FORD ADDS WORKERS, TESLA ADDS ROBOTS

Ford adds work crew at Michigan plant as it boosts output of EV pickup


 The Ford logo is pictured at the Ford Motor Co plant in Genk

Tue, December 13, 2022 

DEARBORN, Mich. (Reuters) -Ford Motor Co on Tuesday said it added a third work crew at an assembly plant near Detroit as it boosts production of its F-150 Lightning electric pickup truck.

The U.S. automaker said it added 250 jobs in November at its Rouge plant in Dearborn, Michigan, as a result of the additional crew.

Ford previously said it was targeting annual production of 150,000 Lightning electric pickups by the fall of 2023.

Later on Tuesday, Ted Cannis, head of Ford's commercial vehicle business, told reporters that the unit was seeing "huge demand."

Ford expects electric vehicle subsidies available under the U.S. Inflation Reduction Act could propel even more demand for the company's electric trucks and vans, Cannis said. But many businesses and fleet management companies are still unsure if they qualify for those subsidies, he said.


Ford is the U.S. market share leader for commercial vehicles, which includes the Lightning and an electric version of its Transit van. The company has set a goal to increase Ford Pro's annual revenue to $45 billion by 2025, up 67% from 2019.

(Reporting by Joseph White in Dearborn, Michigan; Editing by Jonathan Oatis and Bill Berkrot)

Ford F-150 Lightning EV wins 

Motor Trend Truck of the Year

Pras Subramanian

·Senior Reporter

Tue, December 13, 2022 

It’s another big step in the mainstreaming of EVs in America.

Motor Trend magazine named the Ford F-150 Lightning EV its 2023 Truck of the Year. It’s the first time an EV has been the unanimous choice for the Truck of the Year award among Motor Trend judges.

It’s not the first time Motor Trend has named an EV an overall winner, last year it awarded the Lucid Air EV as its 2022 Car of the year, and Rivian R1T pickup its truck of the year.

Ford says F-150 Lightning is America’s best-selling electric truck in November, with sales totaling 2,062. Since Ford started delivering the Lightning in May, sales have totaled 13,258. Ford is now the No. 2 EV brand by sales in the U.S. year to date, behind Tesla.

Before tax incentives, the Ford F-150 Lightning starts at $51,974 in base Pro model trim, which features dual motors, 240 miles of range, and 452hp. Going up a trim level to XLT and adding an extended battery (bumping up range to 320 miles and hp to 580) will set buyers back nearly $81,000 before any tax incentives.

Ford F-150 Lightning

Though the Lightning isn’t cheap, Ford’s better-equipped ICE-powered F-150’s aren’t either. The combination of the Lightning’s features, capability, and performance made the choice easy for Motor Trend judges.

“[The F-150 Lightning] offers a host of features no gas- or diesel-powered truck can match. Be it for the campsite, the job site, or the homestead, the Lightning offers up a world of new possibilities for truck owners all while saving them money at the pump and likely at the repair shop, too. It's a bargain many are going to find exceedingly easy to live with,” Motor Trend’s Scott Evans writes.

Ford says it is ramping up production and deliveries of the F-150 Lightning at its Rouge complex in Dearborn, Michigan, with the target being 150,000 Lightning EVs delivered by the end of next year.

The electric F-150 is such a smash hit, Ford's ramping up production again — and its scale shows why it's not sweating the startups

Nora Naughton
Tue, December 13, 2022 


F-150 Lightning at Ford's Dearborn assembly factory.Nora Naughton

Ford added a third shift at the F-150 Lightning factory last month.


It now plans to build 150,000 Lightnings annually at the EV factory.


Startup production goals lag far behind legacy competitors like Ford.

Ford's F-150 Lightning factory in suburban Detroit is now operating on three shifts, ramping up to full capacity as the carmaker rushes to meet demand for the all-electric pickup just named Motor Trend's Truck of the Year.

Ford is adding this new production shift at the same time it completes two large additions to the factory to increase square-footage by some 300,000 square feet, plant manager Corey Williams told reporters at the factory Tuesday morning. The third shift started work late last month, he said.

The ultimate goal is for Ford to build 150,000 F-150 Lightnings a year at the Dearborn, Michigan factory, double the company's initial production target. Ford set into motion plans to increase its Lightning build capacity after it had to cap reservations at 200,000 late last year. Through November, Ford had sold 13,258 F-150 Lightning trucks.

More than a sign of the truck's popularity, this lofty production goal highlights legacy automakers' advantage over newcomers like Rivian and Lucid when it comes to scaling up. While companies like Ford and GM leverage existing manufacturing footprints and a century's worth of experience building vehicles, startups are struggling with the tricky task of mass-producing vehicles for the first time.

Rivian had built 14,317 of its electric pickup trucks, SUVs, and delivery vans through the end of the third quarter, and is targeting annual production around 25,000 vehicles. Lucid reported it had built 3,687 vehicles in the first nine months of 2022, and is aiming for between 6,000 and 7,000 vehicles for the year.

Ford's global EV sales target for 2023 is 600,000 vehicles, and CEO Jim Farley has said he wants his company to overtake Tesla as the number one seller of electrics in the US. The expansions at Ford's Rouge Electric Vehicle Center are just part of a $30 billion shift toward electric vehicles. Earlier this year, Ford restructured its business to place more focus on its electric division, now called Ford Model e.

ANOTHER WITCHHUNT

Fauci responds to DeSantis’s call for COVID-19 vaccine investigation



Julia Mueller
Wed, December 14, 2022

Outgoing White House medical adviser Anthony Fauci said Wednesday that he “doesn’t have a clue” what Florida Gov. Ron DeSantis hopes to accomplish by calling for a state grand jury investigation into alleged “crimes” related to COVID-19 vaccines.

“I don’t have a clue … what he’s asking for. I mean, we have a vaccine that, unequivocally, is highly effective and safe and has saved literally millions of lives,” Fauci, who is also the director of the National Institute of Allergy and Infectious Diseases (NIAID), told CNN’s Kate Bolduc.

DeSantis on Tuesday announced his office had petitioned for a grand jury investigation into alleged “crimes and wrongdoing” against Floridians “related to the development, promotion and distribution” of the COVID-19 vaccines.

