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Tag: BankmanFried

  • Binance CEO reportedly accused Sam Bankman-Fried of trying to “depeg” stablecoin Tether

    Binance CEO reportedly accused Sam Bankman-Fried of trying to “depeg” stablecoin Tether

    Why it matters: The crypto industry is still reeling from the failure of the FTX exchange last month. Investors are mad and calling for Sam Bankman-Fried’s head over operating what they consider was nothing more than a Ponzi scheme. Now, a private text exchange indicates that Binance CEO Changpeng Zhao believed that Bankman-Fried had been breaking the law even before the financial crisis that brought his crypto empire to ashes.

    According to anonymous sources and private text transmissions leaked to The New York Times, Sam Bankman-Fried (SBF) was still trying to make cryptocurrency trades after his FTX exchange collapsed. The messages were in an encrypted Signal group chat between several crypto executives, including SBF and Changpeng Zhao (CZ).

    On November 10, only one day after FTX imploded, Zhao addressed SBF in the group message to stop making trades and warned him that if he continued, he faced extended “jail time.”

    “Stop now, don’t cause more damage,” CZ wrote. “The more damage you do now, the more jail time.”

    The Times suggests that CZ’s motives were not solely to keep SBF out of legal trouble.

    “My honest advice: stop doing everything. Put on a suit, and go back to DC, and start to answer questions.”

    The quick fall of FTX caused a ripple effect in the entire industry that saw many coins and related businesses tumble. As CEO of Binance, CZ has a vested interest in seeing that the cryptocurrency market does not completely crash and put him too out of business.

    Zhao was afraid that SBF was trying to desperately hold on to FTX with ill-advised trades that could have piled onto the downward momentum the market was already experiencing. Zhao was probably less concerned with Bankman-Fried going to jail and more concerned about Binance’s future if the industry continued its freefall.

    The messages were frantic, and the argument was heated. Zhao accused Bankman-Fried of intentionally trying to “depeg” the stablecoin Tether with a $250,000 transaction. Backed by the US dollar, Tether (USDT) has a fixed (pegged) price of $1. Zhao insinuated SBF was trying to manipulate the market and knock Tether off its peg with the transaction made through the FTX executive’s other failed company, Alameda.

    Bankman-Fried called the claim “absurd.”

    “Huh? What am I doing to stablecoins? Are you claiming that you think that $250k of USDT trading would depeg it? Trades of that size would not make a material impact on Tether’s pricing, and to my knowledge neither myself nor Alameda has ever attempted to intentionally depeg Tether or any other stablecoins. I have made a number of mistakes over the past year but this is not one of them.”

    Ironically, Binance may have caused the bank run leading up to the crisis. Zhao and SBF had been in talks about a merger. During due diligence, CZ offhandedly tweeted general financial details on November 8 that may have caused investors to panic and try to withdraw their funds (tweet above).

    According to an anonymous source, before the Binance/FTX deal, SBF had scheduled a meeting with a top Tether exec in his Bahamian headquarters. He allegedly asked Tether for a billion dollars in funding to prop up FTX, but the company turned him down.

    It is unclear if this bail-out request happened before or after SBF’s $250,000 Tether transaction. What is clear is that CZ felt FTX was utterly doomed during the November 10 message exchange. The dust had not even settled, and Zhao was telling SBF to get ready to be grilled by the government.

    “My honest advice: stop doing everything. Put on a suit, and go back to DC, and start to answer questions,” CZ said, referring to the already initiated investigation by the US Federal Trade Commission for allegedly mishandling the money pool. The CEO had allegedly used FTX to bailout other struggling currencies and advertised the exchange heavily using investors’ funds.

    The day after the chat, FTX filed for Chapter 11. Investors are also suing Bankman-Fried and various actors who promoted the exchange. The lawsuit claims the who thing was a Ponzi scheme targeting “unsophisticated investors from across the country.” Bahama’s Attorney General L. Ryan Pinder has also faced public criticism for not taking swift enough action against FTX and SBF.

    Image credits: Changpeng Zhao by Web Summit, Sam Bankman-Fried by Marco Verch

  • Sam Bankman-Fried arrested in Bahamas on U.S. request

    Sam Bankman-Fried arrested in Bahamas on U.S. request

    Comment

    Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, was arrested Monday in the Bahamas after U.S. prosecutors filed an indictment against him.

    “Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government,” U.S. Attorney Damian Williams said in a statement. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”

    FTX and Bankman-Fried have been under investigation by U.S. law enforcement agencies after his company imploded in November, losing billions of dollars of its customers’ money. He was slated to testify in front of the House Financial Services Committee Tuesday.

