With the approval of Bitcoin ETF's in the US, many were expecting to see the gains in Bitcoin's price to continue, but despite optimistic forecasts that the long-awaited ETFs would trigger a bitcoin price surge, the opposite happened - now we're learning why.

Heavy selling by FTX's bankruptcy estate appears to be a major contributor to bitcoin's price drop since the launch of US ETFs.

The Grayscale Bitcoin Trust (GBTC) was among those receiving ETF approval, so they converted their 'Trust' account into an ETF on January 11. 

FTX had purchased 22.3 million shares of GBTC valued at $597 million in October 2022, but when this converted to an ETF the value of FTX's position jumped to around $900 million.

This is when FTX liquidators decided it was time to sell, all of it.  

FTX's bankruptcy estate dumped 22 million GBTC shares worth close to $1 billion since ETFs were approved.

The irony is painful - Bitcoin ETFs finally receive approval, the crypto world celebrates this 'new gateway for mainstream investors' to get in the crypto market, logically many expected a boost in demand and price.

Instead, we're once again helpless and unable to do anything but watch Bankman-Fried's actions lead to consequences for people far outside of FTX. Their liquidation spree officially put a dampener on any immediate ETF boosts to the market. 

The Bright Side...

Now that FTX has sold its full position, pressure to sell may greatly decrease, bringing back the bull market. 

But for now, bears remain in control as today brought more downward movement. 


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Author: Mark Pippen
London Newsroom
GlobalCryptoPress | Breaking Crypto News

"The situation has stabilized, and the dumpster fire is out, announced FTX attorney Andy Dietderich during a hearing at a Delaware bankruptcy court.

According to our source (who has been 100% accurate with his information since we first spoke with them back in December of last year) FTX is in such a better position than anyone thought possible, re-starting the exchange is now on the table. 

"The overwhelming majority of people currently involved with FTX want to see it up and running again" my insider said last night on Telegram, and then elaborated on what a perfect outcome would be for them "This could end up simply being a story of a company with a bad CEO, a problem that was fixed, but still has a happy ending where no business is forced to shut down, all the employees don't lose their jobs, and investors and customers end up with all the money they're supposed to have."

At this point I was a bit stunned... how did this whole situation go from sounding like one of the biggest disasters in the history of business, to something that could actually end with a healthy company, and everyone getting what is owed to them?

Here's how it could happen:

In mid-November when FTX filed for bankruptcy they owed $3.1 billion to its 50 largest creditors and at least $5 billion more to its nine million customers and smaller creditors.

At that time the company was able to find $3.3bn of assets... so, about $5 billion short. Pretty bad. 

I think most people assumed there wouldn't be a dramatic change in those numbers, but those people would be wrong. Since then, Sam was booted out of the CEO position and a new team came in to clean up and go over everything. 

For much of FTX's business there was no traditional record keeping, and it was their job to review emails, notes, chat logs, anything that contained business details, and create the proper accounting to go with them.

They found more than anyone thought possible...

Frankly, after we discovered the new team billing the bankrupt company for over $30 million for a single month of work, I was wondering if they were really doing enough to justify their price tag. Now it's a bit less shocking to see them charge millions if they’re discovering billions in FTX's assets. 

Total funds available to FTX have more than doubled since they took over. In the 5 months they've been there they we're able to locate $800M in cash, along with $600M in “settlements and investments receivable”.

But the biggest surprise: FTX's huge crypto holdings, which then increased in value...

FTX held way more than most people were expecting - $3.3 billion in crypto is currently sitting in FTX controlled wallets.

...and that gained over $1 billion in value as it sits there.

With FTX in very different circumstances than before, new options seem possible...

With the much improved circumstances FTX finds the business in,  they have narrowed it down to two options.

Option 1: Pay back what they can, then close. Use the funds to pay off debts, then shut down FTX for good.  Keep in mind, they're still about $1 billion short, with around $7 billion of the approximately $8 billion owed - people would get most, but not all of what they are owed.

Option 2: Re-open FTX. Conduct marketing research to find out if people would return to trade on FTX, now that Sam was out of the picture.  If this shows it could be successful, and the largest debt holders are willing to wait, they could re-launch the exchange using some of the funds they currently have, and pay some of their debts with what is left.  Then over time the remaining money owed would be paid out of future profits from the business.

Much of it will come down to how the public views the FTX brand, with Sam now removed...

This was a unique situation where even though you could argue that if Sam was even capable of doing what he is accused of, would have required others at FTX to have failed at their job, or been corrupt themselves - it seems like somehow 100% of the blame is directed at Sam, both from the public and law enforcement. 

Sam Bankman-Fried Leaves an NY Court after a second batch of charges against him were added.

Again, I know that's not true, but I have to remind myself that others have even officially pled guilty to felony crimes over this.  FTX co-founder Gary Wang, and ex-Alameda CEO Caroline Ellison both plead guilty to federal fraud charges.

But then they did the opposite of Sam and avoided the spotlight, successfully too - we've heard nothing from or about them since late last year. 

