Tag: ftx’s
FTX’s bankruptcy hearing details prior control by ‘inexperienced and unsophisticated individuals’
Crypto exchange FTX had its first day of hearings with the U.S. Bankruptcy Court for the District of Delaware on Tuesday.
FTX’s bankruptcy hearing details prior control by ‘inexperienced and unsophisticated individuals’ by Jacquelyn Melinek originally published on TechCrunch
Will FTX’s Collapse Strand Scientists?
An undergraduate physics major at the Massachusetts Institute of Technology (MIT) who founded FTX and quickly became a billionaire, 30-year-old Sam Bankman-Fried began to back philanthropic organizations that supported a wide variety of science-related causes, most designed to improve human well-being. Now, with FTX in bankruptcy and under investigation for misuse of investors’ money, his formerly flush foundations are suddenly strapped for cash and much of that work is at risk. One foundation, the Future Fund, was just launched in February. But by the end of June, its officials reported awarding 262 grants and “investments” totaling $132 million.
It’s unclear how much of that money has been distributed. But on 10 November, five senior Future Fund officials resigned and announced in a statement, “We are devastated to say that it looks likely that there are many committed grants that the Future Fund will be unable to honor….”
Just what will happen to awards the Future Fund and the similar FTX Foundation have already made remains unclear. FTX owes billions of dollars to creditors and is now being investigated by the U.S. Securities and Exchange Commission and the Department of Justice, according to The Wall Street Journal. Writing in an online forum hosted by the Center for Effective Altruism, to which the Future Fund pledged nearly $14 million, Molly Kovite, legal operations manager for the Open Philanthropy foundation, noted that FTX’s creditors could try to “claw back” their investments during bankruptcy proceedings. If grantees received awards after 11 August, which is 90 days prior to the bankruptcy filing, “the bankruptcy process will probably ask you, at some point, to pay all or part of that money back” she predicts.
That has grantees wondering how they will pay the bills. “Everyone is obviously really worried,” Morrison says.
Thanks to Slashdot reader sciencehabit for submitting the article.
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Missing Money, Crypto Houses, and Emoji Payments: Here’s the Most Batshit Revelations From FTX’s Latest Bankruptcy Filing
Once upon a time, the cryptocurrency exchange FTX was a jewel of the web3 world. Now, in the span of a week, its reputation has transformed from shooting star to sinking ship. After admitting to mismanaging large amounts of customer money, the exchange’s founder and CEO, Sam Bankman-Fried (also known by his initials…
FTX’s Failure Is Sparking a Massive Regulatory Response
The fact that regulators apparently had no view into some of the major projects that fell apart this year — such as Celsius, Three Arrows, Luna and now FTX — is “precisely the problem,” said an industry participant who works closely with policymakers. Still, the individual told CoinDesk that they don’t expect any major legislative action to occur this year. Most likely, Congress will look at bills like the Digital Commodities Consumer Protection Act, a bill that Bankman-Fried supported but was written prior to that, in the upcoming year. According to an attorney who requested anonymity, the SEC may have an easier time kicking off the investigation just due to its mandate. “The SEC is in a much better position to go to court and get a freeze [on assets] if they believe there’s a reason to do that,” the attorney said. “The SEC also has a less cumbersome process for subpoenaing testimony and freezing documents.” The SEC and DOJ are likely to cooperate though, to the extent that DOJ investigators may sit in on SEC interviews.
FTX has various U.S. connections, which is all the SEC and DOJ need to assert jurisdiction for their investigations.
FTX appears to be preparing for these investigations, with FTX US General Counsel Ryne Miller having already told the entire company to preserve documents. A former federal prosecutor told CoinDesk that the bankruptcy court may also shed light on the situation, thus assisting government investigators with their probes. “The bankruptcy court has the ability to now oversee the company and to obtain information from the company that, let’s say the DOJ might not have been able to obtain as easily pre-bankruptcy, and they’ll likely have access to a new trustee or an examiner and be able to learn in essentially real-time what’s going on,” the former prosecutor said. Executives like Bankman-Fried may also “be in a tough spot with respect to” deciding whether to cooperate or assert Fifth Amendment rights against self-incrimination, the former prosecutor added. “A complicating factor — for FTX anyway — may be the fact that Bankman-Fried has tweeted his way through his company’s collapse,” adds CoinDesk.
“It’s a complete nightmare,” said Ken White, a former federal prosecutor and a partner at the Brown White & Osborn law firm. “This is a situation where all sorts of agencies are going to be looking at this, the SEC, the FTC, and probably the Department of Justice. There are all sorts of potential criminal and civil consequences — lawsuits. Civil lawsuits are a certainty. And here he is sort of tweeting out his thoughts about it. It’s every attorney’s nightmare of what a client might do.”
The main issue being that Bankman-Fried repeatedly took to Twitter to reassure users that everything was fine. “It creates new bases for criminal or civil claims against him just based on those tweets,” White said. “So if he says that everything’s fine, that their assets are real assets, and that’s not true, then that can be securities fraud, and wire fraud, all sorts of other stuff, not to mention all sorts of civil causes of action … It is just disastrously reckless.”
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Read FTX’s Bankruptcy Filings for Yourself
The cryptocurrency exchange FTX has collapsed and filed for bankruptcy, deflating the entire crypto market with it.
Market Extra: FTX’s stunning collapse nothing like Theranos, says venture investor and crypto bull Tim Draper: ‘This is about people who got ahead of their skis’
Crypto: Crypto lender BlockFi pauses withdrawals in wake of FTX’s collapse
Crypto: FTX’s affiliated trading firm Alameda appears to have shorted Tether
FTX’s money isn’t insured, FDIC says
The Federal Deposit Insurance Corporation (FDIC) slapped the Sam Bankman-Fried-owned cryptocurrency exchange FTX with a cease-and-desist order over “false and misleading statements” that suggest its assets are FDIC-insured. The FDIC doesn’t cover stocks or crypto, and only safeguards funds held in insured bank accounts.
In a letter to the exchange, the FDIC points to a now-deleted tweet from FTX president Brett Harrison, which states “direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the users’ names.” The referenced tweet also says that “stocks are held in FDIC-insured and SIPC [Security Investor Protection Corporation]-insured brokerage accounts.” The FDIC claims this falsely represents…