According to a report by Business Insider, Sam Bankman-Fried (SBF), co-founder and former CEO of FTX, has adapted to the economic system of New York’s Metropolitan Detention Center (MDC), where he is currently awaiting sentencing on multiple felony counts.
The disgraced crypto-billionaire has reportedly been bartering, using food as currency in exchange for various services within the prison.
Former FTX CEO SBF Trades Fish For Services
Per the report, mackerel, a fish commonly referred to as “macks” among inmates, emerged as the currency of choice in federal prisons after cigarettes were banned. The fish’s popularity stems from its stability and value within the prison economy.
Formerly incarcerated individuals like attorney Larry Levin have accepted mackerel as payment from fellow prisoners, using it to acquire services such as beard trims and shoe shines.
The demand for mackerel became so significant that suppliers, including Global Source Marketing, witnessed increased sales, according to Business Insider.
In a prison environment where inmates lack access to traditional or digital currency, products with steady value, such as certain food items and stamps, serve as substitutes for money.
Mackerel and other stable commodities like tuna become a means of exchange, with their value pegged to the dollar. This economic logic allows inmates to engage in various transactions while maintaining a semblance of a barter system.
The use of fish as a medium of exchange in federal prisons has been widespread since 2004, following the cigarette ban.
Sam Bankman-Fried faces sentencing on March 28, 2024, for charges that include wire fraud and conspiracy to commit money laundering, with a potential prison term of up to 110 years. Additionally, SBF is set to stand trial for separate counts related to political bribery.
FTT Surges with Impressive Gains
FTT, the native token of the FTX cryptocurrency exchange, has seen a remarkable surge in value in recent weeks. With substantial gains across various timeframes and an impressive market capitalization of 1.5 billion, FTT has cemented its position among the top 50 tokens in the crypto market.
Over the past 24 hours, FTT has experienced a significant increase of 21%, showcasing the token’s upward momentum. This short-term surge is complemented by a strong performance over the past week, with a notable rise of 26%.
However, the real standout lies in FTT’s gains over the past 14 and 30 days. Within the last two weeks, FTT has skyrocketed by an impressive 100%, while the 30-day timeframe has seen an astounding surge of 315%.
These gains highlight the growing demand and investor interest in FTT as rumors of a possible reboot of the exchange circulate within the crypto community.
Featured image from Bloomberg, chart from TradingView.com
Sam Bankman-Fried has concluded his last testimony in his criminal trial and now the fate of the former FTX CEO lies in the hands of Jurors with the power to convict him to his sentence or exonerate him.
Former FTX CEO Testimony Reaches Climax
Founder and former CEO of failed FTX Trading Ltd, Sam Bankman-Fried has been on trial after being accused of seven counts of fraud and conspiracy charges related to the collapse of the now-bankrupt crypto exchange.
The former CEO has constantly pleaded not guilty on all charges and took the stand for the first time last Friday to personally defend his case on the fraud trial.
Tuesday marked the Bankman-Fried’s last day of testimony in a court trial headed by Judge Lewis A. Kaplan and the FTX founder was seen to be struggling with the barrage of questions delivered to him by prosecutors.
When Assistant US Attorney Danielle Sassoon probed Bankman-Fried on his stance on cryptocurrency exchange regulations and if he advocated for it, the former FTX CEO affirmed he did so to Congress. However, the prosecutors revealed evidence of Bankman-Fried declaring profanities to regulators and customers.
Following the completion of his testimony, the defense rested its case and now the court’s focus is on the next phase of the trial which is the closing arguments, scheduled to begin on Wednesday.
During this phase, the prosecutors and defense will deliver their final arguments to the 12 Jurors consisting of nine women and three men some of whom are nurses, social workers, teachers, and more.
Sam Bankman-Fried is presently out of opportunities to further convince the Jurors, and the testimony of some of his closest work colleagues and employees, Gary Wang, Nishad Singh, Adam Yedidia, and former girlfriend, Caroline Ellison have made his defense and trial case more complicated.
Sam Bankman-Fried Denies Prior Knowledge Of Misappropriated Customer Funds
In his recent testimony, Sam Bankman-Fried denied all allegations of being aware of the billions of dollars in customer funds misappropriated before the collapse of FTX.
When asked by Danielle Sassoon during his testimony if he had warned his employees not to spend customer funds, Bankman-Fried’s primary response was not being able to remember giving any directive.