Next time we hear those names it will probably be as they're being used as witnesses against Sam.

In conclusion…

Remember - if they re-open the exchange they would also return user funds by putting those funds back onto the exchange, a powerful trick to get people to log back in.

Between that and my opinion that most people will see Sam's removal as the problems being 'fixed' - I think a successful future is absolutely possible for FTX. 

According to court records that have just been made available to us, there has been nothing less than a  massive army of professionals working non-stop to clean up the mess at FTX. 

They've been tasked with examining every bit of FTX's business, due to the lack of record keeping during the reign of it's former CEO, Sam Bankman-Fried. 

Of course, hiring a large amount people qualified to review complex financial data doesn't come cheap -but no one seems to have expected it would be this expensive either, as these firms have now billed FTX $38 million PLUS expenses...and that's just for January!

Breaking Down The Bill...

The bankruptcy administrators have retained the services of some of the biggest names in law and finance. Let's take a look at who's involved, and what they're each bringing to the table.  

Leading the pack is the law firm Sullivan & Cromwell, which was hired as counsel. Along with them, the administrators have also retained Quinn Emmanuel Urquhart & Sullivan and Landis Rath & Cobb as special counsel for the proceedings. Meanwhile, consultancy firm AlixPartners was brought in to conduct forensic analysis on DeFi products and tokens that were in FTX's possession.

On the financial front, Alvarez & Marsal and Perella Weinberg Partners were tasked with sorting through FTX's accounting records and determining which assets it could sell. According to court filings, Sullivan & Cromwell billed $16.8 million for January, while Quinn Emanuel Urquhart & Sullivan billed $1.4 million, and Landis Rath & Cobb billed $663,995. Collectively, the three firms have over 180 lawyers assigned to the case and over 50 non-lawyer staff, such as paralegals.

What's more, court filings show that Sullivan & Cromwell lawyers and staff billed a total of 14,569 hours for January. The largest project that Sullivan & Cromwell worked on was discovery, followed by asset disposition and asset analysis and recovery.

Interestingly, the U.S. Department of Justice initially objected to FTX hiring Sullivan & Cromwell, citing potential conflicts of interest. Sam Bankman-Fried, FTX's founder, also objected to the bankruptcy administrators hiring the firm, claiming that the law firm's staff had pressured him into filing for bankruptcy in November. However, in late January, a Delaware bankruptcy court judge approved the firm to continue representing FTX.

In early February, Sullivan & Cromwell submitted a bill for $7.5 million for the first 19 days of bankruptcy work after FTX filed in November. The majority of billed time for Quinn Emanuel Urquhart & Sullivan was spent on Asset Analysis and Recovery as well as Avoidance Action – legalese for attempts to undo certain transactions that the debtor engaged in before bankruptcy. As for Landis Rath & Cobb, a significant amount of time was billed for hearings, litigation, and asset disposition.

But that's not all. AlixPartners billed $2.1 million for 2,454 hours of work. Investment bank Perella Weinberg Partners billed $450,000 (its monthly fee), and court documents show that it spent a significant amount of time on developing a restructuring strategy, as well as correspondence with third parties.

According to its billing breakdown, the bank spent a large amount of time working on the sale of FTX assets LedgerX and FTX Japan. In January, a bankruptcy judge gave the sale the green light to create liquidity to pay back creditors.

Last but not least, Alvarez & Marsal billed $12.3 million, the second-largest charge for the month, behind Sullivan & Cromwell. Some of the largest items it billed for were Avoidance Actions, at 3,370 hours, financial analysis, at 1,168 hours, and accounting at 1,106 hours.

In November, shortly after FTX declared bankruptcy, interim CEO John J. Ray III said that the exchange had a "complete failure of corporate controls and such a complete absence of trustworthy financial information." Ray, who also oversaw the liquidation of Enron and Nortel Networks when they collapsed, called the FTX situation "unprecedented".

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Author: Mark Pippen
London News Desk 
Breaking Crypto News

While the scam is over, the story behind it is not. That won't change as long as it's main character remains in hiding. 

The dollar amount allegedly stolen by 'Crypto Queen' Ruja Ignatova is approximately the same amount Bankman-Fried is accused of losing. But Sam's story is downright boring compared with the chaos still happening today in the aftermath of OneCoin.

Both Sam and Ruja are accused of losing $3 - $4 billion of their user's funds, which puts them in a category beyond just running "crypto scams"- they're officially among the "largest scams ever" both in the number of victims, over 3 million, and the total dollar amount taken from them - over $4 billion in USD value, according to the FBI and Europol.

First Time Hearing About This?

The first time I heard of "OneCoin" it was already over, they had just been shut down, and the people behind it were in the process of being tracked down and arrested.

I was shocked - how could a multi-billion dollar crypto scam happen and it wasn't even on my radar?!

Good news, the problem isn't that you weren't paying attention - OneCoin deliberately avoided attracting attention from people in select 'Western' nations.  They feared that law enforcement in these countries were tech savvy, and way ahead when it comes to cases involving crypto. 

