Greg Pilarowski’s Post

⚖️ Sam Bankman-Fried’s 25-year prison sentence doesn't reflect a failure of FTX, it reflects a failure of America. ⚖️   Binance’s Changpeng Zhao was recently sentenced to four months in prison rather than the three years recommended by prosecutors, roughly a month after FTX’s Sam Bankman-Fried (“SBF”) was sentenced to 25 years. In SBF’s sentencing, Judge Lewis Kaplan cited that SBF knew what he did was wrong and that he’d got caught. But after listening to “Going Infinite” by Michael Lewis on Audible, it’s difficult not to feel sympathetic towards SBF. My own take – he never should have had the freedom to make the mistakes that he did. The regulators stuck their heads in the sand, and Sam paid the price. Michael Lewis is a phenomenal storyteller and famous for his books on financial crises and behavioral finance, like “Liar’s Poker” and “The Big Short”, many of which have been adapted into movies. 📚 For “Going Infinite”, Michael Lewis was embedded with the FTX team, both before and during the meltdown. He saw the trainwreck from INSIDE the train. This made for an amazing book, which highlighted for me that the failure of FTX was our failure to regulate crypto. 🏛 Some key insights from the book: 📈 SBF is an effective altruist (EA). EA’s core idea is to maximize potential good for the world. This leads many, like SBF, to choose to make as much money as possible just to give it away, since they believe that approach will have the largest positive impact on the world. 📈 Initially FTX could not get a bank account because it was a crypto business. At the start all funds for FTX went to Alameda because they HAD TO. And in the beginning Alameda was the key market maker on FTX because they needed to be. 📈 Why does that matter? Because FTX was a startup run by kids. I've been at a startup that grew at hockey stick graph angles during the early days of China's online game boom— it's messy. I've seen it. 📉 But here, FTX had billions of other people’s dollars, AND they had zero regulatory oversight. Did SBF misuse customer funds? The jury said yes, but if FTX was regulated (like any other financial intermediary) he never would have had that opportunity. The true culprit is the US financial regulatory system – the SEC, Congress – for not regulating an emerging and immensely impactful market. In SBF’s own words, he screwed up, but he never should have had the chance to do so in the way that he did. FTX failed because America failed to regulate FTX. We can do better. It’s time to bring crypto in from the cold before we lock up another of our best and brightest. You can find Michael Lewis’s book, Going Infinite, here (or on Audible, which I LOVE): https://lnkd.in/eg54Acre #SBF #CryptoRegulation #Fintech