The governor also shared plans to establish Public Health Integrity Committee due to distrust of the Centers for Disease Control and Prevention (CDC), saying “anything they put out, you just assume, at this point, that it’s not worth the paper that it’s printed on.”

Fauci on CNN cited recently released research by the Commonwealth Fund, which found that COVID-19 vaccines from biotech companies Pfizer, Moderna and Johnson & Johnson collectively saved over 3.2 million American lives and averted more than 18.5 million hospitalizations in two years of the pandemic.

“So what’s the problem with vaccines? I mean, vaccines are life-saving. So, quite frankly … I’m not sure what they’re trying to do down there,” he said.

“It has been politicized and it has been politicized in a way that has actually cost lives,” Fauci added of the vaccine, calling the COVID-19 virus the “common enemy” that Americans should unite around regardless of party, and in spite of mis- and disinformation.

“We’re all in this together. We’re all human beings and we’re all susceptible to disease that can kill us. … When people’s lives are being lost about this, maybe that’ll shake people up enough to realize that we’ve got to start pulling together and not against each other,” Fauci said.

Fauci is stepping away from his government roles this month to pursue the “next chapter” in his career — but that hasn’t stopped top GOP lawmakers from vowing to investigate Fauci over the U.S.’s COVID-19 response.

Republicans have shared plans to probe the origins of the virus and subpoena the NIAID official when they take control of the House in the next Congress.

Fauci back in August dismissed suggestions that the Republican threats influenced his decision to step away from government.

“I have nothing to hide at all, despite the accusations that I’m hiding something. I have nothing that I could not explain clearly to the country and justify,” Fauci told The Hill last month.

 CRIMINAL CRYPTO CAPITALI$M

UPDATED

'O.C.' star and crypto critic Ben McKenzie tells lawmakers that the crypto market is the 'largest Ponzi scheme in history'

Carla Mozée
Wed, December 14, 2022 

Actor and author Ben McKenzie Schenkkan testifies at a Senate Banking Committee hearing on December 14, 2022.CNET via YouTube

The crypto market is the "largest Ponzi scheme in history," actor-turned-crypto critic Ben McKenzie said Wednesday.

McKenzie, who co-wrote a book about crypto, testified to the Senate Banking committee about the fall of FTX.

Million of Americans who have invested in cryptocurrency have been "sold a bill of goods," he said.

The collapse of FTX highlights the harm done to millions of people worldwide who have invested in the cryptocurrency market, an industry dependent on "hype" and "fraud," actor-turned-crypto critic Ben McKenzie told lawmakers in Washington on Wednesday.

"The demise of FTX and Alameda represent the most spectacular corporate downfall since Bernie Madoff's Ponzi scheme imploded in the wake of the Great Financial Crisis," said McKenzie at the Senate Banking Committee hearing examining last month's implosion of FTX and Alameda Research, a related crypto trading firm.

McKenzie was referring to financier Madoff who in 2009 was convicted of running a decades-long Ponzi scheme that conned his investors out of $65 billion and which collapsed during the 2008 financial crisis.

FTX founder and former CEO Sam Bankman-Fried was arrested this week in the Bahamas and faces multiple civil and criminal charges in the US. FTX, meanwhile, is seeking bankruptcy protection.

McKenzie, who shot to fame starring on the early-2000s TV show "The O.C.," was invited to testify at the Senate hearing as he's co-written a book about cryptocurrency and has emerged as a vocal skeptic.

"Surveying the cryptocurrency mania during the summer of last year, I came to a terrifying conclusion: the supposedly multi-trillion dollar industry was nothing more than a massive speculative bubble bound to pop," he told lawmakers. Worse than that, he had "myriad reasons" to believe there was a crypto bubble that was built on a foundation of fraud, he said.

"Investment contracts that are effectively valueless are often described as Ponzi schemes, which are regulated under American law by the Securities and Exchange Commission. In my opinion, the cryptocurrency industry represents the largest Ponzi scheme in history," said McKenzie, who co-wrote "Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud". The book is set for release in July 2023.

"In fact, by the time the dust settles, crypto may well represent a fraud at least 10 times bigger than Madoff," he said. Madoff was sentenced to 150 years in prison and died in April 2021.

Tens of millions of Americans have been "roped in" by the crypto market which makes it a concern for lawmakers, said McKenzie, who holds a degree in economics and foreign affairs from the University of Virginia.

As well, he said FTX investors worldwide have lost access to the money they had entrusted to FTX and it's unclear whether they will ever get it back.

"I believe they and the estimated 40 million other Americans who have invested in cryptocurrency have been sold a bill of goods," said McKenzie. "They have been lied to, in ways both big and small, by a once-seemingly mighty crypto industry whose entire existence in fact depends on misinformation, hype, and yes, fraud."

The first lie is that cryptocurrencies are not currencies "by any reasonable economic definition," McKenzie said at the hearing led by Ohio Democrat Sherrod Brown.

Ben McKenzie testifies against crypto in Senate hearing


Judy Kurtz
Wed, December 14, 2022 at 2:38 PM·1 min read

An actor from “The O.C.” is speaking out against cryptocurrency — testifying at a Senate Banking Committee hearing focused on the collapse of FTX.

Ben McKenzie told lawmakers on Wednesday that the estimated 40 million Americans who invested in cryptocurrency “have been sold a bill of goods.”

“They have been lied to, in ways both big and small, by a once seemingly mighty crypto industry whose entire existence in fact depends on misinformation, hype and, yes, fraud,” McKenzie said.

The 44-year-old performer played Ryan Atwood on the early aughts Fox teen hit “The O.C.”

The self-described “former teen idol” has since become an outspoken critic of cryptocurrencies, raising questions about high-profile celebrity endorsements of digital currencies.

“The first lie is the most obvious: Cryptocurrencies are not currencies by any reasonable economic definition,” McKenzie said.

“Anyone with even an undergraduate degree in economics, such as myself, can tell you that money serves three functions: medium of exchange, unit of account and store of value. Cryptocurrencies cannot do any of the three well, and they have no hope of ever doing so,” McKenzie continued.