Still, today it's not uncommon to find someone who is in the crypto industry (full time) who says they've never heard of OneCoin. But most common seems to be someone remembering OneCoin was 'some kind of scam a few years back' with maybe 10% of people aware of its size - one of the largest scams in history and on the extremely short list of scams with a multi-billion dollar price tag.

It was the US FBI they feared the most, and to avoid them they also avoided scamming US citizens. They believed this was so important that if someone in the US ended up on their site and wanted to join - the signup page would give them an error and close itself.

Ironically, the FBI is leading the way in dismantling OneCoin, and is credited with tracking down many of the executives in custody today.

Comparing Sam and Ruja May Be Unfair... to Sam. He Isn't Nearly as Evil...

There's one huge difference between them  - Sam started a legitimate business. The more money he had the more careless he became.  But those funds were handed over to him for use in his legitimate business, which did exist..

Ruja never intended to start a business - she created a scam. 'OneCoin' was a fraud from the first day it launched, not a single feature ended up to be true.

Her public image was the same, professionally she introduced herself as "Dr Ruja Ignatova" and claimed an educational history of elite colleges, and an employment history at major financial firms.

She is the definition of 'scammer' - so dedicated to it she lives her daily life as the character she created for the single purpose of getting people to believe the opposite of what is really happening. 

Exactly how it appeared on OneCoin's website - but when Forbes was contacted they said OneCoin simply purchased as space, in that space they put an interview, then announced people could read an interview with Ruja in the latest edition of Forbes Magazine.

People behind scams this large don't struggle morally about what they're doing, far from it. They become addicted to the power they feel whenever they step on stage and see thousands of people clapping and cheering for them - the same people they will soon financially ruin. In these short moments they feel like the smartest person on the planet. 

What Puts This Story On a New Level of CRAZY: OneCoin Wasn't Even Real...

To be clear, I am not saying "her coin wasn't as good as she claimed" - I'm saying they didn't even have a coin.

She nicknamed their non-existent cryptocurrency the "Bitcoin Killer', claiming the blockchain technology behind it was so superior, it would soon come to replace Bitcoin.  In reality, she had nothing. No blockchain, no cryptocurrency.

What they did have was the OneCoin App, where people couduse real money to purchase OneCoin, and see it added to their balance - that's the entire system.

The price of OneCoin was also entirely imaginary, having nothing to do with supply and demand they could simply decide what the app would show the public, and of course, they decided to make it look like demand was huge. 

In e-mails obtained by investigators and used in court against OneCoin leaders, Ruja is seen telling the developers building the OneCoin system that:

"We would like to be able to set the price manually and automatically and also control the traded volume."

Legitimate cryptocurrencies cannot control any of those - the market decides the price, and volume is simply the total amount people bought or sold. 

Now That They at Least Appeared to Be Having a Strong Start, They Would Use Their Fake Coin's Fake Success, to Bring in Real Money...

Within the app was also the only 'exchange' where OneCoin could be traded - it had to be this way because trading it anywhere outside of their app would have been technically impossible -  no transferable cryptocurrency existed.  But according to their app, their imaginary cryptocurrency was quickly increasing in value, and that's all they needed to keep users buying more and telling their friends. 

This is where the pyramid aspect comes in to play -users would receive commission from people they invited to OneCoin, then they would also receive commission if that friend brought their friends.

OneCoin users who referred a lot of other users are the only group of people who walked away with a profit, but it's impossible to figure out who was knowingly promoting a scam, and who was a victim believing they were sharing something good. 

OneCoin Held 'Conferences' Attended By Thousands - Here Ruja Would Speak About Blockchain Revolutionizing the World of Finance...

Always booked as the special 'keynote speaker' at her own events, Ruja would give long speeches about what blockchain tech can do, and will do in the future. But back in reality, no blockchain of any kind was being used at OneCoin.

E-Mails obtained by investigators and shown in trials of her partners made it clear - she was the mastermind behind the lies, fully aware of every shady thing they were doing.

In one exchange with co-founder Karl Greenwood, she says “We are not mining actually – but telling people shit" and jokingly referred to OneCoin as 'Trash Coins'. 

The Collapse...

The red flags started to pile up - people discovered that some of OneCoin's directors had previously been involved in other known scams.

Plus, for years people requested any verifiable evidence for any of their claims, and the excuses dragged on so long it became obvious they were hiding something.  They had been telling so many lies for so long that their own statements would occasionally contradict things they said in the past. 

As the inflow of money began to slow down, use of their fake exchange became limited, dividing their members into different levels with each given different trading restrictions. Those who spent a lot on 'educational materials' could trade on more days than those who didn't. 

They were making it impossible for there to be a run of users withdrawing until there was nothing left.

As OneCoin Comes Crashing Down,  Ruja is Nowhere To Be Found...

Some believe she bribed government officials in the 3 countries she had homes in, so they would agree to warn her in advance of any plans against her, or her business.

While that hasn't been proven, we can say that somehow she managed to stay months ahead of authorities, and was long gone when the day came, and OneCoin was forced to shut down as it's leaders were rounded up and arrested.

