LGBTQ+ RIGHTS ARE HUMAN RIGHTS

25 years after Matthew Shepard's death, LGBTQ+ activists say equal-rights progress is at risk

DAVID CRARY
Wed, October 11, 2023

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 Brian Harrington, right, and Chuck Beauchine pray with other mourners during the funeral of Matthew Shepard at St. Mark's Episcopal Church Friday, Oct. 16, 1998, in Casper, Wyo. Shepard, an openly gay University of Wyoming student, died Monday from a beating in Laramie, Wyoming that's widely considered to have been at least in part motivated by his sexual orientation. 

(AP Photo/Michael S. Green, File)

It's been 25 years since Matthew Shepard, a gay 21-year-old University of Wyoming student, died six days after he was savagely beaten by two young men and tied to a remote fence to meet his fate. His death has been memorialized as an egregious hate crime that helped fuel the LGBTQ+ rights movement over the ensuing years.

From the perspective of the movement’s activists — some of them on the front lines since the 1960s — progress was often agonizingly slow, but it was steady.

Vermont allowed same-sex civil unions in 2000. A Texas law criminalizing consensual gay sex was struck down in 2003. In 2011, the military scrapped the “don’t ask, don’t tell” policy that kept gay, lesbian and bisexual service members in the closet. And in 2015, the U.S. Supreme Court ruled that same-sex marriages were legal nationwide.

But any perception back then that the long struggle for equality had been won has been belied by events over the past two years.

Five people were killed last year in a mass shooting at an LGBTQ+ nightclub in Colorado. More than 20 Republican-controlled states have enacted an array of anti-LGBTQ+ laws including bans on sports participation and certain medical care for young transgender people, as well as restrictions on how schools can broach LGBTQ+-related topics.

"Undoubtedly we've made huge progress, but it's all at risk," said Kevin Jennings, the CEO of Lambda Legal, which has been litigating against some of the new anti-LGBTQ+ laws. “Anybody who thinks that once you've won rights they’re safe doesn't understand history. The opponents of equality never give up. They’re like the Terminator — they're not going to stop coming until they take away your rights.”

Some of the new laws are directed broadly at the entire LGBTQ+ community, such as Florida's so-called “Don't Say Gay” law, which imposes bans and restrictions on lessons in public schools about sexual orientation and gender identity. But in many of the GOP-governed states — including Florida — the prime target of legislation has been transgender people.

In addition to measures addressing medical treatments and sports participation, some laws restrict using the pronouns trans students use in classrooms.

“What we’ve said in Florida is we are going to remain a refuge of sanity and a citadel of normalcy,” said Gov. Ron DeSantis as he signed such bills earlier this year. “We’re not doing the pronoun Olympics in Florida.”

Shannon Minter, a transgender civil rights lawyer with the National Center for Lesbian Rights, depicted the wave of anti-trans bills — in some cases leading to legal harassment of trans people — as the one of the gravest threats to the LGBTQ+ community in his 30 years of activism.

“We are in danger now, given the ferocity of this backlash,” he said. “If we don’t stop this with sufficient urgency, we’ll end up with half the country living with very significant bias and lack of legal protection.”

Rodrigo Heng-Lehtinen, executive director of the National Center for Transgender Equality, depicted the legislative attacks as “the backlash to our progress.”

“We made so much progress as an LGBTQ movement, at a fast pace compared to other social justice movements,” he said. “You do have a minority who is overwhelmingly upset by it. They are fired up and they are well-resourced.”

Heng-Lehtinen is optimistic for the long term but said that right now, “trans people across the country are really struggling with feeling any kind of hope.”

The key to changing the current dynamic is for more people in GOP-governed states to get to know and understand trans people, said James Esseks, director of the American Civil Liberties Union's LGBTQ & HIV Project.

"But the efforts of the other side are designed to stop that from happening," Esseks said. “They want trans people to disappear — no health care, can't use public restrooms, can't have a government ID consistent with who you are, and the schools can't teach about the existence of trans people.”

Esseks reflected back to the Supreme Court's historic same-sex marriage ruling in 2015. At the time, he said, many activists were thinking elatedly, “OK, we're kind of done.”

“But the other side pivoted to attacking trans people and seeking religious exemptions to get a right to discriminate against gay people,” he said. “Both of those strategies, unfortunately, have been quite successful.”

The president of the largest national LGBTQ+ rights organization, Kelley Robinson of the Human Rights Campaign, summarized the situation on Tuesday:

"LGBTQ+ Americans are living in a state of emergency — experiencing unprecedented attacks from extremist politicians and their right-wing allies in states across the country, who are working tirelessly to erase us."

Several activists interviewed this week by The Associated Press evoked Matthew Shepard as they discussed broader developments. His memory lives on in many manifestations, including:

— The Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, signed by then-President Barack Obama in 2009. The act expanded the federal hate crime law to include crimes based on a victim’s sexual orientation, gender identity or disability.

— "The Laramie Project," a play based on more than 200 interviews with residents of Laramie, Wyoming, connected to Shepard and his murder. It is a popular choice for high school theater productions but has faced opposition due to policies resembling Florida's “Don't Say Gay” law that have surfaced in various states and communities.

— The Matthew Shepard Foundation, a nonprofit co-founded by Shepard's mother, Judy. Its self-described mission: “To inspire individuals, organizations, and communities to embrace the dignity and equality of all people ... and address hate that lives within our schools, neighborhoods, and homes.”

"Matthew Shepard’s death was a life-altering moment for a lot of people," said Shelby Chestnut, executive director of the Transgender Law Center.

Earlier in his career, Chestnut worked with the New York City Anti-Violence Project, an experience that influences his worries about the recent anti-trans bills.

“When you create conditions where people have lack of access to jobs, to health care, they’re more likely to be victims of violence,” he said.

The communications director of the National LGBTQ Task Force, Cathy Renna, was in the early stages of her LGBTQ+ activism when she became involved in media coverage of Shepard’s murder in 1998.

“It shapes the way you do your advocacy for the rest of your life,” she said. “It got many people involved. It was a lightbulb — realizing that hate crimes are a thing that happens.”

`The Laramie Project' stages a special reading in Wyoming on the 25th anniversary of Shepard murder

MARK KENNEDY
Wed, October 11, 2023 



 Students appear at a vigil against violence at Prexy's Pasture on the University of Wyoming campus in Laramie, Wyo., on Oct. 10, 1999. The weekend marked the one-year anniversary death of Matthew Shepard, a gay University of Wyoming student, who was tied to a fence and beaten into a coma from which he died two days later on Oct. 7, 1998. The Tectonic Theater Project is marking the anniversary by gathering the original cast and creators of "The Laramie Project," and some of the people represented in the piece for a staged reading and conversation as part of the 2023 Shepard Symposium at the University of Wyoming. (AP Photo/Ed Andrieski, File)

NEW YORK (AP) — It has been 25 years since the body of Matthew Shepard was discovered in Laramie, Wyoming. The gay college student had been tied to a fence post, tortured and left to die.

