ABBAS CRITIC ASSISSINATED

Palestinian activist's family seeks ICC probe into his death

JALAL BWAITEL
Thu, December 15, 2022 

RAMALLAH, West Bank (AP) — The family of an outspoken critic of the Palestinian Authority who died last year after allegedly being beaten by Palestinian security forces said Thursday it has asked the International Criminal Court to investigate the death.

Nizar Banat was a harsh critic of the PA, which governs parts of the Israeli-occupied West Bank, and had called on Western nations to cut off aid to it because of what he said was its authoritarianism and human rights violations. Banat's family said he died after Palestinian security forces arrested him and beat him with batons.

“Having lost confidence in the independence of the Palestinian judiciary, Nizar Banat’s family sent a request to ICC prosecutor Karim Khan to investigate their son’s brutal murder and prosecute all those responsible,” the family said in a statement.

At the time of Banat's death, the United States, the European Union and the United Nations called for an investigation, and Palestinian Prime Minister Mohammad Shtayyeh announced the formation of an investigative committee. But critics say the committee has dragged its feet on the probe.

It is rare for Palestinians to ask for an investigation into their own leadership.

Banat's death came amid a crackdown on dissent by the internationally-backed PA, which faces a growing backlash from Palestinians who view it as corrupt and increasingly autocratic — a manifestation of a three-decade peace process with Israel that is nowhere close to delivering Palestinian independence.

His death sparked protests in east Jerusalem and demonstrators burned tires, blocked roads and clashed with riot police in the West Bank city of Ramallah, where the PA is headquartered.

Banat’s family said it views Palestinian President Mahmoud Abbas as bearing full responsibility for Banat’s death. Abbas was elected in 2005 for a four-year term and faced a crisis of legitimacy last year when he called off long-delayed elections where his Fatah party was expected to suffer an embarrassing defeat to its rival Hamas. Abbas cited a dispute with Israel for the latest delay.

Abbas' forces coordinate security with Israeli troops, targeting Hamas and other armed groups that threaten both. The policy is deeply unpopular with Palestinians, many of whom view it as collaboration with an occupying power.

The Palestinians have asked the ICC to investigate alleged war crimes by Israel, a probe it launched last year. The family of Shireen Abu Akleh, a Palestinian-American journalist killed during an Israeli raid in the West Bank this year, have referred a complaint on her death to the international court.

Israel captured the West Bank, along with east Jerusalem and the Gaza Strip, in the 1967 Mideast war. The Palestinians seek those territories for their future independent state.

EDITORIAL: Drilling ban literally hot topic

Republican & Herald, Pottsville, Pa.
Thu, December 15, 2022

Dec. 15—Anyone wondering why the Delaware River Basin Commission doesn't trust the natural gas industry to drill safely need look no further than the adjacent Susquehanna River watershed.

Pennsylvania's government long has been outmaneuvered by the industry. Many members of the state Legislature have been lap dogs for industry interests for more than 15 years. And that has been reflected in the state Department of Environmental Protection's accommodating oversight of drilling.

The DRBC regulates water distribution and exercises some environmental oversight for the Delaware River watershed, which provides water for about 13 million people. Its members are the governments of Pennsylvania, New York, New Jersey and Delaware and the federal government.

The agency has precluded drilling in the watershed, and recently voted to preclude drillers from dumping drilling and fracking wastewater anywhere in the watershed, while making it more difficult for drillers to extract water for fracking operations.

All of those restrictions have drawn howls of protest from the industry, and some landowners have protested that they cannot extract value from their land through drilling leases.

Meanwhile, the DEP makes it hard to argue with the Delaware commission's decisions.

The agency was woefully ineffective in the early days of the industry's arrival. After residents of the tiny crossroads of Dimock, Susquehanna County, filmed themselves lighting their tap water on fire soon after Cabot Oil & Gas Corp. began drilling, the agency finally placed a moratorium on drilling around the village.

The state attorney general's office did not criminally charge Cabot until 2020. Recently, Cabot's successor, Coterra Energy Inc., pleaded guilty to a misdemeanor violation of the Clean Streams Law for the migration of methane into Dimock's residential wells. It agreed to pay $16 million for a municipal water system and to pay residents' water bills for 75 years.

Now, remarkably, the DEP has lifted the moratorium on horizontal drilling for gas under Dimock, while insisting that the decision was not related to the plea deal.

Attorney General Josh Shapiro, the governor-elect, was critical of the DEP during his gubernatorial campaign. Reinstating the moratorium would be a good place for him to start making the agency an aggressive guardian of the public interest.

SCI FI TECH

Nuclear fusion breakthrough 'an enormous game changer,' Constellation Energy CEO says

Grace O'Donnell
·Assistant Editor

Tue, December 13, 2022 

The U.S. Department of Energy announced a breakthrough in nuclear fusion on Tuesday that puts the world one step closer to harnessing an abundant energy source free from carbon emissions and long-lived radioactive waste.

