Legal heat rises for Bankman-Fried

Legal heat rises for Bankman-Fried

Since the collapse of crypto exchange FTX last month, its founder, Sam Bankman-Fried, has faced a series of investigations around the world into how his empire imploded – and how billions in silver dollars from customers have disappeared.

Today, the former crypto mogul, widely known as SBF, faces a wider investigation into possible market manipulation, The Times reports: US federal prosecutors are examining whether he materially influenced illicit trade in two cryptocurrencies whose collapse contributed to the demise of FTX.

Manhattan prosecutors examine TerraUSD and Luna, which are related. (In a nutshell, when TerraUSD fell in value, Luna’s supply would increase, part of a mechanism that was supposed to keep TerraUSD’s price stable.) In May, a flood of sell orders for TerraUSD swamped the market. digital currency market and drives down the price of Luna. The two-coin markets eventually collapsed.

The bulk of TerraUSD’s sell orders appeared to come from one place, according to the Times: SBF trading company Alameda, which had also bet against Luna. If things had gone as planned, Alameda would have reaped a huge profit.

But the trade may have caused the loss of SBF. The collapse of the two coins sparked wider chaos within crypto, including at Alameda. The company, faced with billions in called loans, used money from FTX customers to cover the payments. When FTX customers, worried about the health of the exchange, began rushing to withdraw their money, the company was unable to meet their demands and collapsed.

The investigation is still in its early stages and may not lead to charges against SBF. But it’s another sign of the number of legal problems he and his associates now face.

In other crypto news:

  • FTX held talks with Taylor Swift over a $100 million sponsorship deal, in part because SBF was a fan, according to the Financial Times. Other FTX executives opposed the idea, and it never came to fruition.

  • Only 8% of Americans view crypto positively, according to a poll for CNBC.

Covid cases are skyrocketing in China. Infections are rising rapidly after Beijing eased its ‘zero Covid’ policy, putting pressure on the country’s healthcare system. This surge has raised new concerns about the economy.

Republican states are ramping up the pressure on TikTok. Indiana’s attorney general has sued the video platform, accusing it of misleading users about China’s ability to access their data and children finding inappropriate content. Texas has banned the app for government-issued devices, as have several other Republican-led states.

The former president of Theranos is sentenced to nearly 13 years in prison. Sunny Balwani was found guilty of defrauding investors and patients, and received a longer sentence than the boss of the healthcare start-up, Elizabeth Holmes.

The United States suggests taxing metal from the dirtiest foundries. The White House yesterday sent the EU a proposal combining trade policy and climate policy. It suggests an international consortium promoting trade in steel and aluminum made with lower carbon emissions – and imposing taxes on metals, largely from China, that do not meet certain sustainability standards .

Twitter is reportedly considering charging some Apple users more for subscriptions. The plan to raise the price of Twitter Blue through the iPhone app appears tied to the 30% commission charged by Apple for in-app purchases, according to The Information.

Today is the start of a criminal case against Wirecard, the payment processor which, at the height of its success in 2018, was near the top of Germany’s blue-chip Dax stock index, with a market capitalization over that of Deutsche Bank.

Two years later, it collapsed over an accounting imbroglio that German newspaper Handelsblatt called “the biggest economic scandal in German history”. His downfall served as the inspiration for the Netflix series “King of Stonks,” as well as the basis for the documentary “Skandal!”

Former Wirecard CEO Markus Braun and two associates will stand trial in Munich, in a courtroom inside a huge prison complex. Prosecutors accused Mr. Braun and his colleagues of concocting a gargantuan fraud that tricked auditors, customers and investors by funneling billions through a maze of fake accounts. The case is expected to last over a year.

“From a capital markets perspective, this is probably the biggest deal ever in Germany, certainly the biggest in the last ten years,” said Marc Schiefer, a securities lawyer at the firm of German lawyers TILP Rechtsanwaltsgesellschaft, at DealBook. “So much confidence in the capital markets has been lost.”

Wirecard’s implosion sent shockwaves to German investors, and catalyzed a radical overhaul of the country’s financial watchdog, BaFin. When activist investors and financial journalists, including at the Financial Times, began reporting allegations of wrongdoing within the company, BaFin threatened whistleblowers. The scandal inspired calls across the EU for broader changes to securities law and generated a mountain of lawsuits from investors in Germany.