“Surveying the cryptocurrency mania during the summer of last year, I came to a terrifying conclusion,” McKenzie said. “The supposedly multitrillion-dollar industry was nothing more than a massive speculative bubble bound to pop. Worse than that, I had myriad reasons to believe that the crypto bubble was built on a foundation of fraud.”

The former actor’s testimony comes after the Securities and Exchange Commission alleged that FTX CEO Sam Bankman-Fried diverted customer funds from his cryptocurrency exchange to support his crypto trading firm, Alameda Research, and used customer funds to make real estate purchases and political donations. Bankman-Fried was arrested earlier this week.

SO THIS IS A LIVING WAGE

New FTX CEO John Ray is making $1,300 an hour to clean up Sam Bankman-Fried's collapsed crypto empire

Morgan Chittum
Wed, December 14, 2022 

John Ray, the new CEO of FTXNathan Howard / Stringer

New FTX CEO John Ray is making $1,300 an hour to oversee the firm's bankruptcy, according to filings.

The restructuring exec reportedly billed 156 hours in a two-month span in a previous bankruptcy case, raking in $120,582.

Ray accused the defunct exchange of "old-fashioned embezzlement" in his congressional testimony.

FTX's new chief executive officer John Ray is making $1,300 an hour working on the bankruptcy and restructuring of the failed cryptocurrency exchange, according to court filings.

After FTX filed for bankruptcy protection and reportedly lost $8 billion of customer money in early November, Ray replaced disgraced founder Sam Bankman-Fried as CEO. The veteran restructuring executive has helped oversee insolvencies at several large companies, including defunct energy giant Enron and telecom company Nortel.

"I've just never seen anything like it in all 40 years of doing restructuring work and corporate legal work," he said of FTX in a congressional testimony on Tuesday, accusing the exchange of "old-fashioned embezzlement."

When Ray led Enron through its restructuring process as chairman and CEO almost two decades ago, he collected roughly $1.2 million on an annualized basis. In another instance, he reportedly billed 156 hours in a two-month span during a bankruptcy case, netting $120,582 in that time, according to CNBC.

Ray slammed former FTX execs, adding that the exchange was run by "very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls necessary for a company that is entrusted with other people's money or assets."

It could take months to secure all the company's assets following its downfall, Ray said. And in terms of repaying creditors, that could take much longer. Enron's proceedings, for example, carried on for over a decade.

"We've been able to secure over $1 billion of assets to cold wallets in a secure location," Ray said. "It's an ongoing process. [It] will take weeks if not months to secure all the assets."

Exclusive-How a secret software change allowed FTX to use client money



Tue, December 13, 2022
By Angus Berwick, John Shiffman and Koh Gui Qing

(Reuters) - In mid-2020, FTX's chief engineer made a secret change to the cryptocurrency exchange’s software.

He tweaked the code to exempt Alameda Research, a hedge fund owned by FTX founder Sam Bankman-Fried, from a feature on the trading platform that would have automatically sold off Alameda's assets if it was losing too much borrowed money.

In a note explaining the change, the engineer, Nishad Singh, emphasized that FTX should never sell Alameda's positions. "Be extra careful not to liquidate,” Singh wrote in the comment in the platform's code, which it showed he helped author. Reuters reviewed the code base, which has not been previously reported.

The exemption allowed Alameda to keep borrowing funds from FTX irrespective of the value of the collateral securing those loans. That tweak in the code got the attention of the U.S. Securities and Exchange Commission, which charged Bankman-Fried with fraud on Tuesday. The SEC said the tweak meant Alameda had a “virtually unlimited line of credit.” Furthermore, the billions of dollars that FTX secretly lent to Alameda over the next two years didn't come from its own reserves, but rather were other FTX customers' deposits, the SEC said.

The SEC and a spokesperson for Bankman-Fried declined to comment for this story. Singh did not respond to several requests for comment.

The regulator, which called the exchange “a house of cards,” alleged Bankman-Fried concealed that FTX diverted customer funds to Alameda in order to make undisclosed venture investments, luxury real estate purchases, and political donations. U.S. prosecutors and the Commodity Futures Trading Commission also filed separate criminal and civil charges, respectively.

The complaints – along with previously unreported FTX documents seen by Reuters and three people familiar with the crypto exchange – provide new insights into how Bankman-Fried dipped into customer funds and spent billions more than FTX was making without the knowledge of investors, its customers and most employees.

Police in the Bahamas, where FTX was based, arrested Bankman-Fried on Monday evening, capping a stunning fall from grace for the 30-year-old former billionaire. His company collapsed in November after users rushed to withdraw deposits and investors shunned his requests for more financing. FTX declared bankruptcy on Nov. 11 and Bankman-Fried resigned as chief executive.

Bankman-Fried has apologized to customers, but said he didn't personally think he had any criminal liability.

The auto-liquidation exemption written into FTX code allowed Alameda to continually increase its line of credit until it “grew to tens of billions of dollars and effectively became limitless,” the SEC complaint said. It was one of two ways that Bankman-Fried diverted customer funds to Alameda.

The other was a mechanism whereby FTX customers deposited over $8 billion in traditional currency into bank accounts secretly controlled by Alameda. These deposits were reflected in an internal account on FTX that was not tied to Alameda, which concealed its liability, the complaint said.

“SAFE, TESTED AND CONSERVATIVE”

As Bankman-Fried grew FTX into one of the world’s largest crypto exchanges, consumer protection was a central tenet of his pitch for crypto regulation in the United States. Bankman-Fried stressed this theme in countless statements to customers, investors, regulators and lawmakers. FTX’s auto-liquidation software would protect everyone, he explained.

In congressional testimony on May 12, he called FTX’s software “safe, tested and conservative.”

“By quickly unwinding the riskiest, most undercollateralized positions, the risk engine prevents build-up of credit risk that could otherwise cascade beyond the platform, resulting in contagion,” Bankman-Fried testified.

He did not tell lawmakers about the software change to exempt Alameda. Indeed, he told investors that Alameda received no preferential treatment from FTX, the SEC complaint said.