    Rep. Lee Zeldin (R-N.Y.), a member of the House panel, tweeted Monday night that his committee was “ready to grill” Bankman-Fried “six ways to Sunday.” Zeldin still wanted that opportunity: “Why not allow him to 1st testify tomorrow and answer our many questions?,” he wrote on Twitter.

    Spokespeople for Bankman-Fried, the prime minister of the Bahamas, the attorney general of the Bahamas and the House Financial Services Committee did not immediately respond to requests for comment.

    Bankman-Fried has spent the past few weeks in his Bahamas estate, giving numerous interviews to reporters and making dozens of social media posts trying to explain how his company went from being one of the biggest and most-respected crypto exchanges to filing for bankruptcy after it could not meet its customers’ withdrawal requests. The company owes its top creditors $3 billion, according to bankruptcy filings, and investigators have sought answers on whether it used customer funds to lend money to Bankman-Fried’s investment arm, Alameda Research.

    Bankman-Fried has said he made grave mistakes but has denied any malicious wrongdoing.

    The chief executive brought in to handle the restructuring, John J. Ray, has described a chaotic environment at FTX with “a complete absence of trustworthy financial information.” In prepared remarks for the congressional testimony, Ray said his initial investigation of the company showed “gross mismanagement, excessive leverage” and “failures of internal controls.”

    Bankman-Fried founded FTX in 2019 as an exchange that made money by facilitating trades of cryptocurrencies and taking transaction fees. As the crypto boom unfolded and prices for bitcoin, ethereum and dozens of smaller tokens and coins exploded, the company grew to a valuation of $32 billion and received funding from major investors such as venture capital firm Sequoia and the Ontario Teachers’ Pension Plan.

    As Bankman-Fried, who owned the majority of FTX, saw his own net worth balloon, he amassed political influence as well. He was the second-largest Democratic donor in the 2022 midterm elections. Before FTX’s collapse, Bankman-Fried frequented Capitol Hill, urging lawmakers to regulate the crypto industry. This put him at odds with other crypto industry leaders who oppose government intervention.

    He was also a major proponent of effective altruism and longtermism — philanthropic ideologies that emphasize efficiently using money to help others and considering the impact of philanthropic projects on the lives of future humans who aren’t born yet. He also poured millions into pandemic prevention initiatives.

    Many of the charities and organizations that had took money from him were left in the cold after his company collapsed and his fortune evaporated.

  • Sam Bankman-Fried arrested in the Bahamas, expected to be extradited to U.S.

    Sam Bankman-Fried arrested in the Bahamas, expected to be extradited to U.S.

    Sam Bankman Fried, founder and former chief executive officer of the bankrupt FTX.com exchange, was arrested and taken into custody by the Royal Bahamas Police on Monday at the request of the U.S. government, Damian Williams, the U.S. attorney for the Southern District of New York, said on Twitter.

    See related article: Sam Bankman-Fried says not aware of any improper use of funds in FTX downfall

    Fast facts

    • The arrest was based on a sealed indictment from the Southern District of New York, which will be unsealed on Tuesday morning in the U.S., according to Williams.
    • “The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law,” Bahamian Prime Minister Philip Davis said in a statement, according to a CNBC report.
    • The U.S. will likely request his extradition, Bahamas Attorney General Ryan Pinder said, according to CNBC.
    • The collapse of Bankman-Fried’s FTX exchange caused billions of dollars worth of losses worldwide, bringing accusations of operational misconduct previously undisclosed to users and investors.
    • FTX, formerly one of the world’s largest trading platforms for cryptocurrencies and valued at US$32 billion earlier this year, filed for Chapter 11 bankruptcy protection on Nov. 11, along with Alameda Research and dozens of other affiliated companies.

    See related article: FTX failure a ‘wake-up call’ for security, says former Mt Gox CEO Mark Karpeles 

  • FTX founder Sam Bankman-Fried has been arrested in The Bahamas • TechCrunch

    FTX founder Sam Bankman-Fried has been arrested in The Bahamas • TechCrunch

    Sam Bankman-Fried has been arrested by The Royal Bahamas Police Force following reports that the United States filed criminal charges against the founder and former CEO of cryptocurrency exchange FTX, and is likely to request his extradition.

    The Office of the Attorney General of The Bahamas issued a statement today, which was reported by BNO and other news outlets, that it would hold Bankman-Fried in custody until “a formal request for extradition is made.”