#FTX vs. #Binance:( ⚔️ The Billion-Dollar Blame Game – Crypto’s Biggest Courtroom Brawl to Claw Back Billions💰🔄 ⬇️📊FTX’s fall sent shockwaves through #crypto, and now the #bankrupt exchange is waging a legal war to recoup billions. Leading the charge? A lawsuit against Binance and its CEO Changpeng #Zhao (#CZ) for a whopping $1.76 billion. But this is just one piece of a massive effort to make creditors whole as FTX unleashes lawsuits on big names and institutions worldwide. Here’s how it all went down – and who’s in the hot seat. 💼📉The $1.76 Billion Buyback that Broke FTX In July 2021, Binance and CZ decided to cash out of their stake in FTX. They sold 20% of their international holdings in FTX’s global arm and an 18.4% stake in FTX’s U.S. entity for a sky-high $1.76 billion, paid in a mix of FTT,#BNB, and #BUSD. But here’s the twist: FTX alleges it was already insolvent at the time. According to the lawsuit, FTX’s founder #SamBankmanFried used customer deposits, funneled through its sister firm Alameda Research, to fund the buyback and keep up appearances. FTX now calls the buyback part of a larger scheme to hide its financial instability. 💴🦹CZ’s Alleged Hand in FTX’s #Collapse: But CZ didn’t just cash out, according to FTX – he allegedly played an active role in FTX’s downfall. In November 2022, CZ’s tweets about selling Binance’s FTT holdings caused a panic. FTX claims these tweets were no coincidence but part of a calculated strategy to incite a “bank run” and force its rival’s collapse. As customer withdrawals soared, FTX found itself unable to keep up, leading to its implosion. CZ’s move, which he called “post-exit risk management,” is portrayed by FTX as a deliberate attempt to undermine FTX. 🕸🌎A Web of Binance #Entities in the Crosshairs: This lawsuit doesn’t stop with CZ and Binance as a company – it targets a network of Binance entities spanning jurisdictions from the #CaymanIslands to #Ireland. FTX claims Binance set up this intricate structure to avoid regulatory scrutiny and shield itself from liability, leaving behind a trail of billions owed to FTX creditors. 🫵👮Who Else Is FTX Going After? Altogether, FTX has filed 28 #lawsuits, aiming to recover at least $284 million from other parties in addition to the $1.76 billion from Binance. There’s former White House comms chief Anthony Scaramucci (Skybridge Capital) allegedly snagged a $67 million “influence-buying” boost from FTX. And then there’s “Humpy the Whale” – Nawaaz Mohammad Meerun – accused of market schemes that cost Alameda a cool $1 billion. 🌎📊The lawsuits also extend to crypto exchanges like #Crypto.com, #Huobi, and #MEXC Global, where FTX alleges Alameda traded under aliases to shield assets now withheld from FTX’s estate. 📢😇It’s not just billions at stake – it’s reputations, rivalries, and the fight for crypto’s future. And FTX’s crusade to pay back their #creditors? Just getting started......💨

By next Thursday, August 16, creditors must vote on whether to approve the Chapter 11 liquidation plan of FTX, the once high-flying cryptocurrency exchange. FTX’s former CEO, Sam Bankman-Fried aka SBF—the son of two Stanford law professors, who went on to become one of the world’s youngest billionaires—is behind bars. He’s in the process of appealing his convictions for fraud, conspiracy, and money laundering, as well as his 25-year prison sentence. Ryne Miller 🇺🇸 served as general counsel of FTX US, one of several corporate entities that was part of the sprawling FTX empire. Working out of New York, he was not part of SBF’s high-living, Bahamas-based inner circle. But after a fateful phone call in November 2022 from SBF’s father, Joe Bankman, informing Ryne of a multibillion-dollar “liquidity hole”—some $8 billion to $10 billion in FTX customer deposits that had somehow gone missing—he played a crucial role in responding to the situation. By the end of that week, FTX was in bankruptcy. Why did Ryne leave a partnership at Sullivan & Cromwell LLP, one of the world’s leading law firms, to become the GC of FTX US? Should he have noticed certain red flags at the company, such as the lack of a board or a weak compliance function? What lessons does he draw from his time at the company? And how is he putting them to work today at his new law firm, Miller Strategic Partners LLP, which marks its one-year anniversary next month? Ryne and I covered all this and more, in the latest edition of the Original Jurisdiction podcast. Thanks to Ryne for joining me, and thanks to NexFirm for sponsoring! https://bit.ly/3T3uHWD #podcast #podcasts #podcasting #law #lawyer #lawyers #attorney #attorneys #legalcareer #legalcareers #regulation #regulatorylaw #finance #crypto #cryptocurrency #FTX #bankruptcy #bankruptcylaw #digitalasset #digitalassets #Bitcoin

Sharing the link to my discussion with David Lat and his Original Jurisdiction podcast, for those interested.

