FTx saga continue

[k1976]

FTX’s Original Sin Is a Warning to All of Crypto​

Evidence from the criminal trial of Sam Bankman-Fried suggests fraud was built into FTX from the very beginning.


By Zeke Faux and Max Chafkin
March 28, 2024 at 5:00 AM GMT+8

Sometime between FTX’s collapse and Sam Bankman-Fried’s fraud conviction a year later, a consensus formed about the onetime boy genius of cryptocurrency: His wild, curly hair and beanbag chair naps at the office were largely for show, but his company FTX, which had been used by millions of people to buy and sell digital currencies, was the real deal.

The crypto faithful see FTX as an almost-success story—if only its owner hadn’t taken customer money to cover side gambles. As the author Michael Lewis put it on 60 Minutes, “They actually had a great, real business.”

That idea has been bolstered by a twist in the FTX bankruptcy: When the company collapsed, $8 billion in customer funds had vanished, but the lawyers running it now say they expect to recover enough money to pay back everyone in full. Bankman-Fried’s allies have used this to suggest that the customer funds weren’t so much stolen as they were redirected into at least a few surprisingly good investments.

“Whatever else might be said about Bankman-Fried, he was a brilliant businessman,” the law professors Ian Ayres and John Donohue wrote in a recent essay arguing he was wrong to even declare bankruptcy.

His lawyers have used this argument to call for a light sentence; on March 28 a federal judge will decide whether to go easy on him or send him to prison for 40 years or more, as prosecutors are seeking.
https://www.bloomberg.com/tips/

 

[k1976]

https://www.google.com/amp/s/www.bbc.com/news/business-68560911.amp


Sam Bankman-Fried, the former billionaire crypto boss who was convicted of fraud and money laundering last year, will return to court in New York on Thursday to be sentenced for his crimes.

It is certain the 32-year-old will be going to jail; what is not known is how long for.
The moment has revived debate about the extent of his crimes - and what punishment might fit.

His legal team have called for leniency, but prosecutors are seeking 40 to 50 years in prison

 

[k1976]

FTX's collapse in 2022 was a stunning fall for Bankman-Fried, who had become a billionaire and business celebrity promoting the firm, a platform people could use to deposit and trade crypto.

It attracted millions of customers, before rumours of financial trouble sparked a run on deposits.

In November 2023, a US jury found Bankman-Fried had stolen billions in customer money from the exchange ahead of the collapse to buy property, make political donations and use for other investments.

Many of those customers now appear poised to recover significant sums, under a plan being developed in the separate bankruptcy case.

Under that proposal, former customers could receive money based on what their holdings were worth at the time the exchange collapsed.

In court filings, the defence for Bankman-Fried, who is expected to appeal his conviction, has argued that such recovery warrants a lighter sentence.

They said it proved that "money has always been available" which "would be impossible if [FTX's] assets had disappeared into Sam's personal pockets".

But the repayment plan has left many former customers outraged, since they will miss out on the crypto rebound that has occurred since.

John Ray, the lawyer leading FTX through bankruptcy and a critic of Bankman-Fried, noted the concerns in his own letter to court.
"Make no mistake; customers, non-governmental creditors, governmental creditors, and non-insider stockholders have suffered and continue to suffer," he wrote to the court, arguing that the claims of minimal loss were a sign that Bankman-Fried continued to live "a life of delusion".

Former FTX customers interviewed by the BBC said they were offended by the blithe dismissal of their problems, and urged the judge to reject calls for leniency.

"The people who are saying this are not in a position like I'm in, where you've lost everything," said Arush Sehgal, a 38-year-old tech entrepreneur living in Barcelona, who, with his wife, is one of the exchange's biggest individual creditors, with about $4m worth in savings in dollars and bitcoin at FTX when it collapsed.

 

[k1976]

Angela Chang, of Vancouver, a 36-year-old who worked in software, said she had about $250,000 deposited in dollars with FTX when it collapsed. She said she feared the harm done to FTX customers was being discounted because they were in the crypto industry.

"People think that crypto is criminal and so they have sympathy for this guy .... But I'm not a criminal," she said, describing how the fall of the firm threw her into depression and left her running up credit card debt. Facing a cash crunch, she ultimately sold a portion of a claim to an investor.

Columbia Law professor Daniel Richman said the scale of the crime was rarely as contested as in this case.

But he said decisions are often shaped more by other issues, including a judge's own impressions of the defendant, and what it would take to deter him from further crimes.
In this case, Judge Kaplan, a veteran of the court system who has presided over a slew of high profile trials involving public figures such as Donald Trump and actor Kevin Spacey, has already proven to be sceptical of Bankman-Fried's actions, revoking his bail last year after finding he was trying to intimidate other witnesses.

"Any judge or lawyer will tell you that one of the best things the defendant can do before being sentences is really really show he's on the right path, show some remorse and show some degree of self-knowledge as to his offence," Prof Richman said.

"Here you not only have a defendant who went to trial but you have one who really, at least the judge believed, was obstructive prior to trial," he said, adding that it would be "really surprising" for Judge Kaplan to render a sentence anything like the defence request.

 

[Pinkieslut]

Wanted to add that there are many Crypto firms started by Tiongs based in Singapore. Some of them have also opened secondary office in Dubai due to the lax controls over there.

 

[k1976]

Many try to find a safe haven near to Tiongkok or HK