It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Thursday, January 12, 2023
IMPERIALIST INTERVENTION
Canada sends armored vehicles to Haiti to fight gang violence
North American Leader's Summit in Mexico City
Wed, January 11, 2023
OTTAWA (Reuters) - Canada delivered armored vehicles to Haiti on Wednesday to help combat criminal gangs as the Caribbean nation faces a humanitarian crisis, the Canadian foreign ministry said.
Canadian military aircraft made the delivery to the Haitian National Police in the capital Port-au-Prince, it added.
Haitian gangs have seized control of much of the country since the 2021 assassination of President Jovenel Moise, leading to routine gun battles with police.
Hundreds died in turf battles last year, and in September, Haitian gangs blocked a fuel terminal for nearly six weeks, halting most economic activity.
Canada and the United States provided tactical and armored vehicles and other supplies in October after Haiti urged the international community to send in a "specialized armed force." Ottawa has also sanctioned Haitians accused of gang ties, including a former president, two ex-prime ministers and three high-profile entrepreneurs.
Canadian Prime Minister Justin Trudeau told reporters in Mexico City on Wednesday the sanctions and aid were "making a difference" in Haiti.
"We're all very aware that things could get worse in Haiti and that's why Canada and partners, including the United States, are preparing various scenarios if it does start to get worse," he said.
Canada will continue to provide support but the Haitian crisis must be resolved domestically, said Trudeau, who was attending the North American Leaders' Summit along with U.S. President Joe Biden and Mexican President Andres Manuel Lopez Obrador.
"What is particularly important in this situation is that the Haitian people themselves be at the center of the support, the building of stability, and the resolution of the crisis in Haiti right now."
(Reporting by Ismail Shakil and Steve Scherer in Ottawa; Editing by Richard Chang)
UNDER DESANTIS ANTI-CRT IT WILL BE
How a Florida race massacre in 1923 was almost erased from history
A rural Black community was destroyed by a racist white mob a century ago. Now, historians and descendants are making sure the story of the Rosewood massacre is never forgotten.
Marquise Francis ·National Reporter Thu, January 12, 2023 A Black family’s home in flames in January 1923 amid race riots following allegations that a Black man had attacked a white woman. (Bettmann Archive/Getty Images)
For years, longtime Florida resident Arnett Doctor noticed that his mother routinely went into a deep depression around Christmastime. It wasn’t until weeks later that her yearly depression would subside, and he never understood why. Then one Christmas, when he was 19, Doctor’s mother finally told him about the week of racial violence that she and dozens of other Black people endured in January 1923, when a white mob terrorized and destroyed their rural community in Rosewood, Fla.
Now, 100 years later, historians and descendants of those families, who once buried the ordeal in their memory, are making sure the story of the Rosewood massacre is never forgotten.
“It’s really important that we remember these events because they’ve been hidden for too long,” Maxine Jones, a historian with a focus on African American history and a professor at Florida State University, told Yahoo News. “In order to understand the future and then move forward, we have to understand the past.” The ruins of the two-story shanty near Rosewood, Fla., where 20 Black residents barricaded themselves and fought off a mob of white people. (Bettmann Archive/Getty Images)
The Rosewood massacre is eerily similar to a lot of other tragic incidents of racial violence in American history. In this instance, violence broke out in the town of about 150 mostly Black, land-owning residents on Jan. 1, 1923, after a white woman accused a Black man of assaulting her. News of the allegation spread fast as tensions quickly boiled over. An angry mob of white residents from nearby Sumner, Fla., began hunting for Jesse Hunter, a Black man accused of the assault with no evidence, for a week. Over that time, residents’ homes and businesses were burned down and churches were destroyed. In all, at least six Black people and two white people were killed; no one was arrested following the ordeal. Residents who were able to escape fled to nearby Gainesville, while others, historians say, disappeared altogether. For decades, the incident was never talked about by Rosewood victims out of fear of retribution.
“People sometimes don’t realize the power of fear,” Jones said. “Knowing the reach of powerful white people, they knew they couldn’t talk about it openly. And, in fact, some of the families never even talked about it amongst themselves.
“Fear is very powerful, and to watch everything that you own burn or be stolen and no one being held accountable for that — it was a nightmare over and over again.”
But it didn’t stay buried forever. A crowd of white citizens of Sumner, Fla., near a site where six Black residents of Rosewood, Fla., were killed and buried. (Bettmann Archive/Getty Images)
Jones in 1993 became the lead researcher on a study about the massacre, commissioned by the Florida Legislature. Previously, she said, little was known about the tragic events because former Rosewood residents had been mum about the ordeal. But Doctor, whose own life was transformed by the event he wasn’t even alive for, made it his personal mission to expose it. He wanted the families, including his own, to receive something back for what was stripped from them.
“I called him the Moses of the family,” his cousin Gregory Doctor told the Tampa Bay Times. “God implanted in him the spirit to lead the family and fight for reparations.”
