MarketWatch: Understanding the FTX Debacle

Investment Analysis Clubs Destiny Solutions Corporation
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These celebrities might want to keep an eye on the $TSLA investors vs. Elon Musk/Doge trial going on

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https://archive.ph/f7OzE

Tampa Bay Buccaneers quarterback Tom Brady and the Golden State Warriors’ Steph Curry are among the celebrities that a Texas regulator is investigating for potential securities-law violations tied to their promotions of crypto exchange FTX.

The regulator is scrutinizing payments received by the celebrities to endorse FTX US, along with what disclosures were made and how accessible they were to retail investors, Joe Rotunda, director of enforcement at the Texas State Securities Board, told Bloomberg News in an interview.

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:pushpin: Twitter owner Elon Musk said on Monday evening that the company is planning to delay the relaunch of its $8 per month Blue Verified service.

:pushpin: Musk had earlier said he planned to relaunch Twitter Blue on Nov. 29.

:pushpin: Musk said Twitter will “probably use different color check for organizations than individuals.”

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You think you have heard the last of the fraud and theft at FTX and 10 minutes later, wham, another news story about arrogant sociopaths with no consciences stealing the money of naifs who trusted in the “decentralized” defi app.

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4 minute read · November 22, 2022 6:51 PM UTC · Last Updated 16 hours ago

Bankman-Fried’s FTX, senior staff, parents bought Bahamas property worth $300 mln

By Koh Gui Qing

View of the entrance to the condominium complex ONE Cable Beach, in Bahamas
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[1/5] View of the entrance to the condominium complex ONE Cable Beach, a beachfront residence in New Providence, Bahamas, November 18, 2022. REUTERS/Koh Gui Qing

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  • Summary

  • Companies

  • FTX unit bought 7 condos in high-end resort for “key personnel”

  • Bankman-Fried’s parents named owners of $16.4 mln vacation home

  • Bankman and Fried tell Reuters: Seeking to return deed to FTX

NEW PROVIDENCE, Bahamas, Nov 22 (Reuters) - Sam Bankman-Fried’s FTX, his parents and senior executives of the failed cryptocurrency exchange bought at least 19 properties worth nearly $121 million in the Bahamas over the past two years, official property records show.

Separately, attorneys for FTX said on Tuesday that one of the company’s units spent $300 million in the Bahamas buying homes and vacation properties for its senior staff, and that FTX was run as a “personal fiefdom” of Bankman-Fried. No further details were given. read more

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Most of FTX’s purchases registered in the documents seen by Reuters were luxury beachfront homes, including seven condominiums in an expensive resort community called Albany, costing almost $72 million. The deeds show these properties, bought by a unit of FTX, were to be used as “residence for key personnel” of the company. Reuters could not determine who lived in the apartments.

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The documents for another home with beach access in Old Fort Bay – a gated community that was once home to a British colonial fort built in the 1700s to protect against pirates – show Bankman-Fried’s parents, Stanford University law professors Joseph Bankman and Barbara Fried, as signatories. The property, one of the documents dated June 15 said, is for use as a “vacation home.”

When asked by Reuters why the couple decided to buy a vacation home in the Bahamas and how it was paid for – whether in cash, with a mortgage or by a third party such as FTX – a spokesman for the professors said only that Bankman and Fried had been trying to return the property to FTX.

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Celebrity endorsements might not be “bought” in the future if celebreties can be sued for pumping goods or services which are crap. This will be interesting to follow going forward, and as I said yesterday, the bellwether case of someone using their online clout to influence the purchase of junk is now in the courts system: Elon Musk & $TSLA vs. Hundreds of $TSLA shareholders suing Musk for pumping Doge Coin:

https://archive.ph/Mt1eC

Legal experts say the celebrities’ prominence and wealth make them a juicy target for investors looking to recover some of their losses, with the company and co-founder Sam Bankman-Fried essentially broke. FTX put itself and more than 100 affiliates into bankruptcy proceedings this month, shielding them from suits. The promoters, who aren’t in bankruptcy court, have no such protection.

“A lawsuit against celebrities will generate a ton of money, because they will all settle,” said John Reed Stark, former chief of the US Securities and Exchange Commission’s Office of Internet Enforcement. “It’s one thing to make your fans buy your T-shirt with your face on it. It’s another to tout something that causes them to lose their life savings.”

At least three lawsuits have been filed since FTX’s implosion, including one that seeks to represent “thousands, if not millions, of consumers nationwide.” Tom Brady, Gisele Bundchen, Stephen Curry, Shaquille O’Neal and businessman and TV personality Kevin O’Leary are also among the defendants.

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https://www.bloomberg.com/news/articles/2022-11-23/podcast-ftx-horror-stories-abound-in-the-crypto-exchange-s-bahamas-home?srnd=premium

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The Rise and Fall of FTX Cryptocurrency Exchange

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:pushpin: Crypto firm BlockFi filed for Chapter 11 bankruptcy protection in the wake of FTX’s bankruptcy.

:pushpin: It’s the latest in a series of crypto bankruptcies, following FTX, Voyager and Celsius.