    In a statement, Bahamian Prime Minister Philip Davis said, “The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law. While the United States is pursuing criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere.”

    The office the United States Attorney for the Southern District of New York Damian Williams confirmed the arrest and the fact that it was made “at the request of the U.S. Government, based on a sealed indictment filed by the SDNY.” In a tweet, the office of the SDNY added: “We expect to move to unseal the indictment in the morning and will have more to say at that time.”

    The former billionaire was scheduled to testify tomorrow as a witness before the U.S. House of Representatives Committee on Financial Services, TechCrunch’s Jacquelyn Melinek reported earlier today. The committee is investigating the events that led up to FTX’s implosion, which resulted in the crypto exchange filing for bankruptcy last month and Bankman-Fried being forced to step down as chief executive.

    As TechCrunch previously reported, Reuters reported last month that Bankman-Fried secretly transferred $10 billion in FTX client funds to affiliated trading firm Alameda Research. Bankman-Fried told the publication that the transfer of the funds was a misreading of the “confusing internal labeling.” He has repeatedly claimed ignorance of any wrongdoing.

    Axios reported earlier today that Bankman-Fried “continued to decline to testify in front of the U.S. Senate Banking Committee, and that his lawyers are refusing to accept a subpoena,” according to a new statement from Sens. Sherrod Brown and Pat Toomey.

    This is a developing story. TechCrunch reporter Amanda Silberling contributed to this piece.

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  • Sam Bankman-Fried Agrees to Testify Before House Committee

    Sam Bankman-Fried Agrees to Testify Before House Committee

    The answer as to whether the embattled FTX founder Sam Bankman-Fried will appear before two congressional committees next week is being played out on Twitter.

    In an early-morning post on Twitter on Friday, Mr. Bankman-Fried said he will appear on Tuesday before the House Committee on Financial Services after days of being evasive on the matter. The hearing will focus on the sudden collapse last month of FTX, the cryptocurrency exchange that Mr. Bankman-Fried founded, amid allegations of the misappropriation of billions in customer money.

    Mr. Bankman-Fried, 30, said in a post on Twitter that “there is a limit to what I will be able to say, and I won’t be as helpful as I’d like.”

    Ever since FTX and companies associated with it filed for bankruptcy last month, Mr. Bankman-Fried has been holed up in his residential complex in the Bahamas, where FTX was based. He has granted numerous media interviews either in person in the Bahamas or via Zoom to talk about the collapse of the once popular cryptocurrency trading platform.

    It is unclear if he will appear in person before the House committee.

    Mr. Bankman-Fried did not address a separate request from the Senate Committee on Banking, Housing and Urban Affairs to appear before senators the next day.

    In a letter sent Wednesday, the Senate committee gave Mr. Bankman-Fried until 5 p.m. Thursday to respond to a request that he testify next Wednesday. Committee leaders issued a statement Thursday evening that said Mr. Bankman-Fried’s lawyer had failed to comply with that deadline.

    Senator Sherrod Brown, Democrat of Ohio and chairman of the committee, said in the letter to Mr. Bankman-Fried that if the cryptocurrency trader was unwilling to speak to the committee, he was prepared to issue a subpoena to compel his testimony.

    A spokesman for Mr. Bankman-Fried and his lawyer Mark Cohen declined to comment beyond the Twitter post. Representatives for the Senate committee did not immediately respond to requests for comment.

    Over the past two weeks, Mr. Bankman-Fried has been on something of a media tour, giving interviews to various news outlets and posting messages on Twitter. He has repeatedly said he never intended to defraud anyone — including FTX’s estimated one million customers.

    Mr. Bankman-Fried has said he was not directly involved in trading decisions at Alameda Research, a hedge fund he co-founded and largely owned. Just before FTX’s bankruptcy filing, it was revealed that billions in customer money at the exchange was apparently transferred to Alameda.

    With federal prosecutors and securities regulators investigating the collapse of FTX, the risks are far greater for Mr. Bankman-Fried in testifying before a congressional committee than in talking to the media. Statements that he makes to a reporter do not carry the same legal weight as testimony made before Congress.

    Mr. Bankman-Fried was active in politics, having donated about $40 million to federal campaigns and committees that primarily supported Democrats, according to Federal Election Commission records.

  • FTX Co-Founder Sam Bankman-Fried Arrested in the Bahamas

    FTX Co-Founder Sam Bankman-Fried Arrested in the Bahamas

    Sam Bankman-Fried, the co-founder and former CEO of collapsed crypto exchange FTX, was arrested Monday in the Bahamas, the attorney general’s office for the Bahamas said in a statement.