Arnett Doctor traveled across the state of Florida to talk to descendants of Rosewood following his mother’s death; she had forbidden him to talk about it while she was alive. He connected with a reporter from the St. Petersburg Times in 1982 to elevate the story, and he eventually enlisted a high-powered law firm, Holland & Knight, to help with the fight. Twelve years later, the Florida Legislature passed a claims bill awarding the descendants $2.1 million for their losses. The bill noted that both local and federal officials “had sufficient time and opportunity to act to prevent the tragedy” but “failed to act to prevent the tragedy.” A view in 2020 of the Wright House, where John Wright helped Black residents of Rosewood flee the massacre. (Zack Wittman for the Washington Post via Getty Images)
“The money was important, but I think to the survivors — the nine people who ended up getting the $250,000 — I think even more important was they got to tell their story,” Jones said. “They finally had a voice.”
The bill stopped short of any mention of reparations, which Jones said was key in its passage.
“The word ‘reparations’ is loaded,” she said. “And there was a lot of resistance from Florida legislators to opening this gate, and they tried to make sure when they agreed to compensate these families that there were no loopholes — that other people couldn’t come out of the woodwork and make any more claims against the state.”
In addition to the lump sum, a scholarship fund was created for descendants who attend state colleges. To date, about 300 students have received the Rosewood scholarship since its inception in 1994, according to the Washington Post. Morgan Carter, a Rosewood scholarship recipient who attends Florida A&M University in Tallahassee, Fla., in 2019. (Zack Wittman for the Washington Post via Getty Images)
Marking a dramatic shift from decades past of silence, a slew of events this weekend in Gainesville, Fla., will commemorate the 100th anniversary of the massacre. Speakers will include prominent civil rights attorney Ben Crump and the Rev. Jamal Bryant.
For Jones, the Rosewood massacre should serve as a sobering reminder of why talking about and documenting history, both good and bad, is more important than ever.
“I think these incidents of racial violence, the lynchings explain race relations in this country,” she said. “It explains the tension, the fear, the distrust that still exists between Black and white people in this country.
“We need to talk about this and stop hiding it. It doesn’t mean we don’t talk about the good, but when you study the past, it just gives you an understanding of a lot that connects the past to the present.”
Biden slams House Republicans' plans on taxes, says they will make inflation worse
U.S. President Biden boards Marine One for travel to Kentucky
Thu, January 12, 2023 By Jeff Mason
WASHINGTON (Reuters) -U.S. President Biden criticized House Republicans who have taken control of Congress for backing tax measures that he said would benefit the wealthy at the expense of middle class taxpayers, and make inflation worse.
The Republican-controlled House passed a bill Monday night that would slash tens of billions of funding dollars for the Internal Revenue Service (IRS). The measure is not expected to pass the Senate, where Democrats are the majority, and Biden vowed to veto it even if it did.
As part of the Inflation Reduction Act, passed on party lines last year, Democrats provided money to hire 87,000 new IRS agents who would focus on wealthy taxpayers with complicated returns. The new agents are expected to bring in additional revenue as they scrutinize the returns.
The nonpartisan Congressional Budget Office, which analyzes bills for lawmakers, reported in an analysis on Monday that the Republicans' IRS measure would raise the deficit by $114 billion.
"House Republicans campaigned on inflation. They didn't say if elected their plan was to make inflation worse," Biden told reporters. "Well, let me be very clear: If any of these bills make it to my desk, I will veto them."
(Reporting by Jeff Mason and Doina ChiacuEditing by Frances Kerry)
President Biden slams ‘reckless bill’ from Republicans to reverse funding for the IRS and its 87,000 new hires — here's how it could affect you
Serah Louis Wed, January 11, 2023 President Biden slams ‘reckless bill’ from Republicans to reverse funding for the IRS and its 87,000 new hires — here's how it could affect you
Washington’s lawmakers have come back from their holiday break swinging.
After a days-long speaker standoff, Republicans in the House have moved on to their next priority: clawing back funds from the IRS.
President Joe Biden had included increased funding for the IRS in the Inflation Reduction Act to help the agency catch sneaky tax evaders — especially those high-earners who love to find loopholes. Advocates believe the increased funding could raise as much as $1 trillion by forcing tax cheats to pay their dues, especially after years of budget cuts have gutted the system.
But on Jan. 9, Republicans introduced and passed a bill to rescind that $80 billion in funding.
While it’s likely to be struck down by the Democrat-controlled Senate, and Biden’s office has already voiced his intentions to veto "this reckless bill" if it makes it to his desk, it’s still a strong statement from Republican lawmakers.
Meanwhile, at the center of this political football is an overworked and understaffed tax agency. And whoever wins the power struggle in Washington, experts say taxpayers could be the ones left holding the bag.
The IRS desperately needs the support
The $80 billion in funding spread over the next 10 years would help the IRS modernize its infrastructure, increase enforcement and replace its aging workforce (50,000 of the IRS’s 80,000 workers are expected to leave in the next five years).
A Treasury Department report from May 2021 estimates the extra money would allow the agency to hire around 87,000 new employees — which could include revenue agents and customer service and IT staff — by 2031.
The agency has reportedly been underfunded by about 20% for a decade — leading it to cut back on both staff and technology updates.
The customer service department has been woefully short-staffed as well. During the 2022 filing season, the IRS received around 73 million phone calls from taxpayers — but only 10% were actually answered.
"The combination of more than 21 million unprocessed paper tax returns, more than 14 million math error notices, eight-month backlogs in processing taxpayer correspondence, and extraordinary difficulty reaching the IRS by phone made this filing season particularly challenging," national taxpayer advocate Erin M. Collins wrote in her 2022 midyear report to Congress.
