NO PROVINCIAL COPS

BC

Rob Shaw: Don’t be surprised if Surrey transitions back to the RCMP

NOVEMBER 14, 2022ROB SHAW

Photo: Surrey Police Service

There’s an old axiom in politics: The voters are never wrong. That goes doubly so in Surrey, where voters comprise one of the most important blocks of support in B.C. politics.

As Surrey goes, quite often, so does the government. So the voters there are, to use a highly technical political term, super never wrong.

Keep that in mind if you’re wondering what the BC NDP government will do over the conundrum with Surrey’s on-and-off-again switch to a municipal police force.

The NDP has bent over backwards to accommodate the wishes of the Surrey electorate during its term in office. It scrapped bridge tolls. It backed the taxi sector over ride-hailing companies. It funded an outrageously expensive $4 billion Skytrain line to Langley, after a promise by Doug McCallum garnered public support and swept him into office. And it authorized the original plan to switch Surrey from the RCMP to its own municipal police force, again because of McCallum’s dominant 2018 win.

Much of the approvals were borne out of fear of getting on the wrong side of Surrey voters.

The NDP worried McCallum had tapped into a wellspring of local discontent over transit and policing that it didn’t fully understand. Better to give the resoundingly popular mayor what he wanted, and hope the complicated network of political power brokers in Surrey’s various regional and ethnic communities remained satisfied enough to continue to support local New Democrat MLAs.

But the times have changed.

McCallum was drummed out of office in October’s municipal election, and now faces charges of public mischief over allegations he made misleading claims to police about whether his foot was run over by a pro-RCMP supporter outside a grocery store.

New Mayor Brenda Locke won with a promise to halt McCallum’s transition to a Surrey police force, and restore the RCMP. She reiterated it after her victory on election night, and this coming week the fledgling Surrey police department is expected to halt hiring new officers.

The BC NDP will get dragged into this mess whether it likes it or not, because Solicitor General Mike Farnworth has the final say over whether to allow the switcheroo back to the RCMP.

To try and influence his decision, there is immense pressure being exerted from the police department’s leadership, and its newly hired members.

The Surrey Police Service union recently released a pledge saying 94 per cent of its 275 members will refuse to rejoin the RCMP because they say it’s a toxic work environment, and lacks accountability to the local public, among other things.

The chief of the new police force and the chair of its board have also publicly challenged Locke and claimed she can’t follow through on her promise.

Other critics are pointing to the $100 million already spent on the transition, along with the complicated headache that would be required for municipal officers to transition back into the Surrey RCMP, given the different federal training standards, ranks, pensions and pay scales.

There’s a persuasive factual case that going back to the Surrey RCMP makes no sense. But there was a persuasive factual case there wasn’t enough rider density to justify building a Skytrain line to nowhere too, and that still happened. And the original plan to cancel Surrey RCMP in favour of a new force didn’t look great when you drilled down into the details either.

None of that is going to matter.

When it comes to Surrey and this provincial government, the calculus is simple: Whatever voters voted for in the last municipal election, voters get.

The NDP’s hold of 10 of the 12 seats in the region is not by accident. It is by, at almost every turn, appeasing the voters there in recognition that there are more seats to be won in Surrey than in the entire northern half of the province.

Don’t be surprised if Farnworth approves the transition back to the RCMP.

Rob Shaw has spent more than 14 years covering B.C. politics, now reporting for CHEK News and writing for Glacier Media. He is the co-author of the national bestselling book A Matter of Confidence, and a regular guest on CBC Radio.

rob@robshawnews.com

Sask. RCMP commanding officer questions province's decision to put resources into new marshal service

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Money might be better spent adding resources to RCMP,

says Assistant Commissioner Rhonda Blackmore

Scott Larson · CBC News · Posted: Nov 17, 2022 

Saskatchewan RCMP Assistant Commissioner Rhonda Blackmore says the $20 million the province expects to spend annually on a new marshals service might be better spent on providing more resources for the RCMP. (Trevor Bothorel/CBC)

The commanding officer of Saskatchewan's RCMP is questioning the expense of creating a new law enforcement entity in the province, saying that money might be better spent providing more resources to the RCMP.

Earlier this month, the province announced plans to create a new marshals service, which will have 70 officers and cost $20 million annually.

