US accuses 'crypto king' Bankman-Fried of fraud
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US accuses ‘crypto king’ Bankman-Fried of fraud

Madison Franz



US accuses 'crypto king' Bankman-Fried of fraud
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Bahamas court prepares for Bankman-Fried

While we’re watching this committee hearing into the collapse of FTX in Washington DC, there’s activity at the magistrates’ court in Nassau – where Sam Bankman-Fried was arrested by Bahamas police at the request of US authorities on Monday.

It’s thought Bankman-Fried was brought to court on Tuesday morning in a police car, and a Reuters witness has reported his hearing is currently under way.

We will bring you the latest updates as we have them.

Two Bahamian police cars come to the court house in Nassau
Members of Bankman-Fried's family were seen entering the court house
Image caption: Members of Bankman-Fried’s parents were seen entering the court house
Bahamian Police outside the court house

Timeline of the FTX collapse

  • 2 November: Documents leaked online show Alameda Research – a cryptocurrency hedge fund run by Sam Bankman-Fried – was financially unstable, as its reserves were made up of a crypto token created and issued by its sister company FTX
  • 6 November: Changpeng Zhao, boss of FTX rival Binance announces the firm is selling its holdings in FTX-linked coins “due to recent revelations”. The value of FTX crypto coins plummets and panicked customers rush to cash out
  • 8 November: FTX suspends withdrawals from people trying to access their investments
  • 8 November: Zhao announces that Binance is looking to buy FTX to “protect users”
  • 9 November: Binance walks away from the sale, citing concerns about “mishandling of customer funds and alleged US agency investigations”
  • 9 November: Sam Bankman-Fried attempts to gather emergency funding to plug the $8bn shortfall in finances
  • 11 November: Sam Bankman-Fried resigns and files for Chapter 11 bankruptcy – form of bankruptcy in the US that allows a company to keep trading while it reorgansies its debts

Most of Sam Bankman-Fried’s charge sheet will not surprise many who’ve been watching his case for a while.

Accusations that he misused customer funds have been swirling for weeks. The gist of it is this – If I purchased $100 worth of Bitcoin through FTX I would expect it to be safely tucked away inside my FTX digital wallet for me when I needed and wanted to withdraw it.

US authorities say that in fact he was siphoning off my $100 of Bitcoin to his sister company Alameda Research instead. If proven, this was not only against the terms and conditions of his own platform but also illegal.

So the first seven counts are largely related directly to this fraudulent activity, including the seventh count of money laundering – which was allegedly an attempt to hide the illegal movements of funds.

However, the last count has come as a surprise as he is also being accused of “Conspiracy to Defraud the United States and Violate Campaign Finance Laws”.

It’s widely known that Bankman-Fried was a prolific political investor, but this count accuses him of deliberately hiding certain undisclosed political donations.

No other details are being given yet but the charge will prick the ears of critics who have long accused Bankman-Fried of using his wealth as part of lobbying efforts in the US for favourable crypto industry regulation.

We are dealing with a ‘paperless bankruptcy’

Republican ranking member of the Committee U.S. Rep. Patrick McHenry (R-NC) and House Financial Services Committee Chair Rep. Maxine Waters (D-CA) look on, at a U.S. House Financial Services Committee hearing investigating the collapse of the now-bankrupt crypto exchange FTX after the arrest of FTX founder Sam Bankman-Fried
Image caption: Patrick McHenry and Maxine Waters

The new FTX leader John Ray III, who took over after Bankman-Fried, is still testifying at Congress.

He is asked how bad the situation is around the collapse of FTX.

“We are dealing with a paperless bankruptcy” thanks to the way the company was created, he says.

He adds that it is difficult to trace the assets of FTX and the crypto world “really is unprecedented” due to the lack of documentation.

Could take months to secure FTX assets, CEO Ray says

It could take weeks or months to secure all of FTX’s assets as part of its bankruptcy process, the firm’s CEO has told the US Congress.

John Ray III told the House Financial Services Committee many of the company’s assets are held outside of the US.

Asked about their corporate governance, Ray was unflinching in his criticism of the firm he’s winding up – describing a total absence of risk management in its structure.

US House Financial Services Committee in session

Immaturity of the firm exposed

Samira Hussain

Reporting from the US Capitol

Ray just said staff at FTX were using Slack for expense reports and Quickbooks accounting software.

Ray points out there is nothing wrong with Quickbooks, he says it’s a good product, but not for a multi-billion dollar company.

FTX collapse a result of ‘grossly inexperienced’ people running it

The House Financial Services Committee is asking John Jay Ray III questions now, following his written statement.

Asked about the corporate arrangements and oversight of FTX and other businesses in the group, Ray says the group’s collapse appears to come from “absolute concentration of control in the hands of a small group of grossly inexperienced, non-sophisticated individuals”.

Asked if there was any independent governance or separation between the FTX exchange (where customers could swap traditional currency for crypto) and Alameda Research – Bankman-Fried’s firm which traded cryptocurrency assets – Ray says there was no distinction between the operations.

John J Ray III before the US Congressional committee

The counts against SBF, explained

Sam Bankman-Fried has expressed remorse in interviews for the collapse of his company FTX and the money that was lost, but has denied any fraud.

However, the unsealed indictment accuses him of “knowingly having devised and intending to devise a scheme and artifice to defraud” – and details several types of fraud including commodities fraud, wire fraud, securities fraud, and more.

It states that since 2019, Bankman-Fried had misappropriated customer deposits in a “manipulative” scheme.

It also charges the former billionaire with violating campaign finance laws by making donations to candidates running for office in the names of other people and therefore aggregating more than the alloted $25,000 in one year.

