Tag: Bankruptcy

JCPenney was once a shopping giant. Can it make a comeback? | CNN Business

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New York
CNN Business
—

Marc Rosen didn’t flinch when he was offered the top job at JCPenney last year.

A stalwart of twentieth-century retail for middle-class Americans seeking affordable clothing and home furnishings, JCPenney has struggled for more than a decade and fell into bankruptcy shortly after the Covid-19 pandemic in 2020.

But Rosen, a retail veteran who previously worked at Walmart and Levi’s, said he “did not have any personal hesitancy at all” about trying to revitalize the 120-year-old brand and protect JCPenney from extinction like Barney’s, Lord & Taylor, Century 21 and other shuttered retailers.

“I believe in taking on large scale transformation,” Rosen, 54, told CNN Business in a video interview this month. “There was an opportunity to really take this brand and make it relevant again.”

Rosen is staking his turnaround plan on appealing to “America’s diverse working families.”

The typical customer at JCPenney has a median household income of between $50,000 to $75,000. Roughly 30% of the retailer’s customers are Black, Indigenous and people of color, according to the company, a larger share than many competitors

So JCPenney is chasing these shoppers with an overhauled beauty strategy after a long partnership with Sephora ended. It has remodeled stores and added new major brands and private-label clothing and home furnishings’ labels. The company has also improved its technology and online experience to draw more online sales. Just a quarter of JCPenney’s sales are online, trailing rivals.

Rosen said customers now are shopping at JCPenney more frequently, the first time that has happened for the brand in years, and it’s regaining market share in key departments such as home goods. (JCPenney does not break out sales publicly.)

But there are signs of pressure: visits to all JCPenney stores were down 29% as of October from the same time a year ago, according to data from Placer.ai. In October, traffic to JCPenney’s website increased only 1.26% from a year ago, according to data from SimilarWeb.

Now, a year into Rosen’s tenure, he faces his biggest test at JCPenney yet: the holiday shopping stretch. And it comes at an uncertain moment for the US economy and shoppers.

The company said it’s off to a strong start to the holiday season. But JCPenney’s main customers are feeling strained by the highest inflation in 40 years and they have shown signs of pulling back on discretionary goods— the bulk of what JCPenney sells.

Rosen also has to dig out from years of mismanagement and failed strategies at the company.

The company faces unrelenting pressure from much larger retailers such as Amazon

(AMZN), Walmart

(WMT) and Target

(TGT). TJX

(TJX), the owner of TJMaxx and Marshalls and other “off-price” retailers that have undercut the department stores’ model by selling designer brands at bargain prices.

“The future is going to be a challenging one because it’s difficult for department stores to navigate, even under the best circumstances,” said Erin Schmidt, a senior analyst at Coresight Research, a retail advisory and research firm. “The competition is really fierce.”

JCPenney started as the Golden Rule, a dry goods store, in Kemmerer, Wyoming, in 1902.

Its founder, James Cash Penney, quickly expanded the business and by 1917, there were 175 stores, later renamed JCPenney. By 1929, on the eve of the stock market crash and Great Depression, JCPenney had 1,000 stores.

Its stores were known for their low prices. Merchandise could be bought only with cash, not on credit.

JCPenney survived the Depression and by 1950, Fortune Magazine declared the company the “King of Soft Goods.” Penney himself became known as the “Man with a Thousand Partners.”

By the time he died in 1971, JCPenney had more than 1,600 stores, many in newly-built suburban malls, and was the fifth largest US retailer.

But the company’s mid-market appeal was tested by growing competition during the 1980s and 1990s. Discount stores including Walmart and Target spread, stealing away JCPenney’s budget-conscious customers.

The company was hit hard by the Great Recession in 2008. It lost shoppers to discount stores and struggled to bring them back as the economy began to rebound.

By the end of 2010, JCPenney’s sales had fallen 10% from their 2006 high of about $20 billion, and the company attracted the scrutiny of hedge fund manager Bill Ackman. Ackman bought up a chunk of Penney and installed Ron Johnson, Apple’s former head of stores, as CEO.

Without testing shoppers’ reactions first, JCPenney under Johnson changed its advertisements, its logo and its store designs.

The chain ditched top private-label brands with loyal followings and introduced new ones that had little relevance to its middle-income customers. And it ended coupons, a move that alienated loyal shoppers.

JCPenney’s sales plunged $4.3 billion in 2012, a 25% drop from the previous year. Johnson left in 2013, 17 months into the job.

The company cycled through several CEOs and strategies in the following years and brought back appliances for the first time in decades, a move that didn’t resonate with customers. The company was unprofitable every year beginning in 2011 and its sales fell each year starting in 2015.

In May of 2020, soon after the Covid-19 pandemic began and JCPenney was forced to close stores temporarily, the company filed for bankruptcy after 118 years in business.

At the time, JCPenney had more than 800 stores and 85,000 employees.

JCPenney has around 670 stores today and has little debt for the first time in years.

The company is owned by mall landlords Simon Property Group

(SPG) and Brookfield Asset Management

(BAM). The two firms rescued JCPenney out of bankruptcy for $1.75 billion in the fall of 2020. It was their interest to do so. JCPenney was a key tenant at hundreds of malls and a liquidation would have left vacancies in their shopping centers.

During the bankruptcy process, JCPenney restructured its debt and closed more than 200 stores.

Rosen said JCPenney now has the financial flexibility to invest in upgrading its technology, supply chain and revamping stores under under its new owners.

“That alignment with ownership is critical, especially as you’re going through a transformation that requires significant investment,” he said.

Instead of chasing new shoppers, as several of Rosen’s predecessors tried to do, he has built a strategy centered on convincing existing budget-focused customers to visit more frequently and buy a wider array of goods at JCPenney instead of other stores.

The company is attempting to highlight merchandise and services like hair salons and family portrait offerings that resonate with the its core working-class families. Teachers are the number one profession among its customers, so JCPenney has focused on ensuring stores have clothing they want to wear to work.

JCPenney’s 14-year partnership with Sephora ended in 2020 and it has started to replace many Sephora shops with new beauty departments. Roughly 20% of the products in new beauty areas come from a partnership with Thirteen Lune, an e-commerce company that features brands started by founders of color.

“Customers want to see brands that are brought to them by Brown and Black founders, and they want to see brands that look relevant to their skin types,” Rosen said.

Retail experts say that JCPenney is improving under Rosen and his strategy to target different customers than competitors is shrewd. Stores are better lit than they were before the bankruptcy and top vendors are selling merchandise to the company again.

“A lot of people in the industry wrote them off,” said David Katz, chief marketing officer at Randa Apparel & Accessories, which makes Levi’s, Dockers, Haggar and other brands. “Today, they are a good partner. We’re giving them a lot more financial credit than we used to. We are developing more products for them because we have confidence they’ll be able to sell it effectively.”

Still, JCPenney faces both short-term challenges and long-term questions about its survival.

Inflation is squeezing customers, particularly its middle-income shoppers. It’s not the only retailer facing that problem – Kohl’s said last week that its middle-income customers are buying fewer items when they shop and switching to private brands.

Rosen said that more JCPenney customers are buying the company’s lowest-priced products and switching to its cheaper private brands. The company plans to offer some products at 2019 prices during the holidays, including its St. John’s Bay cable sweater.

The bigger question remains whether there is a place for JCPenney in the changing era of retail and if it can draw younger customers.

Stiff competition has taken a toll on the entire department store landscape, including Kohl’s

(KSS), Nordstrom

(JWN) and Macy’s

(M).

JCPenney can’t solely rely on winning more business from existing shoppers with limited discretionary ability, said Schmidt from Coresight. The chain needs to attract new shoppers, too. But winning new customers has never been harder.

“They’re doing some really good things in terms of their positioning,” Schmidt said. “But the department store is a tough place to be. It will be a challenging road.”

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November 27, 2022
Lakshmi Mittal’s bankrupt brother Pramod Mittal suffers major setback in UK court

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A London court on Monday overturned Pramod Mittal’s agreement with creditors, under which he agreed to pay 0.2 per cent of his total debts of more than $2 billion. Pramod is the younger brother of steel tycoon Lakshmi Mittal, news agency Reuters reported.

In June 2020, Moorgate Industries UK Limited, formerly known as Stemcor UK Limited, filed for bankruptcy due to a debt of about $170 million owed by Pramod Mittal.

In October 2020, the businessman and his creditors entered into an individual voluntary arrangement (IVA).

In court documents filed earlier this month, Joseph Curl, representing Moorgate, stated that Mittal’s debts increased by a factor of more than 40 to nearly $2.7 billion shortly before creditors voted on the IVA proposal.

Curl stated that loans to four of Mittal’s creditors had “absolutely extraordinary” compound interest rates, with interest accounting for more than 97% of his total debt.

Mittal’s lawyers argued that Moorgate lacked evidence to support its claims that the loans were a “sham” or were made for a “fraudulent purpose.”

However, in a ruling, Judge Nicholas Briggs stated that “there was a material irregularity at the meeting of creditors convened to consider [Mittal’s] proposal,” and revoked the IVA.

“Mr Mittal is disappointed with the decision and intends to appeal,” Mittal’s lawyer said in an emailed statement to Reuters.

“He has already informed the judge of his intention and there will be a further hearing in the next few weeks to consider his application for permission to appeal.”

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November 26, 2022
The PC boom has gone bust, and we are about to see the results ahead of Black Friday

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The pandemic-fueled personal-computer boom has ended, so how will that affect demand and pricing for PCs and the retailers that sell them this holiday season?

A sense of the fallout will be provided in the week ahead with results due from PC makers Dell Technologies Inc.
DELL,
+0.67%
and HP Inc.
HPQ,
+0.17%,
along with videoconferencing platform Zoom Video Communications Inc.
ZM,
-1.15%
and electronics chain Best Buy Co Inc.
BBY,
+2.88%

All of those companies will report amid signs of deep holiday discounting for products such as clothing and electronics, after many customers — stuck at home in 2020 and 2021 — loaded up on laptops and other goods and turned Zoom into a digital conference room. But this year, decades-high inflation, and a return to prepandemic spending on travel and hanging out in person, have forced retailers and electronics makers to adjust to a world where more people are spending on essentials.

PC shipments have fallen at rates not seen since at least the 1990s. Adobe
ADBE,
-2.06%
has said online holiday discounts for electronics have been as steep as 17%. For computers, they’ve run for as much as 10% less. TVs are also being sold for cheaper. Holiday-season forecasts have generally called for sales increases, helped by price increases and enduring demand despite those price increases.

In-depth: The pandemic PC boom is over, but its legacy will live on

However, results from Target
TGT,
+0.54%
on Wednesday missed big on third-quarter earnings, and the big-box retailer said it was bracing for a possible decline in fourth-quarter same-store sales, citing “softening sales and profit trends that emerged late in the third quarter and persisted into November.” Results from Walmart
WMT,
+1.51%
were almost the opposite, however, detailing earnings that beat by a wide margin and a raised full-year outlook.

Among smaller retailers, discounter Ross Stores Inc.
ROST,
+9.86%
hiked its full-year profit forecast, citing sales momentum but easier year-over-year comparisons up ahead. But Williams-Sonoma Inc.
WSM,
-6.15%
noted “macro uncertainty” and “increasingly inconsistent” demand.

This week in earnings

The companies report during a shortened, quieter week — thanks to Thanksgiving — and after concerns about a recession have hung over much of the year. With 94% of S&P 500
SPX,
+0.48%
companies having already reported third-quarter results, only a dozen are set to release earnings in the week ahead.

But among those 94%, there are signs that preoccupations with a downturn might be easing, after the economy grew during the third quarter and reversed after two quarters of declines.

FactSet senior analyst John Butters, in a report on Thursday, said 179 companies have mentioned the term “recession,” during earnings calls in the third quarter. That’s still above the average over 10 years, but it’s below the 242 companies that mentioned a recession in the second quarter.