"Why is money being put into creating a new infrastructure with a new police service when we have the infrastructure available?" RCMP Assistant Commissioner Rhonda Blackmore said during a Thursday panel discussion on rural crime at the Saskatchewan Association of Rural Municipalities midterm convention in Saskatoon.

"We have vehicles, we have buildings, training is already in place, and equipment. All of those startup costs are significant," Blackmore said.

• New marshals service in Sask. will have 70 officers by 2026 at cost of $20M annually

• New Sask. marshals service 'completely unnecessary,' police union argues

The province has previously said the new police service is not meant to take over the duties of the RCMP or municipal forces, but will support them by responding to areas with high crime rates, arresting people with outstanding warrants, and investigating farming-related offences like theft and trespassing.

SARM president Ray Orb said the municipalities association is still learning about the marshals service plan, but anything to help the RCMP is welcome.

"The key, I think, is to be able to reduce the amount of rural crime," Orb said. "We simply don't want someone else to replace the RCMP, but we want to complement them."

Orb said the SARM board will be meeting with Christine Tell, the provincial minister for corrections, policing and public safety, to find out more about the service.

Rural crime

Blackmore said RCMP are seeing an uptick in rural crime, especially around fuel and vehicle theft.

"We've had a report of 61 thefts of fuel this year from fuel tanks and from jerry cans and [an] additional 12 thefts from actual farm equipment. So a significant number, and we're seeing those on the rise," Blackmore said.

Tim Brodt, a farmer and president of the Rural Crime Watch Association, said his association is trying to be the eyes and ears to help RCMP thwart criminal activity.

Tim Brodt is president of the Saskatchewan Rural Crime Watch Association. (Geneviève Patterson/Radio-Canada)

Brodt, who is also a councillor with the rural municipality of Edenwold, said his RM is just 15 minutes from Regina and sees a lot of vehicles pass through the area.

"The big thing is just to watch out for new vehicles and stuff because we are so close to the city," Brodt said. "The biggest part of it is just to get to know your neighbours."

• Fertilizer emission reductions, crime high on agenda at SARM convention

Blackmore said any piece of information can help the RCMP when crime occurs.

"You never know what piece of information … might lead to that ability for us to get a judicial authorization, a search warrant, to be able to search somewhere because we were able to place someone at a location based on the information."

RCMP staffing shortage

Blackmore said her police service is looking at a number of ways to increase the number of RCMP officers in rural areas.

"We're really working hard to work on our recruiting from individuals from Saskatchewan so that we have more applicants going into our training facility," she said.

"Since April 1, 103 new cadets are coming into the province, and there's another 18 that have been posted to Saskatchewan that are still finishing up their training," she said.

Orb said it's nice to have the RCMP training facility in Regina, which could help with recruitment, but law enforcement agencies across the country are having a hard time recruiting at the moment.

"We just simply need more officers," he said.

SARM president Ray Orb says the municipalities association is looking into the new marshals service, but does not want it to replace the RCMP. (Trevor Bothorel/CBC)

One way the force is trying to find new officers is with its Indigenous recruiting unit.

"Not only do we want to better represent the population in our province and have Indigenous RCMP officers, but it also allows those individuals to have policing experience as First Nations move toward self-administered policing in years to come," Blackmore said.

• First Nations leaders question new Sask. marshals service amid calls for better policing

• Prince Albert Grand Council to explore policing options for First Nations through agreement with Sask., Ottawa

Orb said the response time it takes for RCMP to respond to calls is an ongoing issue in rural Saskatchewan.

Blackmore said several factors are at play when responding to calls, like weather and road conditions as well as the priority of each call.

"But at the end of the day, the geography is simply one of the challenges that's not going to change," she said.

"One of the best things about living in rural Saskatchewan is that you have lots of open space and lots of room to move. But it's also one of the challenges that causes us some difficulty when it comes to response times."

Changing the boundaries that each RCMP detachment patrols is also an option being looked at, Blackmore said.

"Some of those boundaries were created in the 1950s and haven't necessarily changed, [while] our population has changed in the years since that time."

Shifting the boundaries could make the process of getting to calls more efficient and quicker, she said.

