender or groups of lenders that 729 Millions of dollars owed. The Wall Street Journal reported that investor Peter Thiel will likely suffer the most because he owns 19 percent of BlockFi.
The only other list is number 4 — the Securities and Exchange Commission (SEC). The regulator is still owed $30 million of the $50 million settlement it forced BlockFi to take after it sued the company in February, saying it had breached its lending products. The interest I offered to investors was actually a sale of securities. As part of that $100 million deal, BlockFi agreed to pay another $50 million to 32 state regulators.
The SEC will likely be the first to pay, crypto lawyer Sasha Hodder told CoinDesk, adding that blockchain’s “consumers are really at the bottom of the list here.”
The round robin of loans between BlockFi and Bankman-Fried’s companies is not unique. While BlockFi was saved by FTX US’s $400 million line of credit — of which it used $275 million — it wasn’t the only rescue from which FTX and Alameda later took on big loans.
While Bankman-Fried spoke of being willing to lose large amounts of money to bail out crypto firms affected by the collapse of 3AC and Terra/LUNA for the good of the industry at large, this later revelation It happened that he was not so pious.
The BlockFi deal gave it the option to acquire the crypto lender, under certain circumstances, for more than $240 million.
And while Bankman-Fried offered Voyager Digital a $500 million line of credit from Alameda Research — which was turned down — it later emerged that the trading firm owed Voyager $377 million.
Crypto billionaire killed in helicopter crash 🚨
Russian crypto-billionaire and Libertex Group chairman Vyacheslav Taran has died in a helicopter crash on his way to Monaco.
The 53-year-old man was the only passenger on the flight from nearby Lausanne, Switzerland.
Taran was the founder of Forex Club and Libertex Exchange, a trading and investment platform that handles some cryptocurrencies as well as forex, stocks, stock indices and ETFs. The company said in a statement:
“Vyacheslav Taran will be missed beyond words, and everyone at Libertex will be forever grateful for what he accomplished.”
He is the third crypto executive to die under strange circumstances in the past month.
Last week, 30-year-old Tiantian “TT” Kullander, co-founder of Amber Group and its WhaleFin digital asset platform, died unexpectedly in his sleep.
And on October 28, the co-founder of DeFi lending platform MakerDAO and its DAI stablecoin, 29-year-old Nikolai Mushegian, drowned after being pulled out to sea by the current in Puerto Rico.
Rune Chsistensen, co-founder and CEO of MakerDAO, calls the Musegian key “a security-based approach to smart contract design as we know it today.”
The New York Post said Taran’s helicopter crashed in good weather, and an investigation into the crash has found no indications that authorities believe foul play was involved.
That said, another passenger on the flight reportedly canceled at the last minute – leading to a flurry of comments on Twitter and no speculation in the British tabloid press that something fishy might be going on. .
The Post also noted that Taran was “in a long line of Russian billionaires who have died under mysterious circumstances this year.”
Several news outlets have reported that Ukraine’s Union news agency has alleged — without citing any sources — that Taran had ties to Russian intelligence and moved Russian funds out of the country through crypto operations. .
Coinbase Wallet Drops Four Cryptocurrencies ❌
Coinbase has announced that it will drop support for four old and well-known cryptocurrencies for its wallet: Bitcoin Cash, Ethereum Classic, Stellar Lumens and Ripple’s XRP.
In a note on its website, Coinbase said that starting January 23, 2023, its Coinbase Wallet will no longer support tokens and their networks “due to low usage.”
After this date, it will be possible to transfer these assets to another wallet, but this will require the use of Coinbase’s recovery clause.
It warns, in bold type:
“Sending or receiving unsupported assets through Coinbase Wallet will cause you to lose them.”
This delisting refers only to Coinbase Wallet, not Coinbase.com or the Coinbase Exchange app.
Big names
In the case of the first three, what makes delisting news is their size and history.
Bitcoin Cash (BCH) and Ethereum Classic (ETC) are older forks of two of the largest cryptocurrencies, having split in 2017 and 2016, respectively, due to differences in the mining and node-running communities.
Stellar Lumens (XLM) was something like that, launched by XRP developer Jed McCaleb in 2014 after splitting from cross-border payments firm Ripple.
BCH was created as a result of a split over whether to increase Bitcoin’s block size to make it more scalable—able to handle more transactions per second—to make it a better payment token.
ETC came after a fork was created to undo the effects of a $50 million hack, which some community members called wrong because it was tantamount to changing the blockchain — what they called a terrible precedent.
But these cryptocurrencies have seen their stars dim over the past few years as local tokens from smart contract blockchains competing with Ethereum like BNB, Cardano and Polkadot have gained ground.