Distressed crypto firm BlockFi has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey following the implosion of putative acquirer FTX.

In the filing, the company indicated that it had more than 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion.

In the filing, the company listed an outstanding $275 million loan to FTX US, the American arm of Sam Bankman-Fried’s now-bankrupt empire.

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It is worth noting - and I made a joke about it a week or two back not realizing it was true - that Michael Lewis was embedded with Sam Bankman-Fried and that he would have a book out about the whole thing by Christmas.

Well, I was wrong about the “by Christmas” part, but the rest turns out to be true. Yes, he’s already working on it. Apple is in the running for the movie rights, and it isn’t even a book yet!

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https://archive.ph/Zjz5C

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Bankrupt cryptocurrency lender BlockFi is suing Sam Bankman-Fried over shares in Robinhood that the FTX founder allegedly pledged as collateral earlier this month.

Just hours after filing for bankruptcy protection, BlockFi on Monday sued (opens a new window) Bankman-Fried’s Emergent Fidelity Technologies vehicle, demanding he turn over unspecified collateral BlockFi says it is owed. The complaint was filed in the same New Jersey court where BlockFi initiated bankruptcy proceedings.

The collateral at issue is Bankman-Fried’s stake in Robinhood, the online trading company, according to loan documents seen by the Financial Times. He bought 7.6 per cent of Robinhood earlier this year.

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Sam Bankman-Fried, the founder of FTX, says he donated equally to both Democratic and Republican politicians before his cryptocurrency platform filed for bankruptcy earlier this month, wiping out billions of dollars in customer deposits. And that fact is going to come as a real shock to right-wing political operatives on Fox News who’ve tried to claim Democrats were the only ones beholden to FTX cash.

“I donated to both parties. I donated about the same amount to both parties,” Bankman-Fried said, according to a November 16 phone call published to YouTube by crypto commentator Tiffany Fong on Tuesday.

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TOPLINE

Former FTX CEO Sam Bankman-Fried claimed in a live New York Times interview Wednesday the collapse of his cryptocurrency exchange was driven by numerous mistakes on his part rather than fraudulent activity, as FTX faces allegations it wrongly used billions of dollars in customer funds in a failed attempt to prop up its sister trading firm Alameda Research.

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Did Matt Drudge hire Donald Trump to give him alliterative nicknames to use in headlines?

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Matt Levine is killing it with his coverage of crypto. It’s a shame more crypto enthusiasts are not reading him and examining every cautionary flag he plants. Man is the guy funny! **

His first paragraph right out of the gate and I’m laughing.

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FTX flailing

One thing we know is that, as his crypto exchange FTX and his trading firm Alameda Research were spiraling into bankruptcy, Sam Bankman-Fried was desperately shopping all of their assets to potential bidders to try to keep them afloat. We also know what the list of assets looked like, and it was pretty grisly. “Hello, we have $2.2 billion worth of Serum tokens, do you want them,” Bankman-Fried apparently asked potential rescuers, but the correct answer was “absolutely not.” The list was a lot of venture-capital stakes and weird illiquid tokens that FTX had made up, stuff like that. 1

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Oh man, I’m dying here. Matt Levine should have his own 30 minutes on CNBC late night:

Instead it would have been more useful to offer the Robinhood shares as the most attractive, liquid, normal asset in a bigger package of stuff to a potential rescuer, and that is what Bankman-Fried seems to have done. “Here’s a list of stuff, will you give us a few billion dollars for this list of stuff? Look! The top thing on the list is this nice clean Robinhood stake. Okay that’s enough looking.” You take a wad of crumpled $1 bills and $3 bills and dry cleaning receipts and chewing-gum wrappers, you wrap some crisp $20s around the outside, you hold the wad up in front of people and see what they’ll give you for it. This seems perfectly reasonable.

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https://archive.ph/JBrW9

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Watching this guy lie has given me, at 70 years of age, a new disrespect for sociopaths who seem like the nicest guys on the outside. This guy fooled me for some time. But he didn’t fool Mark Cohodes, that’s for sure:

https://twitter.com/AlderLaneEggs/status/1598379895104671759

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https://archive.ph/GSq8P

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While its Bahamas-based sister-firm FTX.com grew to be the second-largest crypto exchange, FTX US was a fast-growing but relatively small trading platform before its collapse. In January, the firm raised $400 million from investors, valuing the U.S. affiliate at about $8 billion, compared with a $32 billion valuation for FTX.com.

While Bankman-Fried founded FTX US, it was run as a separate company from the international exchange and had more limited offerings for traders. Similar to other U.S. crypto exchanges, it registered as a money-services business, licensed to transfer currency between customers but not subject to the more stringent oversight given to brokerages from agencies such as the Securities and Exchange Commission or the Commodity Futures Trading Commission.

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https://archive.ph/Q4vNv

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**

> Ackman went on to describe the implosion of Bankman-Fried’s crypto exchange FTX, and some of its associated businesses, as “at a minimum, the most egregious, large-scale case of business gross negligence that I have observed in my career.”

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