The former CEO repeatedly told the court that he had not defrauded anyone or embezzled customer funds. Instead, he spread the blame on his former employees and friends, stating that he regretted not properly looking into the $8 billion shortfall in FTX’s balance sheet.
Bankman-Fried testified that when he asked his executives about the shortfall, they stated that they were preoccupied and told him to stop asking questions since it was distracting.
The trial of the former CEO of the defunct crypto exchange FTX, Sam Bankman-Fried (SBF), continued on October 31, with the prosecution cross-examining the defendant. Despite the line of questioning from the prosecutor, SBF managed to spin his narrative on what went on at the crypto exchange. However, it remains to be seen if this will be enough to sway the jury.
Sam Bankman-Fried Says He Didn’t Know Much About The Bug
So far, the prosecution had been able to establish that Sam Bankman-Fried was in the know of everything that went on at the defunct crypto exchange and trading firm Alameda Research and, in fact, was the mastermind of all the illicit activities that went on there.
With this in mind, the defendant was hell-bent on creating doubts in the minds of the jury members. While on cross-examination, the defendant feigned ignorance to some of the questions put forward by the federal prosecutor as to what went on at both companies.
The prosecution asked the defendant if his employees had told him about the bug in the fiat account. In response, he stated that he only became aware because he overheard when they were talking about it. However, he was too preoccupied to deal with the situation at the time.
As to why he didn’t follow up on it, Sam Bankman-Fried stated that his employees had told him that they were working on it, and considering the amount of faith he had in them, he trusted them to handle it. He also alluded to how they worked as a team at the crypto exchange, and he wasn’t necessarily in charge of handling everything, as everyone had tasks delegated to them.
FTX Founder Feigns Ignorance To Happenings At Alameda
While still on cross-examination, the FTX founder was asked about who made the trading decisions at Alameda, of which he suggested that he wasn’t aware of some of the things that went on in the firm despite being the CEO at the time.
He was quick to point out that former associate and Alameda’s ex-CEO Caroline Ellison was the head of trading at the time the North Dimension account was set up.
The defendant, however, seemed to shoot himself in the leg when he stated that he believed that spending customers’ deposits “folded” into risk management. Probably to show good faith, he then stated that he was simply concerned about customers’ portfolios during his time as CEO of Alameda.
Meanwhile, Bankman-Fried also admitted that he “was paying attention but not as much” but as much as he should have as the CEO of FTX. From his testimony, it is evident that the defendant is simply trying to counter the statements of his former associates that he was totally in control of everything that went on in both companies.
The trial is set to continue on November 1, with the defense expected to close its case this week, after which the case will move on to rebuttals. The case is expected to come to a close by the end of next week, with a verdict from the jury coming soon after.
The former CEO of the defunct crypto exchange FTX, Sam Bankman-Fried (SBF), took the stand once again on October 27. This time, it was in front of the jury as Bankman-Fried had a lot to say about what went on at his former company, including revelations about how he planned to sell the exchange to its one-time competition, Binance.
Why Sam Bankman-Fried Wanted To Sell FTX To Binance
According to a live report by CNN, SBF stated that he saw himself selling FTX to Binance when he and co-founder Gary Wang first started it in 2019 due to the number of crypto exchanges that already existed and the fact that he had no idea of how the company was going to get customers.
However, that idea was quickly shut down as Binance is said to have used an internal team to build its exchange platform. Following this, Sam Bankman-Fried noted that he was more motivated than ever to build something out of FTX despite the initial challenge of growing its customer base.
In the weeks after that, the defendant began to feel more hopeful and felt there was a “20% of success,” which he saw as “a huge opportunity” considering the profitability that the biggest exchanges enjoyed.
FTX went on to become one of the biggest exchanges, even surpassing the second-largest crypto exchange by trading volume, Coinbase, at some point. While on the stand, Bankman-Fried revealed that he felt the “design philosophies” of some exchanges then “didn’t make a lot of sense,” so the exchange capitalized on that to create a niche for itself.
The crypto exchange was seen as more alluring to high-volume traders due to its cheaper trading fees and the fact that the crypto exchange had a more advanced risk engine. The risk engine (which was responsible for liquidations) considered the trader’s account (rather than just a particular trade) whenever it liquidated a customer’s position.