In those final months without Ruja, OneCoin stayed open for business, with her younger brother Konstantin Ignatov taking over the title of CEO.  But his reign as OneCoin's top boss was a short one, as he was arrested March 2019 in Los Angeles, and it all ending with him pleading guilty to fraud and money laundering charges.

Co-Founder Greenwood was detained in Thailand in 2018 and then extradited to the United States - just 3 weeks ago his case was closed after a deal to plead guilty was reached.  He still faces up to 40 years in prison.

Mark Scott, a former corporate lawyer, was convicted in November 2019 of laundering $400 million for the group by using a network of shell companies, offshore bank accounts and investment funds.

Another man, David Pike, pleaded guilty to committing bank fraud. He was sentenced to two years probation in March.

Not Even her Husband or 9 Year Old Daughter Has Heard from Her Since...

Most shockingly, she left her husband and now 9 year old daughter behind as well.   

They are said to be under 'constant surveillance' as authorities were expecting Ruja to eventually make contact with them.  If she has, it was done without anyone noticing, as the official status of her with the FBI describes her 2019 disappearance has the 'last time anyone has heard from or seen' her.

Is She Now a He?

It's hard to believe that a 3 year long global search with the powers of multiple law enforcement agencies from multiple countries behind it still hasn't found anything - to avoid even the occasional random sighting she either never goes outside, or has drastically changed her appearance. 

One way people believe she could do this would be for her to live as a man.

A professional sketch artists rendering of Ruja as a male, commissioned as part of Tradingpedia's research in to her disappearance.

Simpler methods of disguise have been suggested too, such as plastic surgery to make her face and body thinner, along with dying her hair blonde, would probably also make her unrecognizable. 

Possible Leads...

Sam Bankman-Fried, the former CEO of cryptocurrency exchange FTX, pleaded not guilty to charges of fraud and money laundering on Tuesday. From what you hear in the press, you would reasonably assume there is a mountain of evidence against him - so is Sam crazy? 

Well, he may not be as crazy as it sounds. 

Why Risk More Years in Prison Instead of Negotiating? To Get ZERO Years in Prison...

Approximately 97% of cases are resolved with a plea deal. Sam, like most defendants, had the option to negotiate how long he would stay in prison, in exchange for pleading guilty. 

We don't know what that deal would have been, but with the charges against him, it's reasonable to think he could have reduced his time behind bars by 10+ years. Turning this down is not a decision someone takes lightly. 

If you choose to be among the 3% of people to go to trial, you must be confident that you can win.

Why Sam Believes the Jury Will find Him INNOCENT...

What Sam and his legal team believe they can prove to a jury revolves around the fact that there is no FTX'- there's two of them, completely separate companies, functioning independently. 

No country in the world charges people with crimes committed in foreign nations with foreign victims.  Bankman-Fried can only be charged with crimes he committed while in the US or against US citizens.

This also reminds me of when after his arrest in the Bahamas, he said he planned on fighting being extradited to the United States, then suddenly reversed this and fully cooperated to insure his trial would take place in the US.

Bankman-Fried's Defense is NOT that He Did Not Break The Law, But Rather that Any Alleged Wrongdoing Occurred Outside the US and Involved Foreign Victims...

Meaning that the alleged crimes were committed by a separate, foreign entity and involved funds belonging to users of FTX International. 

Structurally, the companies remained separate, there were no (known) shared accounts, no fiat or crypto spilling from one to the other. The company/exchange for US citizens had its own website at www.FTX.us - then there was FTX International at www.FTX.com.

If someone from the US attempted to sign up on the FTX international site, they would simply get an error message redirecting them to the US site.

With everything separate, it would have been easy for Sam to simply leave all funds related to FTX US alone, and this is exactly what Sam claims happened. 

So Far, There's No Evidence Saying Otherwise...

In every interview, Sam said that 'all funds in FTX US  were "never touched" and they could give users access to it right now if they wanted to.  This statement is included in the testimony he was planning to give Congress, under oath, but he was arrested the day before that was set to happen. 

But let's forget what Sam has to say, he's a proven liar on other related matters. -  what's been found since he lost control of the company? 

John J. Ray is the acting CEO of FTX appointed to oversee the company being dismantled in the bankruptcy process, and he is no fan of Bankman-Fried.

When testifying to Congress a couple weeks ago, he shared in his opening statements his belief that FTX US funds were involved, but later, during the portion where he takes questions from lawmakers, he was asked what they had found so far - and so far, nothing. 

In a previous report, an insider at the company shared that the new CEO believes they just need to dig deeper to find proof that Bankman-Fried did misuse FTX US funds - he just did a better job at hiding it compared to FTX International. It's reasonable to assume that, and the investigation isn't over - but Sam, the one person who would know, just pleaded innocent in court. 

Sam May Have Viewed US Funds as 'Off Limits' From The Start...

Ryan Miller, a member of FTX US's legal team used to work for the person in charge of regulating FTX, the current head of the SEC, Chairman Gary Gensler.  By the time this all happened, he had been with FTX for nearly a year, tasked with being the contact between the company and regulators. 