On top of these issues, former IRS Commissioner Charles Rettig estimated in 2021 that the agency is losing $1 trillion in unpaid taxes each year — particularly due to evasion from the rich and big businesses. He also indicated they could be slipping through the cracks in part due to the lightly regulated cryptocurrency market, foreign source income and abuse of pass-through provisions.
Rettig has long pushed for increased funding “to bring on the fire-breathing dragons” to take cheaters to task. Could bolstering enforcement do more harm than good?
Supporters argue the funding will help close the “tax gap” by helping catch more evaders.
From the total $80 billion, $45.6 billion has been allotted for increased enforcement — which would go toward hiring more enforcement agents, providing legal support and investing in “investigative technology” to determine who should or shouldn’t be audited. But not everyone is thrilled with the news.
“They’re not going to get this ‘magic money,’” Brian Reardon told Bloomberg. Reardon is the president of the S Corporation Association, which represents small, privately-owned businesses that pass taxes onto their shareholders.
“If you dial up enforcement on people who are otherwise following the rules and paying what they owe, you create resentment and anger. You undermine people’s confidence in the tax system.”
However, the Biden administration maintains that the increased enforcement will be focused on the ultra wealthy and large corporations, and isn’t intended for small businesses or households who earn less than $400,000 a year.
Research from the Department of Treasury indicates that the top 1% of Americans could be dodging as much as $163 billion in taxes each year.
That being said, if the increased budget is approved, Eli Akhavan, a partner at Steptoe & Johnson in New York, says he expects audits will go up. But he’s been telling his wealthy clients they “have nothing to worry about other than some headaches,” provided they’re following good advice and have their “ducks in a row.”
“If there’s nothing to find, there’s nothing to find,” Akhavan says.
Factbox-Who's who in European Parliament's cash-for-influence scandal
European Parliament member Marc Tarabella leaves the headquarters of the Socialist Party
Fri, January 6, 2023
(Reuters) - A corruption scandal has been rocking the European Parliament since Belgian authorities raided parliament offices two weeks before Christmas.
Four people - all affiliated with the chamber - have been charged over allegations Qatar lavished them with cash and gifts to influence decision-making.
The European Parliament said on Monday it had begun a procedure to waive the immunity of two other MEPs after a request from Belgian judiciary.
Qatar has denied wrongdoing.
In arrest warrants issued in Italy, there are also allegations of payments from Morocco. Morocco has not officially commented on the allegations but on Thursday its foreign minister has complained of European parliament 'harassment'.
Investigators searched 19 homes and offices of the European Parliament in raids on Dec. 9-12, recovering 1.5 million euros ($1.59 million) in cash.
WHO'S WHO
The four suspects are charged with participating in the activities of a criminal organisation, money laundering and corruption, and are all in pre-trial detention. Belgian prosecutors only gave their initials but sources close to the investigation confirm they are:
* Eva Kaili: a Greek socialist politician who was one of the European Parliament's 14 vice presidents until mid-December when she was removed from that post over the allegations.
Her Greek socialist PASOK party has expelled her from and Greece has frozen her Greek property.
She has denied any wrongdoing through her lawyers.
* Pier Antonio Panzeri: a former European Parliament member from Italy's centre-left and founder of non-profit group Fight Impunity. Panzeri's lawyer did not reply to requests to comment. Fight Impunity has not responded to a request for comment.
Belgium also submitted European arrest warrants for his wife and daughter in Italy on suspicion of taking part in Panzeri's alleged activities .
Both have denied any involvement.
* Francesco Giorgi: Kaili's partner who is a parliamentary assistant. His LinkedIn account says he is a founder of Fight Impunity and that his specialist areas as a policy adviser are foreign affairs, human rights and the Middle East.
According to two sources with direct knowledge of the matter, Giorgi admitted to Belgian investigators that he took bribes to influence European Parliament decisions and sought to exonerate Kaili.
Giorgi's lawyer said he is currently not commenting on his case.
* Niccolo Figa-Talamanca: an Italian lobbyist and secretary-general of human rights and rule of law campaign group No Peace Without Justice. Prosecutors say the group was used by the suspects to funnel money paid by a Middle Eastern country to buy influence in EU institutions.
Figa-Talamanca could not be reached for comment.
No Peace Without Justice has said he had suspended himself from his role to safeguard the organisation and that the group trusted the investigation would show he had acted correctly.
The European Parliament said on Jan. 2 it had begun a procedure to waive the immunity of two other MEPs after a request from Belgian judiciary.
Sources close to the investigation said both were named by Giorgi and that the MEPs were:
* Marc Tarabella: a Belgian socialist MEP and vice-chair of the parliament’s delegation for relations with the Arab Peninsula.
Tarabella's lawyer Maxim Toller said his client, who denied wrongdoing, was in favour of being stripped of his immunity.
*Andrea Cozzolino: an Italian MEP who worked directly with Francesco Giorgi, the latter being one of his parliamentary assistants.
Cozzolino did not respond to efforts to contact him for comment.
($1 = 0.9420 euros)
(Reporting by Charlotte Van Campenhout and Philip Blenkinsop, additional reporting by Renee Maltezou in Athens; Editing by Raissa Kasolowsky)
KRIMINAL KAPITALISM; OLIGARCH
Roman Abramovich transferred superyachts and private jets worth $4 billion to his children just before the Ukraine invasion, report says
Roman Abramovich is worth more than $7 billion, according to Bloomberg.