U.S. Energy Secretary Jennifer Granholm confirmed that scientists achieved a reaction that created more energy than was used — known as a net energy gain — at the federally-funded Lawrence Livermore National Laboratory in California.

“Last week at the Lawrence Livermore National Laboratory in California, scientists at the National Ignition Facility achieved fusion ignition,” Sec. Granholm said. “It’s the first time it’s ever been done. … Simply put, this is one of the most impressive scientific feats of the 21st century.”

Such a development carries broad implications for renewable energy and long-term solutions to replace fossil fuels, though the benefits are still decades away.

“It'd be an enormous game changer,” Constellation Energy CEO Joe Dominguez told Yahoo Finance Live on Monday (video above). “We've been chasing this for a long time. But the developments we saw out of Lawrence Livermore are, I think, the best developments on fusion energy that we've seen since the work at Princeton probably 30 years ago with the TFTR [Tokamak Fusion Test Reactor]. So it's very exciting. It's transformational.”

Nuclear fusion occurs when two atoms under extreme pressure and heat fuse into one atom, releasing a packet of energy. (Photo: National Ignition Facility at the Lawrence Livermore Laboratory)

A nuclear fusion reaction, which is what keeps the sun and other stars burning, occurs when the nuclei of two atoms fuse into one atomic nucleus. When that happens, the excess mass converts into energy. (The reverse process, nuclear fission, powers existing nuclear power plants and bombs.)

Scientists have been working to achieve sustained nuclear fusion since the Lawrence Livermore Laboratory was founded in the 1950s, but replicating the conditions found within the massive cores of stars in labs on earth has proven to be a seemingly intractable problem.

One difficulty has been in running the reaction long enough to ignite a chain of reactions. Another related challenge has been unleashing larger amounts of energy.

Experts say that nuclear fusion releases 4 million times more energy than burning oil or coal. Put another way, a pickup truck filled with nuclear fusion fuel has the equivalent energy of 2 million metric tons of coal or 10 million barrels of oil. And it produces that energy without the drawbacks of other sources, namely climate change causing carbon emissions and lasting hazardous waste.

Technicians use a service system lift to access the target chamber interior for inspection and maintenance at the National Ignition Facility (NIF) at Lawrence Livermore National Laboratory federal research facility in Livermore, California, United States in 2008. Philip Saltonstall/Lawrence Livermore National Laboratory/Handout via REUTERS

Recent years have shown more promising results, partly due to improved technology and a growing appetite for zero-carbon energy. Donut-shaped reactors using large magnets have been able to extend the time of the reaction. Earlier this year, one such reactor in China set a record for the longest sustained nuclear fusion reaction at 17 minutes. Other tests have claimed to reach a breakeven point, meaning the energy output equaled the energy put into the test.

The development at the Lawrence Livermore Laboratory has seemingly gone further. The National Ignition Facility (NIF) uses a different method of causing fusion by directing powerful lasers at a capsule of hydrogen atoms to generate the pressure and heat necessary.

According to The Financial Times, which first reported the news Sunday, preliminary results show ignition took place, producing 2.5 megajoules of energy, or 120% of the energy that was consumed by the lasers.

That marks a long-awaited advancement in what has been considered a moonshot technology for decades. However, there's still a long runway ahead to move from small reactions in laboratory settings to commercial nuclear reactors.

Specifically, nuclear fusion won't help the world reach its 2030 net-zero targets. It may start to come into play by 2050.

“I still think we're decades away,” Dominguez said. “But this development, where we're now getting more energy out of the reaction than we're putting in to create the reaction, is a gigantic milestone.”

Grace O'Donnell is an editor for Yahoo Finance.


How nuclear fusion works, and why it's a big deal for green energy that scientists made a 'breakthrough'

Paola Rosa-Aquino
Tue, December 13, 2022 

Engineers work at the National Ignition Facility in California's Lawrence Livermore Laboratory.David Butow / Contributor

US Department of Energy scientists produced a nuclear fusion reaction with a net energy gain.

Lawrence Livermore National Laboratory's National Ignition Facility achieved the milestone on December 5.

Fusion energy advocates say it's a step forward in clean, cheap, and almost limitless electricity.

Scientists have made a "breakthrough" in their quest to harness nuclear fusion.

The US Department of Energy officially announced the milestone in fusion energy research on Tuesday.

For the first time, researchers created a nuclear fusion reaction that produced more energy than they put into it.

The experiment, conducted on December 5 at Lawrence Livermore National Laboratory in California, generated 3.15 megajoules of energy, more than the 2.05 megajoules put into creating it.

"Scientifically, this is the first time that they showed that this is possible," Gianluca Sarri, a physicist at Queen's University Belfast, told New Scientist. "From theory, they knew that it should happen, but it was never seen in real life experimentally."

What is fusion energy and why is it a big deal?

This illustration shows how lasers heat a target to the necessary conditions for nuclear fusion to occur

.Lawrence Livermore National Laboratory

Nuclear fusion works by forcing together two atoms — most often hydrogen — to make a heavier one — like helium.