FTX: A Cautionary Tale of Greed and Hubris ✴Introduction: #FTX, once hailed as a major player in the cryptocurrency exchange arena, witnessed a spectacular #downfall that sent shockwaves through the industry. Led by Sam Bankman-Fried, the exchange's collapse unfolded over a tumultuous 10-day period, leaving a trail of #mistrust and financial ruin in its wake. ✴Timeline of #Events: #November2022: CoinDesk Exposes #Alameda Research's #Holdings: CoinDesk's report revealed that Alameda Research, closely associated with FTX, primarily held #FTT and other tokens controlled by FTX #insiders instead of #conventional assets. Market #Reaction and Customer #Withdrawals: The leak led to a significant drop in FTT's market #cap, prompting Binance to announce the sale of its #FTT holdings. Scores of investors and customers began withdrawing their funds from #FTX, totaling $6 billion over three days, signaling a crisis. Failed #Acquisition and #Regulatory Scrutiny: Binance CEO Changpeng Zhao announced a #nonbinding agreement to #acquire FTX's non-U.S. unit. However, Binance cancelled the deal citing regulatory #investigations and #mishandling of funds, exacerbating FTX's predicament. #Misappropriation of Funds and Legal Actions: Allegations emerged that FTX #diverted billions from customers to finance Alameda's activities and #lavish spending. Subsequently, the U.S. DOJ, #SEC, and #CFTC filed charges against Bankman-Fried for #wirefraud, #moneylaundering, and #securitiesviolations. FTX #Bankruptcy and #Recovery Efforts: FTX declared #bankruptcy amidst mounting losses, with approximately $9 billion in customer assets lost. However, efforts to recover assets during bankruptcy proceedings #yielded about $5 billion. #Legal Repercussions and #Celebrity Involvement: Bankman-Fried and his associates faced legal troubles, with some pleading guilty and negotiating deals. #Celebrities endorsing FTX faced #legal action for nondisclosure of #financial ties. #Corporate Governance Failures: Court-appointed #CEO John J Ray described FTX's corporate governance as the #worst he has seen in his 40-year career,, highlighting the absence of #controls and trustworthy #financial information. #Sentencing and #Asset Forfeiture: Sam Bankman-Fried was sentenced to #25 years in prison for #fraud, #conspiracy, and #moneylaundering. Despite seeking a shorter sentence, the judge ordered Bankman-Fried to forfeit approximately $11 billion in assets, emphasizing the #severity of his actions. Conclusion: The #fallout from #FTX's collapse reverberates far beyond the realms of #finance, underscoring the importance of #regulatory oversight, #transparency, and #accountability in emerging markets.

Does the S in SBF stand for sociopath? Bloomberg reports: "Sam Bankman-Fried came up with a lot of ideas to rehabilitate his image and launch a new crypto exchange after FTX went into bankruptcy. Bankman-Fried thought he might “Go on Tucker Carlson, come out as a republican;” “Come out against the woke agenda;” tell people the team running his bankrupt former company “has no idea how to run FTX;” tell people he’s “really glad” the bankruptcy team stepped in and “they’re great.”" He's about as anti-woke as he is woke. There seems to be no narrative he will not consider selling to manipulate observers. Given that he was in the business of selling an asset class based purely on narratives, it should come as no surprise that he regarded his trial similarly as an exercise of marketing a suitable narrative regardless of whether it is true. "In a Google document, which prosecutors attached to a court filing seeking to put Bankman-Fried behind bars for as long as 50 years, the fallen crypto king considered having author Michael Lewis interview him on TV, asking people what to do in a Twitter poll and leaking a document to the press. ... Prosecutors said the Google document helps show that Bankman-Fried is “motivated to launch his redemption narrative” and possibly defraud investors in the future." For future criminals considering a narrative defence, perhaps don't store your conflicting narratives on Google docs? 🤔 And perhaps don't especially label them like SBF? "Applying the maxim that there are no bad ideas in a brainstorm, Bankman-Fried headlined the document: “Note: these are all random probably bad ideas that aren’t vetted; CONFIDENTIAL.”" 🤦🏻 It's probably not a good idea to include a bunch of inconsistent defences in a document. Even if one of them were true, how likely do you think a jury is to believe in it? And an all caps confidential only emphasises you have something to hide. The question remains: how long will the modern idiot Machiavelli spend behind bars? Prosecutors are asking for 50 years (https://lnkd.in/g5RUWTTZ), but I wonder if we should simply slap on an extra 10 for sheer stupidity?