Sam's mom was a lawyer at one of the top firms in the US with clients like Exxon, JPMorgan, Citigroup, Universal Pictures, Sony and more. His father is considered one of the leading experts in tax law, tax shelters, and tax compliance, and teaches law at Stanford.

Between Miller, someone from the world of financial regulation, and his parents, who would surely advise him of the additional rules and risks attached to US investor funds, it's believable that Sam may have just considered this portion of his businesses off-limits. 

Did Sam Plead Innocent Because he Knows They Won't Find Records of Him Misusing US Funds?

This is the big question. 

Keep in mind, however, that Sam's original lawyers dropped him shortly after FTX's collapse due to his "incessant and disruptive tweeting" when he kept ignoring their advice to stop publicly speaking about the matter. 

Sam clearly believes he has a talent for persuading people, and maybe he once did, but the more he spoke publicly to audiences already suspicious of him, the more hated he became. I'm not sure if Sam ever really accepted that this tactic was a failure and he should have listened to his lawyers. 

So is Sam continuing to be a nightmare client for any legal team to represent? He may be pleading innocent because he believes he's so smart, he can just confuse a jury into thinking he's innocent. 

Or, does he know prosecutors will fail to find the evidence they need to prove the charges against him?

-----------
Author: Ross Davis
Silicon Valley Newsroom
GCP | Breaking Crypto News

There's only two ways this can turn out, both bad, but one massively worse than the other.

Prosecutors from New York have unsealed the indictment against him, charging Bankman-Fried with wire fraud, conspiracy, committing fraud against investors, lenders, and the United States, securities fraud, money laundering, and violation of campaign finance laws.

But things aren't as straightforward as it sounds - there's a real possibility some, maybe even most of these charges, get dropped.

It All Comes Down to This: Did Sam Misuse of Funds Include Those from FTX US - a Separate Company and Website from FTX International?

This could be the difference between life in prison, or 10 years with a chance to get out early with good behavior.

The US will only charge him with crimes he committed while in the US, or against US citizens.

For example, US law enforcement cannot pursue a case where investors from France were victims of fraud committed by a company in the Bahamas.  Actually, no country on earth prosecutes cases under those circumstances.

As covered in previous articles, if someone from the United States visited FTX International (ftx.com) they would find themselves unable to get past the home page, they were blocked from joining, only able to view a message re-directing them to FTX's platform for US citizens (ftx.us).

The platforms did not share storage of funds with FTX International either, separate wallets for crypto, separate banks for fiat currency.

In other words, it would be extremely easy for Sam to exclude US funds from his alleged scheme, which would be the smartest thing someone in his position could do (besides leave everyone's funds alone).

So, are there any signs indicating FTX US funds were left untouched?

While Sam's word means very little and I'm not suggesting you put any trust into him, for some reason in every interview he's done following the FTX collapse, he made sure to tell the audience that the US site was not effected, everyone's funds are still there, and he believes 'it could open to let people withdraw today'.

If that is true, Sam committed no crime while in the US, and committed no crimes against US citizens, and suddenly this becomes a very different thing.

Sam Bankman-Fried Being Taken Into Custody by Police in the Bahamas.

As predicted in previous articles, we see Sam being charged with additional crimes like wire fraud, this so they can still lock him up for something even if the charges directly related to him losing billions don't hold up in court.

Similar to how the FBI lacked evidence against Mafia leaders for murders they knew they had committed, so they started digging through their tax history and locked them up for tax violations.

Are There any Signs Sam Mismanaged Funds Belonging to Both FTX International and FTX US Users?

The acting CEO, John J. Ray, appointed to oversee the company's bankruptcy testified with Congress yesterday, Sam was scheduled to appear but that was canceled with his arrest. 

Ray stated they had "NOT found evidence (that Sam made unauthorized withdraws from US customer funds) of that yet"

This is a HUGE - It means if what Ray said is True, Prosecutors do Not Have Evidence for Several of the Charges Against Him! 

If Sam really did leave US funds alone, several charges get dropped before he ever sets foot in a courtroom.

However, a source on the 'inside' at FTX told me that the new CEO "thinks Sam was so reckless with funds from FTX International he's assuming Sam did the same at FTX US and just hid it better" adding that this was "just a personal opinion, but it's a fact that they're looking into where every dollar or token went, so if Sam did anything he shouldn't have they will find it'.

The new CEO and his team have been digging through the records for nearly a month, and their failure to find anything showing Sam's abuse of funds included the FTX US has me prepared for the possibility Sam told the here.

Remember, FTX US staff included former government regulators - would you hire former IRS tax auditors to work for your company if you were secretly committing tax fraud? Probably not.

It's starting to look like Sam followed the rules when it came to FTX US, all high-profile employees specifically worked for FTX US, and saw no red flags that would stop them from vouching for Sam as a legitimate business person.

Where they went wrong is assuming FTX International was operating similarly to FTX US - when in reality Sam saw FTX International as the place where the rules no longer applied.