This explosive process releases massive amounts of energy, the Department of Energy explains. Fusion is the opposite of fission, the reaction that powers nuclear reactors used commercially today.


Fusion occurs naturally in the heart of the sun and the stars, providing these cosmic objects with fuel.

Since the 1950s, scientists have been trying to replicate it on Earth in order to tap into what nuclear energy advocates suggest is clean, cheap, and almost limitless electricity.

According to the International Atomic Energy Agency, fusion generates four times more energy per kilogram than the fission used to power nuclear plants, and nearly 4 million times more energy than burning oil or coal.

What's more, unlike fossil fuels, fusion doesn't release carbon dioxide — the greenhouse gas that's the main driver of climate change — into the atmosphere. And unlike nuclear fission, fusion doesn't create long-lived radioactive waste, according to the Department of Energy.

A view of Leningrad Nuclear Power Plant, in Leningrad, Russia on September 14, 2022.

Sezgin Pancar/Anadolu Agency via Getty Images

But so far, nuclear fusion hasn't solved our energy problems on a grand scale.
What Tuesday's 'breakthrough' announcement means for the future

Tuesday's announcement is a huge step forward in nuclear fusion energy, but applying the technology at commercial scale is likely still years away.

Chanda Prescod-Weinstein, a theoretical physicist, pointed out that the process the Department of Energy uses requires tritium, a rare and radioactive isotope of hydrogen.

"It may yet yield important information that is ultimately transformative. We don't know yet," Prescod-Weinstein tweeted on Monday. "Being able to do this once a day with a laser does not at all mean that this mechanism will scale!"

Investors, including Amazon founder Jeff Bezos, have poured billions into clean energy startups trying to make fusion commercially viable, and Tuesday's announcement is likely to continue that trend.

US scientists achieve ‘holy grail’ net gain nuclear fusion reaction: report

Josh Marcus
Sun, December 11, 2022

US scientists have reportedly carried out the first nuclear fusion experiment to achieve a net energy gain, a major breakthrough in a field that has been pursuing such a result since the 1950s, and a potential milestone in the search for a climate-friendly, renewable energy source to replace fossil fuels.

The experiment took place in recent weeks at the government-funded Lawrence Livermore National Laboratory in California, where researchers used a process known as inertial confinement fusion, the Financial Times reports, citing three people with knowledge of the experiment’s preliminary results.

The test involved bombarding a pellet of hydrogen plasma with the world’s largest laser to trigger a nuclear fusion reaction, the same process which takes place in the sun.

Researchers were able to produce 2.5 megajoules of energy, 120 per cent of the 2.1 megajoules used to power the experiment.

The laboratory confirmed to the FT it had recently conducted a “successful” experiment at the National Ignition Facility, but declined to comment further, citing the preliminary nature of the data.

“Initial diagnostic data suggests another successful experiment at the National Ignition Facility. However, the exact yield is still being determined and we can’t confirm that it is over the threshold at this time,” it said. “That analysis is in process, so publishing the information . . . before that process is complete would be inaccurate.”

The scientific community is abuzz that a net gain fusion reaction has taken place, noting that US energy secretary Jennifer Granholm and US under-secretary for nuclear security Jill Hruby are set to make an announcement from the national laboratory on Tuesday.

Many commentators celebrated the reported fusion breakthrough.

“Scientists have struggled to show that fusion can release more energy out than is put in since the 1950s, and the researchers at Lawrence Livermore seem to have finally and absolutely smashed this decades-old goal,” Arthur Turrell, deputy director of the UK Office for National Statistics, wrote on Twitter on Sunday. “This experimental result will electrify efforts to eventually power the planet with nuclear fusion—at a time when we’ve never needed a plentiful source of carbon-free energy more!”

Oliver Cameron, an executive at self-driving car company Cruise, predicted that with the news out of Livermore, the world could be in for a futuristic era of widespread nuclear fusion energy and broadly capable artificial general intelligence (AGI).

“It is becoming increasingly likely that we end this decade with both AGI and viable nuclear fusion,” he wrote on Twitter on Sunday.

In April, the White House announced a suite of initiatives meant to support the development of the fusion industry.

“Fusion is one of a much larger suite of clean energy gamechangers that [are] commensurate with the scale that the climate challenge requires,” Alondra Nelson, head of the White House Office of Science and Technology Policy, said at the time in a statement. “Now is the time for courageous innovation to accelerate fusion energy.”

The Biden administration also helped secure $370bn in subsidies for low-carbon energy development as part of the 2022 Inflation Reduction Act.

Researchers and environmentalists remain divided over the green potential of nuclear fusion.

Proponents argue that fusion is much safer than nuclear fission, the process that powers all existing nuclear energy plants. They say that if commercial reactors were able to regularly achieve net energy gain, and were powered by renewable energy, fusion could be the energy source that finally weans the world off its dependence of fossil fuels.