Bankman-Fried had directed subordinates to update the software in mid-2020 to enable Alameda to maintain a negative balance on its account, the SEC complaint said. No other customer account at Alameda was allowed to do so, the complaint added. This would allow Alameda to keep borrowing more FTX funds without the need to provide more collateral.

In software tweaks made in August 2020, Alameda was designated as the “Primary Market Maker” or “PMM,” according to a Reuters review of its codebase. Market makers are dealers who enable trading in an asset by standing ready to buy and sell it.

To explain the change, Singh, the chief engineer, inserted a comment into the code: “Alameda would be liquidating, prevented.” He included a warning “not to liquidate the PMM."

Only Singh, Bankman-Fried and a few other top FTX and Alameda executives knew about the exemption in the code, according to three former executives briefed on the matter. A digital dashboard used by staff to track FTX customer assets and liabilities was programmed so it would not take into account that Alameda had withdrawn the client funds, according to two of the people and a screenshot of the portal that Reuters has previously reported.

Bankman-Fried's house of cards "began to crumble" in May 2022, the SEC complaint said.

As the value of crypto tokens plummeted that month, several of Alameda's lenders demanded repayment. Since Alameda didn't have the funds to meet these requests, Bankman-Fried directed Alameda to tap its "line of credit" with FTX to obtain billions of dollars in financing, the complaint said.

Ultimately, when FTX customers dashed to withdraw their money this November, spooked by media reports about the company's financial health, many discovered that their funds were no longer there.

(Reporting by Angus Berwick in London, John Shiffman in Washington, and Koh Gui Qing in New York; Editing by Paritosh Bansal and Chris Sanders

Incoming FCA Chair Calls Crypto Firms Like FTX 'Deliberately Evasive'



Camomile Shumba
Thu, December 15, 2022 

Crypto firms like FTX are "deliberately evasive", the incoming chair of U.K. Financial Conduct Authority (FCA), Ashley Alder, told the Treasury Committee in a meeting on Wednesday.

Alder told the committee that he will be starting with the U.K. financial regulator on Feb. 20. Alder is currently the CEO of Hong Kong’s Securities and Futures Commission (SFC), and once he starts at the FCA he will be working alongside FCA CEO Nikhil Rathi.

"They (crypto firms) are a method by which money laundering happens at size," Alder said.

Crypto firms have been facing increased scrutiny lately following the collapse of crypto exchange FTX, which was the fourth largest exchange at one point. Even Binance, which is currently the biggest exchange with a volume of over $7 billion according to CoinGecko data, is being investigated for money laundering violations and could face criminal charges.


The FCA is currently registering crypto companies so that they can operate in the country and comply with its anti-money laundering rules. It is hoping to get more powers to regulate the crypto sector and ensure consumers are protected once the Financial Services and Markets Bill passes but currently warns people that they should be prepared to lose all their money when investing in crypto.

"I think more importantly from a public's perspective, is that the way in which they bundle a whole set of activities which are normally segregated, in conventional finance gives rise to massively untoward risk," Alder said at the meeting talking about crypto firms.

Hong Kong, where Alder currently resides and takes inspiration from, moved to put in place strict licensing rules for crypto firms that meant they can't serve retail clients in May last year.

CoinDesk reached out to the FCA for a comment.

Read more: Proposed UK Rules Will Make Advertising Crypto a Lot Harder, Industry Warns

FTX Fiasco Fails to Mute Congress’s Biggest Crypto Enthusiasts

REPUBLICANS OF COURSE




Steven T. Dennis and Laura Davison
Wed, December 14, 2022 

(Bloomberg) -- The implosion of Sam Bankman-Fried’s FTX empire hasn’t dimmed the enthusiasm for digital currency among crypto fans in the US Capitol.

With skepticism about cryptocurrency growing among members of Congress, a handful of lawmakers, including Republican Senators Cynthia Lummis of Wyoming and Pat Toomey of Pennsylvania, are trying to convince colleagues that the FTX fiasco doesn’t diminish the underlying value of digital currency.

“There are two conversations going on. One is FTX, and the other is digital assets,” Lummis said on Bloomberg Television’s “Balance of Power with David Westin. “We’re conflating the two in some of these discussions.”

Still, FTX has wedged open a split between some Republicans and Democrats. Since last month’s collapse of FTX and other turmoil in the crypto market Democrats are more likely to say that the fraud charges against Bankman-Fried demonstrate a pattern of unsavory behavior in the industry, while many Republicans see FTX as an outlier.

At a Tuesday House hearing on FTX, Representative Brad Sherman, a California Democrat, who has long wanted to ban cryptocurrencies, said his fear is that people will look at Bankman-Fried as one snake in a Garden of Eden, but that, in reality, “crypto is a garden of snakes.”

Representative Tom Emmer of Minnesota, the incoming GOP whip and co-chair of the Blockchain Caucus, said during the same hearing that FTX represented a business failure and a crime, “not a failure of technology.”

“For the most engaged members of Congress on crypto policy, the FTX collapse remind us of why we care so deeply about this technology — decentralization is the point,” Emmer said.

Another House Republican, Patrick McHenry, who is poised to lead the Financial Services Committee next year, said he’s “a believer in digital assets and the potential it has as a foundation stone of the next internet.”

Toomey, the top Republican on the Senate Banking Committee, held as much as $45,000 in digital assets as of last year, according to the most recent financial disclosures on record. He said he continues to see plenty of value in digital currencies, adding that they should be regulated, starting with stablecoins, which are backed by underlying assets like dollars.

Echoing Lummis, Toomey, who is retiring at the end of this term, said at a Banking Committee hearing on Wednesday that “FTX and cryptocurrencies are not the same thing. FTX was opaque, centralized and dishonest. Cryptocurrencies usually are open-source, decentralized and transparent.”

Lummis has proposed legislation with Senator Kirsten Gillibrand, a New York Democrat, to create a regulatory framework for crypto, one of several that have been proposed.

Lummis argues most digital currencies should be regulated by the Securities and Exchange Commission but Bitcoin should be regulated by the Commodity Futures Trading Commission as a commodity.

“The case for Bitcoin as a store of value is solid,” she said, pointing out that it is limited in number, is fully decentralized and isn’t controlled by anyone. “It has the characteristics of a commodity.”