His legal team has released a statement saying Bankman-Fried was reviewing the charges “and considering all of his legal options”.

New FTX boss blames ‘grossly inexperienced individuals’

John Jay Ray III

We’ve just heard from John Jay Ray III who took charge of FTX in November, after Sam Bankman-Fried resigned.

The US lawyer is a veteran of messy corporate bankruptcies – most famously presiding as chairman of Enron, as the energy giant – one of the biggest companies in the US before its collapse – worked through the fallout from a massive accounting and financial scandal.

Ray has earned a reputation for successfully fighting for money to repay creditors, for example, by winning legal cases against banks that worked with Enron and were accused of participating in fraud.

He told the congressional panel FTX’s collapse stems from the concentration of control in a small group of grossly inexperienced individuals.

Making his first comments since being installed as CEO, Mr Ray said there were unacceptable management practices and computer systems that gave certain people unlimited access to customers’ information.

When he came in he was starting from a “near-zero corporate infrastructure” without any of the record keeping he would expect to find.

He also outlined there were loans and other payments to insiders in excess of $1.5bn.

FTX ‘old school fraud with new technology’ – congressman

The arrest of Sam Bankman-Fried is “welcome news” but does not “get to the bottom of what happened” at the cryptocurrency exchange, a US congressman has said.

Patrick McHenry, the most senior Republican on the House Financial Services Committee, says it appears Bankman-Fried was engaged in “same old-school fraud, just with new technology”.

He goes on to say he believes in the underlying technology behind cryptocurrencies and other digital assists, saying it is important to separate this out from alleged fraudsters who use them to exploit people.

The new charges

According to a document unsealed by a New York court on Tuesday, prosecutors are charging Bankman-Fried with eight counts. They are:

  • Conspiracy to Commit Wire Fraud on Customers
  • Wire Fraud on Customers
  • Conspiracy to Commit Wire Fraud on Lenders
  • Wire Fraud on Lenders
  • Conspiracy to Commit Commodities Fraud
  • Conspiracy to Commit Securities Fraud
  • Conspiracy to Commit Money Laundering
  • Conspiracy to Defraud the United States and Violate Campaign Finance Laws


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Violent Typhoon Mawar sets sights on Philippines, Taiwan and Japan after blow to Guam




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The powerhouse typhoon is the equivalent of a very strong Category 4 hurricane as it approaches the northernmost island of the Philippines before turning to the north, continuing its damaging path.

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Japan says scrambled fighter jets after Russian planes spotted




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The country’s defence ministry says Russian ‘intelligence-gathering’ aircraft spotted near its coasts along the Pacific Ocean and Sea of Japan.

Japan scrambled fighter jets after spotting Russian “intelligence-gathering” aircraft off its coasts along the Pacific Ocean and Sea of Japan on Thursday, the country’s defence ministry has said.

One Russian aircraft travelled from Japan’s north down along part of its west coast, while the other took a similar route along the opposite coast and returned the same way, the Joint Staff office run under the defence ministry said in a brief statement.

“In response, fighters of the Air Self-Defence Force’s Northern Air Force and other units were scrambled,” it added.

There was no further information on the incident, which comes days after Japan hosted Ukrainian President Volodymyr Zelenskyy at the summit of Group of Seven (G7) – a grouping of rich nations – in Hiroshima city.

Japan has joined Western allies in sanctioning Moscow over its February 2022 invasion of Ukraine, and has warned of the threat posed by Russia.

Its latest security document, which once called for enhanced ties and cooperation with Russia, now warns that Moscow’s military posturing in Asia and cooperation with China are “a strong security concern”.

Last May, Chinese and Russian military jets carried out joint flights near Japan immediately after a meeting of the United States-led Quad grouping in Tokyo. India and Australia are other members of Quad.

And more recently, Moscow has carried out military exercises, including test-firing missiles, in the Sea of Japan.

Russia considers Japan to be a “hostile” country – a designation it shares with all European Union countries, the US and its allies, including the United Kingdom and Australia.

Tokyo had complex relations with Moscow before the invasion of Ukraine in February, and the two sides have yet to sign a post-World War II peace treaty.

Attempts to do so have been hampered by a long-running dispute over islands controlled by Russia, which calls them the Kurils.

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France bans short-haul flights to cut carbon emissions

Madison Franz



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France has banned domestic short-haul flights where train alternatives exist, in a bid to cut carbon emissions.

The law came into force two years after lawmakers had voted to end routes where the same journey could be made by train in under two-and-a-half hours.

The ban all but rules out air travel between Paris and cities including Nantes, Lyon and Bordeaux, while connecting flights are unaffected.

Critics have described the latest measures as “symbolic bans”.

Laurent Donceel, interim head of industry group Airlines for Europe (A4E), told the AFP news agency that “banning these trips will only have minimal effects” on CO2 output.

He added that governments should instead support “real and significant solutions” to the issue.

Airlines around the world have been severely hit by the coronavirus pandemic, with website Flightradar24 reporting that the number of flights last year was down almost 42% from 2019.

The French government had faced calls to introduce even stricter rules.

France’s Citizens’ Convention on Climate, which was created by President Emmanuel Macron in 2019 and included 150 members of the public, had proposed scrapping plane journeys where train journeys of under four hours existed.

But this was reduced to two-and-a-half hours after objections from some regions, as well as the airline Air France-KLM.

French consumer group UFC-Que Choisir had earlier called on lawmakers to retain the four-hour limit.

“On average, the plane emits 77 times more CO2 per passenger than the train on these routes, even though the train is cheaper and the time lost is limited to 40 minutes,” it said.

It also called for “safeguards that [French national railway] SNCF will not seize the opportunity to artificially inflate its prices or degrade the quality of rail service”.

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