Previously: Executives seem pretty convinced a recession is coming

Elsewhere on Monday, J.M. Smucker Co.
SJM,
+1.11%
— best known for Folgers and Jif — reports results, following concerns about higher food prices and how much higher they might go. Life-sciences electronics maker Agilent Tecnologies Inc.
A,
+1.21%
report results on Monday as well. Fast-food chain Jack in the Box Inc.
JACK,

reports Tuesday. Tractor and construction-vehicle Deere & Co.
DE,
+0.31%
reports Wednesday, following production and supply-chain snarls but steady demand.

The calls to put on your calendar

Clothing demand, discount demand: Urban Outfitters Inc.
URBN,
+2.44%
reports Monday, while Burlington Stores Inc.
BURL,
+4.63%,
Nordstrom Inc.
JWN,
+1.71%
and dollar-store chain Dollar Tree Inc.
DLTR,
-0.21%
report on Tuesday.

The discounting wave across clothing retailers, an effort to clear inventories, might attract more consumers, but it’s worried Wall Street analysts focused on margins and the bottom line. Still, some analysts have said that more younger shoppers feel like their wardrobes are getting stale, and they say Nordstrom, whose customers tend to have more money, is best geared for “an upcoming wardrobe refresh.”

Off-price clothing and home-goods retailer Burlington, meanwhile, will report after rival discounters Ross and TJX received a lift from investors this week.

See also: The holiday-shopping season has a different problem this year than last — and it could lead to some deals

Ross’ chief executive, Barbara Rentler, noted that rising prices had hurt its lower-income consumers. But Jefferies analysts said that Burlington and other discounters, which often buy up goods that other retailers don’t want, stood to benefit from the inventory purge.

Dollar Tree, meanwhile, reports as more shoppers seek cheaper grocery options, but as food prices rise nonetheless. But Bank of America analysts, in a note last month, said traffic data implied a “slowdown” heading into the results.

The numbers to watch

Demand trends for PCs, electronics: Dell and HP report in the wake of deeper job cuts across the tech industry, while Zoom tries to tack on more features — such as calendar and email functions — to appeal to small business and adapt to a hybrid-work world.

The PC boom’s demise hit home at Dell during its prior quarter, reported in August, after personal-computer sales at the company came in below estimates. Executives, at that time, said PC demand had fallen and that “customers are taking a more cautious view of their needs given the uncertainty.”

Opinion: Tech earnings are about to dive, and there’s no life preserver in sight

Some analysts, however, signaled that some degree of investor pessimism was already baked into the stock prices.

“We recognize the deteriorating industry fundamentals in relation to PCs as well as incremental slowdown in IT Infrastructure. That said, we believe the magnitude of the cuts last quarter set up Dell to be less exposed to another round of material earnings revisions,” JPMorgan analysts said in a note. And even as HP feels similar pain, analysts there said share buybacks could be “a bright spot.”

Results from HP and Dell could also have implications for Best Buy, which sells laptops, TVs, phones and other electronic devices.

“Recall that initial expectations for the year were that BBY would face pressure as it lapped stimulus-fueled spending and broad-based demand for technology products and services,” Wedbush analysts said in a note on Friday.

“However, the macro has been more volatile than expected with consumers facing significant inflationary pressures and lower-income households are making decisions to trade down in some categories such as televisions.”

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November 20, 2022
They Lived Together, Worked Together and Lost Billions Together: Inside Sam Bankman-Fried’s Doomed FTX Empire

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NASSAU, Bahamas—Sam Bankman-Fried’s $32 billion crypto-trading empire collapsed in an incandescent bankruptcy last week, prompting irate customers, crypto acolytes and Silicon Valley bigwigs to ask how something that seemed so promising could have imploded so fast.

The emerging picture suggests FTX wasn’t simply felled by a rival, or undone by a bad trade or the relentless fall this year in the value of cryptocurrencies. Instead, it had long been a chaotic mess. From its earliest days, the firm was an unruly agglomeration of corporate entities, customer assets and Mr. Bankman-Fried himself, according to court papers, company balance sheets shown to bankers and interviews with employees and investors. No one could say exactly what belonged to whom. Prosecutors are now investigating its collapse.

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November 18, 2022
Supposed $477 million FTX ‘hack’ was actually a Bahamian government asset seizure

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Remember that hack of nearly half a billion dollars in cryptocurrency from bankrupt FTX last weekend? Turns out it was actually a government asset seizure.

The Securities Commission of the Bahamas has now acknowledged that it was behind the removal of $477 million in crypto assets from the bankrupt exchange on Nov. 12.

“The Securities Commission of the Bahamas, in the exercise of its powers as regulator acting under the authority of an order made by the Supreme Court of the Bahamas, took the action of directing the transfer of all the digital assets of FTX Digital Markets Ltd. to a digital wallet controlled by the commission, for safekeeping,” the agency said in a statement.

The transfer occurred the day after FTX had filed for Chapter 11 bankruptcy protection in Delaware and immediately sparked concerns of a major hack. The company announced that day that “unauthorized access to certain assets has occurred” and that they were coordinating with law enforcement on the matter.”

On Thursday, the U.S.-based bankruptcy administrators led by John Ray, III, who have taken control of FTX, said in court filings that they had “credible evidence” that officials in the Bahamas had directed FTX founder Sam Bankman-Fried to access FTX’s systems after the Chapter 11 filing, “for the purpose of obtaining digital assets of the debtors.”

The seizure of assets came amid an emerging fight for control over the direction of the bankruptcy proceeding, with officials in the Bahamas filing a separate Chapter 15 bankruptcy petition in federal court in New York on Nov. 15.

That filing was on behalf of FTX Digital Markets Ltd., a subsidiary that managed significant aspects of the company’s operations from its headquarters in the Caribbean island nation.

A Chapter 15 filing is used typically in cases involving companies with debtors in multiple countries.

In its statement, the Bahamian Securities Commission said it believed FTX Digital Markets was not part of the Delaware bankruptcy proceeding.

The administrators of the Delaware bankruptcy have asked the judge in their case to combine the cases, saying that it was duplicative and confusing to keep them separate. The judge scheduled a hearing on the matter for Monday.

The administrators of the Delaware case have accused Bankman-Fried of attempting to undermine their efforts to sort out the mess he left behind by pushing the second bankruptcy case brought by Bahamian officials.

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November 18, 2022
‘This situation is unprecedented’: 10 crazy things detailed in FTX’s bankruptcy filing

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On Thursday, John Ray, III, the new CEO of FTX, dropped a long-awaited declaration in U.S. bankruptcy court, giving a sober assessment of the collapse of Sam Bankman-Fried’s crypto empire. The bankruptcy-court filing followed a whirlwind of events, including the publication of explosive texts Bankman-Fried sent to a Vox reporter earlier this week.

Ray set the tone for what he has found since FTX filed for bankruptcy protection last week, citing his 40 years of experience in the legal and restructuring business, including a role as chief restructuring officer and CEO of Enron, one of the biggest corporate collapses ever.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray wrote. “This situation is unprecedented.”

Here are 10 revelations that Ray made in federal bankruptcy court on Thursday about Bankman-Fried and the FTX debacle he created.

1. Most of FTX’s digital assets have not been secured

As of Thursday, Ray made clear that while he now controls the various FTX trading and exchange platforms and Bankman-Fried’s crypto hedge fund Alameda Research, he’d “located and secured only a fraction of the digital assets” he hoped to recover. In fact, Ray said only some $740 million of cryptocurrency had been secured in new cold wallets. Ray cited at least $372 million of unauthorized transfers that had taken place on the day FTX and Alameda filed for bankruptcy last week, and the “dilutive ‘minting’ of approximately $300 million in FTT tokens by an unauthorized source” in the days after the filing. FTT tokens were created by FTX to facilitate trading on its exchange and made up a big chunk of Alameda’s assets.

2. Nobody knows who the biggest customer creditors are of FTX.

FTX.com and FTX.US had customers around the world who used its cryptocurrency exchanges and platforms. But Ray said he was unable to create a list of FTX’s top 50 creditors that included customers.

3. Alameda Research loaned $4.1 billion out to entities, including Bankman-Fried and his closest partners.

There have been reports that FTX lent out billions of dollars in customer funds to Bankman-Fried’s hedge fund, Alameda Research. But on Thursday, Ray revealed that Alameda had made $4.1 billion of related-party loans that remained outstanding at the end of September. This included a $1 billion loan Alameda made to Bankman-Fried himself, a $543 million loan made to FTX cofounder Nishad Singh, and $55 million borrowed by FTX co-CEO Ryan Salame.

4. FTX corporate funds were used to buy personal homes

Bankman-Fried lived in a luxury resort in the Bahamas, where FTX was also based. There, bankruptcy filings say, corporate funds of FTX “were used to purchase homes and other personal items for employees and advisors.” Ray said in his filing that there is no documentation for the transactions and loans associated with these real estate purchases, which were recorded in the personal name of employees and advisors.

5. Personalized emojis to approve disbursements

To demonstrate the lack of disbursement and appropriate business controls at FTX, Ray pointed out that FTX employees “submitted payment requests through an on-line ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.”

6. Alameda Research was one of the world’s biggest hedge funds

According to the bankruptcy filing, Alameda’s balance sheet showed $13.46 billion in total assets as of the end of September. That’s roughly equivalent to the assets managed by famous billionaire hedge fund traders like Bill Ackman, Paul Tudor Jones and Jeffrey Talpins.

7. Audit opinions from the metaverse

Bankman-Fried secured audit opinions for the international FTX trading platform part of his business from Prager Metis, a firm that Ray had never heard of before. Ray said he went to the firm’s website to learn more about it and discovered that Prager Metis described itself as the“first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland.”

8. Alameda had a secret exemption on FTX.com

Ray’s filing on Thursday indicated that Bankman-Fried’s Alameda hedge fund might have had a trading edge on the FTX.com trading platform. According to the filing, Alameda had a “secret exemption” from “certain aspects of FTX.com’s auto-liquidation protocol.”

9. Customer liabilities are not reflected in FTX financial statements

Ray expects that the FTX.US exchange and trading platform, which serviced American customers, will have “significant liabilities arising from crypto assets deposited by customers through the FTX US platform.” He believes the FTX exchange that was used by FTX clients outside the U.S. could also have significant client liabilities. But none of these liabilities are reflected in the financial statements that were prepared while Bankman-Fried ran FTX, Ray said.

10. Ray has no confidence in any FTX balance sheet

Time and again in the filing, Ray offers the same disclaimer after detailing FTX-related financial statements. He notes that many of the balance sheets at FTX and Alameda are unaudited, and that because they were produced while Bankman-Fried ran and controlled the company, “I do not have confidence in it.”

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November 17, 2022
FTX’s Sam Bankman-Fried Gave Away His Flawed Decision-Making Months Ago

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Opinions expressed by Entrepreneur contributors are their own.

“Let’s say there’s a game: 51%, you double the earth out somewhere else; 49%, it all disappears. Would you play that game? And would you keep on playing that, double or nothing?” Tyler Cowen asked Sam Bankman-Fried, the now-disgraced founder of the bankrupt cryptocurrency exchange FTX, in his podcast back in March 2022.

The vast majority of us would not take the risk of playing that game even once. After all, it seems morally atrocious to take a 49% chance on human civilization disappearing for a 51% chance of doubling the value of our civilization. It’s essentially a coin flip.

But Sam Bankman-Fried isn’t like the majority of people. He responded to this question by telling the podcast host that he is quite willing to play that game — and keep playing it, over and over again. Cowen asked Bankman-Fried about the high likelihood of destroying everything by going double of nothing on a series of coin flips. Bankman-Fried responded that he was willing to make this trade-off for the possibility of coin-flipping his way into “an enormously valuable existence.”