ABOUT THE AUTHOR

Scott Larson

Scott Larson works for CBC News in Saskatoon. scott.larson@cbc.ca

 

Six years after 'the Blob' in the Santa Barbara Channel, researchers find lasting effects in the kelp forest

by Sonia Fernandez, University of California - Santa Barbara

Average annual percent cover of invertebrate phyla. Gray shading indicates the Blob period of 2014– 2015 when bryozoan, ascidian, sponge (Porifera) and annelid cover declined dramatically. Credit: Communications Biology (2022). DOI: 10.1038/s42003-022-04107-z

The nearshore rocky reefs of the Santa Barbara Channel are dynamic places, with populations of fish, mollusks, algae and other assorted sea life shifting in response to currents, storms and a variety of other conditions. They wax and wane, typically returning to some sort of baseline composition—a kind of standard demographic—after disturbances temporarily disrupt the neighborhood, and then subside.

But there is one event in recent history that continues to be felt: an extreme marine heatwave that rolled through the Pacific Ocean several years ago. Nicknamed "the Blob," it consisted of abnormally warm temperatures that blanketed the waters in the Channel from 2014–2016. The Blob wreaked havoc on reef inhabitants, especially sessile invertebrates—filter feeders attached to the nearshore rocky reefs, such as anemones, tubeworms and clams.

"As sessile animals, most species are permanently attached to the substrate as adults," said UC Santa Barbara graduate student researcher Kristen Michaud, the lead author of a paper that appears in the Nature journal Communications Biology. "They cannot forage for alternate food sources and are highly dependent on the delivery of plankton."

Six years later, the number of these creatures has bounced back, but a closer look reveals that the structure of these populations has changed—an indicator of the effects of global warming on coastal oceans.

A 'perfect storm'

Marine heatwaves in the Santa Barbara Channel are not unheard of.

"They tend to be associated with El Niño events," said Dan Reed, a coastal marine ecologist and co-author of the paper. During these events, surface temperatures across the Pacific Ocean rise by a few degrees, and the typical upwelling of nutrient-rich cold water from the deep is suppressed. This affects the abundance of phytoplankton in the surface waters that rely on these nutrients, and by extension, the many sea creatures that rely on the plankton for food. In the Channel, El Niños tend to come with big winter storms that rip out kelp and scour the rocky sea floor. These events are destructive, but are a normal part of life in the Channel's kelp forests—the sites of UCSB's Santa Barbara Coastal Long-Term Ecological Research (SBC LTER) project.

"What was really different about the Blob was that in 2014 and 2015, we got all this warm water, but without the swell," Reed said. This made it easier to suss out the effects of increased temperature on the kelp forest community without the complicating factors of storm and wave action, he explained.

"The Blob is exactly the kind of event that shows why long-term research is so valuable," said Bob Miller, principal investigator at the SBC LTER and a co-author on the paper. "If we had to react to such an event with new research, we would never know what the true effect was. Because SBC LTER is doing work designed to address how the changes in the environment affect coastal marine ecosystems, we are perfectly positioned to examine unprecedented events like this."

According to Michaud, the anomalous heatwave was a "perfect storm" for the filter feeders. Not only did it result in a reduced abundance of food, but it also stoked the creatures' metabolisms, leading them to require more food as temperatures rose. As a result, the average cover of sessile invertebrates across the study sites declined by 71% in 2015.

Among the filter feeders, there were winners and losers.

"The groups of animals that seemed to be the winners, at least during the warm period, were longer-lived species, like clams and sea anemones," Michaud said, explaining that these species could have traits and feeding strategies that enable them to survive periods of stress and low food availability. The more vulnerable invertebrates were the rapid-growing and shorter-lived types such as sea squirts, sponges and bryozoans—compound organisms composed of a few to many tiny, specialized individuals.

"But after the Blob, the story is a little different," Michaud said. "Bryozoan cover increased quite rapidly, and there are two species of invasive bryozoans that are now much more abundant."

According to the study, the species Watersipora subatra, a recent invader, and the long-established Bugula neritina are now more prevalent in the Channel, post-Blob. There could be several reasons for the new dominance of these species, Michaud said, such as a greater tolerance for warmer temperatures compared to the natives, and more aggressive competition for space against reduced numbers of native bryozoans. The kelp forests, which were surprisingly resilient to the heat in the Santa Barbara Channel, may also have assisted in the bryozoan invaders' quest for space by shading out competing seaweeds in the understory.

Additionally, Michaud and her colleagues found that a native sessile gastropod called Thylacodes squamigerous, or "scaled worm snail," has significantly increased in abundance since the onset of the Blob. With a southern range that extends beyond Baja California, the researchers surmise that the animal may have adaptations to warm temperatures that made it robust to the Blob. Its ability to switch to alternative food sources such as kelp detritus could have given it an edge during the phytoplankton lean years.