Laurence Griffiths/Getty Images Roman Abramovich transferred assets to his children before the Ukraine invasion, per The Guardian.
The oligarch's assets included properties, superyachts, helicopters, and private jets.
He owns at least 10 more yachts than was previously known, per the report.
Roman Abramovich's assets including luxury properties, superyachts, helicopters and private jets, were transferred to his children weeks before Russia invaded Ukraine, The Guardian reported.
Ten offshore trusts that hold assets belonging to the sanctioned Russian oligarch were amended in February 2022, according to leaked files revealed by the newspaper.
Assets worth more than $4 billion were transferred to his seven children only three weeks before the start of the war, the report said. The longtime associate of Russian President Vladimir Putin was sanctioned by the UK and European Union in March.
His children's beneficial interest in the trust's assets – including the Eclipse superyacht worth $700 million and shares in Russian companies – rose from 51% to 100%, per the report.
In addition to his six yachts worth more than $1 billion, it was revealed that Abramovich owns at least 10 more yachts and vessels via offshore companies, Forbes reported, citing files it obtained alongside the Organized Crime and Corruption Reporting Project.
The shuffling of assets were detailed in hacked files from Cypriot company MeritServus, which managed the former Chelsea FC owner's finances for two decades, per the reports.
Demetris Ioannides, the chairman of MeritSevus, didn't respond to The Guardian's requests for comment but said: "The paramount responsibility of a trustee is to protect the assets of a trust."
Companies controlled by Abramovich's trusts had assets worth $2.5 billion at the end of 2021, per the reports.
The oligarch's net wealth has increased by $72 million in the year to date, according to Bloomberg's Billionaires Index, to more than $7 billion.
Abramovich seemingly reorganized other assets just weeks before the invasion of Ukraine. He transferred ownership of two private jets in February worth $400 million to his children via two trusts that control a web of shell companies, an FBI agent claimed in June.
Abramovich also tried to sell a property 15 days before the invasion, but was stopped by Portuguese authorities who froze the asset. Three months after being hit by sanctions, the billionaire sold Chelsea football club for $5.3 billion after owning the club for 19 years.
Representatives for Abramovich did not immediately respond to a request for comment from Insider.
The Securities and Exchange Commission on Thursday charged Genesis Global Capital and Gemini, the cryptocurrency exchange founded by Tyler and Cameron Winklevoss, for selling unregistered securities to investors through Gemini's Earn crypto asset lending program.
The SEC alleges the Gemini Earn program constituted an offer and sale of securities under SEC law, raising billions of dollars of crypto assets from hundreds of thousands of investors, and should have registered with the SEC.
"We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors," SEC Chair Gary Gensler said in a statement.
"Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. Doing so best protects investors. It promotes trust in markets. It’s not optional. It’s the law."
According to the complaint, in December 2020, Genesis entered into an agreement with Gemini to offer Gemini customers the ability to loan their crypto assets to Genesis in exchange for interest payments.
Beginning in February 2021, Genesis and Gemini began offering the program to investors.
Gemini facilitated the transaction and deducted for itself an agent fee, sometimes as high as 4.29%, from the returns it received from Genesis, according to the SEC.
The SEC alleges Genesis then exercised its discretion in how to use investors' crypto assets to generate revenue and pay interest to investors.
Last November, Genesis, which is a wholly-owned subsidiary of Barry Silbert's Digital Currency Group (DCG), announced it would pause withdrawals on its lending platform as it lacked sufficient liquidity to meet requests amid volatility in the crypto market in the wake of FTX's collapse. At the time Genesis held approximately $900 million Gemini customer deposits, which remain frozen on the platform.
The SEC's announcement comes as Genesis and Gemini have been engaged in a war of words, with Cameron Winklevoss earlier this week calling for DCG CEO Barry Silbert to step down and accusing Silbert and others at DCG of making "false statements and misrepresentations to Gemini."
Cameron Winklevoss, co-founder of crypto exchange Gemini Trust Co., attends the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021. (Photo by Marco BELLO / AFP) (Photo by MARCO BELLO/AFP via Getty Images)
Investigations continue
“The recent collapse of crypto asset lending programs and the suspension of Genesis’ program underscore the critical need for platforms offering securities to retail investors to comply with the federal securities laws,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement. “As we’ve seen time and again, the failure to do so denies investors the basic information they need to make informed investment decisions.
Investigations into other securities law violations and other entities and persons relating to alleged misconduct are ongoing, according to the SEC.
Grewal encouraged anyone with information about this case or others to come forward and, if necessary, do so under the SEC’s Whistleblower Program.
The SEC is filing a litigated action and part of the requested relief from the Federal District Court will be a monetary civil penalty, plus disgorgement of any ill gotten gains.
The SEC’s action comes after investors brought a class action lawsuit against Gemini, alleging they were duped into investing in the exchange's interest-bearing accounts without being informed that they were unregistered securities.
Gensler has warned for months the agency would take enforcement action if firms didn't comply with SEC rules.
Gensler told Yahoo Finance in an interview in December he has one goal when it comes to regulating crypto markets in 2023: Make crypto exchanges and lending platforms come into compliance with existing rules.