Life in Prison?

Yes, really.  Many think life-sentences aren't given for financial crimes, and that's true for the average case of someone stealing thousands or even low-millions from a company they work for.

But when someone defrauds investors at a total cost in the billions, everyone involved is willing to punish  them as severely as legally allowed. Prosecutors seek the maximum sentence, and if guilty, the jury will agree. 

Looking at the other high-profile multi-billion dollar scandals, one thing that immediately stands out is how we refer to them by the company name, 'Enron scandal' or 'Worldcom scandal' for example. With the focus on the companies involved, the names of the actual people behind those scandals are generally forgotten. 

A multi-billion dollar loss with all the blame focused on 1 individual, the only other name that comes to mind is Bernie Madoff, the former head of the NASDAQ stock exchange, who lost billions of investors funds when his investment firm was exposed for not investing in anyone, it was actually the largest Ponzi scheme in history.

If Sam truly belongs in the same category as Madoff, he should expect a similar fate. Madoff received a sentence of 150 years in prison in 2009 - he died there last year.

If found guilty on all charges, Sam could be sentenced for a maximum of 115 years under current law.

An Unplanned, Early Exit?

Sam was politically connected, and many FTX members with empty accounts are wondering how their money is gone, but Sam had millions in 'profits' to donate to politicians.

Sam and Bill Clinton shared the stage at a conference in the Bahamas.

Sam leveraged his political donations for meetings with lawmakers and other VIPS, he was becoming well-connected in Washington DC - many believe Sam may "know too much" and that worries powerful people.

Take this with a huge grain of salt since it is both a conspiracy theory and prediction - but the idea that Sam's former friends may now want him eliminated was on enough people's minds that both 'Sam Bankman-Fried' and 'Epstein' began trending on twitter with hundreds of tweets like:

"He either gets Epstein treatment or sentenced 2 weeks in a luxurious resort jail, no in between."

While this is one of the more extreme possibilities, one thing is clear - there's no 'good outcome' for him from here.

-----------
Author: Ross Davis
Silicon Valley Newsroom
GCP | Breaking Crypto News

In a sign of how seriously this is being taken, the investigation into Biden's appointed head of the SEC comes from a member of his own party, Representative Ritchie Torres (D-NY) is requesting the Government Accountability Office (GAO) to conduct review of the SEC’s actions leading up to FTX’s collapse last month.

The letter largely focuses on SEC chair Gary Gensler for exclusively claiming regulatory powers over crypto exchanges, but failing to properly regulate them...

“If the SEC has the authority Mr. Gensler claims, why did he fail to uncover the largest crypto Ponzi scheme in US history?” Torres wrote. “One cannot have it both ways, asserting authority while avoiding accountability.”

Torres continues to drill into the Chairman "The operating principle of the SEC must be protection for the investing public, rather than publicity for the political appointee in charge" a reminder of Gensler's investigation into Kim Kardashian's tweet promoting a cryptocurrency, concerned that Gensler was preoccupied with inconsequential but high-profile acts while ignoring less glamorous but necessary responsibilities.

The letter goes as far as basically accusing Gensler of causing the SEC to fall apart under his leadership...

One of those demoralized colleagues is SEC Commissioner Hester Peirce, who has remarked in interviews that Gensler's approach to regulation is "not a good way to regulate" and is not surprised to hear that many have "given up on us."

When it comes to crypto, Gensler has consistently avoided explaining the rules or sharing concerns - organizations only discover they violated regulations when enforcement actions are taken against them.

The SEC has the ability to issue a company an 'exceptive order' which basically results from the company's leaders being able to come in and address concerns with SEC officials. If the SEC believes they are operating outside of the rules unintentionally, this exceptive order serves as an agreement that allows the company to fix what is wrong within a limited timeframe, and the SEC agrees to hold off any enforcement actions against them during that timeframe. 

Zero exceptive orders have been issued since Gensler took over, which shows how badly he destroyed what should be a healthy relationship between regulators and the companies they regulate.

Legitimate businesses should never fear requesting the SEC review their plans or practices, to verify they are in compliance with all relevant regulations. Under Gensler, companies fear they'll leave the meeting with an enforcement action against them.

SEC agents who previously believed their role involved providing assistance and guidance, backed by the ability to enforce the rules, have quit in record numbers as their job changed to simply 'punishing people'.

While watching Sam Bankman-Fried's recent media appearances, a theory entered my head - a gut feeling, but a strong one saying "He's been told he has nothing to worry about" and the more I listened with this theory in mind, the more convinced I became. 

Take a look for yourself and tell me if you see a man in fear of spending years in a federal prison - I don't think anyone could hide how stressful that possibility would be, but at no point did Sam show he was feeling any significant amount of stress. Not in some delusional way either - I don't believe his lack of stress comes from him being detached from reality, pretending everything is fine.

What I do see, is someone who believes the worst case scenario isn't going to happen...

These interviews seem like nothing more than an attempt to salvage his public image.   His strategy is more obvious than he seems to be aware of, as uses a classic pity-educing method of 'beating himself up', expressing regret, and taking some blame... but not too much. 