The murder drew national attention to violence against gay people, and attracted the interest of theater director Moisés Kaufman, who turned the horror into art with “The Laramie Project.”

This 25th anniversary has triggered deep sadness for Kaufman, founder and artistic director of the New York-based Tectonic Theater Project. He wonders about all the things Shepard could have become.

“Every year around this time, it’s painful to remember, but this one has hit particularly hard,” Kaufman tells the AP.

After Shepard's 1998 killing, Kaufman and members of Tectonic traveled to Laramie and wrote the play based on more than 200 interviews. “The Laramie Project” is a poignant mix of real news reports, and actors portraying friends, family, police officers, killers and other Laramie residents.

This week, Tectonic is marking the anniversary by gathering the original cast and creators, and some of the people represented in the piece for a staged reading and conversation as part of the 2023 Shepard Symposium at the University of Wyoming.

“The Laramie Project,” one of the most frequently performed plays in high schools, has been performed in more than 20 countries and translated into more than 13 languages. It is among the top 10 most licensed plays in America.

“Precisely because it wasn’t about Matthew Shepard, precisely because it was about the town of Laramie is why it continues to resonate,” says Kaufman.

"We were hoping that it wouldn’t be relevant anymore. But it is every day more relevant. Hate crimes all over our nation are at much higher rates than they were when Matthew Shepard was killed."

He points to an increase in anti-Asian incidents since the pandemic began, and assaults on transgender and gender-nonconforming people.

In 2009, Kaufman was on hand as the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act was signed by then-President Barack Obama. The act expanded the 1969 federal hate-crime law to include crimes based on a victim’s sexual orientation, gender identity or disability.

“The Laramie Project” has consistently been the subject of pushback by some conservative school districts, and this year faces banishment from Florida stages due to what critics call the “Don’t Say Gay” law.

Elsewhere, theater creators across the nation say school censorship is getting worse, particularly around material with LGBTQ+ themes. Cardinal High School in Middlefield, Ohio, canceled a production of “The 25th Annual Putnam County Spelling Bee” due to content issues.

Kaufman is also alarmed that the Lansing Board of Education in Kansas voted to remove the script of “The Laramie Project” from the school curriculum.

“There has always been — since the inception — a couple of theaters every year where the board of the school says no. All right. But this last year was the first time that the book itself was banned from a classroom.”

Kaufman has always been cheered by the students who find a way to perform the play despite barriers, becoming what he calls artist-activists. “My belief is that the best art occurs at the intersection of the personal and the political,” he says.

___

Mark Kennedy is at http://twitter.com/KennedyTwits

CIA publicly acknowledges 1953 coup it backed in Iran was undemocratic as it revisits 'Argo' rescue

THEY ESTABLISHED A MONARCHY TO COUNTER  A DEMOCRATIC REVOLUTION
JON GAMBRELL
Wed, October 11, 2023 at 10:28 PM MDT·5 min read
13






 Prime Minister Mohammad Mossadegh rides on the shoulders of cheering crowds in Tehran's Majlis Square, outside the parliament building, after reiterating his oil nationalization views to his supporters on Sept. 27, 1951. While revealing new details about one of the most famed CIA operations of all times, the spiriting out of six American diplomats who escaped the 1979 U.S. Embassy seizure in Iran, the intelligence agency for the first time has acknowledged something else as well. The CIA now officially describes the 1953 coup it backed in Iran that overthrew its prime minister and cemented the rule of Shah Mohammad Reza Pahlavi as undemocratic. 

DUBAI, United Arab Emirates (AP) — While revealing new details about one of the most famed CIA operations of all times — the spiriting out of six American diplomats who escaped the 1979 U.S. Embassy seizure in Iran — the intelligence agency for the first time has acknowledged something else as well.

The CIA now officially describes the 1953 coup it backed in Iran that overthrew its prime minister and cemented the rule of Shah Mohammad Reza Pahlavi as undemocratic.

Other American officials have made similar remarks in the past, but the CIA's acknowledgment in a podcast about the agency's history comes as much of its official history of the coup remains classified 70 years after the putsch. That complicates the public's understanding of an event that still resonates, as tensions remain high between Tehran and Washington over the Islamic Republic's rapidly advancing nuclear program, its aiding of militia groups across the Mideast and as it cracks down on dissent.

The “CIA’s leadership is committed to being as open with the public as possible," the agency said in a statement responding to questions from The Associated Press. "The agency’s podcast is part of that effort — and we knew that if we wanted to tell this incredible story, it was important to be transparent about the historical context surrounding these events, and CIA’s role in it.”

In response to questions from the AP, Iran's mission to the United Nations described the 1953 coup as marking “the inception of relentless American meddling in Iran’s internal affairs” and dismissed the U.S. acknowledgments.

“The U.S. admission never translated into compensatory action or a genuine commitment to refrain from future interference, nor did it change its subversive policy towards the Islamic Republic of Iran,” the mission said in a statement.

The CIA's podcast, called “The Langley Files” as its headquarters is based in Langley, Virginia, focused two recent episodes on the story of the six American diplomats' escape. While hiding at the home of the Canadian ambassador to Iran, a two-man CIA team entered Tehran and helped them fly out of the country while pretending to be members of a crew scouting for a made-up science fiction film.

The caper, retold in the 2012 Academy Award-winning film “Argo” directed by and starring Ben Affleck, offered a dramatized version of the operation, with Affleck playing the late CIA officer Antonio “Tony” Mendez. The podcast for the first time identified the second CIA officer who accompanied Mendez, naming him as agency linguist and exfiltration specialist Ed Johnson. He previously only had been known publicly by the pseudonym “Julio.”

“Working with the six — these are rookies," Johnson recounts in an interview aired by the podcast. "They were people who were not trained to lie to authorities. They weren’t trained to be clandestine, elusive.”

But in the podcast, another brief exchange focuses on the 1953 coup.

In it, CIA spokesman and podcast host Walter Trosin cites the claims of agency historians that the majority of the CIA’s clandestine activities in its history “bolstered” popularly elected governments.

“We should acknowledge, though, that this is, therefore, a really significant exception to that rule,” Trosin says of the 1953 coup.

CIA historian Brent Geary, appearing on the podcast, agrees.

“This is one of the exceptions to that," Geary says.

Seven decades later, the 1953 coup remains as hotly debated as ever by Iran, its theocratic government, historians and others.

Iran's hard-line state television spent hours discussing the coup that toppled Prime Minister Mohammad Mosaddegh on its anniversary in June. In their telling, a straight line leads from the coup to the 1979 Islamic Revolution that ultimately toppled the fatally ill shah. It still fuels the anti-Americanism that colors decisions made by the theocracy, whether in arming Russia in its war on Ukraine or alleging without evidence that Washington fomented the recent nationwide mass protests targeting it.