“For my generation, it was fear of weapons that influenced people’s view of nuclear. In this generation, it’s climate change,” Todd Allen, a professor of nuclear engineering at the University of Michigan and director of the school’s Fastest Path to Zero climate centre, told The Independent earlier this year. “I don’t know in the end if these are the technologies that catch fire or not. It’s just interesting to me because they’re the first demos of new ideas in half a century. I think there is a lot of interest and potential.”

Others, however, argue nuclear fusion has a long history of overpromising and under-delivering, despite massive capital expenditures, a sluggish pace of development the world can’t afford given the dwindling time available to avert the worst of the climate crisis.

“We’ve never been in principle against any technology, but it is very clear, every time you start calculating, that the moment you introduce nuclear, the costs are going up and the speed of change is going down,” Jan Haverkamp, an energy expert at Greenpeace, told The Independent in January. “That’s exactly what we can’t afford now as climate change is becoming ever more real. If you start talking about nuclear at this moment, either you’re following a fad or you’re trying to divert the attention from what really needs to be done.”

Still, despite this debate, billions of dollars are flowing into private nuclear startups, like the Bill Gates-backed TerraPower, as well as government efforts like ITER, a 23,000-tonne, $22bn, 35-nation nuclear experiment under construction in France.

US scientists make huge breakthrough in fusion energy

David Millward
Sun, December 11, 2022

Fusion reaction produces net energy gain, says US government lab in scientific milestone - Corbis Historical

A major breakthrough in the search for clean energy has been made by US government scientists at a laboratory in California, it has been reported.

A fusion reaction, carried out at the Lawrence Livermore National Laboratory produced more energy than was absorbed by the fuel to create it.

It represents a major milestone in the drive to wean the US and other major economies from carbon-producing fossil fuels which scientists regard as the main driver of climate change.

The energy crisis triggered by the war in Ukraine has intensified the need for alternative energy.

Earlier this year the Biden administration passed the Inflation Reduction Act, which included nearly $370bn in new subsidies for low-carbon energy.


On taking office, Mr Biden pledged that his administration would be a global leader in the race to develop green technology.

Pictured is the National Ignition Facility at Lawrence Livermore Laboratory - Corbis Historical

The US energy secretary, Jennifer Granholm and under-secretary for nuclear security Jill Hruby are due to announce the breakthrough on Tuesday.

In August last year, the Livermore laboratory announced the results of a reaction which released 1.3 megajoules of energy, about five times the 250 kilojoules that were absorbed by the capsule.

The reaction is produced by bombarding a minute blob of plasma with light from 192 lasers at the laboratory’s $3.5 billion National Ignition Facility, which was initially created to test nuclear weapons by simulating explosions.

Ms Hruby hailed the results at the time.

“These extraordinary results from NIF (National Ignition Facility) advance the science that NNSA (National Nuclear Safety Administration) depends on to modernise our nuclear weapons and production," she said.

“It also offers potential new avenues of research into alternative energy sources that could aid economic development and help fight climate change."

However, that fell short of the 1.9-megajoule target set by the NIF.

That threshold was breached in recent weeks by scientists at Livermore, the Financial Times reported.

It is understood the latest laser reaction produced 2.5 megajoules of energy. The results of the fusion experiment are still being analysed.

Such was the power produced in the fusion experiment that some of the diagnostic equipment was damaged.

The laboratory has remained cautious, beyond describing the experiment as successful.

“Initial diagnostic data suggests another successful experiment at the National Ignition Facility,” it said.

“However, the exact yield is still being determined and we can’t confirm that it is over the threshold at this time.

“That analysis is in process, so publishing the information . . . before that process is complete would be inaccurate.”

Fusion reactions produce neither carbon nor long-lived, radioactive waste - effectively reaching the holy grail in energy production.

It also enables vast amounts of energy to be produced from very little hydrogen fuel.

The technique of inertial confinement fusion dates back to the 1970s and simply put aims to harness the power found in nuclear weapons to produce energy.

Fusion energy has bipartisan support in Washington.

Earlier this year Democratic congressman Don Beyer, who started the Fusion Energy Caucus, stressed the technology was different from that used to produce power at Fukushima and Chernobyl.

“Fusion is the Holy Grail of climate change and decarbonised future,” he told a White House summit.

“Perhaps even more profoundly, fusion has the potential to lift more citizens of the world out of poverty than any idea since fire.”

Nevada flower listed as endangered at lithium mine site



In this Feb. 10, 2020, file photo, a plant ecologist at the University of Nevada, Reno, points to a tiny Tiehm's buckwheat that has sprouted at a campus greenhouse in Reno, Nev. U.S. wildlife officials declared a Nevada wildflower endangered Wednesday, Dec. 14, 2022, at the only place it exists on a high-desert ridge where a lithium mine is planned to help meet growing demand for electric car batteries. 

(AP Photo/Scott Sonner, File)

SCOTT SONNER
Wed, December 14, 2022 

RENO, Nev. (AP) — A Nevada wildflower was declared endangered at the only place it's known to exist — on a high-desert ridge where a lithium mine is planned to help meet growing demand for electric car batteries, U.S. wildlife officials announced Wednesday.

