FTX's Bankman-Fried Goes All-In on "Babe in the Woods" Defense

Inside Sam Bankman-Fried’s Bahamian Penthouse After FTX’s Collapse

That still doesn’t explain why the money was gone. “Where did the $8 billion go?” I ask.

To answer, Bankman-Fried creates a new tab on the spreadsheet and starts typing. He lists Alameda and FTX’s biggest cash flows. One of the biggest expenses is paying a net $2.5 billion to Binance, a rival, to buy out its investment in FTX. He also lists $250 million for real estate, $1.5 billion for expenses, $4 billion for venture capital investments, $1.5 billion for acquisitions and $1 billion labeled “fuckups.” Even accounting for both firms’ profits, and all the venture capital money raised by FTX, it tallies to negative $6.5 billion.

Bankman-Fried is telling me that the billions of dollars customers wired to Alameda is gone simply because the companies spent way more than they made. He claims he paid so little attention to his expenses that he didn’t realize he was spending more than he was taking in. “I was real lazy about this mental math,” the former physics major says….

For Martin Shkreli and Others, ‘No Comment’ Is Not in the Script

It used to be that money managers and entrepreneurs charged with a crime or civil securities fraud would keep their mouths shut and routinely refer any questions to their lawyers.

But in the age of social media, those days are gone. For some media-savvy defendants there is a new script: They jump on Twitter to tell the world they are innocent, even though lawyers think doing so is a terrible — and legally risky — idea.

AT&T to Pay $6 Million to SEC Over Private Calls to Analysts

AT&T Inc. agreed to pay a $6.25 million penalty to settle an unusual lawsuit by federal regulators claiming its executives selectively disclosed nonpublic information about the company’s finances to Wall Street analysts.

The telecommunications giant won’t admit or deny the US Securities and Exchange Commission allegations under a settlement proposal filed Friday by government lawyers with a federal judge in Manhattan. Three AT&T executives who were also named in the agency’s March 2021 suit each agreed to pay a $25,000 penalty, also without admitting wrongdoing.

The SEC alleged that the three executives made private calls to analysts at about 20 firms, disclosing information that included its internal sales data and the impact on revenue. The analysts then reduced their revenue forecasts, the agency said. It said the point of the calls was to avoid a revenue miss for the company.

The comparisons between Madoff and Bankman-Fried are unfair to MadoffThe comparisons between Madoff and Bankman-Fried are unfair to Madoff. Really. The execution of the fraud makes the impact of FTX much worse.

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In a Ponzi scheme the net impact is zero. It is robbing Peter to pay Paul. If you sum everything up, the total pie among those in the scheme is unchanged. You can do an accounting of who got fleeced and who received the fleece, and make restitution. Which is along the lines of what happened with Madoff. Total recovery to this point is 88% of the $19 billion of principal. (Sorry about the profits, those were mostly fake.)

With FTX, everyone is a loser. It’s gone. The bulk of the money was converted into crypto that is now worthless. Or stolen. Money spent on real estate in the Bahamas and the private jets used to fly Amazon packages to home base are rounding errors in the grand scheme of things.

Presenting CoinDesk’s Most Influential 2022

For the past several weeks, the CoinDesk staff has been taking in the fullness of the year’s events and debating the emerging themes and impacts. In October, we asked for the public’s input on our preliminary thoughts and sought nominations. These ideas and names informed our final selection.

To be clear, the Most Influential 2022 is a list, not a ranking. While we acknowledge some of our influencers had an outsize impact this year – and give them more prominence on the list – at some point ranking achievements is unrealistic. And inevitably, not everyone will agree with our choices. Many of our influencers – as befits the crypto bear market we’re in – are bad actors (but influential nonetheless). We make no claim that this is a list of the most admirable or admired.

ABB Settles SEC Charges that it Engaged in Bribery Scheme in South Africa

The Securities and Exchange Commission today announced charges against global electrification and automation technology company, ABB Ltd, for violations of the Foreign Corrupt Practices Act (FCPA) arising out of a bribery scheme in South Africa. The company has agreed to pay a $75 million civil penalty to settle the SEC’s charges.

The SEC’s order finds that, from 2015 through 2017, ABB executives in Switzerland and South Africa colluded with a high-ranking government official at Eskom, an electricity provider owned by the South African government, to funnel bribes to the official through complicit third-party service providers with whom the government official had close personal relationships. ABB paid the service providers more than $37 million to bribe the government official. In return ABB obtained a $160 million contract to provide cabling and installation work at Eskom’s Kusile Power Station.

A Market Hype Cycle Winds Down

Crypto was of course a master class in hype, paying off celebrities like Matt “Fortune favors the brave” Damon, Tom Brady, LeBron James and the confused Larry David. Kim Kardashian even paid a $1.26 million fine for pumping the unregistered token EthereumMax. FTX put its name on the Miami Heat’s stadium and Major League Baseball umpire uniforms. Many celebrities fell for the ruse. Justin Bieber paid $1.3 million for a Bored Ape Yacht Club nonfungible token that’s now worth maybe $70,000. Stupidity.

Mr. Palihapitiya recently claimed that Sam Bankman-Fried of FTX pitched him on an investment but turned him down after he asked for a better board of directors and representations on affiliated-party transactions. Angry SPAC investors almost instantly took to Twitter with hyperbole: “Game respects game” and “@chamath calls out a grift because he was inducted into the grifting hall of fame & elected president just few short years ago.”

Florida’s Politicians: Don’t Say ESG

On December 1, 2022, in a press release full of statements critical of the investment firm BlackRock and its CEO, Larry Fink, Jimmy Patronis, the Chief Financial Officer of Florida, announced that the Florida Treasury would begin divesting $2 billion of Florida state assets currently under management by BlackRock. The statement makes it clear that the Florida official is making the move because of his opposition to the investment firm’s activist positions, especially with respect to ESG issues. This development is the latest step in the process of the increasing politicization of ESG , a pattern that puts companies into the cross-fire as they contend with competing ESG expectations. The Florida CFO’s press December 1, 2022 press release can be found here.