From the U.S. side, the CIA's hand in the coup quickly was revealed as a success of Cold War espionage, though historians in recent years have debated just how much influence the agency's actions had. It also led the CIA into a series of further coups in other countries, including Guatemala, where American clandestine action in 1954 installed a military dictator and sparked a 40-year civil war that likely killed some 245,000 people.

That's led to an American political reappraisal of the 1953 CIA action in Iran. Then-Secretary of State Madeleine Albright acknowledged the U.S.' "significant role" in the coup in 2000. President Barack Obama, speaking in Cairo in 2009, described the CIA's work as leading to the “overthrow of a democratically elected Iranian government.”

But largely absent from the discussion was the CIA itself. After years of conflicting versions of the coup both in public and classified papers, a member of the CIA's own in-house team of historians wrote a reappraisal of the operation in a 1998 paper titled “Zendebad, Shah!” in Farsi — or “Long Live the Shah!”

But despite a series of American historical documents being made public, including a major tranche of State Department papers in 2017, large portions of that CIA reappraisal remain heavily redacted despite attempts to legally pry them loose by the George Washington University-based National Security Archive. That's even after pledges by former agency directors Robert Gates and James Woolsey Jr. in the 1990s to release documents from that coup and others engineered by the agency.

Further complicating any historical reckoning is the CIA's own admission that many files related to the 1953 coup likely had been destroyed in the 1960s.

“It’s wrong to suggest that the coup operation itself has been fully declassified. Far from it," said Malcolm Byrne of the National Security Archive. "Important parts of the record are still being withheld, which only contributes to public confusion and encourages myth-making about the U.S. role long after the fact.”

CRIMINAL CAPITALI$M

India accuses China's Vivo of visa violations, siphoning off $13 billion

Thu, October 12, 2023 

 A man cleans the logo of a Chinese smartphone brand Vivo outside a store in Ahmedabad


By Arpan Chaturvedi and Aditya Kalra

NEW DELHI (Reuters) - Many employees of Chinese smartphone maker Vivo and its Indian affiliates concealed their employment when seeking visas, and some breached rules by visiting the "sensitive" Himalayan region of Jammu and Kashmir, India's financial crime agency has said.

The court statement comes as tension rises with Beijing over business activities after New Delhi tightened curbs on incoming investment and banned hundreds of Chinese apps following border clashes in 2020 that killed 20 Indian and four Chinese troops.

The accusations, detailed on Tuesday in a court filing that is not public, follow the arrest this week of a Vivo executive, Guangwen Kuang, in a money laundering investigation launched in 2022 into India's second biggest smartphone player.

At least 30 Chinese individuals entered India on business visas and worked as Vivo employees, but their application forms "never disclosed" that the firm was their employer, the agency, the Enforcement Directorate, said in the 32-page filing.

"Various Chinese nationals have been traveling across India, including sensitive places of Jammu and Kashmir and Ladakh, in gross violation of Indian visa conditions," it added, shedding light for the first time on the alleged offences.

"Many employees of Vivo group companies worked in India without appropriate visas," the agency said in the filing.

"They have concealed information regarding their employer in their visa applications and cheated the Indian embassy or missions in China."

Asked for comment, Vivo, which has a market share of 17%, reiterated a statement from earlier this week that said the executive's arrest "deeply concerns us", while adding that it remained "dedicated to legal compliance".

China's foreign ministry, which said this week it was closely following the case, did not respond to a Reuters request for comment.

The Indian embassy in Beijing and the foreign ministry in New Delhi also did not respond.

In their decades-old border dispute, both India and China claim large tracts of land controlled by the other in the western Himalayas.

India bars foreigners from entering or staying in the areas of Ladakh and parts of Jammu and Kashmir it has designated as "protected", unless they have a permit from the authorities - a document that is separate from a visa.

Last year, the agency raided 48 sites linked to Vivo and its associates in the money laundering investigation, accusing the company of illegally siphoning money to China to evade Indian taxes through companies it indirectly controls.

This week's court filing says 1.07 trillion rupees ($12.87 billion) was remitted outside India by Vivo to some trading companies controlled by its Chinese parent, in what the agency called a "masking layer" intended to escape government notice.

"While no profits were shown from 2014-15 to 2019-20 in the statutory filings and no income taxes were paid ... huge sums were siphoned off out of India," the Enforcement Directorate added.

In July last year, the agency estimated a figure of 624.7 billion rupees ($7.5 billion) had been remitted mainly to China.

(Reporting by Arpan Chaturvedi and Aditya Kalra; Additional reporting by Brenda Goh in Shanghai, David Kirton in Shenzhen and Krishn Kaushik in New Delhi; Editing by Clarence Fernandez)

India arrests Chinese employee of smartphone maker Vivo
Nikhil Inamdar and Mariko Oi - BBC News
Wed, October 11, 2023 




India's financial crimes agency has arrested a Chinese employee of smartphone maker Vivo, the firm said.

Indian officials have not commented yet but Vivo said it "will exercise all available legal options" on behalf of its employee, Andrew Kuang.

Authorities raided Vivo's office last year, accusing it of illegal remittances from India to China.

It is the second-biggest smartphone brand in India, after Samsung, according to industry data.

Vivo has denied any wrongdoing and said it complies with Indian law.

The arrest comes on the back of a widening rift between India and China.

Last week, Reuters reported that Indian police had formally accused Vivo of helping transfer funds illegally to NewsClick, a news portal that is under investigation on charges of spreading Chinese propaganda.

Tuesday's arrest happened under the Prevention of Money Laundering Act (PMLA). It is "a very stringent law and allows for criminal cases to be filed, unlike regular foreign exchange violations which are majorly considered civil offenses," according to Atul Pandey, Senior Partner at legal firm Khaitan.

Vivo has also been accused of customs evasion by the tax enforcement agency. The firm is owned by China's BBK Electronics, which also operates brands such as Oppo and Realme in India.

In the past 18 months, Indian authorities have also targeted other Chinese mobile phone companies such as Xiaomi by freezing $670m of assets.

Earlier this year, India's minister of state for electronics and IT Rajeev Chandrashekhar told parliament that Chinese companies had evaded taxes to the tune of $1.1bn. He said the government had managed to recover only about 18% of this amount.

Speaking to the BBC on the condition of anonymity, a senior legal counsel who represents several Chinese companies in India said that the crackdown was initially meant to put pressure on the Chinese government in the aftermath of a deadly border clash in 2020 that killed 24 soldiers. India had responded then by banning hundreds of Chinese apps, including TikTok.

But subsequent investigations have led to major Chinese firms such as Xaomi and Oppo India being accused of financial crimes. Both firms have denied the allegations.

Relations between the neighbours have deteriorated since, with India most recently registering "strong protest" over a new Chinese map that it said laid claim to its territory.

