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Everyone Got Duped By Sam Bankman-Fried’s Big Gamble

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1 year ago

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Sam Bankman-Fried was found guilty of stealing billions of dollars from his Bitcoin exchange FTX customers. It’s a dramatic setback for Silicon Valley’s disheveled wunderkind, who has met celebs such as Gisele Bündchen and Tom Brady.

Bankman-Fried did what he always did on November 7, 2022, when his enterprise began its dizzying, irreversible collapse: he evaluated the odds.

Earlier that day, a rival executive had aired concerns about Bankman-Fried’s crypto exchange’s finances on social media, scaring clients into a multi-billion dollar bank run.

Bankman-Fried conferred with two of his top deputies via online chat. “To be clear, you think the tweet is net bad?” he inquired.

They deliberated about their alternatives. Was it feasible that his opponent would retract his criticism? Could this stop the bleeding? “Fairly unlikely,” wrote Bankman-Fried.

After a guilty verdict, Bankman-Fried risks decades in prison.

fried

It was the kind of calculation Bankman-Fried had been doing for years, the fast computations colleagues said he employed in almost every situation – weighing a break-up, evaluating a dangerous trade.

That strategy worked for a while. Bankman-Fried amassed an estimated $26 billion in personal wealth, multiple magazine covers, and broad political influence as the cryptocurrency’s boy wonder. The flameout was significantly more rapid.

As previously said, the tweet was a flop. In less than five days, billions of dollars poured out of the site. When it was all said and done, more than $8 billion in customer funds had gone missing, and the corporation had gone bankrupt. Five weeks later, prosecutors in Manhattan charged Bankman-Fried, who had already resigned, with wire fraud, securities fraud, commodities fraud, and money laundering.

Two contradicting stories emerged during the four weeks of trial. In one, the erstwhile mogul was a brilliant but clueless genius whose faults as CEO enabled tremendous fraud to take place right under his nose. On the other, with the help of former members of his inner circle, Bankman-Fried stole billions of dollars from customers, betting he’d never be found.

Both accounts show how closely FTX’s fortunes were related to the image of its creator, whose eccentric charisma pulled previous presidents, celebrities, and corporate giants into his sphere and his multibillion-dollar bet.

Bankman-Fried was open about his desire to get wealthy. According to him, he wanted to make all those billions solely to give them away.

fried

After a guilty verdict, Bankman-Fried risks decades in prison.

Bankman-Fried and his younger brother were taught at a young age about utilitarianism, which holds that the most ethical choice is the one that does the most good for the greatest Number of people.

Bankman-Fried attended a seminar by Will MacAskill, a 25-year-old doctorate student at Oxford and the originator of effective altruism, a utilitarian-tinged ideology that uses mathematics to determine how individuals might maximize their philanthropic influence.

Mr. MacAskill advised that to achieve the best, Bankman-Fried should take his enormous brain to profitable Wall Street and contribute most of his pay to worthy organizations.

Bankman-Fried was purchased. In 2014, he applied his degree to Jane Street, a high-frequency trading firm, and reportedly donated around half of his earnings to charitable organizations.

Three years later, Bankman-Fried discovered an industry that may make him wealthy than traditional trading: cryptocurrency.

He launched Alameda Research, a crypto investment firm, at 25 after finding that Bitcoin values fluctuated significantly across countries. Alameda reportedly gained $20 million from arbitrage trading in just three weeks.

In 2019, he established FTX, a Hong Kong-based cryptocurrency exchange for international investors. Like Elizabeth Holmes, another Silicon Valley entrepreneur whose star fell, he got big-name investors to contribute to the company not only money but also credibility.

fried

After a guilty verdict, Bankman-Fried risks decades in prison.

Within months, the daily trading volume on FTX had surpassed $300 million. With a fortune of $22.5 billion, he appeared on the Forbes 400, the magazine’s annual ranking of the wealthiest Americans, in 2021.

Some credit his extraordinary achievement to an exceptionally high-risk tolerance, a willingness to risk severe consequences for a large gain.

“He would be happy to flip a coin if it came up tails and the world was destroyed,” his ex-girlfriend and former CEO of Alameda Research, Caroline Ellison, testified at trial. “As long as if it came up heads the world would be more than twice as good.”

According to internal sources, life at FTX may be likened to a grown-up maths camp, populated by a diverse group of smart misfits and headed by the constantly rumpled Bankman-Fried.

“He was super disorganised, he was always in cargo shorts, he was always sloppy,” a former FTX employee told the BBC. “He would walk around the office in bare feet.”

According to the employee, those at the top were a close-knit group who sometimes unthinkingly listened to Sam. “It could be cult-like.”

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Natalie Tien, who oversaw public relations and Bankman-Fried’s schedule at FTX for almost two years, claimed he was charismatic to the point where the company seemed “toxic” at times.