The reshaping of the sessile invertebrate populations after the Blob are among the many shifts in the kelp forests that Michaud, Miller, Reed and colleagues at the SBC LTER have been focusing on, particularly with respect to climate change.

"Nothing's permanent in this system," Reed said. "Things fluctuate on the order of months, other things on the order of years." With the decades' worth of continuous data collected at the LTER's study sites, scientists can watch for changes that might otherwise go unnoticed now but in the future could result in more profound effects.

The heat of the Blob may have subsided in the Channel, but the researchers expect the changes it wrought to continue, according to Miller, who has an eye on potential effects on the local food web, particularly with animals like surfperch, which forage for sessile invertebrates in the kelp forest.

"This pattern in the community structure has persisted for the entire post-Blob period," Michaud added, "suggesting that this might be more of a long-term shift in the assemblage of benthic animals—these communities may continue to change as we experience more marine heat waves and continued warming."

More information: Kristen M. Michaud et al, The Blob marine heatwave transforms California kelp forest ecosystems, Communications Biology (2022). DOI: 10.1038/s42003-022-04107-z

Journal information: Communications Biology , Nature

Provided by University of California - Santa Barbara 'Warm Blob' marine heatwave helps invasive algae take over Baja Californian waters

CRIMINAL CAPITALI$M

Christine Duhaime: The wild FTX Ponzi scheme touched Vancouver

NOVEMBER 17, 2022CHRISTINE DUHAIME

“When you bought Bitcoin on FTX, it seems they would “record” that you held Bitcoin on a scrap of paper somewhere, or as with other business records, on Signal’s auto-erasing text messaging app” | Image: stockcatalog, Creative Commons

One struggles to find the words to describe the FTX debacle. 

It’s a wild story – a 30-year-old crypto dude who amassed a personal fortune of $25 billion in one year, and now is worth nothing! His crypto exchange, FTX, filed for bankruptcy in Delaware, with up to $30 billion missing. 

“I f—ed up”, tweeted FTX CEO Sam Bankman-Fried, known as SBF, after the exchange collapsed. That hardly describes it. 

Four people – SBF, his girlfriend Caroline Ellison, Zixiao Wang and Nishad Singh – controlled the whole house of cards. They apparently all lived together in a love nest in the Bahamas, played video games much of the time, and inter-dated with six other roommates. 

The house of cards had two fictional rooms: one was the crypto exchange, FTX, and the other was Alameda Research LLC. SBF led FTX; the girlfriend led Alameda. To make it fun, they decided to create their own currency out of thin air called FTTs. As some Tik-Tokers have pointed out, the FTT stands for “facial tissue token” – nothing more than a Kleenex. 

Many crypto dudes create tokens out of thin air and sell those puffs of air to innocent consumers, sometimes for upwards of $100 per puff. Crypto people call them tokens. In the real world, such things are called securities which, since 1933, can’t be sold to innocent consumers like candy but, well, should I say it? There are no securities law cops around in crypto. 

You didn’t need a VPN to use FTX from Canada. When you bought Bitcoin on FTX, it seems they would “record” that you held Bitcoin on a scrap of paper somewhere, or as with other business records, on Signal’s auto-erasing text messaging app. Like that isn’t sketch. 

SBF would hand the money sent by consumers over to his girlfriend at Alameda to spend. And, she spent. And spent. And spent. He did, too. Billions of dollars gone and things like private jets, luxury housing, fancy cars – the usual toys – started to be acquired. Even the Bahamas love nest was a luxury spend. This wasn’t profits, though, it was money owed to consumers of FTX that was supposed to be held in trust.

Here’s where the pieces of puff come into the picture. 

As FTX sent billions of consumer funds over to the girlfriend at the Alameda entity, she would record it as a loan, backed by pieces of the Kleenex token – the FTT. So, they weren’t really short of funds when people like the due diligence gurus from the Ontario Teacher’s Pension Plan came to invest the pensions of Canadians into FTX because they had billions of pieces of Kleenex recorded. On a scrap of paper. Somewhere. Maybe even in auto-erased Signal messages.

The girlfriend spent some of that money right here in Vancouver, and the girlfriend’s company became the control person of a British Columbia issuer, although mysteriously I couldn’t see where that was disclosed to investors, as required. How she came to be approved to control a British Columbia public company is another mystery.  