India arrests Vivo exec, three others in money laundering case

Arpan Chaturvedi and Aditya Kalra
Updated Tue, October 10, 2023 

A man cleans the logo of a Chinese smartphone brand Vivo outside a store in Ahmedabad


By Arpan Chaturvedi and Aditya Kalra

NEW DELHI (Reuters) -India's financial crime agency on Tuesday arrested four industry executives including one Chinese national working for smartphone maker Vivo in India in a case of alleged money laundering, according to legal papers and lawyers working on the case.

The arrest adds to the legal troubles of the Chinese phone maker in India and comes amid rising tensions between Beijing and New Delhi over issues ranging from border disputes to India's increasing scrutiny of Chinese businesses and investment.


Vivo said in a statement it "firmly adheres to its ethical principles and remains dedicated to legal compliance. The recent arrest deeply concerns us. We will exercise all available legal options".

India's Enforcement Directorate (ED) did not immediately respond to requests for comment.

Earlier in the day, two sources told Reuters that four Vivo employees had been arrested, but during a court hearing where executives were produced lawyers said only one Vivo employee, a Chinese national identified in legal papers as Guanwen Kuang, was arrested.

Further details of the investigation were not immediately clear. The ED’s counsel, Manish Jain, sought 10 day custody for the arrested individuals, but the judge ordered only three days.

The names of three other executives, and their affiliations, were not immediately clear.

The executives were arrested in relation to an ongoing 2022 case where the ED raided Vivo's offices and accused it of money laundering, the first of the sources said.

Vivo has repeatedly denied the allegations. It has previously said it cooperated with authorities to provide them with all required information and was "committed to be fully compliant with laws".

Vivo is owned by China's BBK Electronics, which also operates brands such as Oppo and Realme in India. Vivo is the second biggest smartphone brand in India with a 17% market share in shipments, trailing behind Samsung, according to data from research firm Counterpoint.

In 2022, the ED blocked 119 bank accounts linked to Vivo's India business, but a court later revoked the move.

Indian police also have formally accused Vivo of helping transfer funds illegally to a news portal under investigation on charges of spreading Chinese propaganda, Reuters reported last week. Vivo hasn't commented on the matter.

Relations between India and China have increasingly soured since a 2020 military clash on their disputed Himalayan border in which 20 Indian soldiers and four Chinese troops were killed.

Since then, India has banned hundreds of Chinese apps including TikTok, citing national security concerns, and tightened scrutiny of incoming investments from its neighbour.

Recently, carmaker BYD's proposal to invest $1 billion to build electric cars and batteries in India faced increased scrutiny from New Delhi, forcing the carmaker to drop its plans, Reuters reported in July.

(Reporting by Aditya Kalra and Arpan Chaturvedi in Delhi; Editing by Sohini Goswami, Kim Coghill and Mark Potter)

CRIMINAL CRYPTO CAPITALI$M

FTX was a boys’ club. When Caroline Ellison asked Sam Bankman-Fried for equity in the hedge fund she ran, he said ‘it was too complicated’

Ben Weiss
Tue, October 10, 2023 

Michael M. Santiago—Getty Images


Caroline Ellison is arguably the star witness in the government’s case against Sam Bankman-Fried, the former CEO of the bankrupt crypto exchange FTX who’s on trial for fraud. And what became apparent during her testimony on Tuesday is that, compared with three other key lieutenants who’ve all turned on their former boss, she took similar risks for far smaller rewards.

Ellison, who testified that she conspired with Bankman-Fried “to commit these crimes,” is the former CEO of Alameda Research, a crypto hedge fund Bankman-Fried also owned. She was given no equity in Alameda and only half-a-percentage-point stake in FTX. When she broached a conversation with him over receiving equity in the hedge fund, he was “initially receptive” but later told her “it was too complicated.”

Gary Wang, cofounder and the former CTO of FTX, had a 16% stake in FTX and a 10% stake in Alameda. Nishad Singh, former director of engineering at FTX, owned 5% of the company, according to Michael Lewis’s recent SBF tell-all. And Bankman-Fried owned the lion’s share—90% of Alameda and more than half of FTX, per Lewis.

Moreover, while the three siphoned billions of dollars in personal loans out of Alameda—what prosecutor Danielle Sasson called “loans to insiders”—Ellison took out a comparatively minuscule $1.3 million to invest in a startup, she said on Tuesday. Even Ryan Salame, co-chief of FTX’s Bahamas subsidiary whom past witnesses don’t usually cite as part of the FTX inner circle, took out $35 million to donate to Republican political campaigns.

Ellison was, by most measures, handsomely compensated during her time working for Bankman-Fried, whom she also dated on and off. She had a base salary of $200,000 in addition to large bonuses, including a $20 million haul in 2021, half of which she said she invested in a startup. (Prosecutors later told the judge that she personally invested in AI darling Anthropic, but it was unclear whether that was in reference to the $10 million she mentioned as part of her prior testimony.)

However, her comparative lack of compensation with those in the boys' club of Bankman-Fried, Singh, and Wang highlights a continuing theme throughout her testimony: how she, the only woman in Bankman-Fried’s inner circle, answered to him and his lieutenants, not the other way around.

Bankman-Fried has previously laid the blame for the collapse of FTX at Ellison’s feet, saying in writings published by the New York Times that she didn’t appropriately hedge against risk. “She continually avoided talking about risk management—dodging my suggestions—until it was too late,” he wrote. And Mark Cohen, one of his lawyers, hit again and again on this theme in his opening statement, repeatedly mentioning Ellison by name. “As the majority owner of Alameda, he spoke to Ms. Ellison, the CEO, and he urged her to put on a hedge, something that would protect against such a downturn,” Cohen said of his client.

Ellison, though, repeatedly emphasized in her testimony that it was Bankman-Fried who told her to ignore the considerable risks Alameda was running. In late 2021, for example, she told Bankman-Fried why it would be incredibly risky for Alameda to take out $3 billion in loans to invest in startups—it would further imbalance the hedge fund’s balance sheet. Even after she raised her concerns, Bankman-Fried said that he planned to go ahead and take out billions of dollars in loans, unveiling FTX Ventures in January 2022.

At one point, prosecutors asked Ellison about her ex’s appetite for risk. If there were a 50% chance that a coin flip would lead to the world being “twice as good,” she said, “he’d be happy to flip a coin if it turned up tails and the world was destroyed.”

This story was originally featured on Fortune.com

Chinese Bribes, Thai Prostitutes and an End to the Lies: Caroline Ellison’s Explosive Second Day of Testimony Against Sam Bankman-Fried

Sam Kessler, Helene Braun, Nikhilesh De, Elizabeth Napolitano
Updated Wed, October 11, 2023 

Caroline Ellison, one of Sam Bankman-Fried’s top deputies and also his ex-girlfriend, testified Wednesday that she felt relieved when his crypto empire started to collapse because it meant she could stop lying.