The Fish and Wildlife Service's formal listing of Tiehm's buckwheat and its accompanying designation of 910 acres (368 hectares) of critical habitat for the 6-inch-tall (15-centimeter-tall) flower with yellow blooms raises another potential hurdle for President Joe Biden's “green energy” agenda.

With an estimated remaining population of only about 16,000 plants, the service concluded that Tiehm's buckwheat is on the brink of extinction.

“We find that a threatened species status is not appropriate because the threats are severe and imminent, and Tiehm’s buckwheat is in danger of extinction now, as opposed to likely to become endangered in the future,” the agency said.

The proposed mining and mineral exploration poses the biggest threat to the flower. It's also threatened by road-building, livestock grazing, rodents that eat it, invasive plants and climate change, the service said. It said an apparent, unprecedented rodent attack wiped out about 60% of its estimated population in 2020.

Ioneer, the Australian mining company that's been planning for years to dig for lithium where the flower grows on federal land halfway between Reno and Las Vegas, says it has developed a protection plan that would allow the plant and the project to coexist.

But the listing under the Endangered Species Act subjects the mine to its most stringent regulatory requirement to date.

It also underscores the challenges facing the Biden administration in its efforts to combat climate change through an accelerated transition from fossil fuels to renewables.

“Lithium is an important part of our renewable energy transition, but it can't come at the cost of extinction,” said Patrick Donnelly, Great Basin director for the Center for Biological Diversity, which petitioned for the listing in 2019 and sued last year to expedite the plant's protection.

The mining company said the decision "provides further clarity for the path forward" and is “fully in line with Ioneer's expectations” for development of the mine site at Rhyolite Ridge in the Silver Peak Range west of Tonopah, near the California border.

“We are committed to the protection and conservation of the species and have incorporated numerous measures into our current and future plans to ensure this occurs,” Ioneer managing director Bernard Rowe said in a statement.

“Our operations have and will continue to avoid all Tiehm's buckwheat populations,” he said.

The service's final listing rule will be published Thursday in the Federal Register.

The conservationists who sued to protect the plant insist that Ioneer's mitigation plan won't pass legal muster. They pledge to resume their court battle if necessary to protect the buckwheat's habitat from the rush to develop new lithium deposits.

The flowers are found on a total of just 10 acres (4 hectares) spread across about 3 square miles (7.8 square kilometers). Federal agencies are prohibited from approving any activity on federal lands that could destroy, modify or adversely affect any listed species' critical habitat.

Donnelly said the company's latest operations plan for the first phase of the mine proposes avoiding a “tiny island of land” containing 75% of its population — surrounded by an open pit mine and tailings dumps within 12 feet (3.7 meters) of the flowers.

The Bureau of Land Management is reviewing the environmental impacts of Ioneer's latest operations and protection plans.

But Donnelley noted that USFWS estimated in Wednesday's final listing rule that the proposed scenario would “disturb and remove up to 38% of the critical habitat for this species, impacting pollinator populations, altering hydrology, removing soil and risking subsidence.”

“Ioneer's ‘Buckwheat Island’ scenario would spell doom for this sensitive little flower,” Donnelly said.

The mine is among several renewable energy-related projects facing legal or regulatory challenges in Nevada. They include another lithium mine proposed near the Oregon border and a geothermal power plant where the Dixie Valley toad has been declared endangered in wetlands about 100 miles (160 kilometers) east of Reno.

“Now that the buckwheat is protected, we’ll use the full power of the Endangered Species Act to ensure Ioneer doesn’t harm one hair on a buckwheat’s head,” Donnelly said.

How dams built by China starve the Mekong River Delta of vital sediment





Starving the Mekong: Lives are remade as dams built by China upstream deprive Mekong River Delta of precious sediment


Thu, December 15, 2022 
By Kanupriya Kapoor, Simon Scarr and Phuong Nguyen

SOC TRANG, Vietnam (Reuters) -Standing on the bank of the Mekong River, Tran Van Cung can see his rice farm wash away before his very eyes. The paddy's edge is crumbling into the delta.

Just 15 years ago, Southeast Asia's longest river carried some 143 million tonnes of sediment – as heavy as about 430 Empire State Buildings – through to the Mekong River Delta every year, dumping nutrients along riverbanks essential to keeping tens of thousands of farms like Cung's intact and productive.

But as Chinese-built hydroelectric dams have mushroomed upriver, much of that sediment is being blocked, an analysis of satellite data by Germany-based aquatic remote sensing company EOMAP and Reuters shows. (Graphic - Starving the Mekong: )

The analysis reinforces an estimate by the Mekong River Commission, set up in 1995 by countries bordering the river, that in 2020 only about a third of those river-borne soils would reach the Vietnamese floodplains. At the current rate of decline, the commission estimated, less than five million tonnes of sediment will reach the delta each year by 2040.