When it comes to blame, he seems to think he found the magic ratio of blame to excuses, as anytime he takes responsibility for doing something wrong, it comes with a reminder that he would never had made these mistakes if he knew the details of Alameda Research's trading positions at the time.

While it was met with disbelief every time he said it, he remained firm on not knowing vital details about Alameda Research, even though it is a company he created, that he has majority ownership of, and is holding a massive amount of the funds from investors he brought in.  I doubt his pitch to investors was 'put a few million in to this company, which I have nothing to do with'. 

My point is, he isn't making these public appearances to claim innocence, or even explain what happened. He's making them with the goal of getting people to say "Sam's a good guy who just made some mistakes".

I can't help but think that the only way being liked becomes more important than being free, is if he's already convinced his freedom isn't at risk.

But in order to objective, i'm open to the possibility that I'm just misreading him.  So I set aside any of my own opinions and 'gut feelings' and re-examined the situation strictly looking at the facts to see if I come to the same conclusion in the end.

Starting with some things worth a deeper look.

Sam's parents are not typical lawyers, and after learning more about them I think it's time to question how involved in FTX Sam's parents may be... 

Those who graduate from Stanford law school are considered among the top of the legal field - so you can imagine what it takes to be hired to teach those students - both of Sam's parents worked as Stanford Law professors. 

What kind of law do they specialize in? The kind that someone in Sam's position would be hiring right now.

The mother worked at Paul Weiss, one of the top firms in the US with clients like Exxon, JPMorgan, Citigroup, Universal Pictures, Sony and more. She is one of the founders of a "secretive Silicon Valley PAC that supports Democratic candidates" called Mind The Gap. 

Sam's father is considered one of the leading experts in tax law, tax shelters, and tax compliance, according to his Stanford bio page. I found this video uploaded by Stanford Law School featuring him speaking on the topic.

In other words, Sam Bankman-Fried was born with the perfect legal team already in the room.

If anyone could make sure Sam's actions stayed within legal grey areas or completely unenforceable by US regulators, it's them.

On this note, Sam has repeated in every interview that none of these questionable actions were done with funds from the US version of FTX. There indeed was a completely separate site for US investors, and if someone from the US tried to access the FTX for the rest of the world, they would find themselves blocked from signing up.

Sam remaining in the Bahamas doesn't help him avoid anything, the Bahamas does have an extradition treaty with the US, so if US regulators charged him with a crime, the government in the Bahamas would arrest Sam and put him on an airplane.  Most seem to believe he's 'obviously guilty' - so why hasn't he been extradited?

But his parents weren't his only source for guidance...

Gary Gensler is the head of the US Securities and Exchange Commission. A man named Ryne Miller was Gensler's lead counsel at his previous role as CFTC Chairman.

Ryne Miller has been working at FTX for a little over one year - now he's their general legal council.

"His industry expertise and leadership will be critical as we forge cooperative working relationships with U.S. regulators" FTX said in an official press release at the time. In that same statement, Ryne Miller confirms he will be "working alongside U.S. regulators" for FTX's benefit.

These are the people who helped make sure the US branch of FTX stayed completely separate from FTX International...

FTX international is registered in Antigua and Barbuda, a small island with no capital gains tax, no wealth or inheritance taxes, and no personal income tax.

In every interview Sam has stated that the US version of FTX could open up to users immediately, and they will find all of their funds there untouched. If true, it's likely Sam violated no US laws.

If only his non-US company broke any laws, and none of it's victims were US citizens - the US justice system isn't interested.

Sam is doing interviews again - which is something no CEO in his position has done before.

Sam's decision to continue speaking publicly has already caused his original lawyer quit,

What Sam doesn't seem to understand is there is no valid reason/excuse for what happened - it's that simple.  Therefore, nothing he says can make it better.

Reaction to his latest interviews have been predictable.

"[Sam is] Either the STUPlDEST man alive, or all those funds donated to lawmaker’s political campaigns is paying off… He’s acting like he’s been told ‘you have nothing to worry about’" Tweeted Crypto Press Association Editor in Chief, Ross Davis.

In this video, Michael Novogratz, Billionare CEO of Galaxy Digital reacts to Sam Bankman-Fried's interview yesterday at The New York Times' DealBook Summit.  Novogratz calls Sam as 'delusional' and believes he "needs to prosecuted".

Video courtesy of CNBC

Official bankruptcy court filings state that FTX owes more than $3 billion to its top 50 creditors. The largest single loan listed in the document is over $226 million, with the rest of the total debt owed falling somewhere between $21 million and $203 million.

The "hack"...

As things unfolded last week a significant number of tokens were moved from the official storage wallets of FTX. It's not surprising that some would suspect a "inside job," but former FTX employees are spreading rumors that the same authorities from the Bahamas government who are investigating the company for possible legal violations are also the thieves.

Analytics firm Chainalysis is tracking the funds that originated from the FTX exchange and say the funds are now being traded from Ethereum to Bitcoin. The FTX hacker once held 228,523 ETH, making them one of the top Ether wallets globally.