Alameda loaned $110 million to the British Columbia public company, Voyager Digital, another bankrupt crypto outfit where consumers lost their money. Voyager Digital is being sued in the U.S., and the plaintiffs are alleging that it was a crypto Ponzi scheme. A lawyer in Vancouver was its director. 

A Ponzi scheme is a financial fraud that induces consumers to invest by promising returns from an allegedly legitimate business, where proceeds from new investors are paid to previous investors, cultivating the illusion of legitimacy, and inducing further investment. Ponzi schemes are presumptively insolvent from inception, as a matter of law, meaning that because they spent investor’s money (rather than protecting it as trust funds), they end up in bankruptcy. 

The Ponzi scheme is named after Charles Ponzi. Over 101 years ago, in Boston, he ran a scheme similar to the FTT puff tokens which FTX sold, only he sold consumers illusive international reply mail coupons, that were also recorded on scraps of paper somewhere. The US Postal Service took him down after figuring out that the scheme was smoke and mirrors – Ponzi was just taking money from investors and giving them nothing in return. Sound familiar?

The wildness of FTX goes on and on. They had no board meetings, they didn’t know their own bank accounts, they have an audit firm that exists in the Metaverse’s Decentraland, they don’t know who works there or anyone’s terms of employment, employees were supplied with drugs. 

The new bankruptcy team has said that they aren’t about to trust anything – statements, financials or records – from the FTX crypto dudes, including SBF. And who can blame them? Like all schemers, they lied to just about everyone, from start to finish. 

SBF is said to be still at the love nest in the Bahamas presumably waiting for the FBI to show up.

Christine Duhaime is a financial crime expert with Fusion Intelligence.

Sam Bankman-Fried Cashed Out

$300M in Previous Funding Round: 

WSJ

In a previously undisclosed detail, most of the

 $420 million raised in October 2021 went directly

 to Bankman-Fried, the Journal reported.

By Nelson Wang
Nov 18, 2022 

"The Hash" panel discusses the parallels and differences between the implosions of crypto exchange FTX and the fall of the most infamous business fraud in American history – the Texas-based energy trading con Enron (ENE)

Former FTX CEO Sam Bankman-Fried personally received $300 million from a $420 million funding round for the company in October 2021, according to a Wall Street Journal report that cited FTX financial records it had reviewed, as well as people familiar with the transaction.

The arrangement was previously undisclosed, with Bankman-Fried telling investors at the time it was partially to reimburse him for money he’d spent to buy out Binance’s stake in FTX a few months earlier, the Journal reported.

In July 2021, Bankman-Fried bought out the approximately 15% of FTX owned by Binance, which was FTX’s first investor. Binance CEO Changpeng “CZ” Zhao tweeted this month that the amount of the buyout was $2.1 billion in Binance’s stablecoin BUSD and FTX’s exchange token FTT.

The October 2021 funding round valued FTX at $25 billion and raised money from financial heavyweights such as BlackRock, Tiger Global, Singapore’s sovereign wealth fund Temasek and Sequoia Capital. A few months later, some of those same investors helped raise $400 million for FTX's U.S. subsidiary at an $8 billion valuation.

According to the Journal, it was unclear what Bankman-Fried did with the $300 million, while FTX's 2021 audited financial statements said the money was being kept by the company for "operational expediency" on behalf of a "related party."

Read more: Temasek Says Its FTX Investment Is Now Worth Zero

Celebs like Tom Brady, Larry David did ads for crypto giant FTX. Now they're getting sued

 – CBC News

November 19, 2022
By Megan Johnson

At its peak, crypto giant FTX was so big it attracted celebrities like tennis pro Naomi Osaka and actor Larry David to promote its brand. Now its collapse is shining a critical light on the industry — and pulling the stars into a lawsuit, too.

A legal complaint filed this week in Miami accuses now-bankrupt FTX and its CEO Sam Bankman-Fried of deceiving consumers into investing.

The lawsuit, which has yet to be certified, also names 12 celebrity “brand ambassadors” as defendants, including Osaka, David, quarterback Tom Brady, model Giselle Bündchen, basketball player Shaquille O’Neal and Canadian businessman Kevin O’Leary.

But the celebrity-studded legal complaint is just one chapter in the saga of Bankman-Fried’s collapsing crypto exchange, which filed for bankruptcy on Nov. 11.