Stretching nearly 5,000 kilometres from the Plateau of Tibet to the South China Sea, the Mekong is a farming and fishing lifeline for tens of millions as it swirls through China, Laos, Myanmar, Thailand and Cambodia before reaching Vietnam.

"The river is not bringing sediment, the soil is salinised," said Cung, 60, who has grown rice at his family's 10-hectare farm for more than 40 years.

"Without sediment, we are done," he said. His diminishing harvest now brings in barely half of the 250 million dong ($10,636) annually that he earned just a few years ago, and his two children and several neighbours have left the area to seek more stable and lucrative work elsewhere.

DAMS TRAP SEDIMENT

For decades, scientists and environmentalists have warned upstream dam projects jeopardise livelihoods in a region of some 18 million people and an annual rice market of $10.5 billion that is a major food source for up to 200 million people across Asia, according to WWF estimates, Reuters calculations and Vietnam's Chamber of Commerce and Industry.

Worry shared by Lower Mekong nations has already led Cambodia to pause plans for two dams on the river, according to the Mekong Dam Monitor, an online platform that provides real-time data on dams and their environmental impact.

But in China and Laos, dam-building goes on. Of seven new dams planned in Laos, at least four are co-financed by Chinese companies, according to Mekong Dam Monitor data.

China's foreign ministry said the country accounted for only a fifth of the total Mekong basin area and only 13.5% of the water flowing out of the Mekong's estuary, adding that there was already a "scientific consensus" on the impact of China's upstream dams. The ministry did not address the slide in sediment levels or the role of Chinese dams in that decline.

Using data derived from thousands of satellite images, EOMAP and Reuters analysed sediment levels around four major dams on the Mekong, two in China and two in Laos. The analysis showed each dam drastically reduced the sediment that should have otherwise flowed through at those locations – by an average of 81% of the sediment load across the four dams.

"The dams are trapping sediment ... each one traps a certain amount, so there isn't enough reaching the floodplains," said Marc Goichot, a WWF river specialist in Vietnam who was not involved in the analysis but reviewed the results.

"Sediment and deltas should be able to regenerate and rebuild themselves," he said. "But the pace at which the natural balance is being forced to change in the Mekong is too fast for the sediment to keep up."

'WAKE-UP CALL'

Farmers in the Vietnamese Mekong River Delta region were not prepared for the speed at which their landscape - and fortunes - have changed.

The area under rice farming has shrunk by 5% in the last five years alone, with many forced to adopt shrimp farming in salty seawater as an alternative.

Incomes in this once-booming region are now among Vietnam's lowest, even as the national economy grows at a projected 8% for 2022. The region has seen more outward migration than any other in Vietnam since 2009, according to Vietnam's Chamber of Commerce and Industry.

The Mekong River Commission estimated in 2018 that total sediment flow by now would be around 47 million tonnes per year. It could be far lower – estimated at just 32 million tonnes per year, according to scientific studies from the last decade including one published in July 2021 in the journal Nature Communications.

"In the past three or four years there has been a wake-up call about sediment," said the head of the commission, Anoulak Kittikhoun of Laos. "We definitely cannot return to sediment levels seen in the past. We need to preserve what we have."

Meanwhile China, eager to boost renewable energy capacity to reduce its reliance on coal, has already built at least 95 hydroelectric dams on tributaries flowing into the Mekong, called the Lancang in China.

Another 11 dams have gone up since 1995 on the main river itself in China – including five mega-dams each standing more than 100 metres tall – while China has helped to build two in Laos.

Dozens more are planned. State-owned Huaneng Lancang River Hydropower, tasked with developing resources, aims to double the network's 21.3 gigawatt capacity by 2025, its chairman Yuan Xianghua told Reuters.

CASCADING EFFECT

The analysis by EOMAP and Reuters of satellite images taken over three decades around four major dams in China and Laos found evidence that the dams reduce sediment flow drastically.

The analysis relied on measurements of turbidity depicted in the images – the amount of light scattered by solid particles suspended in water – as a proxy for sediment levels. Sediment clouds water as it flows: the muddier the water, the higher the turbidity and the more sediment it is likely carrying.

EOMAP used the same approach to gauge sediment in the Elbe River in 2010 and in hydropower reservoirs in Switzerland and Albania in 2021. Its findings on those waterways matched ground observations.

The satellite images for the Mekong analysis date back to the 1990s, which "allows us to calculate turbidity levels before many of the dams were built," said EOMAP data analyst Philipp Bauer.

After discarding images obscured by cloud cover or pollution, the team was left with 1,500 depicting the turbidity around two dams in China and two in Laos. Experts not involved in the analysis agreed the findings made clear the dams were a key culprit behind the delta's sediment loss.

"Mainstream dams catch everything," said economist Brian Eyler at the Stimson Center, which runs the Mekong Dam Monitor. "China's got 11 on the mainstream, plus other countries, so all these are working together to reduce sediment load."