TILP is representing more than 15,000 Wirecard retail investors and 16 institutional investors in a separate civil lawsuit against Braun and EY, Wirecard’s auditor. EY says the investors’ lawsuit is without merit. The collusive acts of fraud at Wirecard were implemented through a highly complex criminal network designed to deceive everyone,” a company spokesperson said in a statement to DealBook.

If the criminal trial returns a guilty verdict, Schiefer said, that could bolster the investors’ civil suit. But he is not convinced that the lawsuit will lead to better investor protection: “It’s like the German national football team. We have lost again and again, and no lesson is learned.

Serena Ventures, the venture capital firm founded by Serena Williams, is leading a $12 million funding round for Juno, a healthcare company focused on underserved communities.

The investment, which will help Juno expand from New York to Atlanta, Los Angeles and Tulsa, stems in part from the tennis star’s well-documented health issues after giving birth to her daughter five years ago.

Juno targets its services to families, including primary care, women’s health, and pediatrics, and promises transparent and affordable pricing while accepting a range of insurance plans, including Medicare and Medicaid. For additional membership fees that start at $20 per month, users can access additional benefits like weekend appointments.

The company was founded in Harlem two years ago by Dr. Akili Hinson, a physician and former consultant at McKinsey & Company, with the aim of focusing on communities struggling to access adequate health care due to disparities. socio-economic and racial.

Ms. Williams’ own health issues informed her investment. She has spoken of her frustration after the birth of her daughter five years ago after being forced to seek help from medical professionals to deal with life-threatening medical complications. According to the Population Research Bureau, black women are three times more likely than white women to die in childbirth or soon after.

“There is a serious need to address the issues of equity in health care, mental health and wellbeing services that many communities face,” Ms Williams said in a statement.

Hinson added in an interview, “The fact that we provide culturally appropriate care – and that we train all of our physicians to provide culturally appropriate care – is also central to what she believes in and learned from. his own experience.”

Last week at the DealBook Summit, Andrew interviewed some of the world’s most influential leaders, including US Treasury Secretary Janet Yellen, Ukrainian President Volodymyr Zelensky, Meta’s Mark Zuckerberg and Netflix’s Reed Hastings.

One theme emerged in just about all of these conversations: Every decision is a trade-off – sometimes moral, sometimes economic, and sometimes both. Here’s how some of the speakers said they’re handling those choices, as part of today’s special section on themes raised at the summit.

Benjamin Netanyahu: Asked why he is reluctant to commit to supplying air defense systems to Ukraine, the recently re-elected Israeli PM says his relationship with Russia helps preserve Israel’s access to space Syrian air force, which he considers vitally important for Israel. “Foreign policy and democracy are a combination of moral principles and expediency,” Netanyahu told Andrew. “What presupposes primacy? Interests or values? The answer is neither. You balance the two.

Janet Yellen: Some of the Biden administration’s biggest concerns relate to China’s policies and their effect on global supply chains, Taiwan and human rights. And yet, the Treasury Secretary appeared to acknowledge that US policy toward Beijing rests on a compromise framework: while she worries about overreliance on China for essential supplies, “I expect and hope that there will be strong ties between China and the United States in mutually beneficial trade and investment.

Laurence D. Fink: The BlackRock CEO calls climate change the greatest existential crisis, and his firm’s approach to investing has pushed corporate America to cut emissions. But asked about Republican criticism of his focus on climate-conscious investing, he admitted: “I actually believe we’re going to need hydrocarbons for 70 years.”

Learn about some of the big issues raised at the Summit, the future of the news industry at sustainability in fashion and how leaders balancing the views of workers with business imperatives.


  • SoftBank CEO Masayoshi Son has quietly increased his stake in the Japanese tech investor above 33%, giving him more control over the company. (Bloomberg)

  • Blackstone CEO Stephen A. Schwarzman played down concerns about the company’s giant property fund, which has faced a wave of investor withdrawals. (FT)

  • Struggling used-car market Carvana has been in talks with restructuring advisers as some of its major creditors have agreed to team up in negotiations. (Bloomberg)


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