Hearing that podcast made me realize the high-risk, high-reward decision-making philosophy that made his wealth possible — but also fragile. Indeed, he did end up in an enormously valuable existence — worth $26 billion at the peak of his wealth. He was the golden boy of crypto — lobbying and donating to prominent government figures, giving interviews to numerous high-profile venues and rescuing failing crypto projects. He was even nicknamed crypto’s J.P Morgan.

His decision-making philosophy worked out for him — until it didn’t.

FTX — the crypto exchange he founded, which represented the source of his wealth — filed for bankruptcy on November 11, along with 130 other companies associated with it. That filing stemmed from the revelation of some very shady bets and trades, which led to a run on the exchange and federal investigations for fraud.

Related: ‘I’m Sorry. That’s The Biggest Thing.’ Sam Bankman-Fried and Cryptoworld Lose Big in FTX Meltdown, Company Files For Bankruptcy.

Bankman-Fried resigned as CEO as part of the bankruptcy filing. His wealth — all tied up in FTX and related entities — shrank to near zero. His coin-flipping luck finally ran out.

So what happened? As his financial empire was collapsing, Bankman-Fried tweeted: “A poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users’ margin.”

Certainly, we shouldn’t simply take Bankman-Fried’s word for the situation at hand, given the circumstances. Yet at least the atrocious bookkeeping part of the explanation and excessive optimism about user funds is supported by the only external investigation of the matter so far.

Binance, the world’s biggest cryptocurrency exchange, originally offered to buy out FTX as FTX was collapsing. However, after taking a look at FTX’s books, they saw that the problem was too big to solve. Binance backed out, citing revelations of “mishandled customer funds” and describing “the books” as “a nightmare” and “black hole,” according to a person familiar with the matter.

Messing around with customer funds is a big no-no. The Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Department of Justice (DOJ) are all investigating FTX’s handling of customer funds. Specifically, they’re examining whether FTX followed securities laws related to the separation of customer assets and trading against customers. Based on Binance’s statements when it backed out of the deal, and even Bankman-Fried’s own tweets, FTX very likely violated securities laws.

Indeed, Reuters reported that Bankman-Fried built what two senior employees at FTX described as a “backdoor” in FTX’s book-keeping system, created using bespoke software. This backdoor enabled Bankman-Fried to execute commands that would not alert others, whether at FTX or external auditors. The two sources told Reuters that Bankman-Fried “secretly transferred $10 billion of customer funds” from FTX to Bankman-Fried’s own trading company, called Alameda Research.

Bankman-Fried described his decision to move this money to Alameda as “a poor judgment call.” This coin flip landed the wrong side up. Double or nothing turned into nothing.

The underlying story here is of a fundamental failure of compliance and risk management. The inner circle of executives at FTX and related companies, such as Alameda, lived together at a luxury penthouse and had very strong personal and romantic bonds. CoinDesk reported several former and current employees at FTX described the inner circle as “a place full of conflicts of interest, nepotism and lack of oversight.” Naturally, this context of personal loyalty at the top makes it hard to have any oversight and risk management. It allows things like secret software backdoors, shady bookkeeping and mishandling of client funds to flourish.

Related: FTX’s Crypto Empire Was Reportedly Run By a Bunch of Roommates in the Bahamas Who Dated Each Other, According to the News Site That Helped Trigger the Company’s Sudden Collapse

Such nonchalance toward risk management stems fundamentally from Bankman-Fried’s decision-making philosophy of high-risk, high-reward bets. Bankman-Fried is unquestionably a visionary and financial genius. One of the most prominent venture capital firms in the world, Sequoia Capital, invested $210 million in his company, and a partner at the firm said that Bankman-Fried had a “real chance” of becoming the world’s first trillionaire. Yet it ignored the serious dangers of Bankman-Fried’s decision-making philosophy.

Bankman-Fried is not the only multi-billionaire who ignores risk management and oversight. Consider Elon Musk‘s approach to Twitter.

After taking over the company, he fired the vast majority of the existing executive team and replaced them with a select inner circle loyal to him. Then, he started experimenting with various Twitter features, most notably selling blue checkmark verification badges for $8 a month without any mechanism for confirming a user’s real identity.

Previously, Twitter only offered verification — for free — to those who had some public status and could prove it. After Musk’s offering, thousands of new accounts popped up with a blue checkmark impersonating real people and companies, such as an account that looked like Eli Lilly claiming that insulin is now free. Musk seemed very surprised by this outcome and paused the paid blue checkmark program in response.

Let’s be honest — the outcome for Twitter in introducing paid blue badges was clearly predictable, and many publicly predicted it would go badly. Yet there was no meaningful risk management and oversight check on Musk’s actions, just like there was none over Bankman-Fried.

The outcome of Musk’s risk-taking at Twitter might be bankruptcy, which would mostly be a loss for some big banks and investors. The outcome of Bankman-Fried’s risk-taking at FTX is definitely bankruptcy. That bankruptcy not only harms large investors — it also destroys the savings of thousands of ordinary people who held their money in FTX, given Bankman-Fried messed with customer funds.

Bankman-Fried’s misdeeds also harm the many worthwhile charitable causes to which he donated, such as pandemic preparedness. A committed philanthropist who already gave away many millions focusing on evidence-based charities, Bankman-Fried raised hopes for inspiring billionaires to give away their wealth rapidly, just like MacKenzie Scott. However, many charity projects to which he promised funding are now in limbo, with their funding withdrawn; the employees at Bankman-Fried’s granting organization, the FTX Future Fund, resigned due to the revelations of misdeeds at FTX.

Such harmful consequences from a lack of oversight and risk management highlight why it’s critical for founders to have someone who can help them make good decisions, manage risks and address blind spots. Such risk managers need to be in a strong position, able to go to the Board of Directors or other sources of insight. When I serve consulting clients in this role, I insist on being able to access this oversight body as part of my consulting contract. I almost never need to use this option, but having it available helps me rein in the double-or-nothing impulses of brilliant founders such as Bankman-Fried or Musk since they know I have that option.

An important takeaway: If you’re deciding to make an investment with a seemingly brilliant entrepreneur, do your due diligence on risk management and oversight. If it seems like the entrepreneur has no one able to rein in their impulses, be wary. They will take excessive risks, and you’re gambling rather than investing your money wisely.

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Gleb Tsipursky

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November 14, 2022
FTX bankruptcy is ‘somebody running a company that’s just dumb-as-f___ing greedy,’ says Mark Cuban

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Billionaire Dallas Maverick’s owner Mark Cuban recently offered his perspective on the implosion of crypto platform FTX late this week.

“‘That’s somebody running a company that’s just dumb-as-fucking greedy.’”

— Mark Cuban

Cuban, speaking on Friday at a conference in Washington, D.C. hosted by Sports Business Journal, shared the view that avarice was at the root of the downfall of one-time crypto darling Sam Bankman-Fried, whose firm FTX Group just filed for chapter 11 bankruptcy.

“So what does Sam Bankman [Fried] do, he’s just–‘gimme more, gimme more, gimme more.’ So I’m gonna borrow money, loan it to an affiliated company and hope and pretend to myself that the FTT tokens that are in there on my balance sheet are gonna to sustain their value.”

Check out: Mark Cuban says buying metaverse real estate is ‘the dumbest shit ever

FTX’s collapse marks a stunning turnabout for a company, which was once valued at $26 billion, and whose founder, Bankman-Fried was viewed by many in the crypto industry as a venerable actor in the Wild West of digital exchanges.

On Thursday, the 30-year-old entrepreneur tweeted: “I f—ked up, and should have done better,” referencing the collapse of his exchange.

Embattled FTX, short billions of dollars, sought bankruptcy protection after the exchange experienced the crypto equivalent of a bank run. FTX, an affiliated hedge fund Alameda Research, and dozens of other related companies also filed a bankruptcy petition in Delaware on Friday morning. Boasting a nearly $16 billion fortune recently, Sam Bankman Fried’s net worth had all but evaporated in the wake of the FTX implosion, according to the Bloomberg Billionaires Index.

The price of FTX’s native token FTT went down about 88.8% over the past seven days to around $2.74, according to CoinMarketCap data.

The U.S. Justice Department and the Securities and Exchange Commission are looking into the crypto exchange to determine whether any criminal activity or securities offenses were committed.

Regulators and are examining whether FTX used customer deposits to fund bets at Alameda Research, a no-no in traditional markets, according to reports.

Cuban, who is one of the stars of the investing show “Shark Tank” and owns the NBA’s Dallas Mavericks, is a big investor in crypto and blockchain-related platforms. According to a CNBC report, he has said that 80% of his investments that aren’t on Shark Tank are crypto-centric.

See: Tom Brady, Steph Curry and Kevin O’Leary set to lose big from FTX bankruptcy filing

For his part, Cuban is part of a class-action lawsuit accused of misleading investors into signing up for accounts with crypto platform Voyager Digital, which filed for bankruptcy in July. The suit alleges that Cuban touted his support for Voyager and referred to it “as close to risk-free as you’re gonna get in the crypto universe.”

Cuban mentioned Voyager in his Friday interview. Representatives for the billionaire investor didn’t immediately respond to a request for comment.

The Mavericks owner took to Twitter on Saturday to say that the crypto implosions “have been banking blowups. Lending to the wrong entity, misvaluations of collateral, arrogant arbs, followed by depositor runs.”

Cuban’s net worth is $4.6 billion, according to Forbes.

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November 12, 2022
Elon Musk warns Twitter could face bankruptcy as top executives flee

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Elon Musk told Twitter staff Thursday to brace for “difficult times ahead” and warned that the company could go bankrupt if it doesn’t find new ways of making money.

Speaking at an all-employee meeting on Thursday, Musk said Twitter was losing money and that “bankruptcy isn’t out of the question,” according to reporting from Platformer and Bloomberg.

The revelations marked another whirlwind day since Musk took control of the social media platform.

Late Wednesday night, Musk sent his first email to employees, ordering them to stop working from home and to show up at the office Thursday morning, reversing the work-from-anywhere policy Twitter implemented during the pandemic.

“Sorry that this is my first email to the whole company, but there is no way to sugarcoat the message,” wrote Musk, before he described a dire economic climate for businesses like Twitter that rely almost entirely on advertising.

“Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn,” Musk said. “We need roughly half of our revenue to be subscription.”

The following day, Musk called his first “all-hands” meeting, where he gave a bleak assessment of the company’s finances and expanded on the in-person work requirement.

Musk said that while “exceptional” workers would be allowed to work remotely, others who didn’t like it could quit, said an employee at the meeting who spoke on condition of anonymity out of a concern for job security. Musk himself is known for putting in arduous workweeks, and has claimed to have worked 120-hour weeks, including all 24 hours of his 47th birthday.

“He has never been a fan of remote work from the start,” MarketWatch reporter Andrew Keshner told CBS News.

Elon Musk fires top executives after Twitter takeover

02:21

Layoffs, then resignations

Half a dozen high-profile leaders left Twitter this week, following the carnage of about 3,700 layoffs last week, or half of Twitter’s head count.

Departures include Twitter’s chief privacy officer, Damien Kieran; its chief compliance officer, Marianne Fogarty; and its chief information security officer, Lea Kissner, who tweeted Thursday that “I’ve made the hard decision to leave Twitter.”

The latest resignations also include that of Yoel Roth, Twitter’s head of trust and safety, a previously little-known executive who became the public face of the company’s content moderation after Musk took over. An executive confirmed Roth’s resignation to coworkers on an internal message board seen by The Associated Press.

Roth’s resignation is a “huge loss” for Twitter’s reliability and integrity, said his former coworker and friend Emily Horne.