She noted the CoinDesk scoop that undid the company, saying the crypto news site’s scoop was based on a balance sheet Alameda sent to lenders to mislead them into thinking the trading firm was on more solid financial footing than it really was – though the numbers were ugly enough to spark the collapse.

Ellison said Bankman-Fried instructed her to use FTX customer funds to repay Alameda’s lenders despite recognizing the risk.

She disclosed an unrelated bribery incident with Chinese officials to retrieve locked funds, highlighting the trust Bankman-Fried had in her.

 Caroline Ellison wept on the witness stand near the end of her second day testifying against her former boss and ex-boyfriend, fallen cryptocurrency mogul Sam Bankman-Fried.

The diminutive and soft-spoken former CEO of Alameda Research described the unraveling last November of her hedge fund and its sister company, the FTX exchange, and the “relief” she felt as revelations about their fraud became public.

“I felt a sense of relief that I didn’t have to lie anymore,” Ellison testified.

Her voice trembled and cracked as she recalled one particular text message exchange between her and Bankman-Fried during what she described as the “overall worst week of my life."

"I felt indescribably bad about all the ... people that lost their jobs ... [and the] people that trusted us that we had betrayed," Ellison told the packed courtroom as she reached for a tissue.

Bankman-Fried, the defendant, did not look up as she wept, but kept typing on his court-issued laptop.

It was the second day of testimony for Ellison, the former Wall Street trader and star witness in the government’s criminal fraud case against Bankman-Fried.

The smoking gun

During her testimony, Ellison discussed the document that caused Bankman-Fried’s companies to collapse: the balance sheet CoinDesk’s Ian Allison reported on exclusively on Nov. 2, 2022.

She said that balance sheet was a version of the one Alameda sent to its lenders, designed to mislead them into thinking Alameda was healthier financially than it really was. On Wednesday, she called it a “dishonest” document.

But even the fudged numbers were ugly enough – brimming with FTX’s FTT token and other tokens closely related to Bankman-Fried – to raise questions about how viable Alameda and FTX were.

“It understated the true extent of Alameda’s risk, but it still showed that Alameda was in a fairly risky position,” Ellison said of the balance sheet.

CoinDesk has won three journalism awards for its reporting that set off the chain of events leading to FTX’s collapse.

‘Sam told me to’

Bankman-Fried told Caroline Ellison to continue repaying Alameda Research’s lenders with FTX customers’ money, which she did despite misgivings, she testified Wednesday.

In May 2022, the Luna crypto token’s decline led to a broader market downturn which caused several of Alameda’s creditors to call back loans that they’d made to the Bankman-Fried–founded trading fund, Ellison testified.

“I was in a constant state of dread,” she said. “I knew we would have to take the money from our [FTX] line of credit and that was money that could be called in at any time.”

Asked why that money was particularly risky, Ellison said it “was coming from FTX customers” who could try to withdraw it at any time.

Ellison said she grew increasingly worried throughout the spring of 2022 that Alameda’s reliance on FTX customer funds could lead to catastrophe for both firms.

“I was concerned that if everyone would find out, then everything would come crashing down,” Ellison said.

In spite of her concerns, Ellison testified that she continued to pay back lenders via Alameda’s FTX line of credit – which meant using FTX customer funds – “because Sam told me to.”

“I thought it was wrong,” she told prosecutors.

Bribing Chinese officials

In the most salacious bit of testimony Wednesday, Ellison said she and a handful of FTX and Alameda executives “paid a large bribe to Chinese officials” to secure funds that had been locked on Chinese exchanges. Neither FTX nor Alameda was involved in the investigation – which Ellison said involved an entity which at one point traded with Alameda, and was being probed for money laundering.

(Judge Lewis Kaplan, who is overseeing the Bankman-Fried trial, said the bribery anecdote was relayed to the jury to illustrate Bankman-Fried’s “trust and confidence” in Ellison and to speak to “motives” – not because Bankman-Fried was being charged with crimes in relation to alleged bribery. He did not mention that Bankman-Fried is currently scheduled to go on trial again next spring on bribery and other charges.)

After the FTX/Alameda team initially failed to secure the funds through negotiation with the Chinese government via lawyers, Ellison said they then tried – and again failed – to release the funds through a scheme involving the creation of fake exchange accounts using the identities of “Thai prostitutes.”

Ellison said Ryan Salame — another ex-FTX executive who’s pleaded guilty to charges — told her the names.

Finally, the funds were secured after Ellison made a payment of $100 million to a crypto account which, to her understanding, was tied in some way to Chinese government officials. Ellison recalled an incident when an employee protested against the plan in a meeting: Bankman-Fried grew increasingly annoyed with the employee, whose father was a Chinese government official, and eventually told her to "shut the f*** up."

In a private “State of Alameda” memo Ellison authored in November 2021, shortly after the payment was made, she included a bullet point titled “-150m from the thing?” under a section detailing “notable/idiosyncratic” financial events. The entry, she said, referenced the payment to Chinese officials: “I didn’t want to put in writing that we paid what I believed were bribes,” she testified.

Before breaking for lunch, prosecutors teased the jury with another memo authored by Ellison – a personal to-do list. It contained the item: “getting regulators to crack down on Binance.”

Binance is the world’s largest crypto exchange and, in the aftermath of FTX’s November 2022 collapse, U.S. regulators have accused it of wrongdoing.

“Sam said that he thought that was one of the best potential ways for FTX to increase market share,” Ellison said. “Regulators had been promising him this would happen for a while.”

Duping Genesis

Alameda had by mid-June 2022 borrowed 77% of the $13 billion of customer U.S. dollar deposits into FTX, according to an internal FTX spreadsheet introduced by prosecutors and authenticated by Ellison. Ellison said she asked FTX executives Gary Wang and Nishad Sing to gather the data for her when she grew concerned about the size of Alameda’s borrowings from FTX.

By this point in June, the data showed Alameda had borrowed 52% of all ETH deposits, 44% of USDT deposits and 25% of BTC deposits into FTX – as well as all of the Australian dollar and BRZ deposits into the exchange. (BRZ is an Ethereum token backed by Brazil’s currency, the real.)

When Genesis, a major Alameda lender, asked Ellison if she could provide documentation of Alameda’s financials, Ellison said she and Bankman-Fried worried that providing accurate financials would “show that Alameda was risky,” so the pair devised strategies to improve the look of Alameda’s financial position. (Genesis, now defunct, is a subsidiary of Digital Currency Group, which also owns CoinDesk.)

At one point, said Ellison, Bankman-Fried suggested Alameda could “put employees’ personal SRM tokens on its balance sheet” and take other measures to inflate the firm’s assets. SRM is a token on the Solana blockchain that Bankman-Fried had created and distributed, in part, to employees, according to earlier court testimony.