"They can do that appropriately, working with the SEC, or we can continue on a course with more enforcement actions, and I would have to say that the runway's getting shorter," Gensler said.
CRIMINAL CRYPTO CAPITALI$M TOO
BlockFi Creditors Battle to Keep Their Details Secret krisanapong detraphiphat
Jack Schickler Wed, January 11, 2023
BlockFi creditors are seeking to keep their personal details secret, arguing in a Tuesday court filing that they will be at risk of hacks or identity theft if their names are revealed as part of bankruptcy proceedings.
Creditors of the bankrupt crypto lender are seeking to avoid a situation seen in the case of Celsius – where the financial details of hundreds of thousands of users were published as part of standard judicial procedure.
Andrew Vara, a U.S. Department of Justice official responsible for bankruptcy cases, argued in a separate Tuesday filing to the New Jersey bankruptcy court that “disclosure is a basic premise of bankruptcy law,” needed to avoid any suggestion of impropriety – echoing arguments he has previously made in the case of collapsed crypto exchange FTX.
A committee of BlockFi creditors said that giving away a valuable client list for free would reduce the value of the estate – and that publication would make them vulnerable to theft, noting that even experienced bitcoin developers such as Luke Dashr can be the subject of hacks.
In the case of FTX, the motion to publish the creditor list – which has been supported by media companies including Bloomberg and the New York Times – will be considered at a court hearing in Delaware later on Wednesday, Jan. 11, and judge Michael Kaplan is set to consider the BlockFi case at a Jan. 17 hearing.
FTX Loan Wiped Out $800M in BlockFi Executives’ Equity, Court Filing Reveals
Jack Schickler Thu, January 12, 2023
Executives from bankrupt crypto lender BlockFi granted themselves pay rises of as much as $275,000 each, after they saw $800 million in their equity holdings wiped out because of a loan from collapsed crypto exchange FTX, a court filing shows.
A statement of financial affairs for BlockFi, which was filed Thursday in the U.S. Bankruptcy Court for the District of New Jersey, contains thousands of pages of transactions that took place in the run-up to BlockFi's collapse. The firm had gross revenue of over $4 million for 2022 until its bankruptcy filing in November.
Last June, FTX offered BlockFi a $400 million loan, and Thursday's filing details the impact of the loan on 13 of BlockFi’s top executives.
“The massive impact of the FTX transaction on management equity led BlockFi’s board of directors to, among other things, increase base salaries and make retention payments for those that remained in the interest of retaining business critical knowledge and capabilities,” the filing stated.
Founder and CEO Zac Prince, for example, saw $413 million in equity value eliminated, and was compensated by a salary increase from $250,000 to $400,000, while Chief Operating Officer Flori Marquez saw a raise from $225,000 to $500,000, the filing said.
BlockFi lawyers have been at pains to stress that – unlike other crypto bankruptcy cases such as the one for lender Celsius Network – there were no last-minute panicky withdrawals by BlockFi senior executives before its collapse.
No member of the BlockFi management team withdrew any cryptocurrency from the platform after Oct. 14, the filing said, and the management team represented just 0.15% of the $7.7 billion in retail withdrawals over the year.
But the filings nonetheless reveal significant withdrawals made by senior management – including over $9 million taken out of the platform by Prince in April, which the filing said was to pay U.S. federal and state taxes, and his withdrawal of just over $870,000 in August.
Most transaction data is anonymized, with the court due to consider next week whether to unseal creditor information. In a parallel hearing Wednesday, a Delaware judge agreed FTX customer names can remain secret for three months.
CRIMINAL CRYPTO CAPITALI$M A law firm involved in FTX's bankruptcy is under fire from 4 senators after an ex-customer noted that it earned $20 million from the crypto giant
Pete Syme Wed, January 11, 2023 Elizabeth Warren and Sam Bankman-Fried, the FTX founder, leaving Manhattan Federal Court in January.
Tom Williams-Pool/Getty Images; Fatih Aktas/Anadolu Agency via Getty Images
An FTX customer filed an objection to law firm Sullivan & Cromwell acting as the crypto exchange's counsel.
The objection notes that FTX had already done business with the law firm to the tune of $20.5 million.
Now four senators including Elizabeth Warren have written to the judge with concerns about S&C.
Four US senators have raised concerns about the law firm handling FTX's bankruptcy case, Sullivan & Cromwell, due to the two companies' past relationship.
The bipartisan letter was sent on Monday by Democrats Elizabeth Warren and John Hickenlooper, and Republicans Thom Tillis and Cynthia Lummis, in response to a motion filed in the Delaware bankruptcy court on January 4.
An FTX customer called Warren Winter called on the court to disqualify Sullivan & Cromwell as the debtors' counsel, or otherwise "provide robust disclosures." According to his motion, which Insider has seen, FTX paid the law firm $20.5 million in fees and retainers before it filed for bankruptcy on November 11 last year.
That court filing also pointed out that FTX US's general counsel, Ryne Miller, was a partner at the same law firm which is now investigating possible wrongdoing at FTX.
Winter called Sullivan & Cromwell's appointment as FTX's counsel: "The most flagrant attempt by a fox to guard a henhouse in recent memory."
And now four senators have raised concerns about the law firm too, saying Sullivan & Cromwell "may well bear a measure of responsibility for the damage wrecked on the company's victims."