“He’s worked incredibly hard under very challenging circumstances, including being personally targeted by some of the most vicious trolls who were active on the platform,” said Horne, who oversaw global policy communications at Twitter until 2018. “He stayed through all of that because he believed so deeply in the work his team was doing to promote a public conversation and improve the health of that conversation.”

Twitter asks dozens of former employees to return days after massive layoffs

06:11

Since the layoffs, Twitter has asked some of the fired staff to return. In the meantime, experts say the dramatically smaller headcount will likely make it harder for the platform to uphold its legal obligations to ensure users’ data privacy.

Cybersecurity expert Alex Stamos, a former Facebook security chief, tweeted Thursday that there is a “serious risk of a breach with drastically reduced staff” that could also put Twitter at odds with a 2011 order from the Federal Trade Commission that required it to address serious data security lapses.

“Twitter made huge strides towards a more rational internal security model and backsliding will put them in trouble with the FTC” and other regulators in the U.S. and Europe, Stamos said.

FTC is watching

The FTC said in a statement Thursday that it is “tracking recent developments at Twitter with deep concern.”

“No CEO or company is above the law, and companies must follow our consent decrees,” said the agency’s statement. “Our revised consent order gives us new tools to ensure compliance, and we are prepared to use them.”

The FTC would not say whether it was investigating Twitter for potential violations. If it were, it is empowered to demand documents and depose employees.

In an email to employees seen by the AP, Musk said “Twitter will do whatever it takes to adhere to both the letter and spirit of the FTC consent decree.”

“Anything you read to the contrary is absolutely false. The same goes for any other government regulatory matters where Twitter operates,” Musk wrote.

Twitter paid a $150 million fine in May for violating the 2011 consent order. Its updated version established new procedures requiring the company to implement an enhanced privacy protection program as well as beef up info security. The new procedures also require the company to include an exhaustive list of disclosures Twitter must make to the FTC when introducing new products and services — particularly when they affect personal data collected on users.

“If Twitter so much as sneezes, it has to do a privacy review beforehand,” tweeted Riana Pfefferkorn, a Stanford University researcher who said she previously provided Twitter outside legal counse

MoneyWatch: Twitter delisted from the New York Stock Exchange

06:51

Musk is fundamentally overhauling the platform’s offerings and it’s not known if he is telling the FTC about it. Twitter, which gutted its communications department, didn’t respond to a request for comment from the AP Thursday.

The mercurial CEO, who has been fined over cavalier tweets in the past, has a history of tangling with regulators. “I do not respect the SEC,” Musk declared in a 2018 tweet, referring to the Securities and Exchange Commission.

The consequences for not meeting FTC’s requirements can be severe — such as when Facebook had to pay $5 billion for privacy violations.

Appeal to fleeing advertisers

Musk’s memo and staff meeting echoed a live-streamed conversation on Twitter Spaces Wednesday in which Musk tried to assuage advertisers, who have been fleeing Twitter, citing a rise in hate speech on the platform, since he took control of it late last month and dismissed its top executives.

Advertisers including Oreo maker Mondelez, Allianz, Audi, General Mills, GM, United Airlines and Pfizer have paused their ads on the platform, leading to a major cash crunch for the company. More are expected to follow.

In his live-stream, Musk asserted that hate speech has declined on the platform since he took over and asked advertisers to be patient, warning them that the company would do “plenty of dumb things” in coming weeks.

“If we do not do bold moves, how will we make great improvements? We have to be adventuresome here and then I think we will make really big leaps,” he said.

For now, Twitter relies exclusively on advertising for revenue. Musks’ goal is to reduce that amount to half, while bringing more money in from subscriptions. In the Thursday email, Musk told employees the “priority over the past 10 days” was to develop and launch Twitter’s $8 monthly subscription service, which includes a blue check mark next to the name of paid members — the mark had previously only been given to verified accounts.

The project has had a rocky rollout, as newly bought fake accounts this week have tried to impersonate high-profile figures such as basketball star LeBron James and the drug company Eli Lilly.

In a second email to employees, Musk said the “absolute top priority” over the coming days is to suspend “bots/trolls/spam” exploiting the verified accounts system.

On Friday, the rollout of the new subscription service, Twitter Blue, a flood of fake accounts had been frozen by the company, according to tech reporter Zoe Schiffer.

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November 11, 2022
FTX’s Sam Bankman-Fried: ‘I was shocked to see things unravel the way they did’

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Sam Bankman-Fried, co-founder at crypto exchange FTX, tweeted Friday that he was “shocked to see things unravel the way they did,” after he quit as chief executive and the company and its related entities filed for bankruptcy.

See: Sam Bankman-Fried resigns as CEO of FTX as cryptocurrency exchange files for Chapter 11 U.S. bankruptcy

The bankruptcy “doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes,” Bankman-Fried tweeted Friday.

Bankman-Fried has seen his net worth plunge to almost zero from $16 billion in less than a week, according to Bloomberg Billionaires index.

FTX was once the third largest cryptocurrency exchange by trading volume. Bitcoin
BTCUSD,
+0.10%
fell 3.4% Friday to around $16,838, hovering at around a two-year low, according to the CoinDesk data.

A representative at FTX didn’t respond to a request seeking comment.

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November 11, 2022
Bitcoin falls to 2-year low, other cryptos down after market reacts to FTX bankruptcy news

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FTX, the crypto exchange, filed for voluntary Chapter 11 bankruptcy in a Delaware court on Friday, and chief executive Sam Bankman-Fried has resigned.

Following the news, here is how prices are doing for major cryptocurrencies, according to CoinDesk data.

Bitcoin BTCUSD, -4.92% The price for Bitcoin was around $19,350 before the announcement of the potential FTX/Binance deal on Tuesday. The price jumped to $20,590 in less than an hour after the announcement. But dropped to a 2-year low of $17,484. Currently, the Bitcoin price is $16,907.19, a change of -5.04% over the past 24 hours.

Ethereum ETHE, -9.66% Currently, the Ethereum price is $1,252.60, a change of -6.60% over the last 24 hours. The price of Ethereum was around $1,438 before the announcement, and peaked at $1,562 under an hour after. Later on Nov 8, the price dropped to $1,289.

FTT: Today the price of FTT, which is the FTX token, is $2.74, down 20.37% in the last 24 hours, according to CoinMarketCap data. At the beginning of the week, on Nov 7, the price was around $22.06.

Solana: Currently, the price is $17.34, a change of 2.91% over the past 24 hours. The price of Solana before the announcement was around $27.69, and peaked at $31.29 shortly after the announcement.

Binance Coin: The Binance Coin price is $285.74, a change of -7.02% over the past 24 hours. The Binance Coin price was around $322 before the announcement that Binance might acquire FTX on Nov 8.

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November 11, 2022
Crypto Exchange FTX Files For Bankruptcy, CEO Resigns

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FTX has filed for Chapter 11 bankruptcy.

The move includes FTX US, the group’s American subsidiary, which up to yesterday was believed to be solvent and able to keep running despite the international arm’s issues.

The company’s official Twitter account posted a press release on Friday morning detailing the decision, which also includes a resignation by CEO Sam Bankman-Fried.

SBF had been on the spotlight for a couple of years, amassing great media coverage as he led what became known as the FTX Empire. The name alluded to the many companies under the FTX umbrella, including Alameda Research, a quantitative trading firm founded by SBF.

Alameda is actually on the center of the issues that led to FTX’s downfall. A leaked balance sheet of the trading firm sparked doubts in the industry, culminating in one of the largest holders of FTX’s native crypto token, FTT, announcing they’d be offloading their position.

Binance CEO CZ’s tweet sparked a feud with SBF, who said, in a since-deleted tweet, that FTX was fine and assets held by the company were as well. Soon after, however, an acquisition deal between Binance and FTX came to light, with SBF then conceding to a “liquidity crunch.”

The bailout sparked optimism in the industry. However, CZ made it clear from the start that Binance could walk away from the deal “at any time.” Notably, the company had yet to perform due diligence by analyzing FTX’s financial books in order to decide whether to move forward with the acquisition.

After reviewing the financial condition of FTX, Binance officially decided to not purchase the non-U.S. business operations of FTX.

In addition to the liquidity issues, the revelations made this week led to several U.S. regulators opening investigations into FTX, while others broadened their probes.

It’s uncertain how long FTX customers will have to wait to get their bitcoin funds back, or whether that will ever fully happen.

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Namcios

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November 11, 2022
Public Miner Capitulation Takes Shape With Core Scientific On The Ropes
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The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

Core Scientific Capitulation

We’ve been highlighting the case for more public miner capitulation over the last few months. News shows that Core Scientific, the largest publicly traded mining company by hash rate and miner fleet, may face bankruptcy. The highlights from their SEC filing are the following:
Core Scientific is halting all debt service payments.

Bitcoin holdings are now 24; they sold 1,027 over the last month.

Cash resources will be depleted by the end of the year or sooner.

Core Scientific claims Celsius owes them $5.4 million.

A giant in the mining space, holding over 9,600 bitcoin at its peak, Core Scientific has now nearly depleted its entire treasury. Month-over-month growth in holdings is now worse than the summer capitulation and selloff we saw back in June 2022. Yet, in June the selloff was much larger in size (6,099 bitcoin). It’s not necessarily the Core Scientific treasury we are concerned about now but rather the treasuries and holdings of all other bitcoin miners if this is a bigger warning sign for the industry.

Core Scientific’s bitcoin holdings went from a whopping 9,618 in May to only 24 in October

Core Scientific was able to drive higher bitcoin production and share of the hash rate by having the largest debt-to-equity ratio in the space at 3.5. Now that debt is coming due during the worst time to try and raise more equity, with depressed prices and lack of financial appetite in the market.

Currently, the company’s liquidity situation is dependent on two variables: the bitcoin price going higher and electricity costs coming down. Our view is that it will be incredibly lucky for either to materialize as a stagnating bitcoin price continues and electricity prices, especially for hosting bitcoin miners, is only trending higher. Looking at Q2 earnings, Core Scientific’s cost of revenues went from 67% to 92% compared to last year. Higher power consumption costs played a significant factor.

The biggest risk associated with mining equities and the rising hash rate is not only if companies can survive and get to the other side; some will and some won’t. Rather, the question you need to ask yourself as an investor is whether your stake in the company will get significantly diluted along the way.

For now, we think broad-based underperformance of miners relative to bitcoin itself can be expected.

Let’s now turn our attention to the potential for a capitulation across the ASIC market, as Core Scientific, the world’s largest publicly traded mining firm by hash rate faces liquidity/solvency worries.

Even without recent developments, ASIC prices were already in fire sale-like territory and are at new all-time lows. Luxor’s Hash Rate Index shows just how depressed prices have become across machine efficiency types in the chart below. As miners have gone to the latest, more efficient rigs, that’s put further downward price pressure on older mining models. As there’s more demand for newer rigs like the S19 XP and other brand new hardware to stay competitive, selling pressure rises for older models that are unviable or unprofitable even with the cheapest energy costs. In the worst case, older machines are just given away for free.

Although Core Scientific will have many options such as debt restructuring, Chapter 11 bankruptcy or a potential merger on the table; selling off and liquidating a part of their 130,000 miner fleet may be another option. Increased selling pressure by miners will only add more strain to depressed prices. Further declines in ASIC prices also impact all miners who are collateralizing or financing their ASICs as the value of ASIC prices can drop further. Now, we await what strain this will have on hash rate over the medium term and if we’re to see a significant falloff in hash rate over the next three to six months. We do not believe this cycle ends without a 20% fall in peak-to-trough hash rate.

ASIC prices are in free-fall mode as hash rate continues to increase while price stays stagnant

Final note: Bitcoin mining is a brutal business, and the current state of these conditions is the last remaining bear to slay in regards to the conclusion of this bear market cycle and the rebirth of the next bull market.

Only the strong will survive.