Bankman-Fried Sticks To His Story
Meanwhile, SBF, who has continued to deny any wrongdoing in how he ran FTX and Alameda Research, once again stated on the stand that he didn’t defraud customers. The defendant responded in the negative while replying to a question from his primary counsel, Mark Cohen, on whether he defrauded anyone or not.
While giving his testimony, Sam Bankman-Fried sought to counter the testimonies of witnesses like Wang, Caroline Ellison, and Nishad Singh, as he suggested that they had more leeway than they seemed to have suggested. His close associates had earlier heaped all the blame on the defendant by suggesting that they simply followed Bankman-Fried’s orders as he was totally in control.
Ellison, in particular, had accused Bankman-Fried of directing her to commit the crimes when she used FTX customers’ funds to repay lenders and for other purposes. However, SBF noted that Caroline was the one in charge of Alameda Research and that she even declined when he asked her if she wanted another co-CEO after Sam Trabucco resigned.
Former FTX CEO Sam Bankman-Fried has finally testified in court as his legal team begins to construct a defense against charges of two counts of fraud and five counts of conspiracy. It would seem the 31-year-old former billionaire is now taking a different tactic in his latest attempt to wiggle out of the fraud charges.
While taking the stand, SBF claimed his legal team gave the green light for all of his shady actions leading up to the epic collapse of the exchange.
The prosecution closed its case last week after 12 trial days after calling on several key witnesses, including Alameda Reserach’s ex-CEO Caroline Ellison, FTX’s co-founder Gary Wang, and former Director of Engineering Nishad Singh. Although these witnesses have also implicated Bankman-Fried, the defense continues to work on a not-guilty stand.
SBF’s defense team presented him as the third witness after Krystal Rolle, Bankman-Fried’s lawyer in the Bahamas, and database expert Joseph Pimbley. US District Judge Lewis Kaplan allowed SB to take to the stand at his fraud trial On October 26, outside the jury’s presence.
In his testimony, SBF claimed his lawyers at the time, including Dan Friedberg, approved all of his actions, making him believe he was acting in good faith and everything was fine.
The FTX founder said lawyers were involved in setting this system for diverting customer funds into an Alameda bank account. However, prosecutors have said SBF should not allowed to suggest that the involvement of lawyers in decision-making is an indication of innocence of any wrongdoing.
SBF counters that he was acting without criminal intent on the advice of his attorneys. But when the prosecution’s attorney Danielle Sassoon cross-examined him, he found it difficult to cite specific instances in which his attorneys gave their approval.
“The witness has what I’ll simply call an interesting way of responding to questions,” Judge Kaplan said.
The defense also made the point that testimonies from former FTX top employees were tailored to implicate Bankman-Fried in the hopes of them receiving lenient sentences.
What’s Next For The FTX Founder’s Defense?
Prosecutors say Sam Bankman-Fried was key in diverting customer funds to Alameda Research, while also donating more than $100 million to political campaigns in the US. If convicted, the former FTX CEO could spend up to 20 years in prison.
SBF’s defense seems bleak at the moment, and Judge Kaplan has already disqualified seven of its witnesses. Bankman-Fried is expected to testify to the jury on Friday, where Kaplan is to decide if he could speak to the jurors about lawyers approving his actions.
However, the extra details from their testimonies have also not gone unnoticed. One of them happens to be when Ellison mentioned on the stand that SBF had mentioned his ambition of one day becoming the President of the United States. While they may be unrelated, it could also explain why Bankman-Fried was cozying up to several political figures.
The defendant’s curls were always seen to be one of his standout features, and he thought so, too, according to Ellison’s testimony. She mentioned on the stand that Bankman-Fried had once told her that his hair was “essential to his image” and very valuable, as he believed that the hair had earned him more money in his past jobs.
How Co-Conspirators Felt After The FTX Collapsed
While admitting to her role as a co-conspirator, Ellison seemed to be remorseful (or so it seemed) about her actions. During her testimony, she mentioned how she felt a sense of relief after FTX’s collapse as she didn’t have to lie anymore. According to her, the vent provided an opportunity for her to take responsibility and be honest about what she had done.
Ellison wasn’t the only one who felt certain emotions in the weeks following FTX’s collapse, as Singh mentioned that he was suicidal for days. He mentioned how, in spite of it all, he was optimistic that they could salvage the whole situation rather than playing the blame game.