The three-year-old empire — FTX, FTX.US and a trading firm called Alameda Research — once valued at $32 billion US, is fast becoming another cautionary crypto tale.

Naomi Osaka’s outfit during the Miami Open tennis tournament in April displayed the FTX logo. (Wilfredo Lee/Associated Press)

Bankman-Fried has been oscillating from regretful to defiant in tweets posted from his home in the Bahamas, saying he will raise $8 billion to fix FTX and then telling a Vox reporter, “F*** regulators [they] make everything worse.”

The details of the meteoric fall of FTX are emerging in the bankruptcy process.

20) I was on the cover of every magazine, and FTX was the darling of Silicon Valley.<br><br>We got overconfident and careless.

&mdash;@SBF_FTX

‘Complete failure of controls’

John J. Ray, the new court-appointed CEO of FTX, says he has overseen many corporate failures in his 40-year career, including the liquidation of Enron, but said this week: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

London-based crypto blogger David Gerard spoke to CBC’s The Current on Friday and said Bankman-Fried came across as kind of a “nerdy, misunderstood trading genius.”

But behind the scenes bankruptcy filings now show FTX was shuffling money between entities — shoring each up with no backing, said Gerard.

“He knew he was broke. He was going out there nodding and smiling but knew FTX was a dead company,” Gerard told CBC.

As for the celebrity endorsements, Gerard said stars were likely well paid.

Larry David attends the premiere of HBO’s Curb Your Enthusiasm in 2017 in New York. David is one of 12 celebrities named in a lawsuit against FTX. (Charles Sykes/Invision/The Associated Press)

“It was a gig,” said Gerard.

And for investors, he said the draw was the promise “you could get rich for free. Who doesn’t want free money?”

FTX appeared strong and solvent, up until November.

But a balance sheet obtained first by the Financial Times and summarized in the Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware showed FTX had about $1 billion in cash or crypto currency backed by US dollars — which was offset by $9 billion US owed to customers.

Bankman-Fried attends the 2022 Forbes Iconoclast Summit via video on Nov. 3 in New York City. His cryptocurrency exchange FTX has since bled billions of dollars. (Arturo Holmes/Getty Images)

Ray, the new court-appointed CEO, calls the FTX situation “unprecedented” and says the company was in the control of a “very small group of inexperienced, unsophisticated and potentially compromised individuals.”

He calls Bankman-Fried’s ongoing tweets “erratic and misleading public statements.”

All this has left the cryptocurrency industry reeling.

“The more that gets uncovered, the more in awe those of us in the industry are about just how much of a cluster f— … it’s just a complete mess,” said Brian Mosoff, CEO of Toronto-based Ether Capital.

Mosoff says this crash will leave investors fearful.

“You just have this monumental collapse of this enormous and well-respected entity seemingly overnight. Everyone’s a little blindsided,” said Mosoff.

Binance and FTX logos are seen in this illustration. Bankman-Fried blamed himself for FTX’s losses and details of what happened are now emerging in U.S. bankruptcy court. (Dado Ruvic/Reuters)

Ironically, the ad Larry David filmed for FTX — in which his character is portrayed as foolish for rejecting crypto — now seems prescient.

The two-minute spot features David as a curmudgeonly character who travels through time, expressing disdain for inventions ranging from the wheel to coffee to the light bulb, insisting they’ll never catch on. At the end of the two-minute spot, he rejects FTX. Now David is accused of being culpable for Americans’ trust in FTX.
Celebs face damaged reputations

Dave Pouliot, lawyer and Montreal founder of Coinmiles, says he’s not sure if actors can be held accountable — but says they may think twice before endorsing another crypto-token-based venture.

“Their personal reputation risk is at stake here. I think these are actors, they’re being paid to endorse a brand publicly. So whether or not they could be found liable from a civil perspective, but reputational damage will be done. They are not likely to appear in another commercial of an investment nature,” said Pouliot.

His company does not take investor money, instead offering bitcoin rebates to users. But Pouliot says he’d like to see the industry moved to regulate itself, building in better protections and education.

Tampa Bay Buccaneers quarterback Tom Brady attends a news conference after a practice session in Munich, Germany, on Nov. 11. He is one of the celebrities named in a lawsuit against FTX.

(Matthias Schrader/Associated Press)

Part of the problem with FTX, was how great its founder seemed.