Lummis’s disclosure showed holdings of $100,001 to $250,000 in Bitcoin as of last year, though she said Wednesday her assets are in a blind trust, “so I don’t know whether I have Bitcoin” currently. Crypto valuations have also decreased substantially over the course of this year.

Lummis said she’s bullish on getting legislation passed next year, with the new House Republican majority and Gillibrand working with the Biden administration, with the goal of forging a bipartisan and “asset neutral” bill.

“We’re going to make a full court press,” she said.

Republican Senator Thom Tillis of North Carolina, another member of the Banking Committee, also sees the potential for bipartisan legislation next year on regulating crypto and non-bank fintechs.

“It may very well be if we research it that it may need to be banned, but I’m not there yet,” he said, adding that he said he wouldn’t invest in crypto himself yet. “It’s not proven.”

--With assistance from Jarrell Dillard, Allyson Versprille and Madison Mills.

A top FTX exec blew the whistle on Sam Bankman-Fried's moves just 2 days before the crypto exchange's collapse

George Glover
Thu, December 15, 2022 

Sam Bankman-Fried is escorted out of the Magistrate Court building after his arrest, in Nassau, the Bahamas, on December 13.

Dante Carrer/Reuters

An FTX exec told authorities about potential illegality at the crypto exchange 2 days before its bankruptcy.

Ryan Salame said customer funds were being used to cover losses at trading firm Alameda, a filing showed.

Former FTX CEO Sam Bankman-Fried was arrested by Bahamian authorities Monday to face fraud charges.

A top FTX executive helped speed up Sam Bankman-Fried's downfall by alerting authorities in the Bahamas about potential wrongdoing at the crypto exchange just two days before its bankruptcy, a court filing shows.

FTX Bahamas co-CEO Ryan Salame told the country's security commission that customer funds were being used to cover losses at sister trading firm Alameda Research on November 9, according to court records released Wednesday.

Salame said that Bankman-Fried, FTX co-founder Zixiao "Gary" Wang and engineer Nishad Singh were the only employees at the crypto group that could have transferred assets held by the exchange to Alameda.

That allegation drove the launch of the police investigation that led to Bankman-Fried's eventual arrest by Bahamian police Monday.

Bankman-Fried is currently being held in a jail in the Bahamas and awaiting potential extradition to the US on criminal charges including wire fraud, securities fraud and money laundering.

Salame is the first FTX employee known to have cooperated with authorities to help bring down the disgraced crypto CEO. He worked for Alameda between 2019 and 2021 before joining FTX Digital Markets, the crypto exchange's Bahamas division.

Like Democratic Party donor Bankman-Fried, Salame has high-profile political ties: his partner is failed far-right Republican congressional candidate Michelle Bond.

Bond's congressional candidate financial disclosure report showed that she received $400,000 in consulting fees from FTX Digital Markets when unsuccessfully campaigning to represent New York's 1st Congressional District.

Read more: FTX's Bahamas unit paid co-CEO's MAGA Republican congressional candidate girlfriend $400,000

SBF thinks one of his biggest mistakes at FTX was slashing his workday from 18 hours to 13 hours a day, his planned testimony shows

Matthew Loh
Wed, December 14, 2022 

Bankman-Fried was not present for Tuesday's hearing, but prepared 

a testimony for the House Financial Services Committee.

Tom Williams/CQ-Roll Call Inc via Getty Images

Disgraced FTX CEO Sam Bankman-Fried said he used to work 18 hours a day, per his planned testimony.

He wrote that one of his biggest mistakes was cutting his workday down by 30%.

Bankman-Fried currently faces fraud charges from the SEC, and was arrested on Monday.

FTX founder Sam Bankman-Fried thinks one of his biggest mistakes was cutting his workday from 18 hours to about 13 hours a day, he wrote in a draft of his planned testimony.

In his 7,000-word draft, Bankman-Fried wrote that he was "less grounded in operational details" in the months leading up to his exchange's downfall.

"I had prided myself on staying grounded: staying in the weeds, day to day, of the company," read a copy of this draft, which was first obtained by Forbes and Bloomberg.


"I also prided myself on having a strong work ethic; I began FTX routinely working 18 hour days. But for much of 2022, I believe that I was working about 30% less than I used to," he added. "And even when I was working, I was less focused and disciplined than I used to be."

Bankman-Fried wrote that he started spending more time this year talking with regulators, working on branding and new deals for FTX, and managing the exchange's workforce.

"That's time that wasn't spent focusing on the actual core product, including risk management," the draft read.

Bankman-Fried wasn't able to testify as scheduled before the House Services Financial Committee on Tuesday, because he was arrested the day before in the Bahamas.

Instead, newly appointed FTX CEO John Ray's testimony became the nucleus of Tuesday's hearing. Ray accused FTX of engaging in "plain old embezzlement" under Bankman-Fried and called the company's leadership "grossly inexperienced."

Bankman-Fried distanced himself from allegations of fraud in his draft, which was not read out in full at Tuesday's hearing.

In the planned testimony, he blamed himself for making a "number of significant mistakes" but said he didn't know about risky investments executed by FTX.

"I thought that I could hold FTX together despite the expansion. I was wrong," he wrote. "I bit off more than I could chew, and ended up failing to focus on risk management."

Bankman-Fried was charged with fraud by the Securities and Exchange Commission on Tuesday, and is accused by authorities of diverting "billions of dollars" of FTX's customer funds for "his own personal benefit and to help grow his crypto empire."

Bankman-Fried's spokesperson, Mark Botnick, told Insider he had no further comment on Bankman-Fried's testimony draft.

Sam Bankman-Fried is a world-class manipulator and the implosion of FTX is an 'old-school fraud,' Congressman says

Jennifer Sor
Tue, December 13, 2022 

Sam Bankman-Fried, founder and CEO of FTX, testifies during a Senate Committee hearing about "Examining Digital Assets: Risks, Regulation, and Innovation," on Capitol Hill in Washington, DC, on February 9, 2022Photo by SAUL LOEB/AFP via Getty Images

Sam Bankman-Fried is a world-class manipulator and the implosion of FTX was "old-school fraud," Patrick McHenry said.