Relevant Past Articles:
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Dylan LeClair And Sam Rule

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October 28, 2022
CBS Evening News, October 12, 2022

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CBS Evening News, October 12, 2022 – CBS News

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Alex Jones ordered to pay nearly $1 billion in damages to Sandy Hook families; Teen takes plunge in fight against cancer

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October 12, 2022
Alex Jones ordered to pay nearly $1 billion in damages to Sandy Hook families

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Alex Jones ordered to pay nearly $1 billion in damages to Sandy Hook families – CBS News

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Conspiracy theorist Alex Jones was ordered to pay nearly $1 billion to Sandy Hook families for calling the 2012 school shooting a hoax. Nikki Battiste reports.

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October 12, 2022
Alex Jones Will Likely Be Broke ‘For The Rest Of His Life,’ Ex-Prosecutor Says

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A former U.S. attorney has predicted that conspiracy theorist Alex Jones will be unable to financially recover for the rest of his life, even if he tries to wiggle his way out of paying the $965 million a jury determined he owes to several family members of those killed in the 2012 Sandy Hook school shooting.

“It’s an old sorry tale that it’s one thing to get a verdict and another thing to chase it,” Harry Litman, a former deputy assistant attorney general, said Wednesday on MSNBC. “You can attach his assets. I’m sure there will be subsequent litigation where he’ll say ‘bankruptcy’ and they’ll try to get forensic investigators and say he doesn’t have it.

“But we’re talking about such outsized numbers that even if he’s able to bob and weave some, I just don’t see how he winds up anything but basically broke now for the rest of his life.”

On his Infowars show Wednesday, Jones mocked the jury’s verdict as it was being read. “Ain’t gonna be happening, ain’t no money,” he said, as the live news feed showed a plaintiff crying in the courtroom.

Jones then encouraged viewers to donate to him and assured them the money would not go to the victims’ families but to pay to appeal the decision and save his company.

Harry Litman reacts to jury ordering Alex Jones to pay nearly $1 billion to Sandy Hook families: “We’re talking about such outsized numbers that even if he’s able to bob and weave some, I just don’t see how he winds up anything but basically broke now for the rest of his life.” pic.twitter.com/PvK90nm2UV

— MSNBC (@MSNBC) October 12, 2022

Multiple family members of Sandy Hook victims, as well as an FBI agent who responded to the 2012 shooting, sued Jones for his repeated lies that the massacre was a hoax. A Connecticut jury ruled on Wednesday that Jones must pay them a combined total of nearly $1 billion in damages, 10 years after a gunman killed 20 children and six adults at the school in Newtown, Connecticut.

Jones plans to appeal the verdict. His company, Free Speech Systems, filed for bankruptcy protection in July during the early stages of another trial in Texas that ultimately determined he must pay $45 million to the parents of a child killed in the Sandy Hook shooting.

In April, Jones filed to put three small business entities linked to his Infowars empire into bankruptcy protection. A Justice Department monitor flagged the move as a potential abuse of the federal bankruptcy system and an apparent effort to delay damages trials.

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October 12, 2022
Bankrupt Crypto Lender Celsius Could Leave Customers Last In Line To Get Paid

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Alex Mashinsky, chief executive officer of Celsius NetworkPhotographer: Dania Maxwell/Bloomberg

© 2018 Bloomberg Finance LP

What Happened

Earlier this month, crypto lender Celsius Network filed for Chapter 11 bankruptcy protection in federal court the Southern District of New York. The filing was not a surprise to many familiar with the company’s recent news, as it had been more than a month since Celsius halted customer withdrawals due to self-reported and self-described “extreme market conditions.” What alarmed many in the industry, especially Celsius users, is the way the company will likely treat the frozen funds.

In the court filing, Celsius’ Chief Executive Officer Alex Mashinsky disclosed a roughly $1.2 billion hole in the company’s balance sheet. As of July 13, 2022, the company had $5.5 billion in total liabilities and $4.3 billion in assets. Celsius said it owes consumer users (as opposed to institutional partners) more than $4.7 billion.

A financially distressed company can choose between a few different types of bankruptcy proceedings. Celsius chose Chapter 11, which generally prioritizes repayments to secured creditors first, then unsecured creditors, and finally equity holders. Unsecured creditors are most likely to be individuals or institutions that lent money without obtaining specified assets as collateral, or “security”, to protect their loan.

While it is unclear how Celsius and the bankruptcy court will classify Celsius users that have been prevented from accessing their funds, Celsius’ terms of service and court papers seem to indicate users will be treated as unsecured creditors. This begs the question of when and if Celsius’ customers will be able to recoup some or any of their losses. This may well be the subject of heated litigation in the bankruptcy court.

Key Actors

● Celsius Network

● CEO Alex Mashinsky

Context

Celsius Claimed To Be As Safe As A Bank

Celsius held itself out as a safe alternative to traditional banks and promised users high interest rates. Customers could use their credit cards or bank accounts to buy crypto assets. To entice customers to stake their cryptocurrency with Celsius, the company promised returns of up to 20% on deposits, including 8.8% on stablecoins like Tether’s USDT.

Mr. Mashinsky consistently downplayed risks entailed by these strategies and called initial allegations that the company was having issues as “Fud” (“fear, uncertainty and doubt”).

Many Celsius customers have written to the Bankruptcy Court, arguing to get access to their funds and saying they felt lied to by the company and Alex Mashinsky.

“I watched every single AMA (Ask me Anything) each Friday since sign-up, and week in and week out Alex would talk about how Celsius is safer than banks because they supposedly don’t rehypothecate and use fractional reserve lending like the banks do,” says Stephen Richardson.

Another Celsius user, Brian Kasper, said “Celsius continued to tell people they were better than a bank. Safer, with better returns. As well as tell us they had billions in liquid cash.”

Despite Celsius only recently filing for bankruptcy, questions about its risk management procedures had been circulating for years. For instance, in June 2021, Crypto Custodian Prime Trust cut ties with Celsius after its risk team expressed concern about Celsius’ strategy of “endlessly re-hypothecating assets.” Since March 2020, Celsius had been using Prime Trust to store assets for some of its customers.

As Scott Purcell, founder of Prime Trust and Fortress.xyz, told me, “In 2020 I took a long look at Celsius and other lending/staking platforms out of professional curiosity. The more I learned about their business models, the more concerned I became. I researched how they were paying such high interest rates. I can certainly understand getting a premium for doing something that banks were shying away from. I also understand lending (hypothecating) assets to enable people to borrow (margin). That’s a terrific business. But that didn’t explain the huge range of interest rates Celsius (and others like them) were paying people for lending BTC, ETH and other crypto assets. I read that they weren’t just lending once (hypothecating) but that their model was one of rehypothecation; lending the same assets over and over and over again to juice yields. If true, that was stunning, it might or might not be legal (I’m not an attorney, so not my call) but, without question, this would be destined for failure as any sharp market movement in either direction would be catastrophic to such a ridiculously leveraged business model. And yet people were lining up to send cash or crypto to them on this model…insane.”

Celsius initially claimed it could generate such large yields by simply lending customer funds to institutions but Celsius shifted strategy and began using more decentralized finance (DeFi) platforms. This ultimately led to the recently disclosed $1.2 billion shortfall in Celsius’ balance sheet.

Not All Bankruptcies Are Created Equal

Because Celsius was not a registered broker dealer, it was able to file for Chapter 11 bankruptcy protection, rather than under Chapter 7.

Chapter 11 bankruptcy allows businesses to operate while they restructure their finances to pay creditors. Had Celsius been regulated as a securities or commodities brokers or filed for Chapter 7 bankruptcy, its only option would be to liquidate, allowing the court to sell off what assets remain to pay off debts.

Celsius has been making efforts to free up as much operational capital as possible. Recently Celsius freed up more than a billion dollars in crypto assets, mostly in wBTC and a type of ether (ETH) derivative token called stETH by paying off its remaining debt to a variety of decentralized finance (DeFi) protocols such as AAVE and Compound.

In its bankruptcy filings, Celsius requested permission to pay up to $3.76 million in liens and vendor claims, and said it has $167 million in cash to support business operations.

Celsius Slipped Through Crypto’s Regulatory Cracks

Celsius’s terms of service – if enforceable – may present problems for customers seeking full recovery of their deposits. The terms states that users transfer “all right and title” of their crypto assets to Celsius including “ownership rights” and the right to “pledge, re-pledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer or use” any amount of such crypto, whether “separately or together with other property”, “for any period of time,” and “without retaining in Celsius’ possession and/or control a like amount of [crypto] or any other monies or assets, and to use or invest such [crypto] in Celsius’ full discretion.” Celsius has written in court filings that customers transferred ownership of crypto assets to the company, making those customers unsecured creditors.

Had Celsius been a bank, deposits of up to $250,000 would be insured by a federal body. Users of a broker-dealer would be insured for up to $500,000 in securities and cash by a separate body, the SPIC.

In September 2021, regulators in Kentucky, New Jersey and Texas hit Celsius with a cease and desist order, arguing its interest-bearing products should be registered as securities. State securities boards in Alabama, Kentucky, New Jersey, Texas and Washington have also launched probes into Celsius, Reuters reports. The SEC is also reportedly looking into Celsius.

This May Not Just Be a Celsius Problem

Other pseudo-banks like Voyager (also bankrupt) and BlockFi (fortified by FTX) have similar language in their terms of service.

Blockfi’s terms states that “BlockFi has the right, without further notice to you, to pledge, repledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer, invest or use any amount of such cryptocurrency provided by you under a Loan, separately or together with other property, with all attendant rights of ownership.” BlockFi warns, “[a]ny bond or trust account maintained by BlockFi for the benefit of its clients may not be sufficient to cover all losses incurred by clients. In light of these risks, you should carefully consider whether holding cryptocurrency in a BlockFi account is suitable.”

Voyager’s terms point out that it is unclear how customer’s cryptocurrency would be treated in case of an insolvency proceeding and explicitly warns that customers could be “treated as an unsecured creditor” and experience “the total loss of all Customer Cryptocurrency.”

Voyager filed for bankruptcy protection earlier this month. Then last week, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) ordered Voyager to cease any representations that its customers’ funds would be protected in case of the company’s failure. The statement said, “Voyager has made various representations online, including its website, mobile app, and social media accounts, stating or suggesting that: (1) Voyager itself is FDIC-insured; (2) customers who invested with the Voyager cryptocurrency platform would receive FDIC insurance coverage for all funds provided to, held by, on, or with Voyager; and (3) the FDIC would insure customers against the failure of Voyager itself. These representations are false and misleading and, based on the information we have to date, it appears that the representations likely misled and were relied upon by customers who placed their funds with Voyager and do not have immediate access to their funds.”

Key Numbers

Celsius has said it owes users more than $4.7 billion.

Celsius was valued at about $3 billion after raising $690 million in a Series B financing round in May 2022, according to the bankruptcy filing.

Celsius said in court that the value of its assets have fallen by about $17.8 billion since March 30, 2022, to $4.3 billion from roughly $22.1 billion.

Key Quote

“We’ve seen again that lending platforms are operating a little like banks. They’re saying to investors ‘Give us your crypto. We’ll give you a big return 7% or 4.5% return.’ How does somebody offer (such large percentage of returns) in the market today and not give a lot of disclosure? . . . If it seems too good to be true, it just may well be too good to be true.” – Gary Gensler

Outlook

In general, Chapter 11 bankruptcies prioritize repayments to secured creditors, then unsecured creditors, and finally equity holders. Celsius listed over 100,000 creditors around the world in its filing, including Pharos USD Fund ($81 million owed) and Alameda Research (owed almost $13 million).

Celsius noted in its bankruptcy filing that its customers transferred ownership of their crypto to the company, which likely indicates Celsius’ intention of treating users as unsecured creditors. While users may litigate their status as secured or unsecured creditors, this will take years and could still result in users never seeing their assets again.