"Put bluntly, the firm is simply not in a position to uncover the information needed to ensure confidence in any investigation or findings," the letter added.
A spokesperson for Sullivan & Cromwell said that John J. Ray III, the former Enron CEO who is now in charge of FTX, has "decades of experience and success in matters similar to the current FTX situation and is supervising a broad team of sophisticated professionals, including conflicts counsel."
"S&C never served as primary outside counsel to any FTX entity. The firm had a limited and largely transactional relationship with FTX and certain affiliates prior to the bankruptcy, as is common, and is disinterested as required by the Bankruptcy Code."
FTX did not immediately respond to Insider's request for comment.
Letter From US Senators 'Inappropriate,' Won’t Sway Me, FTX Bankruptcy Judge Says
Jack Schickler
COINDESK Wed, January 11, 2023
A bipartisan letter from four U.S. senators is an “inappropriate” intervention in bankruptcy proceedings that won’t sway judicial decisions, Delaware Judge John Dorsey told a court hearing Wednesday.
The letter, from John Hickenlooper (D-Colo.), Thom Tillis (R-N.C.), Elizabeth Warren (D-Mass.) and Cynthia Lummis (R-Wyo.) called for an independent examiner to be appointed to investigate the collapse of the crypto exchange.
The letter is an “inappropriate ex parte communication,” Dorsey said, using a legal term for court interventions that don't give all parties the chance to be represented.
“I will make my decisions on the matters referred to in the letter based only upon admissible evidence and the arguments of parties and interest presented in open court,” Dorsey said. The bankruptcy court judge added that the letter “will have no impact whatsoever on my decisions in this case which will only be based upon the facts and law presented by the parties."
The senators’ letter raised questions about the ability of law firm Sullivan & Cromwell to impartially represent the crypto company's new executives. FTX filed for bankruptcy Nov. 11.
FTX finds over $5 billion in liquid assets, judge extends ruling keeping creditor names secret
A lawyer for FTX said Wednesday in a Federal bankruptcy hearing in Delaware that lawyers have located over $5 billion of cash, liquid cryptocurrency, and other liquid investments belonging to the company measured as of November 11, the date FTX filed for bankruptcy protection.
In a ruling from the bench, federal bankruptcy Judge John T. Dorsey granted FTX's motion to keep its customer's names under seal.
The $5 billion in newfound assets do not include crypto in custody with the Securities Commission of the Bahamas valued at approximately $425 million as of the company's petition date, the attorney added. "That position was valued at about $170 million at the end of 2022. It contains a large amount of FTT and is highly volatile," said Andrew Dietderich a partner at law firm Sullivan & Cromwell advising FTX.
FTX's total located assets were previously said to be around $1 billion on December 20, according to reporting from CoinDesk on what FTX's legal counsel said in a closed meeting with creditors.
The attorney said the FTX’s bankruptcy team is also, "underway on plans to monetize 300 other non-strategic investments with a book value of $4.6 billion."
The total amount of the shortfall between FTX's assets and the amount it owes customers and other creditors, however, is still "not yet clear," Dietderich added.
"We know what Alameda did with the money," Dietderich told the court about FTX's associated hedge fund that prosecutors have alleged illegally used FTX customer funds to carry out risky investments.
Dietderich also said the debtor bankruptcy team knows Bankman-Fried instructed FTX CTO Gary Wang to create the "Alameda backdoor." Previously mentioned in court filings, this secret feature allowed Alameda to borrow from customers on the exchange without their permission.
According to Dietderich, the size of Alameda's line of credit with FTX was $65 billion.
"It bought planes, houses, threw parties, made political donations, made personal loans to its founders. It sponsored the FTX Arena in Miami, a Formula One team, the League of Legends, Coachella, and many other businesses, events, and personalities. It gambled on cryptocurrency investments, often unsuccessfully." Redacted creditor names
Also at issue during Wednesday's hearing was whether names and personally identifying information of FTX’s 9 million customers should be kept confidential while the company works to reorganize or sell the troubled firm.
"I'm going to overrule the objections and allow [the names] to remain sealed at this point," Judge Dorsey said following arguments from several parties. "But I'm not going to leave it open for [six months]. I'm going to...approve an order that extended it for three months."
In court, Dietderich revealed the company had identified more than 9 million customer accounts with about 120 billion associated transactions.
Kevin Cofsky of Perella Weinberg Partners testified that FTX's customer lists, including both names and contact information, are a key company asset.
"A significant component of the business is the customers themselves," Cofsky told Judge Dorsey, reasoning that the company would maintain more value it could pass on to creditors and prospective buyers if customers are protected from poaching by industry competitors.
“That will give buyers confidence that…what they are buying has value,” Cofsky told Judge Dorsey.
In a declaration filed in the proceedings, Cofsky added that customers would not have anticipated their private information being disclosed, explaining that "a hallmark feature of cryptocurrency is a holder's ability to remain anonymous to the public."
In early December, a group of media organizations including Bloomberg L.P., Dow Jones, The New York Times Company, and The Financial Times filed a motion to intervene in the bankruptcy proceedings to reject the request of the debtors to keep FTX creditor names private. Media companies indicated in their arguments the public's right to access the names.
The U.S. Trustee joined in the news organizations' arguments that FTX's customer names should be made public, given that bankruptcy proceedings usually require disclosure of creditor names and addresses.