Meanwhile, during that period, it would seem that all Wang was concerned about was not going to jail, as he flew into the US six days after FTX filed for bankruptcy. According to him, he believed that he was likely to be charged and decided to be one step ahead by agreeing to cooperate with the prosecutors in order to get a shorter prison sentence.
Sam Bankman-Fried’s trial will resume on October 26, with the prosecution concluding its case, after which the defense will move to open its case. The defendant is set to testify in what seems to be a last-ditch effort by SBF’s lawyers to salvage his case.
Regulatory uncertainty and travel restrictions are forcing the city’s crypto elites to shift their operations to more hospitable jurisdictions.
Sam Bankman-Fried’s time in Hong Kong was relatively brief, but incredibly lucrative. In the three years he spent in the city, the unabashed workaholic known for sleeping in his office established FTX, a crypto derivatives exchange that quickly became one of the world’s busiest trading outlets. And the success of that business turned Bankman-Fried into the richest person in crypto at the age of 29 with a $26.5 billion fortune. And then he left.
In September, Bankman-Fried jetted off to the Bahamas for good. His legions of social media followers were surprised by the unfamiliar sight of him donning a suit as FTX’s management team welcomed the country’s prime minister to their new headquarters. Why the Bahamas?
“It’s really important that we have long-term regulatory guidance and clarity,” he said from the company’s office in the Caribbean archipelago. “Hong Kong has not yet drafted the actual bill…there’s uncertainty about exactly how that is going to turn out.”
Hong Kong has developed into a hotbed for blockchain and crypto-related businesses. Many of the global elites from the crypto industry got their start in Hong Kong, including exchanges Crypto.com, BitMEX, Bitfinex, OSL and others. The world’s largest stablecoin, Tether, was launched from Hong Kong. And the city notched up an astounding $60 billion worth of incoming cryptocurrencies between July 2020 and June 2021, according to blockchain data firm Chainalysis.
But regulatory uncertainty in Hong Kong combined with strict quarantine requirements have become catalysts for some crypto companies to shift their operations to other markets where regulators are moving more swiftly to roll out rules that support the nascent industry.
Singapore is the nearest such locationand it managed to attract a veritable who’s who of the crypto billionaire ranks. Since the city-state opened its door to “crypto tokens” in January 2020,Brian Armstrong’s Coinbase, Changpeng Zhao’s Binance, Cameron and Tyler Winklevoss’ Gemini have already set up business units and applied for licenses to operate there.
The Monetary Authority of Singapore (MAS) said that it’s already received 170 applications for crypto-related service providers as of July. Although the financial regulator has turned down two applicants so far, three other candidates, Australia-based exchange Independent Reserve, the brokerage arm of DBS Bank and Singapore’s fintech company Fomo Pay, announced over the past three months that they had secured licenses. Coinhako also said in November that it had received in-principle approval from MAS, making it the latest to begin operating as a regulated crypto exchange in the country. So far, around 70 crypto-related service providers have been granted temporary exemptions that allow them to operate without a license for six months.
Forbes Asia
Crypto.com, the world’s third-largest spot exchange by 24-hour trading volume, according to CoinGecko, shifted its headquarters this year from Hong Kong to Singapore. Eqonex Group, a Nasdaq-listed digital asset financial services firm, established its crypto derivatives exchange last year in Singapore rather than Hong Kong, where it operates much of its other businesses. The firm, formerly known as Diginex, cited Hong Kong’s regulatory regime which bans crypto derivatives and limits trading services to professional investors.
“These were the two things that we really didn’t feel were the right way to go, and in fact were contrary to the way that we had designed our products,” said Richard Byworth, CEO of Eqonex Group.
Hong Kong introduced an opt-in licensing regime in 2018 for platforms that allow investors to buy and sell security tokens, which are traditional stocks and bonds in a digital form. At the time, most cryptocurrencies fell outside the scope of the framework. Furthermore, licensed exchanges are only allowed to serve professional investors with a portfolio of at least HK$8 million ($1 million) in liquid assets. They are also banned from offering traders access to crypto futures and derivatives.
So far, the only firm to be granted a license under Hong Kong’s voluntary regime is crypto trading platform OSL. The Securities and Futures Commission (SFC) said in November that it has applications from several other firms under consideration.
Wayne Trench, CEO of Hong Kong-based digital asset trading platform OSL.