XRP is a top 10 token with a market capitalization of $19.8 billion as of November 29. It is the seventh largest cryptocurrency as well as the eighth most traded, with a 24-hour volume of $927 million.
Even so, trading on the token — widely known as “Ripple” because of its close ties to the cross-border payments firm — has been suspended on Coinbase and many other U.S. exchanges for nearly two years.
This is because Ripple is locked in an ongoing legal battle with the Securities and Exchange Commission (SEC). This is a closely watched case in the crypto industry because it amounts to a test case for the regulator’s claim that virtually all cryptocurrencies except bitcoin are securities.
If the SEC wins, any U.S. exchanges listed on it could be sued for selling securities without a broker-dealer license.
And while the SEC could do this at any time, the concern was that it would specifically do so in the case of XRP because the lawsuit specifically classified the token as a security.
On January 19, 2021, Coinbase joined several other top US exchanges in suspending XRP trading.
There is not much crypto literacy in America 😬
The second annual Crypto Literacy Survey found that Americans are still largely crypto illiterate.
Only 9% of 1,000 respondents to CryptoLiteracy.org’s 30-question October survey achieved a passing grade of 60%, despite the questions being very basic.
And while that’s more than double last year’s 4%, it’s still well below the 32% who said they own cryptocurrencies, and the 36% who said they plan to buy cryptocurrencies in the next six months. intend to
However, the number of respondents who were crypto owners nearly doubled to 17 percent, despite the nearly 70 percent drop in bitcoin’s price — suggesting that the crypto winter has kept as many people from investing in digital assets. has stopped as much as one might expect. .
What crypto isn’t doing, however, is becoming more diverse, with the survey report arguing that crypto has a “country club problem” with less ownership by the wealthy and educated.
It’s also more popular among men than women — 46% of men said they own crypto, up from 22% last year, while women only increased from 12% to 18%.
Neil Bergkois, who led the initiative, said:
“Now more than ever, it’s critical that we increase crypto literacy and help people understand the nuances of crypto, such as how to handle themselves and transact securely.”
Bergquist described the organization’s goal as “providing consumers with an educational guide to understanding risk and reducing harm in a confusing environment,” adding:
“While these results suggest that we still have work to do to improve crypto literacy, the results are also encouraging as consumers are becoming more interested in learning about crypto and, therefore, more crypto literate. “
Known unknown
Looking at an understanding of the basics, Crypto Literacy found that there is “a vocabulary problem” — with education about crypto vocabulary in need.
Only 30% knew what network nodes were, while only 25% understood cryptomining, 20% correctly identified staking and Satoshi, and decentralized finance, or DeFi, came in at just 18%.
Non-fungible tokens, or NFTs, outperformed the broader crypto market, with 40% able to correctly answer: “What is a non-fungible token?”
(The answers to “select all that apply” were: A) a token that represents a unique digital asset; b) A type of cryptocurrency token that is non-fungible. C) An avatar used by an online celebrity. D) a cryptocurrency used by general financial traders. (e) I don’t know.)
It’s worth noting that with the 40% who “correctly” answered A)) 22% answered B)—which isn’t really wrong.
Unknown Unknown
Perhaps more worryingly, there’s also a big difference in how little people think they know: only 31% say not knowing or understanding enough about crypto is a barrier to investing. .
It’s apparently worse among millennials, with 54% saying they own crypto and 59% intend to buy in the next six months — yet they scored just 1% more than Gen X and Gen Z in the quiz. scored, and only two points more than the baby boomers.
Matters of trust
Notably, this survey took place before the FTX exchange erupted in a scandal that tarnished the reputation of crypto as the world’s second-largest exchange sold its sister trading company $10 billion. had loaned consumer funds, which were lost. At least $8 billion of that.
So it’s quite likely that the 8% who cited not trusting crypto companies as a barrier to investing would have been higher.
A total of 35% rated the crypto industry as “mostly” or “somewhat” trustworthy, while only 25% rated it as “mostly” or “somewhat” untrustworthy.
However, the survey comes after crypto lenders collapsed into bankruptcy over the summer when hedge funds took on huge and unbacked loans and extremely risky DeFi bets with consumer funds.
That’s to say nothing of a massive series of hacks that saw DeFi hit particularly hard, with thieves losing more than $3 billion.
The survey wrapped up by asking: “Is the crypto industry still in the Wild West days?”
And while he didn’t exactly answer yes or no, the conclusion was:
“This year has certainly shown the dangers associated with centralized cryptocurrency systems and companies. In less than 12 months, major crypto companies have gone bankrupt after losing billions of dollars in consumer funds, from advertising during the Super Bowl. have gone so far as to file for it.”
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