Wednesday's hearing follows a Tuesday court filing in the bankruptcy of crypto lender BlockFi in which creditors asked their personal information remain under seal. The U.S. Trustee has objected to the motion, arguing that "disclosure is the basic premise of bankruptcy." The issue will be covered in a January 17 hearing.
Customers of bankrupt crypto lender Celsius, which includes hundreds of thousands of retail investors, had their information published in a publicly available court record at the beginning of October.
The court will have a status hearing Jan. 20 on the matter. Sam Bankman-Fried's trading firm borrowed $65 billion from FTX via a 'secret backdoor' to fund donations and a luxury lifestyle, bankruptcy court hears
Pete Syme Thu, January 12, 2023 Sam Bankman-Fried arrives at Manhattan federal court on January 3.
Gotham/GC Images Bankruptcy lawyers revealed Sam Bankman-Fried's Alameda had access to $65 billion from FTX.
The customer loans were made available via a backdoor created by FTX cofounder Gary Wang, they said.
The money was used for luxury purchases like planes, parties, and political donations.
Sam Bankman-Fried instructed his FTX cofounder Gary Wang to create a "secret" backdoor to enable his trading firm Alameda to borrow $65 billion of clients' money from the exchange without their permission, the Delaware bankruptcy court was told Wednesday.
Wang was told to create a "backdoor, a secret way for Alameda to borrow from customers on the exchange without permission," according to FTX's lawyer, Andrew Dietderich.
"Mr Wang created this back door by inserting a single number into millions of lines of code for the exchange, creating a line of credit from FTX to Alameda, to which customers did not consent," he added. "And we know the size of that line of credit. It was $65 billion."
The CFTC made similar allegations when it brought charges against Wang in December. But the value of that line of credit hasn't been revealed before now. The CFTC then described it as "virtually unlimited."
And in November, Reuters reported that SBF had moved $10 billion between the two companies, with a further $2 billion still unaccounted for.
Dietderich told the court that with the $65 billion back door, Alameda "bought planes, houses, threw parties, made political donations."
The rest of the money went towards personal loans, sponsorships, and investments, according to Dietderich.
"We know that all this has left a shortfall, in value to repay customers and creditors," he added. That amount "will depend on the size of the claims pool and our recovery efforts."
Bankman-Fried's attorney did not immediately respond to Insider's request for comment, sent outside normal working hours.
Sam Bankman-Fried launches Substack: ‘I didn’t steal funds, and I certainly didn’t stash billions away’
Mary Ann Azevedo Thu, January 12, 2023
FTX founder and former CEO Sam Bankman-Fried launched his own Substack newsletter today, in a very unusual move for someone who was recently arrested and is facing eight counts of U.S. criminal charges.
In a post titled “FTX Pre-Mortem Overview,” Bankman-Fried maintains his innocence surrounding the collapse and bankruptcy of FTX, a cryptocurrency exchange he founded in 2019 that went on to raise $2 billion in funding and achieve a valuation of a staggering $32 billion.
He wrote:
I didn’t steal funds, and I certainly didn’t stash billions away. Nearly all of my assets were and still are utilizable to backstop FTX customers. I have, for instance, offered to contribute nearly all of my personal shares in Robinhood to customers–or 100%, if the Chapter 11 team would honor my D&O legal expense indemnification.
When Bankman-Fried stepped down from FTX in November, Enron turnaround veteran John J. Ray III was appointed as the new CEO.
The 30-year-old former billionaire continues to insist that if he were not “forced” to declare bankruptcy that the company would have been able to repay all its customers. He wrote: “There were numerous potential funding offers–including signed LOIs post chapter 11 filing totaling over $4b. I believe that, had FTX International been given a few weeks, it could likely have utilized its illiquid assets and equity to raise enough financing to make customers substantially whole.”
On January 3, Bankman-Fried pled not guilty to all eight counts of criminal charges, which included wire fraud, conspiracy to commit money laundering and conspiracy to misuse customer funds, among others. Bankman-Fried could face up to 115 years in jail if convicted on all charges. His trial date has been set for October 2, 2023.
Last month, a U.S. judge released Bankman-Fried on a $250 million bail bond after he was extradited to America from the Bahamas. The bail package allowed Bankman-Fried to remain under house arrest at his parents’ home in Palo Alto, California.
In the Substack, Bankman-Fried went on to share what he described as “a record of FTX US’s balance sheet as of when I handed it off.”
Image Credits: SBF Substack
He went on to say:
If FTX had been given a few weeks to raise the necessary liquidity, I believe it would have been able to make customers substantially whole. I didn’t realize at the time that Sullivan & Cromwell—via pressure to instate Mr. Ray and file Chapter 11, including for solvent companies like FTX US–would potentially quash those efforts. I still think that, if FTX International were to reboot today, there would be a real possibility of making customers substantially whole. And even without that, there are significantassets available for customers.
I’ve been, regrettably, slow to respond to public misperceptions and material misstatements. It took me some time to piece together what I could–I don’t have access to much of the relevant data, much of which is for a company (Alameda) I wasn’t running at the time.
This is not the first time the disgraced founder has taken to airing his thoughts publicly. In November, he said in a series of tweets that FTX International was looking to raise liquidity and was in talks with a “number of players.” Then in December, he talked from an undisclosed location in the Bahamas with reporter Andrew Ross Sorkin for a DealBook event, a discussion that his legal team “very much” did not approve of, he told Sorkin with a boyish grin.