OSL
Now, the city’s regulators are discussing the possibility of a compulsory licensing regime for exchanges that offer virtual asset trading, including bitcoin and others that were previously excluded. The proposal, however, still suggests limiting exchanges operating in Hong Kong to only offering services to high-net-worth individuals. The restrictions on crypto derivatives are also likely to apply on licensees under the new regime.
“Frankly, it’s not an easy set of rules to comply with. But what the Hong Kong regulations have done is deliver, in my mind, the highest level of investor protection in digital assets anywhere in the world,” said Wayne Trench, CEO of OSL.
But others contend the policy will result in retail investors taking even greater risks if their only option is to resort to using unregulated exchanges to buy and sell cryptocurrencies in Hong Kong. “As much as you want to ban it, people will always find a way to buy crypto, and they will do it somewhere else,” said Henri Arslanian, crypto leader of PwC based in Hong Kong. “It’s just the reality of it, which puts the public more at risk ironically.”
Nearly one-third of Hong Kong’s residents are estimated to have invested in, transferred, or exchanged cryptocurrencies for goods and services, according to a newly published survey by payments giant Visa. Among developed markets, Hong Kong was ranked only behind the U.S. in terms of its residents engagement with the digital assets, the survey shows.
The SFC said last month that they are currently reviewing the rules that block retail investors from using crypto trading platforms as part of its efforts in maintaining a practical approach toward providing a “well-defined” regulatory environment.
Byworth of Eqonex said Hong Kong still has other policies in its favor that make it easier for the city’s businesses to recruit and retain international talent. “Even if Hong Kong goes down on a road of restrictive regulations around crypto and loses a lot of people to Singapore, the city can take quite a lot of market share back at any moment when it decides to change course and reverse into a more flexible regulatory regime,” he said.
Visitors to Hong Kong Fintech Week walk past a booth displaying the symbols for bitcoin and ether on November 4, 2021.
Paul Yeung/Bloomberg
It’s not just the regulatory framework that matters, but also the pandemic travel restrictions that have an impact on Hong Kong’s appeal as a place to do business. The city’s “zero infection” strategy has become a major obstacle for many of the businesses based there. Residents returning to Hong Kong face a mandatory hotel quarantine period of up to three weeks.
The Asia Securities Industry & Financial Markets Association, a lobby group representing some of the world’s biggest banks, said Hong Kong’s status as a financial center was at risk because of its “highly restrictive” quarantine policy. The group said in October that 48% of the companiespolled in a recent survey were contemplating moving staff or functions away from Hong Kong due to the uncertainty over when the restrictions would be lifted.
Meanwhile, Singapore has already opened its border to vaccinated travelers from at least 18 countries. Aside from starting to ease travel restrictions, the city-state’s proactive stance on regulation makes it more attractive as other jurisdictions move in the opposite direction. Singapore is gaining headway as some nearby countries, such as China and South Korea, clamp down on their domestic crypto industries. China recently banned all cryptocurrency transactions and mining, and South Korea shut down nearly 40 exchanges deemed unqualified in September.
Coinbase’s debut in Japan in August shed a positive light on the country, which has been at the forefront of regulating crypto assets since 2017 following the $460 million bitcoin hack on local exchange Mt. Gox. But crypto-related crimes are still a problem for Japan, where trading platform Liquid also became the victim of a cyberattack just months ago.
To be sure, Singapore can’t rest on its laurels just yet. The government still has to decide whether the trading of crypto derivatives will be permitted. The digital instruments range from those that already exist in traditional market like futures and options, to the more innovative ones like “perpetual swaps,” a type of futures contract without an expiry date.
Forbes Asia
The Monetary Authority of Singapore said last year that it will not regulate crypto derivatives unless they are offered on approved trading platforms, and the authority warned retail investors of their risks.
The reality is that only a handful of countries have even begun to discuss crypto derivatives. “There’s no one-size-fits-all perfect crypto regulatory regime out there,” said Arslanian of PwC. “All that the crypto ecosystem wants is clarity and the ability to operate a business.”
The Bahamas is a standout in this regard because it moved quickly in late 2020 to lay out a comprehensive framework across both spot and derivatives trading which gave it a first-mover advantage.
According to Bankman-Fried, the restrictions on services to a local market are less important than restrictions that hinder or even block a business from offering its services to the rest of the world. “Because for most companies, this isn’t just about maximizing how much business can be done directly toward one place’s population, it’s more about where is a good home for a business generally,” he said.
Sam Bankman-Fried, CEO of crypto derivatives exchange FTX.