...but was there actually no hacker at all?!

To be fair, the rumors started because no one was coming forward to say otherwise.  Millions in crypto gets moved, with no legitimate entity claiming responsibility, the logical conclusion is a hack. 

After coming forward, the Bahamas government confirmed they were indeed behind it - but it wasn't corrupt officials stealing funds. Regulators in the Bahamas officially state they are in possession of the funds which were taken as part of a seizure of assets - to prevent anyone at FTX from doing anything with them.

It all seemed settled, then we learned - this isn't what happened either.

The actual story with the FTX "hack"...

Basically "all of the above".

Some funds were sized by regulators in the Bahamas.  Some funds were stolen. 

Chainalysis tweeted this summary:

"Reports that the funds stolen from FTX were actually sent to the Securities Commission of The Bahamas are incorrect. Some funds were stolen, and other funds were sent to the regulators."

This was confirmed again as FTX tweeted to alert other exchanges to keep an eye out for hacked funds hitting their platforms, so they could then freeze the account before the hackers can make any trades. 

Collateral Damage...

In related news, Solana is "facing difficulties" following the collapse of FTX, due to their strong ties with FTX and its sister company, Alameda Research, which invested in nine Solana projects since December 2020.

So far, Solana has lost over 60% of its value since the FTX saga began, and users have removed about an equal percentage from the total staked supply. In response, Tether announced they will be taking $1 billion USDT it had on the Solana blockchain and moving it to the Ethereum blockchain, as they don't foresee the supply being needed on the Solana blockchain in the near future.

While there's no shortage of die-hard Solana supporters posting that they're taking this opportunity to load up on SOL tokens at a discount, others are saying there's still a big hit to come, with FTX rumored to a large amount of Solana tokens that they will probably be forced to put on the market. 

Sam Bankman-Fried...

Last week he was direct messaging journalists, claiming he has plans to raise billions to make FTX customers 'whole' again - causing the newly appointed FTX CEO (installed to oversee the bankruptcy) to come out clarifying Sam has no role with the company, and isn't authorized to raise funds or speak on FTX's behalf, even calling Sam 'delusional'. 

It seems he caught on that he was doing himself more bad than good, today is day 5 of silence. 

-----------------------
Author: Mark Pippen
London News Desk 
Breaking Crypto News 

One of the most interesting things to watch in the Sam Bankman-Fried (aka SBF) fallout are those who previously praised him, now trying to figure out why they ever said things that sound completely insane today.

In all fairness, while Sam's wrongdoings were deliberate and dishonest - blaming everyone who once worked with, or once simply liked the guy is going a step too far, in my opinion. If the accusations we've heard are true, you can be sure very few people knew the truth

Sam had accumulated a sizeable list of endorsements, and it wasn't made up of a bunch of easily scammed or gullible people...

Even the person who begun FTX's downfall first believed they were legit.  Binance CEO 'CZ' started the avalanche that would burry Sam and FTX by sending out of tweet when he lost confidence in the company - but before that, he trusted Sam and FTX enough to have $2 billion of his assets tied up in their FTX's official token, FTT.

Earning trust within an industry can be a chain reaction, where getting 'in' with one person who is more established than yourself can lead to a dozen more if you play your cards right.  So who was the first 'big name' in crypto to publicly link themselves with Sam? I have no idea, and they aren't to blame for this anyway.

While researching another story I came across this, the only organization that I've seen address the situation by adding disclaimers to their old write-ups about Sam.

The organization is called 80,000 Hours, and they say their goal is to 'provide research and support to help students and graduates switch into careers that effectively tackle the world’s most pressing problems' 80,000 hours refers to the average time someone will spend working in their chosen career in their entire lifetime. 

What was a page on their site containing 10 paragraphs of pure praise for SBF, now begins with a statement:

 Our statement regarding the collapse of FTX

The collapse of FTX is likely to cause a tremendous amount of harm – to customers, employees, and many others who have relied on FTX. We are deeply concerned about those affected and, along with our community, are grappling with how to respond.

Though we do not know for sure whether anything illegal happened, we unequivocally condemn any immoral or illegal actions that may have taken place.

Prior to this, we had celebrated Sam Bankman-Fried’s apparent success, had held him up as a positive example of someone pursuing a high-impact career, and had written about how we encouraged him to use a strategy of earning to give (for example, on this page). We feel shaken by recent events, and are not sure exactly what to say or think.

In the meantime, we will start by removing instances on our site where Sam was highlighted as a positive example of someone pursuing a high-impact career, since, to say the least, we no longer endorse that. We are leaving up discussions of Sam in places that seem important for transparency, for example this blog post on the growth of effective altruism in 2021, and this user story.

In the coming weeks and months we will be thinking hard about what we should do going forward and ways in which we should have acted differently.

If you are out there trying the best you can to use your career to help solve the world’s most pressing problems with honesty and integrity, we also want to say we support and value you.

We are following the situation closely and hope to write more soon.