Adding further complications, in traditional bankruptcy proceedings, creditors have claims denominated in dollars and those claims are measured as of the date of the bankruptcy filing. Many wonder how the price volatility of bitcoin will play out in this instance.

Celsius is scheduled to appear in bankruptcy court again later this month.

Decision Points

These recent bankruptcy proceedings in the cryptocurrency space serve as a reminder that the lack of regulatory clarity often results in a lack of clear consumer protections and rights.

Terms of Service often indicate how customers will be treated when things go wrong. Investors should carefully review terms of service and reach out to the company or their own legal representation before trusting funds with platforms. Users should also understand that if something sounds too good to be true, it likely is and usually big rewards (like high interest offerings) also pose big risk to users.

The premise of bitcoin was always self-custody, which means users don’t earn returns but also means they act as their own bank.

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Hailey Lennon, Senior Contributor

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August 1, 2022
Donald Trump Fast Facts | CNN Politics

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CNN
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Here’s a look at the life of Donald Trump, the 45th president of the United States.

Birth date: June 14, 1946

Birth place: New York, New York

Birth name: Donald John Trump

Father: Fred Trump, real estate developer

Mother: Mary (Macleod) Trump

Marriages: Melania (Knauss) Trump (January 22, 2005-present); Marla (Maples) Trump (December 1993-June 1999, divorced); Ivana (Zelnicek) Trump (1977-1990, divorced)

Children: with Melania Trump: Barron, March 20, 2006; with Marla Maples: Tiffany, October 13, 1993; with Ivana Trump: Eric, 1984; Ivanka, October 30, 1981; Donald Jr., December 31, 1977

Education: Attended Fordham University; University of Pennsylvania, Wharton School of Finance, B.S. in Economics, 1968

As Trump evolved from real estate developer to reality television star, he turned his name into a brand. Licensed Trump products have included board games, steaks, cologne, vodka, furniture and menswear.

He has portrayed himself in cameo appearances in movies and on television, including “Zoolander,” “Sex and the City” and “Home Alone 2: Lost in New York.”

Trump’s slogan, “Make America Great Again,” was first used by Ronald Reagan while he was running against President Jimmy Carter.

For details on investigations into alleged Russian meddling in the 2016 election, visit 2016 Presidential Election Investigation Fast Facts.

1970s – After college, works with his father on apartment complexes in Queens and Brooklyn.

1973 – Trump and his father are named in a Justice Department lawsuit alleging Trump property managers violated the Fair Housing Act by turning away potential African American tenants. The Trumps deny the company discriminates and file a $100 million countersuit, which is later dismissed. The case is settled in 1975, and the Trumps agree to provide weekly lists of vacancies to Black community organizations.

1976 – Trump and his father partner with the Hyatt Corporation, purchasing the Commodore Hotel, an aging midtown Manhattan property. The building is revamped and opens four years later as the Grand Hyatt Hotel. The project kickstarts Trump’s career as a Manhattan developer.

1983-1990 – He builds/purchases multiple properties in New York City, including Trump Tower and the Plaza Hotel, and also opens casinos in Atlantic City, New Jersey, including the Trump Taj Mahal and the Trump Plaza. Trump buys the New Jersey Generals football team, part of the United States Football League, which folds after three seasons.

1985 – Purchases Mar-a-Lago, an oceanfront estate in Palm Beach, Florida. It is renovated and opens as a private club in 1995.

1987 – Trump’s first book, “Trump: The Art of the Deal,” is published, and becomes a bestseller. The Donald J. Trump Foundation is established in order to donate a portion of profits from book sales to charities.

1990 – Nearly $1 billion in personal debt, Trump reaches an agreement with bankers allowing him to avoid declaring personal bankruptcy.

1991 – The Trump Taj Mahal files for Chapter 11 bankruptcy protection.

1992 – The Trump Plaza and the Trump Castle casinos file for bankruptcy.

1996 – Buys out and becomes executive producer of the Miss Universe, Miss USA and Miss Teen USA pageants.

October 7, 1999 – Tells CNN’s Larry King that he is going to form a presidential exploratory committee and wants to challenge Pat Buchanan for the Reform Party nomination.

February 14, 2000 – Says that he is abandoning his bid for the presidency, blaming discord within the Reform Party.

January 2004 – “The Apprentice,” a reality show featuring aspiring entrepreneurs competing for Trump’s approval, premieres on NBC.

November 21, 2004 – Trump Hotels & Casino Resorts Inc. files for Chapter 11 bankruptcy.

2005 – Establishes Trump University, which offers seminars in real estate investment.

February 13, 2009 – Announces his resignation from his position as chairman of Trump Entertainment Resorts. Days later, the company files for bankruptcy protection.

March 17, 2011 – During an interview on ABC’s “Good Morning America,” Trump questions whether President Barack Obama was born in the United States.

June 16, 2015 – Announces that he is running for president during a speech at Trump Tower. He pledges to implement policies that will boost the economy and says he will get tough on immigration. “When Mexico sends its people, they’re not sending their best…They’re sending people who have lots of problems,” Trump says. “They’re bringing drugs, they’re bringing crime, they’re rapists, and some, I assume, are good people.”

June 28, 2015 – Says he’s giving up the TV show “The Apprentice” to run for president.

June 29, 2015 – NBCUniversal says it is cutting its business ties to Trump and won’t air the Miss USA and Miss Universe pageants because of “derogatory statements by Donald Trump regarding immigrants.”

July 8, 2015 – In an interview with CNN’s Anderson Cooper, Trump says he “can’t guarantee” all of his employees have legal status in the United States. This is in response to questions about a Washington Post report about undocumented immigrants working at the Old Post Office construction site in Washington, DC, which Trump is converting into a hotel.

July 22, 2015 – Trump’s financial disclosure report is made public by the Federal Election Commission (FEC).

August 6, 2015 – During the first 2016 Republican debate, Trump is questioned about a third party candidacy, his attitude towards women and his history of donating money to Democratic politicians. He tells moderator Megyn Kelly of Fox News he feels he is being mistreated. The following day, Trump tells CNN’s Don Lemon that Kelly was singling him out for attack, “You could see there was blood coming out of her eyes, blood coming out of her wherever.”

September 11, 2015 – Trump announces he has purchased NBC’s half of the Miss Universe Organization, which organizes the annual Miss USA and Miss Universe pageants.

December 7, 2015 – Trump’s campaign puts out a press release calling for a “complete shutdown of Muslims entering the United States until our country’s representatives can figure out what is going on.”

May 26, 2016 – Secures enough delegates to clinch the Republican Party nomination.

July 16, 2016 – Introduces Indiana Governor Mike Pence as his running mate.

July 19, 2016 – Becomes the Republican Party nominee for president.

September 13, 2016 – During an interview with CNN’s Jake Tapper, New York Attorney General Eric Schneiderman says his office is investigating Trump’s charitable foundation “to make sure it’s complying with the laws governing charities in New York.”

October 1, 2016 – The New York Times reports Trump declared a $916 million loss in 1995 which could have allowed him to legally skip paying federal income taxes for years. The report is based on a financial document mailed to the newspaper by an anonymous source.

October 7, 2016 – Unaired footage from 2005 surfaces of Trump talking about trying to have sex with a married woman and being able to grope women. In footage obtained by The Washington Post, Trump is heard off-camera discussing women in vulgar terms during the taping of a segment for “Access Hollywood.” In a taped response, Trump declares, “I said it, I was wrong and I apologize.”

October 9, 2016 – During the second presidential debate, CNN’s Cooper asks Trump about his descriptions of groping and kissing women without their consent in the “Access Hollywood” footage. Trump denies that he has ever engaged in such behavior and declares the comments were “locker room talk.” After the debate, 11 women step forward to claim that they were sexually harassed or sexually assaulted by the real estate developer. Trump says the stories aren’t true.

November 8, 2016 – Elected president of the United States. Trump will be the first president who has never held elected office, a top government post or a military rank.

November 18, 2016 – Trump agrees to pay $25 million to settle three lawsuits against Trump University. About 6,000 former students are covered by the settlement.

December 24, 2016 – Trump says he will dissolve the Donald J. Trump Foundation “to avoid even the appearance of any conflict with my role as President.” A spokeswoman for the New York Attorney General’s Office says that the foundation cannot legally close until investigators conclude their probe of the charity.

January 10, 2017 – CNN reports that intelligence officials briefed Trump on a dossier that contains allegations about his campaign’s ties to Russia and unverified claims about his personal life. The author of the dossier is a former British spy who was hired by a research firm that had been funded by both political parties to conduct opposition research on Trump.

January 20, 2017 – Takes the oath of office from Chief Justice John Roberts during an inauguration ceremony at the Capitol.

January 23, 2017 – Trump signs an executive action withdrawing the United States from the Trans-Pacific Partnership, a 12-nation trade deal negotiated by the Obama administration and awaiting congressional approval.

January 27, 2017 – Trump signs an executive order halting all refugee arrivals for 120 days and banning travel to the United States from seven Muslim-majority countries for 90 days. Additionally, refugees from Syria are barred indefinitely from entering the United States. The order is challenged in court.

February 13, 2017 – Trump’s national security adviser, Michael Flynn, resigns amid accusations he lied about his communications with Russian ambassador to the United States, Sergey Kislyak. Flynn later pleads guilty to lying to the FBI.

May 3, 2017 – FBI Director James Comey confirms that there is an ongoing investigation into ties between the Trump campaign and Russia during a hearing on Capitol Hill. Less than a week later, Trump fires Comey, citing a DOJ memo critical of the way he handled the investigation into Clinton’s emails.

May 2017 – Shortly after Trump fires Comey, the FBI opens an investigation into whether Trump “had been working on behalf of Russia against American interests,” citing former law enforcement officials and others the paper said were familiar with the probe.

May 17, 2017 – Former FBI Director Robert Mueller is appointed as special counsel to lead the probe into Russian meddling in the 2016 election, including potential collusion between Trump campaign associates and Russian officials. Deputy Attorney General Rod Rosenstein makes the appointment because Attorney General Jeff Sessions recused himself from investigations into Trump’s campaign.

May 19, 2017 – Departs on his first foreign trip as president. The nine-day, five-country trip includes stops in Saudi Arabia, Israel, the Vatican, a NATO summit in Brussels and a G7 summit in Sicily.

June 1, 2017 – Trump proclaims that the United States is withdrawing from the Paris climate accord but adds that he is open to renegotiating aspects of the environmental agreement, which was signed by 175 countries in 2016.

July 7, 2017 – Meets Russian President Vladimir Putin in person for the first time, on the sidelines of the G20 meeting in Hamburg, Germany.

August 8, 2017 – In response to nuclear threats from North Korea, Trump warns that Pyongyang will “face fire and fury like the world has never seen.” Soon after Trump’s comments, North Korea issues a statement saying it is “examining the operational plan” to strike areas around the US territory of Guam.

August 15, 2017 – After a violent clash between neo-Nazi activists and counterprotesters leaves one dead in Charlottesville, Virginia, Trump holds an impromptu press conference in the lobby of Trump Tower and declares that there were “fine people” on both sides.

August 25, 2017 – Trump’s first pardon is granted to former Arizona sheriff Joe Arpaio, who was convicted of criminal contempt for disregarding a court order in a racial-profiling case. Trump did not consult with lawyers at the Justice Department before announcing his decision.

September 5, 2017 – The Trump administration announces that it is ending the DACA program, introduced by Obama to protect nearly 800,000 undocumented immigrants brought to the United States as children. Trump calls on Congress to introduce legislation that will prevent DACA recipients from being deported. Multiple lawsuits are filed opposing the policy in federal courts and judges delay the end of the program, asking the government to submit filings justifying the cancellation of DACA.