Bankman-Fried is a former Massachusetts Institute of Technology physics student who had worked at Jane Street, an elite financial firm. After founding FTX he attracted top Silcon Valley investors and donated millions to politicians, pushing for regulatory change.

It was after the rival owner of the world’s largest exchange questioned FTX’s stability that cracks appeared.

There was a three-day panic sell-off costing FTX billions.

Binance head Changpeng Zhao considered buying FTX but fast backtracked, citing regulator concerns. But further industry regulation is futile, says Mosoff.

“You can tick off as many regulatory check boxes and paper filings as you want. If [bad actors] want to do something nefarious, they’ll find a way to do it,” said Mosoff.

Mosoff says the Mount Gox scandal — a Tokyo-based bitcoin exchange that imploded in 2014 — and Quadriga — the exchange whose founder Gerald Cotten died mysteriously in 2018 taking the keys to $250-million in crypto assets to the grave — did not scare people away for good.

He said the FTX saga will hopefully slow the flocks of “get-rich-quick” investors drawn by Bitcoin’s rise from $4,000 to a $70,000 high in 2020.

“People were blindly sending money in to buy these assets,” he said.

In the end, despite volatility, Mosoff believes when all the current drama shakes out, cryptocurrencies like bitcoin and ethereum will still retain their glitter.

FTX Latest: Firm Starts Asset

 Review as Part of Chapter 11

Bloomberg News

Sat, November 19, 2022 

(Bloomberg) -- FTX Trading Ltd. and about 100 affiliated companies are starting a strategic review of global assets as a part of the Chapter 11 bankruptcy process.

That comes after FTX said it fired three top deputies of former Chief Executive Officer Sam Bankman-Fried, the Wall Street Journal reported.

The collapse of the crypto empire is being transformed into a new political battlefront as Republicans highlight links between Democrats and their one-time benefactor Bankman-Fried.

Missouri Republican Senator Josh Hawley on Friday sent a broad request for correspondence between federal agencies and Democrats, including the Biden administration and the House and Senate Democrats’ campaign committees, regarding FTX and trading house Alameda Research. Hawley said he’s trying to determine whether Bankman-Fried’s more than $37 million in political donations to Democrats may have created pressure on regulators to be lenient with the former crypto executive.

Meanwhile, the chair of a House panel is asking FTX to turn over documents and information by Dec. 1 as part of its investigation into the collapse of the crypto platform.

Key stories and developments:

• FTX Bankruptcy Bombshells Squeeze Crypto Lenders Behind Bull Run

• Wall Street Beat: FTX Lesson for Taking Funds by Debt and Tokens

• FTX’s Point of No Return Was Ellison’s Tweet, Trade Data Show

• Bankman-Fried’s Island Haven Draws Scrutiny After FTX Demise

• FTX Existential Crisis Fix; TMT’s Mega-Cap Problem (Podcast)

(Time references are New York unless otherwise stated.)

FTX Starts Global Asset Review as Part of Chapter 11 (3:18 a.m.)

FTX Trading Ltd. and about 100 affiliated companies are starting a strategic review of global assets as a part of the Chapter 11 bankruptcy process.

“Based on our review over the past week, we are pleased to learn that many regulated or licensed subsidiaries of FTX, within and outside of the US, have solvent balance sheets, responsible management and valuable franchises,” FTX Group’s new Chief Executive Officer John J. Ray III said in a statement.

The FTX companies, known as FTX Debtors, have engaged Perella Weinberg Partners LP as lead investment bank and started preparing some assets for sale or reorganization, according to the statement.

FTX Japan to Develop System for Withdrawals: Asahi (11:54 p.m.)

The Japan unit of FTX has started developing a system that will enable customers to withdraw their funds, the Asahi newspaper reported Saturday, citing company executive Seth Melamed.

FTX Fires Sam Bankman-Fried’s Top Deputies, WSJ Reports (10:07 p.m.)

FTX said it fired three top deputies of former Chief Executive Officer Sam Bankman-Fried, the Wall Street Journal reported.

FTX co-founder and chief technology officer Gary Wang, engineering director Nishad Singh and Caroline Ellison, who ran Alameda Research, were terminated from their positions, the paper said, citing an FTX spokeswoman late Friday. The paper didn’t say if it attempted to reach the executives for comment.