"Fraudsters are going to defraud investors if they get any chance to do that," the Congressman said.

The former FTX CEO was set to testify before Congress before his arrest late Monday.

Sam Bankman-Fried is a world-class manipulator, and the implosion of FTX is an example of "old-school fraud," Congressman Patrick McHenry said on Tuesday.

"Fraudsters are going to defraud investors if they get any chance to do that," the North Carolina Representative said in an interview with CNBC. "So this is an old-school fraud with a new piece of technology."

The comments follow Bankman-Fried's arrest shortly before he was scheduled to testify to Congress about the collapse of FTX. Bankman-Fried said he would testify remotely, but was arrested Monday evening on multiple charges including fraud, money laundering, and conspiracy.

Over the prior month, the disgraced crypto executive had been on a public apology tour, speaking to news outlets on the implosion of FTX's finances. Though Bankman-Fried has denied accusations of fraud, he notoriously told a Vox reporter "Fuck regulators," in an interview last month, which experts say could later incriminate him in court.

"It shows he was a manipulator of world-class capacity, and he was trying to pull off something that was light-touch regulation for his platform," McHenry said.

The Congressman emphasized the need for "durable" crypto regulation to protect investors and innovators in the industry, possibly referring to the fact that FTX International was an offshore exchange, meaning it was exempt from US protections. He was also critical of current SEC chairman Gary Gensler, who has taken a hands-off approach to crypto regulation.

"Congress has to step in. What we've seen under the Gensler regime is, he said, 'come in and talk to me," McHenry said. "They referred to FTX as an unregulated crypto exchange. Well, there is no means to be an unregulated crypto exchange in the United states."

$1.6B FTX International Customers Group Hires Law Firm to Create Official Bankruptcy Committee



Ian Allison
Tue, December 13, 2022 

A growing group of non-U.S. customers of FTX.com, which currently counts up to around $1.6 billion in lost funds, has lawyered up and is looking to create an official customer committee in order to protect their rights of ownership over their assets on the exchange.

The non-U.S. FTX customers, led by Eversheds Sutherland attorneys Sarah Paul and Erin Broderick, had already formed the first FTX ad hoc group. As an official committee it would be granted additional consultation and approval rights within the Chapter 11 case, including being entitled to payment of professional fees by the bankruptcy estates.

After FTX filed for Chapter 11 bankruptcy protection with a widely reported shortfall of as much as $8 billion, a primary task for non-U.S. customers of the exchange is to establish that funds removed from customer accounts and transferred to other FTX-affiliated entities, such as Alameda Research, are not the property of FTX’s bankruptcy estate.

Establishing this would mean the money from these customer accounts should not be distributed to all creditors, as per the U.S. Bankruptcy Code, but rather belong to the account-holding customers, explained Broderick, a cross-border restructuring attorney with experience in crypto bankruptcy cases, including failed exchange Mt. Gox.

“The rights of the non-U.S. customers and why they’re differently situated is really important,” said Paul, a former federal prosecutor in the U.S. Attorney’s Office for the Southern District of New York. “First, there is an irreconcilable conflict between the interests of the non-U.S. customers and the creditors of the other silos. The starkest example of that is the transfer of the $10 billion to Alameda from FTX.com. The terms of service situate the assets differently, as customer funds, as opposed to property of the estate.”

Despite the confusion over the collapse of FTX and the actions of its former CEO, Sam Bankman-Fried, who was arrested on Monday in the Bahamas, there are certain aspects of the bankruptcy that are more straightforward than, say, Celsius Network, the bankrupt lending platform that has spawned a number of ad hoc customer groups.

“In comparison with Celsius, which had an Earn program where customers transferred the rights and title of their crypto assets to Celsius, here for the non-U.S. customers, there were just the terms and service that are governed by English law,” Paul added.

Certain FTX customers did enter into margin trading or other arrangements that gave the FTX debtors a “legal or equitable” interest in such property, noted Broderick. However, it has been reported that the customer assets subject to these arrangements made up a small portion of the total $16 billion in volume trading at the time, she said.

Those specific customer assets may be the property of the estate, although there are arguments to the contrary, but this misses the point and confuses two separate issues, Broderick added.

“It is undisputed that $10 billion of the $16 billion in customer funds on the FTX.com exchange was transferred to Alameda,” Broderick said via email. “Whether the customer assets were fraudulently transferred to satisfy Alameda’s liabilities or whether the transfers are just one piece of a Ponzi scheme remains to be seen, but it doesn’t change the fact the FTX.com customers have a greater legal and equitable right to the return of their own property or the value thereof before it is distributed out to other creditors or used or sold by the debtors without the protection of their interests.”

Read more: The FTX Downfall: Full Coverage

Japan Was the Safest Place to Be an FTX Customer



JP Koning
Tue, December 13, 2022 

FTX was a massive hydra with subsidiaries across the globe. Amid FTX’s failure and entrance into bankruptcy court, one of these subsidiaries appears to be relatively unscathed: FTX Japan. Assuming FTX Japan makes it through, here are some things that other nations can learn from Japan’s experience.

J.P. Koning, a CoinDesk columnist, worked as an equity researcher at a Canadian brokerage firm and a financial writer at a large Canadian bank. He runs the popular Moneyness blog. This opinion piece is part of CoinDesk’s Crypto 2023 outlook.

FTX Japan is a Japanese-based crypto exchange, formerly known as Liquid, that Bahamas-based FTX purchased in early 2022. Whereas the customers of most FTX entities are in limbo, FTX Japan says that it is close to paying out its customers in full:

"We have put together a plan for the resumption of withdrawal service, which has been shared with and approved by the new FTX Trading management team. Development work for this plan has already started and our engineering teams are working to allow FTX Japan users to withdraw their funds."

Japanese customers' cash and crypto will not be bogged down in U.S. bankruptcy proceedings given "how these assets are held and property interests under Japanese law," the exchange says. Meanwhile, the funds of customers of the flagship Bahamas-based exchange, FTX International; Chicago-based FTX US; and FTX Australia remain stuck in bankruptcy limbo.