By next Thursday, August 16, creditors must vote on whether to approve the Chapter 11 liquidation plan of FTX, the once high-flying cryptocurrency exchange. FTX’s former CEO, Sam Bankman-Fried aka SBF—the son of two Stanford law professors, who went on to become one of the world’s youngest billionaires—is behind bars. He’s in the process of appealing his convictions for fraud, conspiracy, and money laundering, as well as his 25-year prison sentence. Ryne Miller 🇺🇸 served as general counsel of FTX US, one of several corporate entities that was part of the sprawling FTX empire. Working out of New York, he was not part of SBF’s high-living, Bahamas-based inner circle. But after a fateful phone call in November 2022 from SBF’s father, Joe Bankman, informing Ryne of a multibillion-dollar “liquidity hole”—some $8 billion to $10 billion in FTX customer deposits that had somehow gone missing—he played a crucial role in responding to the situation. By the end of that week, FTX was in bankruptcy. Why did Ryne leave a partnership at Sullivan & Cromwell LLP, one of the world’s leading law firms, to become the GC of FTX US? Should he have noticed certain red flags at the company, such as the lack of a board or a weak compliance function? What lessons does he draw from his time at the company? And how is he putting them to work today at his new law firm, Miller Strategic Partners LLP, which marks its one-year anniversary next month? Ryne and I covered all this and more, in the latest edition of the Original Jurisdiction podcast. Thanks to Ryne for joining me, and thanks to NexFirm for sponsoring! https://bit.ly/3T3uHWD #podcast #podcasts #podcasting #law #lawyer #lawyers #attorney #attorneys #legalcareer #legalcareers #regulation #regulatorylaw #finance #crypto #cryptocurrency #FTX #bankruptcy #bankruptcylaw #digitalasset #digitalassets #Bitcoin

Cyprus SEC extends FTX Europe suspension to May 2025 - https://lnkd.in/di5q9a6R #cryptocurrency #bitcoin #news #affiliateprogram #affiliatemarketing #DigitalMarketing #Technology #money #blockchain #investing The Cyprus Securities and Exchange Commission has extended its suspension on FTX Europe’s investment firm license, banning the crypto exchange from offering services or accepting any new clients. In a notice published on Nov. 5, Cyprus regulators announced that they have extended the suspension on FTX EU by another six months. This is the fourth time the Cyprus agency has extended its suspensions on FTX EU since the initial suspension on Nov. 11, 2022, which is around the same time FTX in the U.S collapsed. Until the suspension is lifted, currently set to May 30, 2025, the firm is banned from carrying out investment services or activities, taking part in new business transactions, accepting new clients and promoting itself as an investment service. Though, the agency does give FTX EU permission to complete its transactions and return funds and financial instruments to clients. According to the notice, the Cyprus SEC has extended FTX EU’s suspension in order to give the firm time to move forward with the steps needed to comply with the investment and regulated markets laws that are currently in place. Due to the suspension, FTX Europe’s website does not offer any trading options, instead it only lets users log in to see their balance or request a withdrawal. After the FTX declared bankruptcy in November 2022, Cyprus SEC suspended FTX Europe’s license due to the “suitability of the members of the management body” and the need to safeguard client assets. FTX Europe was originally a Swiss startup company named Digital Assets AG, before it changed its name when FTX acquired it for $323 million in 2021. According to a Reuters report, FTX’s restructuring team tried to gain back some of the funds spent on acquiring FTX Europe, stating that the price was a “massive overpayment,” though they ended up settling the dispute by selling FTX Europe back to its original founders for $32.7 million, only slightly more than 10% of its acquisition price. Shortly after being green lit by Cyprus SEC in 2022, FTX EU opened a regional headquarters in Cyprus alongside its main headquarters in Switzerland. Source link