Ellison said that she and Bankman-Fried were still concerned that the new balance sheet they’d assembled would scare Genesis, so she went on to create “seven different, alternative balance sheets” for the pair to consider sending to the lender. Ellison walked through some of the balance sheets in court and detailed the different strategies she used in an attempt to hide Alameda’s risky financials.

Read more: Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading Titan Alameda’s Balance Sheet

“I didn’t want to be dishonest but was afraid to share the truth,” Ellison testified.

A princely sum

FTX considered raising capital from Saudi Arabian Prince and Prime Minister Mohammed Bin Salman, Ellison testified.

At that time, around June 2022, Alameda Research got into trouble after a broader decline in the crypto market that summer led several of the hedge fund’s biggest lenders to recall their loans to Alameda, Ellison said.

According to text messages the prosecution showed from June 2022, crypto lender Genesis had asked Alameda to pay back $500 million “in $250 million clips.” In addition to that, former crypto lending desk Celsius also asked for its loans to be repaid.

It was after Celsius’ request that Sam Bankman-Fried said he was considering selling FTX shares to Bin Salman to raise more money to repay Alameda’s lenders, Ellison said.

Someone who answered the phone at the Saudi consulate in the U.S. hung up after a CoinDesk reporter asked about Ellison’s testimony.
Moral ‘framework’

The former Alameda CEO also recalled how Bankman-Fried had said that lying and stealing money were permissible in his worldview.

“He didn’t think rules like ‘don’t lie’ [and] ‘don’t steal’ fit in that framework,” she said.

She recalled becoming more and more used to doing those things and sending false information to business partners or taking FTX customers’ money.

“Over time, it was something I became more comfortable with while working there,” she said.

Vague labeling

To avoid “legal trouble,” Ellison used vague language in an internal FTX document detailing how much Alameda had taken from the now-bankrupt crypto exchange, she testified.

Prosecutors introduced as exhibits spreadsheets created by Ellison detailing Alameda’s financial balances. The documents, according to Ellison, showed that Alameda had taken more than $10 billion from customers of FTX by May 2022.

Asked why this money was labeled “FTX borrows,” Ellison said she was following orders from Bankman-Fried. “I didn’t want to say explicitly ‘FTX customer money,’” she said on Wednesday.

Bankman-Fried “told us not to put things in writing that might get us in legal trouble.”

SBF’s valuable (lack of a) haircut

At one point, prosecuter Danielle Sassoon presented a picture of Bankman-Fried, asking Ellison to describe him. Ellison repled that it appeared he didn’t put much effort into his appearance. “He looked … sloppy,” she said. He “didn’t cut his hair often.”

And there was a reason for that, she recalled. The press and investors frequently took Bankman-Fried’s appearance as a sign that he was a typical Silicon Valley nerd who knew how to code but didn’t care much about fancy designer clothes or cars, which is exactly the image he wanted, Ellison recalled.

“[Sam] said he had gotten higher bonuses because of his hair,” she said. He had told his colleagues at his companies that his hair "had been very valuable [to his career]," she added.

It was also better for FTX’s image, Ellison recalled him telling her, which was also the reason behind the two of them switching their cars from “luxury company vehicles” to much cheaper brands like Toyota and Honda.

Blow to defense

Judge Kaplan dealt a blow to the defense this week when he denied multiple requests from Bankman-Fried’s lawyers to mention his charitable giving and the lack of clear U.S. crypto regulations. That crypto exchanges are not regulated like securities trading venues is “irrelevant” and only likely to confuse the jury, Kaplan said.

Kaplan also ruled that the Bankman-Fried jury would not be able to hear about the likelihood of recoveries from the FTX bankruptcy.

After releasing the jury on Wednesday – just before the court adjourned for the day – Kaplan also sided in favor of a government proposal to bar the defense from mentioning FTX's sizable stake in Anthropic, an AI startup whose valuation has surged in recent months. The defense may have hoped to use the investment to show the jury that FTX could have survived if Bankman-Fried's investments had been given a bit more time to play out.

Kaplan wasn't convinced, however. "This is like saying that if I break into the Federal Reserve Bank, make off with a million bucks, spend it all on Powerball tickets and happen to win, it was okay," the judge said.

Day one recap

Ellison began her testimony on Tuesday, and opened by saying she committed crimes with Bankman-Fried by sending balance sheets that misstated Alameda’s assets and liabilities to the crypto hedge fund’s lenders and by taking FTX customer funds and using them to repay debts or for investments, to the tune of around $10 billion.

Things fell apart in November 2022, Ellison said, when asked Tuesday what happened when customers tried to withdraw their funds.

“Initially FTX was able to process some withdrawals, but pretty soon it started running out of money. Alameda tried to send more money to FTX, but there wasn’t enough to cover all the customer claims,” she said. This was “because Alameda had taken it to make our own investments and to repay our lenders.”

Over the course of her first day of testimony, Ellison walked the jury through how Bankman-Fried, despite naming her (and for a spell, Sam Trabucco) as CEO of Alameda, still largely retained control over the firm’s decisions, and how he disregarded her advice on issues like whether to expand FTX’s investment portfolio.

Alameda’s inability to sell large portions of the FTT token came up. Selling the token would have depressed the price enough to dramatically hurt Alameda’s credit with lenders, she said.

“[Bankman-Fried] gave us a lot of instructions about FTT; at various points he instructed us to buy if there was a large amount of selling or if the price was going down too much,” she said.

Read all of CoinDesk’s coverage here.

Jack Schickler contributed reporting to this story.





Alameda Research allegedly paid Chinese officials around $150M to regain $1B worth of exchange accounts

Jacquelyn Melinek
Updated Wed, October 11, 2023 


Image Credits: Michael M. Santiago / Getty Images


During the Sam Bankman-Fried trial on Wednesday, former Alameda Research CEO Caroline Ellison testified that the crypto trading firm paid Chinese officials to get their Alameda trading accounts on OKX and Huobi in China unlocked.

Judge Lewis Kaplan noted that the defendant is not charged in this case with bribery of Chinese officials, and the evidence was being offered for “limited purposes to display trust and confidence” as well as “motive” between Bankman-Fried and Ellison.

Bankman-Fried was CEO in 2020 when the accounts, valued around $1 billion, were frozen, Ellison testified. But in November 2021, Bankman-Fried said a colleague, David Ma, who was “Chinese and had connections,” found a way to get the accounts unfrozen, Ellison testified. (By the time the freeze was resolved, Ellison was co-CEO of Alameda, alongside Sam Trabucco.)

Bankman-Fried seemed slightly distracted, looking toward jurors rather than at the monitor, where a transcription of the testimony was being displayed in real time. His Poland Spring water bottle was half full and slightly crunched in from him gripping it and placing it down. Bankman-Fried’s parents sat nearby writing notes feverishly.