For example, before China built its fourth-largest dam at Nuozhadu in Yunnan province, the water's turbidity measure in 2004 averaged 125.61 so-called 'nephelometric turbidity units', or NTUs, according to satellite data.

After the dam was completed in 2012, average turbidity at the same spot plummeted 98% to just 2.38 NTUs - clear enough to meet the World Health Organization's classification for drinking water.

The Xayaburi and Don Sahong dams in Laos are the most recent to come online, with Xayaburi the largest on the entire Mekong River. Average turbidity before China constructed the Xayaburi dam was 101.51 NTUs, while after the dam came online in 2019, turbidity tumbled 95% to an average of 5.16 NTUs.

And on Laos' southern border with Cambodia, turbidity fell about 42% to 42.39 NTUs after the Don Sahong dam started up in 2019.

Reuters asked both the Chinese and Laotian governments about the impact of their dams and plans to build more. China's foreign ministry did not respond to questions about its existing and planned dams or their impact on sediment levels, while the Laotian government did not respond to requests for comment.

Governments of other countries through which the Mekong flows also did not respond to requests for comment.

FAR-REACHING IMPACTS

At Cung's rice farm in Vietnam, riverbank seedlings have little time to take root before they fall into the water as the banks give way.

Located about 430 kilometres (270 miles) from the nearest upstream dam – and roughly 1,400 kilometres from the Chinese border – the farm area's turbidity has dropped about 15% in the last 20 years, to about 61 NTUs on average today, according to the analysis by EOMAP and Reuters.

Downriver countries affected by the dwindling sediment have lobbied unsuccessfully for China to share data on sediment flows as well as details of its dam-building plans. Beijing shares data only about the water levels and flow rates from its mainstream dams.

Last year, the Mekong River Commission launched its own joint study with China looking at the dams' impacts, but the results won't be known until 2024 at the earliest.

But while the commission has raised concerns about sediment depletion, "We have not had a serious conversation [with China] about sediment yet," said commission chief Kittikhoun.

"Water flow is a priority. Working with China, you have to take it one step at a time."

Sitting cross-legged by the river, rice farmer Cung said he and his peers have struggled to find information about how to adapt to the changes wrought by dams.

"It's not an easy decision to make but sometimes quitting is the only economic choice that makes sense," Cung said.

($1 = 23,505.0000 dong)

(Additional reporting by David Stanway, Claire Trainor and Manas Sharma; Editing by Katy Daigle and Kenneth Maxwell)

Whitebark pine that feeds grizzlies is threatened, US says

 Seen are whitebark pine that have succumbed to mountain pine beetles through the Gros Ventre area east of Jackson Hole, Wyo., on Aug. 1, 2011. U.S. officials say climate change, beetles and a deadly fungus are imperiling the long-term survival of the high-elevation tree found in the western U.S. (Rick Egan/The Salt Lake Tribune via AP, File) 

MATTHEW BROWN
Wed, December 14, 2022

BILLINGS, Mont. (AP) — Whitebark pine trees can live more than 1,000 years, but in just two decades more than a quarter of the trees that are a key food source for some grizzly bears have been killed by disease, climate change, wildfires and voracious beetles, government officials said as they announced federal protections Wednesday.

The U.S. Fish and Wildlife Service will designate whitebark pine as threatened with potential extinction, according to details obtained by The Associated Press. The belated acknowledgement of the tree’s severe decline will require officials to craft a recovery plan and pursue restoration work.

Whitebark pines are found at elevations up to 12,000 feet (3,600 meters) — conditions too harsh for most tress to survive. They are considered a “keystone” species other plants and animals depend on for survival, and their edible seeds are spread almost exclusively by a bird, the Clark's nutcracker.

A nonnative fungus — white pine blister rust — has been killing whitebark pines for a century and they've been largely wiped out in areas. That includes the eastern edge of Yellowstone National Park, where seeds from the trees are a source of food for threatened grizzly bears.

More recently, the trees have proven vulnerable to bark beetles that have killed millions of acres of forest, and climate change that scientists say is responsible for more severe wildfire seasons.

The trees occur across 126,000 square miles (326,164 square kilometers) of land in Wyoming, Montana, Idaho, Washington, Oregon, California, Nevada and western Canada.

Wildlife officials declined to designate which forest habitats are critical to the tree’s survival, stopping short of what some environmentalists argue is needed.

An estimated 88% of whitebark pine habitat is federally owned, with most of that area managed by the U.S. Forest Service.

Just over 50% of standing whitebark pine trees are dead, according to researchers. That includes about 25% that died in the past two decades, said Alexandra Kasdin with the U.S. Fish and Wildlife Service.

Despite the losses, remaining whitebark populations are resilient enough to withstand disease and other problems for decades, she said.

“We have found it is likely to become endangered with extinction in the foreseeable future, not that it is in danger of extinction now,” Kasdin said. “The species is still relatively widespread.”

Noah Greenwald with the Center for Biological Diversity said the decision not to designate critical habitat means whitebark stands could be harmed by construction of ski areas or other developments.