What is it about Japan that may end up allowing Japanese customers of FTX to get their money before anyone else?

In brief, careful regulation of crypto exchanges.

Spurred by the failure of Mt. Gox in 2014 and the 2017 hacking of Coincheck, both Tokyo-based exchanges, Japan's Financial Services Agency (FSA) established a broad set of standards for crypto exchanges, or what it defines as Crypto Asset Exchange Service Providers (CAESP). The FSA is also responsible for overseeing banking, securities and exchanges, and insurance sectors.

Read more: JP Koning – Let's Stop Regulating Crypto Exchanges Like Western Union

Here are six key elements of the FSA's framework for overseeing crypto exchanges:

1. Japanese crypto exchanges must segregate customer fiat and crypto from the exchange's own crypto. That is, they can't deposit the exchange's own operating funds into the same account, or wallet, as their customers' funds.

A separation of funds reduces the scope for fraud. For example, it would have been easier for FTX executives based in the Bahamas to raid customer funds held at their Japanese subsidiary if those funds were mingled together with FTX's corporate money.

2. Going beyond segregation, Japanese exchanges must entrust customers' fiat money balances to a third-party Japanese institution – a trust company or bank trust – where they are managed by a trustee with customers designated as the beneficiaries.

By interposing a third-party trustee between FTX Japan and its customers, regulators would have reduced the latitude for FTX insiders to tamper with Japanese customers' cash.

Another advantage of a trust requirement is that it adds a layer of protection in the event of bankruptcy. Storing customers' funds with a third-party trustee prevents them from being diverted into a general pot where they can be claimed by an exchange's other competing creditors.

Other countries are less stringent. Take the U.S., for instance. U.S. exchanges, including FTX US, operate under state money transmitter law. While some states do require money transmitters to keep customer funds in a trust but many don't, including Florida, Pennsylvania and Georgia. This lack of a trust company layer may be one reason why FTX US customers haven’t heard a peep about getting their money back.

FTX Japan claims to be holding 6.03 billion yen worth of customer fiat in trust, or US$44 million.

3. A more explicit bankruptcy protection stipulates that customers of Japanese exchanges are entitled to receive payment in priority to general creditors in the case of bankruptcy.

Customers are creditors of an exchange. They own an exchange-issued IOU. But a crypto exchange may have other creditors including bond holders, bank lenders, suppliers or other subsidiaries holding inter-company debts. When an exchange goes under, all of these IOU owners are desperate to get some of the remaining crumbs. Putting customers at the very front of the line of creditors is a way to protect them.

Compare the luxury of being a Japanese customer of FTX to the plight of Australian customers of FTX. To their horror, they recently found themselves competing with the parent company, FTX Trading, for part of the Australian bankruptcy estate.

4. The FSA requires Japanese exchanges to keep at least 95% of customers' crypto in cold wallets. Because cold wallets are not connected to the internet, they are more secure against hacking and internal fraudsters.

FTX Japan claims it currently holds 3,194 bitcoin (BTC) in cold wallets, as well as 16,418 in ether (ETH), 64.1 million XRP and a handful of other assets.

Many exchanges in unregulated jurisdictions already use cold wallets (although probably not for 95% of their customers' funds). However, smaller exchanges may use other exchanges such as FTX to store customer funds rather than their own cold wallets.

Australian exchange Digital Surge, with around 30,000 customers, recently entered into voluntary administration because it kept a significant amount of money on FTX. Huobi lost $13.2 million worth of customer funds that it had stored on FTX, while Crypto.com had $10 million in exposure.

Japan’s 95% cold wallet rule helps protect against such losses, as does the following 5% rule:

5. For the 5% of customer's crypto that can be kept in a less-secure hot [internet connected] wallet, Japanese exchanges must "back" each unit of hot-walleted crypto with exchange-owned crypto held in a segregated cold wallet. So, for example, if an exchange holds 5 BTC of customer funds in a hot wallet, it must hold another 5 BTC of its own personal coins in reserve, for a total of 10 BTC.

The FSA refers to these reserves as an exchange's performance-guarantee assets. If there are any inappropriate leakages from hot wallets, the exchange's reserve must be used to make customers whole.

6. Lastly, all of these rigid requirements must be verified by an external watchdog.

Each Japanese exchange must undergo a yearly "audit of separate management" whereby a public accountant examines that each of the above requirements for holding assets are abided by. That is, the auditor verifies that all customer fiat money is being held in trust, that customer funds are segregated from exchange funds, that at least 95% of all crypto is held in a cold wallet and that the exchange is holding an appropriate amount of performance guarantee assets.

FTX Japan customers haven't received their funds back yet. So we don't know for sure if they’ll be made whole. But initial indications suggest they will be. If so, credit goes to the six preceding protections afforded to customers of Japanese exchanges.

In response to FTX's failure, many jurisdictions are already scrambling to fashion their own regulations for crypto exchanges. They should be watching Japan closely.

SEE 

https://plawiuk.blogspot.com/search?q=FTX

https://plawiuk.blogspot.com/search?q=BINANCE

https://plawiuk.blogspot.com/search?q=CRIMINAL+CRYPTO

Crypto Market’s Near-Apocalypse in 2022 Turns Zombie Tokens Into Dead Coins


Jocelyn Yang
Tue, December 13, 2022 
When the decentralized marketplace Storeum debuted its own freshly minted cryptocurrency in July 2019, the STO token soon grabbed traders’ attention: The STO price jumped from a few cents to an all-time high around $35 for a few days in March 2020 before quickly settling back to less than $1.

But Storeum has since gone mostly quiet. Its website no longer works and social media accounts are inactive. The token technically still exists, in zombie form, as a contract on the Ethereum blockchain. This year, the STO has taken another step toward oblivion: It has vanished from the pricing site CoinGecko, which lists nearly 13,000 cryptocurrencies that are still considered viable in some form.

CoinGecko officials would not confirm when exactly Storeum was deactivated from its website. But a cursory search using the Wayback Machine, which archives websites from prior dates, shows that a Storeum token page was still active as of early 2022. Now, typing Storeum into CoinGecko’s search bar turns up no results.

Call it a dead coin.