    The arrest came after the office was notified by the US that it’s filed criminal charges against Bankman-Fried and would likely seek extradition, the office said. Damian Williams, the US Attorney for the Southern District of New York, confirmed the arrest and said an indictment would likely be announced Tuesday.

    “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,” Williams wrote in a tweet Monday afternoon. “We expect to move to unseal the indictment in the morning and will have more to say at that time.”

    Bankman-Fried, who’s better known as SBF, resigned as FTX’s CEO in November after the beleaguered cryptocurrency platform filed for Chapter 11 bankruptcy protection. The Bahamas-based exchange had been one of the biggest players in cryptocurrency, and Bankman-Fried renowned for his lobbying of politicians on both sides of the aisle, but its meltdown has raised doubts about cryptocurrency and has left customers wondering if they’ll ever get their money back.

    Revelations about the holdings and close relationship between FTX and Alameda Research — over a third of the assets on Alameda’s balance sheet were FTT tokens issued by FTX — last month triggered a cascading series of events that led Alameda to cease operations and FTX to file for bankruptcy protection. Billions in investors’ funds seemingly vanished overnight.

    “I was the CEO of FTX. That means I was responsible,” Bankman-Fried said during a live interview at the Dealbook Summit on Nov. 30. Bankman-Fried noted he “wouldn’t be surprised if sometime I am up there talking about what happened to our representatives.”

    The US Department of Justice and other agencies are investigating allegations of fraud and mishandling of funds by FTX. Bankman-Fried has denied committing fraud or purposely misusing customer money.

    The former face of crypto has been asked by US Rep. Maxine Waters, the chair of the House Financial Services committee, to testify at a hearing on the FTX debacle scheduled for Dec. 13. Bankman-Fried responded that he’s willing to testify but that he needed time to prepare.

    Philip Davis, the Bahamas’ prime minister, said that while the US is pursuing criminal charges against SBF, the island nation where the exchange was based is also conducting its own criminal and regulatory investigations into FTX’s collapse.

  • FTX Founder Sam Bankman-Fried to face inquiry by US prosecutors for theft and market manipulation- Technology News, Firstpost

    FTX Founder Sam Bankman-Fried to face inquiry by US prosecutors for theft and market manipulation- Technology News, Firstpost

    FP StaffDec 09, 2022 15:26:27 IST

    Federal prosecutors in the United States will be investigating whether FTX’s founder Sam Bankman-Fried had any role in manipulating the market for two cryptocurrencies back in May that led to their collapse and resulted in the implosion of his own cryptocurrency exchange, as per a New York Times report. 

    FTX Founder Sam Bankman-Fried to face inquiry by US prosecutors for theft and market manipulation

    FTX, which was valued at $32 billion at its peak, filed for bankruptcy protection last month after the collapse of an acquisition deal involving rival exchange Binance prompted billions in withdrawals from customers. Image Credit: AFP

    The prosecutors are looking into whether Bankman-Fried controlled the prices of two interlinked currencies, TerraUsd and Luna, to benefit the entities he controlled including FTX and Alameda Research. Bankman-Fried is also being investigated on charges of theft and misappropriation of funds when he tried to bail out Alameda by giving them FTT tokens and user funds as collateral.

    The investigation is in its early stages, the newspaper said, adding that it is not clear whether prosecutors have determined any wrongdoing by Bankman-Fried, or when they began looking at the TerraUSD and Luna trades.

    Regulators around the globe, including in the Bahamas where FTX is based and in the United States, are investigating the role of FTX’s top executives including Bankman-Fried in the firm’s stunning collapse.

    FTX, which was valued at $32bn at its peak, filed for bankruptcy protection last month after the collapse of an acquisition deal involving rival exchange Binance prompted billions in withdrawals from customers.

    Bankman-Fried, who once ranked as the world’s second-richest millennial after Mark Zuckerberg, last week denied intending to commit fraud but apologised for making a “lot of mistakes” in his handling of the cryptocurrency exchange.

    In recent weeks, U.S. authorities have sought information from investors and potential investors in FTX, according to two sources with knowledge of the requests.

    Federal prosecutors in New York are asking for details on any communications such firms have had with the crypto firm and its executives, including Bankman-Fried, the sources said.

    Bankman-Fried on Sunday said he would testify before the US Congress about FTX’s collapse after he “finished learning and reviewing” the events that led to its implosion.