The accounts were reopened to Alameda after Ellison made about $100 million to $150 million in payments of “crypto transfers” to accounts, even though she “didn't know for certain who it was,” she said. It was later revealed that the accounts were to Chinese officials. Ellison said that Bankman-Fried and Trabucco told her via a Signal chat to make the payments.

Prior to the accounts reopening, Ellison said employees tried to come up with a number of “strategies” to open the accounts, like getting their lawyers to contact the exchanges and government officials. They even considered getting Thai prostitutes to open accounts on the exchanges, in hopes that they could transfer funds to them, she testified, though these efforts didn’t work.

An Alameda trader who was called “Handi” quit in early January 2022 because she disagreed with the decision to pay bribes to Chinese officials, as her father was one himself. Prior to her transfer being complete, she argued with Bankman-Fried about it; during that argument, he allegedly told her to “shut the fuck up,” Ellison testified.

On February 2, 2022, about a month after Handi quit, Trabucco wrote in a Signal chat, “Did Handi’s father immediately turn us in or something?” Bankman-Fried replied, “lol.”

Ellison shared a list with prosecutors, in which she wrote things to consider, including one note that said “150m from the thing?” referring to the money transferred to regain the accounts.

When asked in examination why she didn’t put in writing that the $150 million was a payment to China, Ellison said she “didn’t want to put in writing we paid to get the accounts unlocked,” because she “thought [it] might leak and be used against [Alameda] in a court case.”

Mark Cohen, Bankman-Fried’s main lawyer, tried to strike Ellison’s statement about not wanting the payments in writing, but it was overruled. Cohen tried again and Kaplan replied curtly: “Well counsel, when I overrule, that’s the end of discussion.”


Caroline Ellison Says ‘Sam Was the One’ Who Caused FTX Collapse

Chris Dolmetsch, Yueqi Yang and Bob Van Voris
Wed, October 11, 2023 

(Bloomberg) -- In June 2022, amid the broader crypto meltdown, Caroline Ellison and FTX co-founder Sam Bankman-Fried were looking at a massive hole in Alameda Research’s balance sheet.

FTX’s affiliated hedge fund had borrowed billions of dollars from the cryptocurrency exchange’s deposits. If FTX customers or potential lenders caught wind of it, Ellison, Alameda’s chief executive officer, feared it would “all come crashing down.” But Bankman-Fried had a solution: create new balance sheets. Ellison came up with seven.

The alternative balance sheets were one of the ways Bankman-Fried asked her to lie in his futile efforts to preserve his crypto empire, Ellison said during her second day on the stand as the star witness in his fraud trial in Manhattan federal court. Towards the end of her testimony, Ellison fought back tears as she recalled her feelings when Alameda’s $14 billion debt to FTX finally doomed both companies.

“That was overall the worst week of my life,” Ellison testified Wednesday about the exchange’s November 2022 collapse. Though she “felt indescribably bad about people who were harmed,” she said she was also relieved.

“I felt a sense of relief that I didn’t have to lie anymore, that I could start taking responsibility for what I had done,” said Ellison, who pleaded guilty to fraud and agreed to cooperate with prosecutors barely a month after FTX’s bankruptcy.

Effective Altruism

Wednesday’s testimony by Ellison, who is also Bankman-Fried’s ex-girlfriend, directly took on one of his main defense arguments: that she, not he, was in charge of Alameda when it borrowed billions from FTX. For months, Bankman-Fried has suggested that Ellison was primarily responsible for Alameda’s borrowing and that he only failed to supervise her.

“I mean, I absolutely could have, should have done things differently, and I could have hedged things earlier in the year,” Ellison testified. “But Sam was the one who chose to make all these investments that put us in a leveraged position in the first place.”

She also cast in a new light Bankman-Fried’s well-publicized adherence to the Effective Altruism movement, which encourages followers to make as much money as possible to use for the betterment of society. During FTX’s better days, Bankman-Fried was a well-known donor to the Democratic Party and other causes. Ellison noted that he initially bought luxury cars but then switched to a Toyota Corolla, which he thought would be “better for his image.”

Ellison, who followed Effective Altruism, testified Bankman-Fried’s beliefs were such that even actions like lying and stealing could be justified in pursuit of the greater good. She said Bankman-Fried’s outlook influenced her as well.

“When I started working at Alameda, I don’t think I would have believed if you told me I would be sending false balance sheets to our lenders or taking customer money, but over time it was something I felt more comfortable with,” Ellison testified.

Bankman-Fried’s lawyers could begin their cross-examination on Thursday.

Under questioning by Assistant US Attorney Danielle Sassoon, Ellison detailed the growing sense of crisis permeating the crypto industry through the spring and summer of 2022, following the collapse of Terraform Labs’s stablecoin. Ellison said Alameda had borrowed $13 billion from FTX by mid-June 2022.

“I was in a state of dread,” she said of that time. “I was kind of thinking and imagining every day about what might happen if people tried to withdraw too much money at one time.” She said she imagined FTX customers, lenders and everyone Alameda worked with “would get hurt by this.”

It was in that context that Bankman-Fried asked her to create false balance sheets for Alameda that would conceal the scale of Alameda’s exposure to FTX from lenders like Genesis.

“I understood him to be directing me to come up with ways to conceal things in our balance sheet we both agreed would look bad,” Ellison said.

In August 2022, she said Bankman-Fried started blaming her for the worsening situation.

“Sam started saying Alameda should have hedged way more earlier in the year, that was a big mistake, that was my fault, and I was largely responsible for the financial situation,” Ellison testified. “I got upset. I started crying.”

She said that she probably did make mistakes but said Bankman-Fried was more to blame for the mess they found themselves in.

In describing her growing concerns, Ellison echoed earlier testimony by other prosecution witnesses, including FTX co-founder Gary Wang, who said Bankman-Fried directed him to alter the exchange’s backend code so that Alameda could borrow unlimited amounts. Wang also pleaded guilty and agreed to cooperate in December.

Wang and Ellison were often in the same group Signal chats with Bankman-Fried and other FTX executives, she said. That continued into fall 2022, by which time Ellison said she and Bankman-Fried were no longer a couple.

“We had broken up a few months prior, so I was trying to avoid spending much time with him in a social context and having one-on-one conversations with him,” she testified.

Ellison said Bankman-Fried directed that they should use the disappearing message setting on the Signal app. He also asked them to use the “New York Times test” and imagine their text as a newspaper headline before sending it.

Saudi Lifeline

She and Bankman-Fried discussed other potential lifelines for FTX. On one occasion, he raised the possibility of asking Saudi Arabia’s Crown Prince Mohammed bin Salman to buy shares in FTX. Financier Anthony Scaramucci arranged a dinner between Bankman-Fried and the Saudi ruler in late October when the former was visiting Riyadh for a conference. MBS has never been publicly listed as an FTX investor.