During the crypto bull market of recent years, the number of cryptocurrencies seemed to be ever-increasing, roughly quadrupling from 2019 through early 2022, based on data from the website Statista. Since peaking at 10,397 in February 2022, the number has dropped by about 1,000, the biggest-ever decline in the 13-year-old crypto industry’s volatile history.

“It’s relatively simple for someone to create a token,” said Riyad Carey, research analyst at crypto data firm Kaiko. “But these tokens can obviously lose interest extremely quickly.”

Just as STO arrived during an earlier crypto bull-market hype cycle, a bevy of tokens appeared last year as bitcoin (BTC) – the oldest and largest cryptocurrency by market value, often viewed as an industry bellwether – shot to a record $69,000.

According to CoinGecko, which uses a different methodology from Statista’s, over 8,000 cryptocurrencies were newly listed in 2021, but some 3,300 of them, or roughly 41%, ended up being deactivated and delisted.

“During this period, many cryptocurrency projects, tokens and coins with little to no value or any immediate or discernible purpose were launched by various anonymous developers,” Julia Ng, growth marketing at CoinGecko, wrote in a recent analysis. “Few were actually committed to their projects, which resulted in a high rate of failure, and thus their ultimate demise.”

Tokens might be removed from the site due to a lack of any discernible trading activity within the last two months, based on CoinGecko's methodology. A coin might also be taken off CoinGecko if it's deemed to be a "rug pull" or other scams, or if the project team requests a deactivation.

"This might occur when the team disbands, rebrands, shutters the project, or undergo major token overhauls where old tokens become sufficiently illiquid or dead, according to CoinGecko standards," Ng wrote.

Chart shows the number of deactivated cryptocurrencies on CoinGecko, by year listed. (CoinGecko)

The overall crypto market’s capitalization has shrunk from an all-time high of $3 trillion in November 2021 to about $850 billion now. Bitcoin’s price has fallen 66% over the past year and ether (ETH) is down 71%.

Kaiko’s Carey estimated that the number of failed tokens could be “significantly higher in the past two years” because of the explosion in 2017 in the number of ERC-20 tokens – a type that’s easy to mint and runs atop the Ethereum blockchain.

“It’s relatively simple for someone to create a token and an associated decentralized exchanges [DEX] liquidity pool,” Carey told CoinDesk. “If no one is providing liquidity, there will be little or no trading volume.”.

Rug pull

Besides losing buyers’ interests, some token failures could be associated with scams, according to Chainalysis Director of Research Kim Grauer.

One of the more common schemes, referred to in the gallows-humor jargon of crypto traders as the “rug pull,” involves “creating a token, funding the liquidity pool, and then removing all the liquidity after an initial rush of people buy the token,” as Carey describes it.

As is the case with Storeum, the contract behind the token remains on the blockchain; the data is still there, for posterity, even when the token has gone dormant and is long forgotten. Etherscan, a data explorer for the Ethereum blockchain, shows no transactions have occurred for 231 days.

A warning notice on the Etherscan page reads, "Warning! There are reports that this token used a fake team profile on their website. Please exercise caution when interacting with this token."

At one point, back in 2019, there was chatter on the forum bitcointalk.org that the Storeum project might be a "scam hitting on all cylinders," including speculation that team members were ginned up using artificial intelligence.

Chainalysis’s Grauer told CoinDesk that “it is difficult for a token to totally ‘die’ because the code keeps the project running even without buyers.”

The existence of dead coins points up a key paradox of the crypto industry, according to Kaiko's Carey: Decentralization, often portrayed as a pillar of virtue, can proves to be little more than an illusion. Just like the fast growth.

It's “decentralization, in that the bar to creating tokens has been dramatically lowered in recent years,” Carey said. It's “centralization, in that many of these tokens or projects relied on one or a few individuals to provide liquidity and keep the project alive. Centralized exchanges are well within their right to remove tokens with little or no trading volume, as they won’t contribute to revenue and likely entail some cost to upkeep.”

Some tokens might be better off dead.

House of Commons erupts in laughter after Jagmeet Singh says: 'When I'm prime minister ...'

Story by Bryan Passifiume • 

NDP Leader Jagmeet Singh had to endure peals of laughter after he suggested he could one day be prime minister.© Provided by National Post

The House of Commons ended the sitting year on a somewhat silly note, at the expense of an opposition party leader.

Responding to Prime Minister Justin Trudeau during the final question period of the year on Wednesday, NDP Leader Jagmeet Singh may have had a bit of a bruised ego after his statement earned peals of laughter from MPs, prompting an admonishment from House Speaker Anthony Rota.

“When I’m prime minister, I will keep my promises,” Singh exclaimed shortly after Trudeau concluded speaking, triggering a disruption of laughter, catcalls and guffaws that lasted nearly a full minute.

“I know everybody is excited and Christmas is coming … my advent calendar says two days but I think something went wrong there,” a wisecracking Rota said as he attempted to steer the proceedings back on track.

“Calm down everyone, take a deep breath.”

While Singh looked visibly affronted by the response, he was given a chance to repeat himself — which was met with a supportive standing ovation by his caucus-mates. He got derailed a second time, but on his third attempt — after another call for order from Rota — Singh was able to finish his question.

Canada’s health-care crisis dominated much of question period on Wednesday, particularly with pediatric emergency rooms overrun with children afflicted by respiratory illnesses.

Singh was challenging the prime minister’s assertions that the deadlock between the federal government and the provinces was the fault of the premiers, who want more money from Ottawa to ease the backlogs.

“I want to remind the prime minister that he promised in the last election to hire 7,500 more nurses and doctors, a promise that if he had kept would have absolutely helped in dealing with this crisis,” Singh said immediately prior to the outburst.

During a year-end interview with The Canadian Press, Trudeau said he won’t throw money at the problem without looking at reforms.

On Monday, Singh threatened to pull out of the “supply and confidence” agreement propping up the minority Liberal government if more isn’t done federally to alleviate the crisis.

In exchange for supporting the government in key votes and keeping the government from collapsing prior to the 2025 election, the Liberals promised to move ahead with a number of NDP initiatives, including dental care, prescription medicine and health care.