FTX’s legal battle with Anthony Scaramucci and SkyBridge Capital is more than just a financial dispute—it’s a deeper reflection of the toxic culture and questionable practices that surrounded the crypto giant. What’s behind this lawsuit, and what does it reveal about FTX's dealings with money, influence, and transparency? FTX filed a lawsuit against Scaramucci as part of a broader effort to recover funds for creditors. The firm alleges that Sam Bankman-Fried (SBF) engaged in lavish, showy investments in various companies, including SkyBridge Capital, to enhance his political and financial standing during the 2022 “crypto winter.” But the real kicker? These investments weren’t just to boost legitimate ventures—they were allegedly aimed at creating the illusion of solvency and maintaining FTX’s image in the public eye. In fact, one of the core accusations is that millions of dollars were funneled into these “investments,” only for the money to be shuffled back, inflating valuations and propping up the image of both SkyBridge and FTX. This raises troubling questions about potential money laundering—using investments as a mechanism to recycle funds and hide the true state of FTX’s finances. As the legal fallout from FTX’s bankruptcy and Bankman-Fried’s fraud charges continues to unfold, more details about these investments will come to light. But one thing is clear: the crypto industry, which once promised decentralisation and transparency, is now facing questions about the very practices it was supposed to be free of. If these allegations are true, it’s a stark reminder of the need for accountability in the crypto world. The industry can no longer afford to ignore the complex financial games being played behind the scenes. As investors, regulators, and consumers, we must demand more transparency and less hype. What can we learn from the FTX debacle, and how can we push for better practices in this space? Let me know your thoughts in the comments.

Just finished this book by the author of Liars Poker and Moneyball, about the rise and fall of the crypto-currency exchange FTX and its founder Sam Blankman-Fried. It describes his life, maths focused education, time as a trader, signing up to “Effective Altruism” (EA), then cryptocurrency, establishing FTX, moving to Bahamas, generating enormous financial backing, followed by huge cash inflows often deployed on sponsorships and high risk investments. The author was lucky to be close to the main characters as the business failed and the investigators were called in. This is a book about vision, ambition, enthusiasm, “probabilistic decision making” and courage. It is also about greed, corruption, loss and criminality. Takeaways: 1. SBF has a gift for numbers but no gift for rigor, order and discipline. He has a delusional superiority complex that manages to wrap together innocence, naivety, arrogance and self-consumption. 2. FTX/Alameda were two well-conceived money-making machines that went off the rails due to: too much focus on the code and not enough focus on the ethics, lack of basic controls, and absence of “serious adults in the room” 3. FTX/Alameda and their ventures were driven by the greed of investors, SBF and many of the employees, self-justified by the cloak of “Effective Altruism”. 4. “Effective Altruism” (you need to search) is often the fig-leaf support and justification for greedy people 5. Blindly making “Expected Value” the basis for decision making is dangerous when potential upsides of (low probability outcomes) are huge but the probability of ruin is high. 6. Crypto-currencies and exchanges, and everything associated with them, should be avoided by everybody other than those comfortable with losing 100% of their money. 7. The Liquidation industry is just as greedy: in this case gorging itself on the remnants of FTX/Alameda. Maybe SBF was right when claiming that if he could make sure all stakeholders were made whole. 8. The Regulators need to act more forcefully and promptly to protect the small guy with effective regulation (even thoughI have limited sympathy with those that gambled and lost). 9. Money blinds people. As SBF/FTX splashed the cash, celebrities, the rich and famous and world leaders beat the path to SBF’s door to bask in the reflected glory. This is classic Lewis: he provides easy to understand explanations of a complex subject. His understanding of the financial system combined with his gift for understanding people make for great story telling. As he ends up in the “scene of the crime” - the FTX encampment in Bahamas- he provides a running commentary as the business implodes and the investigators arrive , interviewing the main characters including hours with SBF. The book seems to suffer from “get it out quick after the FTX failure”. It is a bit light weight but easy to read. On the Edge provides deeper technical understanding and is less “reality tv”. 7/10