It wasn’t the first time that Bankman-Fried sought the help of a foreign government, Ellison testified. She said the two had several discussions about a “large bribe” they paid to Chinese officials in November 2021 to unfreeze $1 billion in Alameda funds that had been caught up in a crypto crackdown in that country.

Ellison said FTX executives explored various ways to access the funds, but none proved to be successful. She said Bankman-Fried grew frustrated over the issue, at one point yelling at a trader who objected to the idea of bribery to “shut the f**k up” during a meeting.

Eventually, she said they decided they had to pay the officials. Prosecutors added a bribery charge to Bankman-Fried’s indictment in March but later separated it to be tried separately after the original counts.

Ellison said she lied to other employees about the bribe.

“I didn’t want the facts of our crimes to get out,” she said.

The case is US v. Bankman-Fried, 22-cr-673, US District Court, Southern District of New York (Manhattan).

--With assistance from Hannah Miller and Emily Nicolle.




Emails show how Bankman-Fried toyed with Paradigm VCs, who had misgivings but gave him nearly $300 million anyway

Jeff John Roberts
Wed, October 11, 2023

The ongoing fraud trial of Sam Bankman-Fried in New York has produced some remarkable witness testimony—including from his ex-girlfriend Caroline Ellison—but also new documents that provide an illuminating, and sometimes cringeworthy, look at how the FTX founder manipulated venture capital investors.

One of the more remarkable exhibits to emerge at trial is an email exchange between Bankman-Fried and the crypto fund Paradigm, which invested $278 million in the failed exchange—money that the fund has since "marked to zero," according to partner Matt Huang, who testified last week.

The emails are from April 2021, several months before FTX announced a $900 million Series B funding round that eventually valued the company at $18 billion. In a series of curt messages, Bankman-Fried suggests the Paradigm might be responsible for "word on the street" rumors that his exchange should be valued at $12 billion:

Bankman-Fried's message then goes on to pressure the Paradigm team by saying he is happy not to take their money, sniffing that "it's totally fine if you want a $12b val, but we don't, and we would rather just not raise, which is totally fine with us! Also lots of others are happy with 20b."

He further adds that FTX's hoard of in-house FTT tokens—which today are nearly worthless—means the exchange should be worth even more, and concludes the email by lamenting that he's unsure "how we as a community got to where we are—we should be looking to work together in the crypto space, not fight each other."

In response, Huang and another Paradigm investor, Arjun Balaji, reassure Bankman-Fried they are not behind rumors that FTX should be valued at $12 billion, and that any difference of opinion is due to their desire to maximize success. This includes Huang telling him that the consensus is "everyone loves you, SBF + the core FTX platform."

The most ironic part of the email exchange, however, is when Balaji lays out the concerns that made Paradigm reluctant to immediately go along with Bankman-Fried's proposed $20 billion valuation:

As the screenshot above shows, Balaji is worried that FTX lacks a board or any of the oversight that is typically attached to a startup of its size, and that the entire operation is run entirely by Bankman-Fried. Using corporate jargon, he also frets over potential "value leakage" arising from the FTT token and from the unusual overlap between FTX and Bankman-Fried's hedge fund, Alameda Research.

These concerns would turn out to be entirely prescient, as, after FTX imploded, it turned out that Alameda had been raiding customer money from the exchange while Bankman-Fried was using the in-house funny-money FTT tokens to prop up the company's balance sheet.

Unfortunately for Paradigm, the firm did not heed its initial misgivings, and, in what appears to have been a case of pure venture capital FOMO, instead pressed ahead all the same with its Series B investment. It went on to invest millions more only six months later in a follow-on round.

The exchange between Paradigm and Bankman-Fried also contains an additional nugget of interesting information in the form of the subject line of the emails, which is "Re: rob sarver."

The subject appears to refer to Robert Sarver, the onetime owner of the Phoenix Suns, and coincides with a time when Bankman-Fried was preparing to make a number of large investments into sports-related endorsements—including a $135 million naming rights deal with the Miami Heat.

In the email exchange, Huang tells Bankman-Fried he spoke to Sarver who "Said all good things" and wishes the pair luck on collaborating. Bankman-Fried replies that he hopes a deal with Sarver will come to fruition.

No such deal ever materialized, however, as Sarver would soon after confront allegations of racism and misogyny and go on to sell the Suns—and the WBNA's Phoenix Mercury—shortly after FTX collapsed.

This story was originally featured on Fortune.com




Caroline Ellison Testifies That SBF's Strange Philosophy Justified Lying and Stealing

Noor Al-Sibai
Wed, October 11, 2023 


Blurred Lines

In her latest courtroom salvo, Sam Bankman-Fried's former colleague and romantic partner Caroline Ellison testified that her ex had what seems to be a pretty skewed moral compass.

As transcribed by Bloomberg, the latest remarks from Ellison, the former CEO of FTX sister firm and alleged slush fund Alameda Research, show not only Bankman-Fried's philosophical tolerance for dishonesty, but his purported penchant for pushing others into it as well.

SBF was, as Ellison put it, a "utilitarian" who didn't have much affinity for rules that prohibited lying and theft — a philosophy that ties in neatly with the Effective Altruism movement that both ascribed to.

Prior to the arduous crash of the FTX crypto exchange last fall and its stunning aftermath, Bankman-Fried, then a billionaire, was considered the poster boy for Effective Altruism, which is centered on making as much money as possible so that it can be used to help make the world a better place.

Though he admitted nearly a year ago that the "ethics stuff" was "mostly a front," Bankman-Fried's utilitarian thinking nevertheless seems, at least per his ex-girlfriend's reckoning, to have played a major role in the way he ran FTX.

"He thought the only moral rule that mattered," Ellison said in court today, "was doing whatever would maximize the utility."

Spittin'

As the 28-year-old said in her testimony, that attitude eventually rubbed off onto her and made her "more willing to do things like lie and steal."

"When I started working at Alameda I don’t think I would have believed if you told me I would be sending false balance sheets to our lenders or taking customer money," Ellison added, "but over time it was something I felt more comfortable with."

These remarks made during the former Alameda CEO's second day of testimony against Bankman-Fried offer another look into the modus operandi and self-regard of the disgraced crypto scion as more information comes out about him in court, in the media, and in a bombshell new SBF biography by journalist Michael Lewis that dropped just in time for the trial to begin.

During her previous appearance before the court, Ellison said Bankman-Fried "directed" her to commit the financial crimes she pleaded guilty to at the end of 2022, which included multiple counts of fraud and conspiracy.

"I sent balance sheets at the direction of Sam [Bankman-Fried] that made Alameda's balances look less risky to investors," she said during her October 10 testimony, per transcription from the crypto site Coindesk.

We've long known that Ellison's testimony against her ex-boyfriend and alleged co-conspirator was going to include loads of dirty laundry, but the bars she's dropping are nevertheless keeping us riveted as the case barrels on.

More on SBF: Alameda Secretly Had Value of Negative $2.7 Billion, Insider Tells Court