India Moving Some Troops From Sinking Town Near China Border
petition seeks to halt construction of a hydroelectric project that it says is causing the sinking
Sudhi Ranjan Sen Thu, January 12, 2023
(Bloomberg) -- India has relocated some troops from areas surrounding a sinking Himalayan town that’s near a disputed border with China, Army Chief Manoj Pande said.
Pande didn’t give details on how many soldiers would be moved away for safety but said over 20 military installations around the town of Joshimath in the northern state of Uttarakhand have sustained “medium to minor damage.”
“We remain prepared to relocate more units if required, but our operational preparedness remains intact,” Pande said in an annual address of the state of the army’s operations. “There has been no impact to our readiness.”
The gateway town for mountain expeditions and Hindu pilgrimage sites like Badrinath has seen rapid infrastructure growth plus massive tourist footfalls. This has, in turn, damaged its ecosystem and triggered frequent landslides and flash floods.
The area is a also a key Indian garrison center to defend a large portion of the disputed 3,488-kilometer (2,170-mile) border with China known as the Line of Actual Control. India has over 20,000 troops and military hardware including artillery and missile systems located in the area.
The Supreme Court of India is set to hear a plea from a local Hindu religious leader on Jan. 16 after cracks began to appear in more than 600 buildings in the tiny town. The petition seeks to halt construction of a hydroelectric project that it says is causing the sinking The crisis has reignited a decades-old development versus environment debate in the region.
While relief and rescue operations for affected families are underway, the lawsuit in India’s top court has sought legal intervention in halting work on a tunnel being built by state-run NTPC Ltd. for its nearby hydroelectric power project until it’s examined and approved by a panel of geologists, hydrologists and engineers.
CRIMINAL CAPITALI$M Bank to pay $31M redlining settlement, DOJ's largest ever Justice Department Redlining Assistant Attorney General of the U.S. Department of Justice's Civil Rights Division Kristen Clarke, right, speaks next to United States Attorney Martin Estrada, of the California central division, while announcing the largest redlining case in American history during a news conference Thursday, Jan. 12, 2023, at the Second Baptist Church in Los Angeles.
(AP Photo/Stefanie Dazio)
ASSOCIATED PRESS KEN SWEET Thu, January 12, 2023
NEW YORK (AP) — The Justice Department accused Los Angeles-based City National Bank on Thursday of discrimination by refusing to underwrite mortgages in predominately Black and Latino communities, requiring the bank to pay more than $31 million in the largest redlining settlement in department history.
City National is the latest bank in the past several years to be found systematically avoiding lending to racial and ethnic minorities, a practice that the Biden administration has set up its own task force to combat.
The Justice Department says that between 2017 and 2020, City National avoided marketing and underwriting mortgages in majority Black and Latino neighborhoods in Los Angeles County. Other banks operating in those neighborhoods received six times the number of mortgage applications that City National did, according to federal officials.
The Justice Department alleges City National, a bank with roughly $95 billion in assets, was so reluctant to operate in neighborhoods where most of the residents are people of color, the bank only opened one branch in those neighborhoods in the past 20 years. In comparison, the bank opened or acquired 11 branches in that time period. In addition, no employee was dedicated to underwriting mortgages at that one branch, unlike branches in majority white neighborhoods.
“This settlement should send a strong message to the financial industry that we expect lenders to serve all members of the community and that they will be held accountable when they fail to do so,” Assistant Attorney General Kristen Clarke, who leads the Justice Department's civil rights division, said in a statement.
Attorney General Merrick Garland has prioritized civil rights prosecutions since taking the helm at the Justice Department in 2021 and the department, in the Biden administration, has put a higher priority on redlining cases than under previous administrations.
The Biden task force includes the Justice Department as well as bank regulators like the Comptroller of the Currency and the Consumer Financial Protection Bureau, and is focused not only on explicit forms of redlining but also cases where computer algorithms may cause banks to discriminate against Black and Latino borrowers.
Despite a half-century of laws designed to combat redlining, the racist practice continues across the country and the long-term effects are still felt to this day. The average net worth of a Black family is a fraction of a typical white household, and homes in historically redlined neighborhoods are still worth less than homes in non-redlined communities.
As part of the settlement, City National will create a $29.5 million loan subsidy fund for loans to Black and Latino borrowers, and spend $1.75 million on advertising, community outreach and financial education programs to reach minority borrowers.
In a statement, City National said it disagreed with the Justice Department's allegations, but that it will “nonetheless support the DOJ in its efforts to ensure equal access to credit for all consumers, regardless of race.”
The Justice Department said City National cooperated as part of the redlining investigation and is working to resolve its issues in other markets, as well.
Clarke announced the settlement Thursday morning at a historic Black Baptist church in South Los Angeles that was an important force in the civil rights movement and has been the venue for speeches by the Rev. Martin Luther King Jr., Malcolm X and others.
The settlement with City National is the largest settlement with the Justice Department. A settlement with the Department of Housing and Urban Development with Associated Bank in 2015 involved the bank making a commitment to make $200 million in increased lending in minority-majority neighborhoods, along with a $10 million subsidy fund similar to the one agreed to by City National.
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AP Reporter Stefanie Dazio contributed to this report from Los Angeles.