September 19, 2017 – In a speech at the United Nations General Assembly, Trump refers to North Korean leader Kim Jong Un as “Rocket Man” and warns that the United States will “totally destroy North Korea” if forced to defend itself or its allies.

September 24, 2017 – The Trump administration unveils a third version of the travel ban, placing restrictions on travel by certain foreigners from Chad, Iran, Libya, North Korea, Somalia, Syria, Venezuela and Yemen. (Chad is later removed after meeting security requirements.) One day before the revised ban is set to take effect, it is blocked nationwide by a federal judge in Hawaii. A judge in Maryland issues a similar ruling.

December 4, 2017 – The Supreme Court rules that the revised travel ban can take effect pending appeals.

December 6, 2017 – Trump recognizes Jerusalem as Israel’s capital and announces plans to relocate the US Embassy there.

January 11, 2018 – During a White House meeting on immigration reform, Trump reportedly refers to Haiti and African nations as “shithole countries.”

January 12, 2018 – The Wall Street Journal reports that Trump allegedly had an affair with a porn star named Stephanie Clifford, aka Stormy Daniels. The newspaper states that Trump’s personal attorney, Michael Cohen, arranged a $130,000 payment for a nondisclosure agreement weeks before Election Day in 2016. Trump denies the affair occurred. In March, Clifford sues Trump seeking to be released from the NDA. In response, Trump and his legal team agree outside of court not to sue or otherwise enforce the NDA. The suit is dismissed. A California Superior Court judge orders Trump to pay $44,100 to Clifford, to reimburse her attorneys’ fees in the legal battle surrounding her nondisclosure agreement.

March 13, 2018 – Trump announces in a tweet that he has fired Secretary of State Rex Tillerson and will nominate CIA Director Mike Pompeo as Tillerson’s replacement.

March 20, 2018 – A New York Supreme Court judge rules that a defamation lawsuit against Trump can move forward, ruling against a July 2017 motion to dismiss filed by Trump’s lawyers. The lawsuit, filed by Summer Zervos, a former “Apprentice” contestant, is related to sexual assault allegations. In November 2021, attorneys for Zervos announce she is dropping the lawsuit.

March 23, 2018 – The White House announces that it is adopting a policy, first proposed by Trump via tweet in July 2017, banning most transgender individuals from serving in the military.

April 9, 2018 – The FBI raids Cohen’s office, home and a hotel room where he’d been staying while his house was renovated. The raid is related to a federal investigation of possible fraud and campaign finance violations.

April 13, 2018 – Trump authorizes joint military strikes in Syria with the UK and France after reports the government used chemical weapons on civilians in Douma.

May 7, 2018 – The Trump administration announces a “zero tolerance” policy for illegal border crossings. Sessions says that individuals who violate immigration law will be criminally prosecuted and warns that parents could be separated from children.

May 8, 2018 – Trump announces that the United States is withdrawing from the Iran nuclear deal.

May 31, 2018 – The Trump administration announces it is imposing tariffs on steel and aluminum imported from allies Canada, Mexico and the European Union.

June 8-9, 2018 – Before leaving for the G7 summit in Quebec City, Trump tells reporters that Russia should be reinstated in the group. The annexation of Crimea in 2014 led to Russia’s suspension. After leaving the summit, Trump tweets that he will not endorse the traditional G7 communique issued at the end of the meeting. The President singles out Canadian Prime Minister Justin Trudeau for making “false statements” at a news conference.

June 12, 2018 – Trump meets Kim in person for the first time during a summit in Singapore. They sign a four-point statement that broadly outlines the countries’ commitment to a peace process. The statement contains a pledge by North Korea to “work towards” complete denuclearization but the agreement does not detail how the international community will verify that Kim is ending his nuclear program.

June 14, 2018 – The New York attorney general sues the Trump Foundation, alleging that the nonprofit run by Trump and his three eldest children violated state and federal charity law.

June 26, 2018 – The Supreme Court upholds the Trump administration’s travel ban in a 5-4 ruling along party lines.

July 16, 2018 – During a joint news conference with Putin in Helsinki, Trump declines to endorse the US government’s assessment that Russia interfered in the election, saying he doesn’t “see any reason why” Russia would be responsible. The next day, Trump clarifies his remark, “The sentence should have been, ‘I don’t see any reason why it wouldn’t be Russia.” He says he accepts the intelligence community’s conclusion that Russia meddled in the election but adds, “It could be other people also.”

August 21, 2018 – Cohen pleads guilty to eight federal charges, including two campaign finance violations. In court, he says that he orchestrated payments to silence women “in coordination and at the direction of a candidate for federal office.” On the same day, Trump’s former campaign chairman, Paul Manafort is convicted on eight counts of federal financial crimes. On December 12, Cohen is sentenced to three years in prison.

October 2, 2018 – The New York Times details numerous tax avoidance schemes allegedly carried out by Trump and his siblings. In a tweet, Trump dismisses the article as a “very old, boring and often told hit piece.”

November 20, 2018 – Releases a statement backing Saudi Arabia in the wake of the murder of Washington Post journalist Jamal Khashoggi, a Virginia resident, killed in October at a Saudi consulate in Turkey. Khashoggi was a frequent critic of the Saudi regime. The Saudis initially denied any knowledge of his death, but then later said a group of rogue operators were responsible for his killing. US officials have speculated that such a mission, including the 15 men sent from Riyadh, Saudi Arabia, to murder him, could not have been carried out without the authorization of Saudi leader Crown Prince Mohammed bin Salman. In the statement, Trump writes, “Our intelligence agencies continue to assess all information, but it could very well be that the Crown Prince had knowledge of this tragic event, maybe he did and maybe he didn’t!”

December 18, 2018 – The Donald J. Trump Foundation agrees to dissolve according to a document filed in Manhattan Supreme Court. The agreement allows the New York attorney general’s office to review the recipients of the charity’s assets.

December 22, 2018 – The longest partial government shutdown in US history begins after Trump demands lawmakers allocate $5.7 billion in funding for a border wall before agreeing to sign a federal funding package.

January 16, 2019 – After nearly two years of Trump administration officials denying that anyone involved in his campaign colluded with the Russians to help his candidacy, Trump lawyer and former New York City mayor, Rudy Giuliani, says “I never said there was no collusion between the campaign, or people in the campaign. I said the President of the United States.”

January 25, 2019 – The government shutdown ends when Trump signs a short-term spending measure, providing three weeks of stopgap funding while lawmakers work on a border security compromise. The bill does not include any wall funding.

February 15, 2019 – Trump declares a national emergency to allocate funds to build a wall on the border with Mexico. During the announcement, the President says he expects the declaration to be challenged in court. The same day, Trump signs a border security measure negotiated by Congress, with $1.375 billion set aside for barriers, averting another government shutdown.

February 18, 2019 – Attorneys general from 16 states file a lawsuit in federal court challenging Trump’s emergency declaration.

March 22, 2019 – Mueller ends his investigation and delivers his report to Attorney General William Barr. A senior Justice Department official tells CNN that there will be no further indictments.

March 24, 2019 – Barr releases a letter summarizing the principal conclusions from Mueller’s investigation. According to Barr’s four-page letter, the evidence was not sufficient to establish that members Trump’s campaign tacitly engaged in a criminal conspiracy with the Russian government to interfere with the election.

April 18, 2019 – A redacted version of the Mueller report is released. The first part of the 448-page document details the evidence gathered by Mueller’s team on potential conspiracy crimes and explains their decisions not to charge individuals associated with the campaign. The second part of the report outlines ten episodes involving possible obstruction of justice by the President. According to the report, Mueller’s decision not to charge Trump was rooted in Justice Department guidelines prohibiting the indictment of a sitting president. Mueller writes that he would have cleared Trump if the evidence warranted exoneration.

May 1, 2019 – The New York Times publishes a report that details how Giuliani, in his role as Trump’s personal attorney, is investigating allegations related to former Vice President Joe Biden, a potential Trump opponent in the 2020 presidential race. Biden’s son, Hunter Biden, served on the board of a Ukrainian energy company called Burisma Holdings. In 2016, the elder Biden pressured Ukraine to oust a prosecutor who had investigated Burisma for corruption. Giuliani suggests that Biden’s move was motivated by a desire to protect his son from criminal charges. Giuliani’s claims are undermined after Bloomberg reports that the Burisma investigation was “dormant” when Biden pressed the prosecutor to resign.

June 12, 2019 – Trump says he may be willing to accept information about political rivals from a foreign government during an interview on ABC News, declaring that he’s willing to listen and wouldn’t necessarily call the FBI.

June 16, 2019 – Israeli Prime Minister Benjamin Netanyahu unveils a sign at the proposed site of a Golan Heights settlement to be named Trump Heights.

June 18, 2019 – Trump holds a rally in Orlando to publicize the formal launch of his reelection campaign.

June 28, 2019 – During a breakfast meeting at the G20 summit in Osaka, Japan, Trump and Saudi Crown Prince Mohamed bin Salman reportedly discuss tensions with Iran, trade and human rights.

June 30, 2019 – Trump becomes the first sitting US president to enter North Korea. He takes 20 steps beyond the border and shakes hands with Kim.

July 14, 2019 – Via Twitter, Trump tells Reps. Alexandria Ocasio-Cortez, Rashida Tlaib, Illhan Omar and Ayanna Pressley to “go back” to their home countries. Ocasio-Cortez, Tlaib and Pressley are natural-born US citizens; Omar was born in Somalia, immigrated to the United States and became a citizen.

July 16, 2019 – The House votes, 240-187, to condemn the racist language Trump used in his tweets about Ocasio-Cortez, Tlaib, Omar and Pressley.

July 24, 2019 – Mueller testifies before the House Judiciary Committee and the House Intelligence Committee.

July 25, 2019 – Trump speaks on the phone with Ukrainian President Volodymyr Zelensky. Trump asks Zelensky for a “favor,” encouraging him to speak with Giuliani about investigating Biden. In the days before the call, Trump blocked nearly $400 million in military and security aid to Ukraine.

August 12, 2019 – A whistleblower files a complaint pertaining to Trump’s conduct on the Zelensky call.

September 11, 2019 – The Trump administration lifts its hold on military aid for Ukraine.

September 24, 2019 – House Speaker Nancy Pelosi announces the beginning of an impeachment inquiry related to the whistleblower complaint.

September 25, 2019 – The White House releases notes from the July 25 call between Trump and Zelensky. The readout contains multiple references to Giuliani and Barr. In response, the Justice Department issues a statement that says Barr didn’t know about Trump’s conversation until weeks after the call. Further, the attorney general didn’t talk to the President about having Ukraine investigate the Bidens, according to the Justice Department. On the same day as the notes are released, Trump and Zelensky meet in person for the first time on the sidelines of the UN General Assembly. During a joint press conference after the meeting, both men deny that Trump pressured Zelensky to investigate Biden in exchange for aid.

September 26, 2019 – The House releases a declassified version of the whistleblower complaint. According to the complaint, officials at the White House tried to “lock down” records of Trump’s phone conversation with Zelensky. The complaint also alleges that Barr played a role in the campaign to convince Zelensky that Biden should be investigated. Trump describes the complaint as “fake news” and “a witch hunt” on Twitter.

September 27, 2019 – Pompeo is subpoenaed by House committees over his failure to provide documents related to Ukraine. Kurt Volker, US special envoy to Ukraine, resigns. He was named in the whistleblower complaint as one of the State Department officials who helped Giuliani connect with sources in Ukraine.

October 3, 2019 – Speaking to reporters outside the White House, Trump says both Ukraine and China should investigate alleged corruption involving Biden and his son. CNN reports that the President had brought up Biden and his family during a June phone call with Xi Jinping. In that call, Trump discussed the political prospects of Biden as well as Elizabeth Warren. He also told Xi that he would remain quiet on the matter of Hong Kong protests. Notes documenting the conversation were placed on a highly secured server where the transcript from the Ukraine call was also stored.