They left those roles after FTX appointed John J. Ray to oversee the bankruptcy, according to the report. The newspaper had previously reported that the executives were aware of the decision to send client money to trading firm Alameda.

Hawley Seeks Democrats’ Emails as FTX Collapse Turns Political (4:04 p.m.)

The collapse of the crypto empire founded by political mega-donor Sam Bankman-Fried is being transformed into a new political battlefront as Republicans highlight links between Democrats and their one-time benefactor.

Missouri Republican Senator Josh Hawley on Friday sent a broad request for correspondence between federal agencies and Democrats, saying he’s trying to determine whether Bankman-Fried’s more than $37 million in political donations to Democrats may have created pressure on regulators to be lenient with the former crypto executive.

Short Sellers Jump on Crypto Stocks Despite Steep Cost of Wagers (2:44 p.m.)

Short sellers have pounced on crypto-focused equities as the digital-assets space crumbles in the wake of FTX’s public implosion.

Crypto stocks are nearly three times more shorted than the average share, even as short sellers are paying almost eleven times as much in financing costs to bet against them, according to data compiled by Ihor Dusaniwsky and Matthew Unterman at S3 Partners.

Traders banking on losses in a handful of crypto stocks, including Block Inc., Coinbase Global Inc., MicroStrategy Inc. and five others, added $55 million worth of new shorts in the week through Friday, according to S3’s analysis. Total crypto short interest for these eight stocks is more than $4.5 billion.

Silvergate Shares Slide as FTX Fallout Attracts Short Sellers (1:16 p.m.)

Silvergate Capital Corp. shares slumped, putting them on pace to lose a quarter of their value this week, as investors punished the bank for its ties to bankrupt FTX.

Shares of the company, which held deposits for FTX, dropped 9.9% to $25.14 at 1:03 p.m. in New York. Thursday’s nearly 11% drop triggered a short-sale circuit breaker. Data from S3 Partners indicates short interest levels in Silvergate are around 11% of the shares available for trading.

FTX Looks at Years of Lawsuits to Recover Billions From Customers (1:12 p.m.)

FTX’s bankruptcy opens the door to creditors’ likely lawsuits looking to claw back billions of dollars in assets that customers and insiders withdrew before the crypto company’s abrupt Chapter 11 filing.

As the company’s advisers scramble to get a handle on its finances, they’ll have a slate of bankruptcy tools available that will allow them to try to wrangle funds back into the FTX empire to try to pay all creditors, though the efforts will likely take years.

Crypto Fallout Leaves US Retiree Benefits Mostly Unscathed (12:35 p.m.)

Most of the largest US state and local government pension funds have dodged the ongoing fallout from the collapse of crypto exchange FTX by not directly investing in digital tokens. For the pensions that have dipped into the risky asset class, the investments represent just a small amount of the retirement funds’ portfolio, and much of the limited exposure is indirect via crypto-related stocks or other investment products.

Nearly all of the top 10 US pension funds by assets said they are not invested in Bitcoin or any other cryptocurrencies, according to an informal survey by Bloomberg.

House Panel Seeks Documents in Investigation on FTX Blowup (11:13 a.m.)

The chair of a House panel is asking FTX to turn over documents and information by Dec. 1 as part of its investigation into the collapse of the once-prominent crypto platform.

“FTX’s customers, former employees, and the public deserve answers,” said Representative Raja Krishnamoorthi, chairman of the House Oversight Subcommittee on Economic and Consumer Policy, in a Friday letter to former FTX CEO Sam Bankman-Fried and John J. Ray III, the new CEO and chief restructuring officer who oversaw the liquidation of Enron Corp.

He requested details on the circumstances surrounding the crypto firm’s spiral into bankruptcy last week, including an explanation of the company’s liquidity issues, how those issues of the Bahamas-based parent company affected its US arm, and details of how customer funds were being used. The subcommittee is also seeking internal documents and communications.

FTX Auditor Defends Work as New CEO Blasts Financials (10:57 a.m.)

The auditors of FTX Trading Ltd. are defending their work, even after the new management of the imploded crypto exchange lambasted the auditors in a stunning bankruptcy filing.

“We believe the financial statements of FTX Trading Ltd. as of 12/31/21 were fairly stated and we stand behind our audit opinion,” New York-headquartered accounting firm Prager Metis CPAs LLC said in a statement to Bloomberg Tax.

--With assistance from Stephen Stapczynski.

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