“How it’s going to be able to survive in a warming world isn’t totally known, so it would be prudent to identify places likely to be refuges and ensure they get protected,” Greenwald said.

The species is not commercially harvested, but California wildlife officials said timber harvests should nevertheless be considered a threat in areas where whitebark pine are intermingled with other trees. Federal officials said logging could affect individual trees or local areas, but was unlikely to have species-level impacts.

A 2009 court ruling that restored protections for Yellowstone grizzly bears cited in part the tree’s decline, although government studies later concluded the grizzlies could find other things to eat.

That's complicated government efforts to declare the bears recovered and no longer needing federal protection. Grizzlies raid caches of whitebark pine cones hidden by squirrels and devour the seeds within the cones to fatten up for winter.

Environmentalists had petitioned the government in 1991 and again in 2008 to protect the trees. After getting sued, wildlife officials in 2011 acknowledged that whitebark pines needed protections but they took no immediate action, saying other species faced more immediate threats.

At the time many mountaintops across the West were turning red with dying stands of whitebark pine, said 2008 petition author Sylvia Fallon, a Natural Resources Defense Council biologist.

“Now you look up at the mountains and you see fields of gray, dead trees,” Fallon said Wednesday. “It's taken 14 years since we filed the petition, but I'm glad to see Fish and Wildlife finally make this determination."

The protections adopted Wednesday were proposed two years ago. The final rule includes new provisions that allow members of Native American tribes to collect seeds from whitebark pine for ceremonial or traditional use.

Researchers and private groups are working with federal agencies on plans to gather cones from blister rust-resistant trees, grow the seeds in greenhouses and then plant them back on the landscape.

“There's hope here,” said Diana Tomback, a University of Colorado Denver biology professor and policy director for the Whitebark Pine Ecosystem Foundation.

“We know how to find genetic resistance to white pine blister rust and there's a number of whitebark pine trees that have it. They will be the foundation of a planting strategy,” she said.

A draft of the restoration plan is expected early next year.

Some work already has been accomplished, including the planting of nearly 1 million disease resistant seedlings by the advocacy group American Forests, said Elizabeth Pansing the group's senior manager of western forest science. So far that work “is not happening at the pace or scale needed” to accomplish range-wide restoration, Pansing said.

Future efforts will seek to reseed about a third of the whitebark pine’s range in coming years, Pansing said. Clark's nutcrackers would then spread seeds from disease-resistant trees across the remainder of the range, according to Pansing and Tomback.

“It may take several human lifetimes, but eventually through natural processes we believe we can restore whitebark pine,” Tomback said.

FORD ADDS WORKERS, TESLA ADDS ROBOTS

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


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

Tue, December 13, 2022 

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

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

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

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

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


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

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

Ford F-150 Lightning EV wins 

Motor Trend Truck of the Year

Pras Subramanian

·Senior Reporter

Tue, December 13, 2022 

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

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

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

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

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

Ford F-150 Lightning

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

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

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

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

Nora Naughton
Tue, December 13, 2022 


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

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


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


Startup production goals lag far behind legacy competitors like Ford.

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

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

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

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

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

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

ANOTHER WITCHHUNT

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



Julia Mueller
Wed, December 14, 2022

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

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

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

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

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

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

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

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

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

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

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

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

 CRIMINAL CRYPTO CAPITALI$M

UPDATED

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

Carla Mozée
Wed, December 14, 2022 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ben McKenzie testifies against crypto in Senate hearing


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

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

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

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

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

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

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

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

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

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

SO THIS IS A LIVING WAGE

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

Morgan Chittum
Wed, December 14, 2022 

John Ray, the new CEO of FTXNathan Howard / Stringer

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

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

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

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

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

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

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

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

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

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

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



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

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

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

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

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

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

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

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

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

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

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

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

“SAFE, TESTED AND CONSERVATIVE”

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

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

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

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

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

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

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

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

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

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

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

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

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



Camomile Shumba
Thu, December 15, 2022 

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

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

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

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


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

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

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

CoinDesk reached out to the FCA for a comment.

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

FTX Fiasco Fails to Mute Congress’s Biggest Crypto Enthusiasts

REPUBLICANS OF COURSE




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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

George Glover
Thu, December 15, 2022 

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

Dante Carrer/Reuters

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

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

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

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

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

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

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

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

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

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

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

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

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

Matthew Loh
Wed, December 14, 2022 

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

a testimony for the House Financial Services Committee.

Tom Williams/CQ-Roll Call Inc via Getty Images

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

Jennifer Sor
Tue, December 13, 2022 

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

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

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

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

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

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

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

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

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

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

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

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



Ian Allison
Tue, December 13, 2022 

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

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

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

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

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

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

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

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

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

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

Read more: The FTX Downfall: Full Coverage

Japan Was the Safest Place to Be an FTX Customer



JP Koning
Tue, December 13, 2022 

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

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

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

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

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

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

In brief, careful regulation of crypto exchanges.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEE 

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

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

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