October 6, 2019 – After Trump speaks on the phone with Turkish President Recep Tayyip Erdogan, the White House announces that US troops will move out of northern Syria to make way for a planned Turkish military operation. The move marks a major shift in American foreign policy and effectively gives Turkey the green light to attack US-backed Kurdish forces, a partner in the fight against ISIS.

October 9, 2019 – Turkey launches a military offensive in northern Syria.

October 31, 2019 – Trump says via Twitter that he is changing his legal residency from New York to Florida, explaining that he feels he is treated badly by political leaders from the city and state.

November 7, 2019 – A judge orders Trump to pay $2 million to settle a lawsuit against his charity filed by the New York state attorney general. According to the suit, Trump breached his fiduciary duty by allowing his presidential campaign to direct the distribution of donations. In a statement, Trump accuses the attorney general of mischaracterizing the settlement for political purposes.

November 13, 2019 – Public impeachment hearings begin and Trump meets Erdogan at the White House.

November 20, 2019 – During a public hearing, US Ambassador to the European Union Gordon Sondland says he worked with Giuliani on matters related to Ukraine at the “express direction of the President of the United States” and he says “everyone was in the loop.” Sondland recounts several conversations between himself and Trump about Ukraine opening two investigations: one into Burisma and another into conspiracies about Ukrainian meddling in the 2016 US election.

December 10, 2019 – House Democrats unveil two articles of impeachment, one for abuse of power and one for obstruction of Congress.

December 11, 2019 – Trump signs an executive order to include discrimination against Jewish people as a violation of law in certain cases, with an eye toward fighting antisemitism on college campuses.

December 13, 2019 – The House Judiciary Committee approves the two articles of impeachment in a party line vote.

December 18, 2019 – The House of Representatives votes to impeach Trump, charging a president with high crimes and misdemeanors for just the third time in American history.

January 3, 2020 – Speaking at Mar-a-Lago, Trump announces that a US airstrike in Iraq has killed Qasem Soleimani, the leader of the Islamic Revolutionary Guards Corps Quds Force.

January 8, 2020 – Iran fires a number of missiles at two Iraqi bases housing US troops in retaliation for the American strike that killed Soleimani. No US or Iraqi lives are reported lost, but the Pentagon later releases a statement confirming that 109 US service members had been diagnosed with mild traumatic brain injuries in the wake of the attack.

January 24, 2020 – Makes history as the first President to attend the annual March for Life rally in Washington, DC, since it began nearly a half-century ago. Trump reiterates his support for tighter abortion restrictions.

January 29, 2020 – Trump signs the US-Mexico-Canada Agreement into law, which replaces the North American Free Trade Agreement.

January 31, 2020 – The Trump administration announces an expansion of the travel ban to include six new countries. Immigration restrictions will be imposed on: Nigeria, Eritrea, Tanzania, Sudan, Kyrgyzstan and Myanmar (known as Burma), with exceptions for immigrants who have helped the United States.

February 5, 2020 – The Senate votes to acquit Trump on two articles of impeachment. Sen. Mitt Romney is the sole Republican to vote to convict on the charge of abuse of power, joining with all Senate Democrats in a 52-48 not guilty vote. On the obstruction of Congress charge, the vote falls along straight party lines, 53-47 for acquittal.

May 29, 2020 – Trump announces that the United States will terminate its relationship with the World Health Organization.

July 10, 2020 – Trump commutes the prison sentence of his longtime friend Roger Stone, who was convicted of crimes that included lying to Congress in part, prosecutors said, to protect the President. The announcement came just days before Stone was set to report to a federal prison in Georgia.

October 2, 2020 – Trump announces that he has tested positive for coronavirus. Later in the day, Trump is transferred to Walter Reed National Military Medical Center, and returns to the White House on October 5.

November 7, 2020 – Days after the presidential election on November 3, CNN projects Trump loses his bid for reelection to Biden.

November 25, 2020 – Trump announces in a tweet that he has granted Michael Flynn a “full pardon,” wiping away the guilty plea of the intelligence official for lying to the FBI.

December 23, 2020 – Announces 26 new pardons, including for Stone, Manafort and son-in-law Jared Kushner’s father, Charles.

January 6, 2021 – Following Trump’s rally and speech at the White House Ellipse, pro-Trump rioters storm the US Capitol as members of Congress meet to certify the Electoral College results of the 2020 presidential election. A total of five people die, including a Capitol Police officer the next day.

January 7-8, 2021 – Instagram and Facebook place a ban on Trump’s account from posting through the remainder of his presidency and perhaps “indefinitely.” Twitter permanently bans Trump from the platform, explaining that “after close review of recent Tweets…and the context around them we have permanently suspended the account due to the risk of further incitement of violence.”

January 13, 2021 – The House votes to impeach Trump for “incitement of insurrection.” He is the only president to be impeached twice.

January 20, 2021 – Trump issues a total of 143 pardons and commutations that include his onetime political strategist, Steve Bannon, a former top fundraiser and two well-known rappers but not himself or his family. He then receives a military-style send-off from Joint Base Andrews on Inauguration morning, before heading home to Florida.

February 13, 2021 – The US Senate acquits Trump in his second impeachment trial, voting that Trump is not guilty of inciting the deadly January 6 riots at the US Capitol. The vote is 43 not guilty to 57 guilty, short of the 67 guilty votes needed to convict.

May 5, 2021 – Facebook’s Oversight Board upholds Trump’s suspension from using its platform. The decision also applies to Facebook-owned Instagram.

June 4, 2021 – Facebook announces Trump will be suspended from its platform until at least January 7th, 2023 – two years from when he was initially suspended.

July 1, 2021 – New York prosecutors charge the Trump Organization and Trump Payroll Corporation with 10 felony counts and Chief Financial Officer Allen Weisselberg with 15 felony counts in connection with an alleged tax scheme stretching back to 2005. Trump himself is not charged. On December 6, 2022, both companies are found guilty on all charges.

February 14, 2022 – Accounting firm Mazars announces it will no longer act as Trump’s accountant, citing a conflict of interest. In a letter to the Trump Organization chief legal officer, the firm informs the Trump Organization to no longer rely on financial statements ending June 2011 through June 2020.

May 3, 2022 – The Trump Organization and the Presidential Inaugural Committee agree to pay a total of $750,000 to settle with the Washington, DC, attorney general’s office over allegations they misspent money raised for former President Donald Trump’s inauguration.

June 9-July 21, 2022 – The House select committee investigating the January 6, 2021, attack on the US Capitol holds eight hearings, where it hears from witnesses including top ex-Trump officials, election workers, those who took part in the attack and many others. Through live testimony, video depositions, and never-before-seen material, the committee attempts to paint the picture of the former president’s plan to stay in power and the role he played on January 6.

August 8, 2022 – The FBI executes a search warrant at Trump’s Mar-a-Lago resort in Palm Beach, Florida, as part of an investigation into the handling of presidential documents, including classified documents, that may have been brought there.

August 12, 2022 – A federal judge unseals the search warrant and property receipt from the FBI search of Mar-a-Lago. The unsealed documents indicate the FBI recovered 11 sets of classified documents from its search, including some materials marked as “top secret/SCI” – one of the highest levels of classification, and identify three federal crimes that the Justice Department is looking at as part of its investigation: violations of the Espionage Act, obstruction of justice and criminal handling of government records.

September 21, 2022 – The New York state attorney general files a lawsuit against Trump, three of his adult children and the Trump Organization, alleging they were involved in an expansive fraud lasting over a decade that the former President used to enrich himself. According to the lawsuit, the Trump Organization deceived lenders, insurers and tax authorities by inflating the value of his properties using misleading appraisals.

October 3, 2022 – Trump files a lawsuit against CNN for defamation, seeking $475 million in punitive damages.

November 15, 2022 – Announces that he will seek the Republican presidential nomination in 2024.

November 19, 2022 – Trump’s Twitter account, which was banned following the January 6, 2021, attack on the Capitol, is reinstated after users respond to an online poll posted by Twitter CEO and new owner Elon Musk.

December 19, 2022 – The Jan. 6 insurrection committee votes to refer Trump to the Department of Justice on at least four criminal charges. Four days later the panel releases its final report recommending Trump be barred from holding office again.

February 9, 2023 – Trump’s Facebook and Instagram accounts are restored following a two-year ban in the wake of the Jan. 6, 2021 insurrection, a Meta spokesperson confirms to CNN. On March 17, 2023, YouTube restores Trump’s channel.

March 30, 2023 – A grand jury in New York votes to indict Trump, the first time in American history that a current or former president has faced criminal charges.

April 4, 2023 – Surrenders and is placed under arrest before pleading not guilty to 34 felony criminal charges of falsifying business records in Manhattan criminal court. Prosecutors allege that Trump sought to undermine the integrity of the 2016 election through a hush money scheme with payments made to women who claimed they had extramarital affairs with Trump. He has denied the affairs. Hours after his arraignment, Trump rails against the Manhattan district attorney and the indictment during a speech at his Florida resort at Mar-a-Lago.

May 9, 2023 – A Manhattan federal jury finds Trump sexually abused former magazine columnist E. Jean Carroll in a luxury department store dressing room in the spring of 1996 and awards her $5 million for battery and defamation.

May 15, 2023 – A report by special counsel John Durham is released. In it he concludes that the FBI should never have launched a full investigation into connections between Donald Trump’s campaign and Russia during the 2016 election. The report does not recommend any new charges against individuals or “wholesale changes” about how the FBI handles politically charged investigations, despite strongly criticizing the agency’s behavior.

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April 12, 2021
Keeleg to Launch and Offer Free Access to Its AI-Powered Legal Tool Until May 1 in Response to COVID-19

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Press Release
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updated: Apr 8, 2020

SAN FRANCISCO, April 8, 2020 (Newswire.com)
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Keeleg is pleased to announce the public launch and offer of free access to its AI-powered, self-help immigration legal tool in response to the COVID-19 outbreak.

Every year, millions of people apply for legal permanent resident status, apply for naturalization to become U.S. citizens, or petition relatives to permanently immigrate to the United States of America. In addition to filing fees, the process can be quite expensive and complex. Through the help of Keeleg’s cloud-based, AI web application – dubbed Cato – users get qualified and prepare their own immigration applications or get connected to the best immigration attorneys around them.

Cato is a tool that combines artificial intelligence and the knowledge of award-winning attorneys to provide assistance for users with their immigration applications or search for the best immigration attorneys in their area. Cato’s knowledge currently covers hundreds of different immigration case scenarios, and new skills are being developed and added to cover other specialties and use cases.

“After years spent in the industry, we noticed that something was broken and that there was and is a lack of access to legal knowledge and protection for all that need it. By leveraging cutting-edge technology like machine learning, natural language processing, natural language understanding, and natural language generation to power Cato, we aim to bridge this gap between supply and demand and make access to legal help and knowledge, easy, affordable, reliable, and time-saving for all,” said Anthony Remo Luna, CEO, and Co-founder of Keeleg.

As a continuation of our mission to make legal access easy and to foster our commitment to people that seek legal knowledge, the company will be releasing a suite of other legal products dedicated to Chapter 7 individual bankruptcy filings and Wills and Trusts by Summer 2020. Users can sign up to get access to its early access program to try and prepare their applications for free.

About the company:

Keeleg is dedicated to leveraging technology to make legal knowledge and help easy and available to everyone. The San Francisco-based company includes award-winning attorneys with over 30 years of experience in the private practice of law, software engineers, and tech enthusiasts and has created a new platform that leverages artificial intelligence to offer affordable, reliable and time-saving legal solutions.

Contact:

Anthony Remo Luna, CEO, and Co-Founder

social@keeleg.com

Stay in the know, follow Keeleg on Facebook, Twitter, and LinkedIn.

Source: Keeleg

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April 8, 2020