“We just trusted him 100%,” she told the BBC. “To a degree that we kind of worried [about] speaking up for ourselves.”

The company’s employees were not the only ones who were captivated.

Appearing in shorts and ill-fitting T-shirts with Bill Clinton, Tony Blair, Gisele Bundchen, and Katy Perry, he became a type of spokesperson for the crypto business as a whole just as it began to reach new heights.

Part of the mystery stemmed from the fact that Bankman-Fried seemed to forego the amount of luxury that his money could have bought. During the trial, his defense attorneys said he did not own a yacht. He drove an old Toyota Corolla. Meanwhile, he spoke before Congress, calling for greater regulation of the cryptocurrency business, distinguishing himself from many of his contemporaries.

“In a weird way, he seemed kind of like the grown-up in the crypto world,” said Zeke Faux, an investigative journalist and the author of Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall.

And then there was the proclaimed final goal: Bankman-Fried would give it all away.

“It was a great story, everybody loved it,” Mr Faux remarked. “People loved it in Congress, the VCs loved it, the bankers loved it.”

“The problem with his story is that it was not true,” he told me.

Sequoia Financing, a venture financing firm, published a breathless profile on Bankman-Fried in their magazine in September 2022. FTX was worth $32 billion at the time.

Author Adam Fisher detailed Bankman-Fried’s efforts to maximize his fortune in order to maximize his impact on the world in the now-deleted essay FTX’s SBF Has a Saviour Complex, and Maybe You Should Too. Fisher wrote that it was risky. “But the maths couldn’t be clearer.”

“To do the most good for the world,” he said, “SBF needed to find a path on which he’d be a coin toss away from going totally bust.”

A month and a half later, industry news site CoinDesk released a shocking story claiming that Alameda had invested more than half of its $15 billion portfolio in FTT, the crypto coin issued by FTX. The announcement sparked concerns about the true worth of Alameda’s interests, as well as the apparent conflict of interest between Alameda and FTX, who are separate entities.

Then, on November 6, industry rival Binance CEO Changpeng Zhao, CZ, said that he would liquidate his own substantial FTT holdings.

On November 11, FTX imploded, taking the story of cryptocurrency’s prodigy.

The fall was not unexpected for some watchers of the crypto boom and Bankman-Fried’s spectacular climb to prominence.

SOURCE – (BBC)

 

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Trudeau Accelerates Bond Selloff Over Mass Spending Fears

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2 days ago

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2024-11-23

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Trudeau, Bond Market
Trudeau accelerated a bond selloff due to expectations of faster growth and a deeper deficit

Prime Minister Justin Trudeau has accelerated bond selloffs, citing fears of a larger deficit over his GST giveaway. Investors were concerned he was returning to his free-spending strategy as an election loom.

On Thursday, Trudeau unveiled a C$6.3 billion ($4.5 billion) tax relief and rebate program. It includes a two-month moratorium on federal sales tax on various commodities such as Christmas trees, wine, toys, and books and a C$250 check for almost 19 million Canadians, or over half of the population.

The declaration looked to mark the end of a brief period of fiscal restraint, as Finance Minister Chrystia Freeland committed to contain budget deficits to prevent stoking inflationary pressures.

Now that inflation has returned to the Bank of Canada’s 2% target, policymakers have reduced the benchmark interest rate by 125 basis points since June.

Trudeau’s Liberal government sees an opportunity to dig deeper into the public purse, but some analysts believe investors are keeping a careful eye on the country’s debt.

Bonds continued to fall on Thursday following the announcement, as the 10-year benchmark yield rose 7 basis points to 3.457%. After retail data showed a rise in consumer spending on Friday, it increased by up to 3.488%.

As the Trudeau government considers additional fiscal spending, concerns about Canada’s financial situation persist.

Budget Shortfall

Freeland has yet to publish final spending and income figures for the fiscal year that ended in October. Parliamentary Budget Officer Yves Giroux predicts a deficit of C$46.8 billion, much exceeding Freeland’s self-imposed aim of a C$40 billion shortfall.

Despite promises to reduce deficits, the Trudeau government continues to increase expenditure. This year’s budget includes a new capital gains tax inclusion rate to balance the cost of new housing and social initiatives.

This sparked anger from investors and entrepreneurs but allowed Freeland to present a consistent deficit despite significant spending.

The recent declaration indicates that Trudeau’s government no longer feels restrained in its capacity to use economic stimulus to restore favor.

Pierre Poilievre’s Conservatives have led most surveys by roughly 20 points for over a year. They have pounded the prime minister on affordability and promised to reduce taxes, especially income taxes. An election is expected in late October 2025.

The sales tax break will run from December 14 to February 15. The left-wing New Democratic Party intends to support it but has stated that it will continue to advocate for its permanent implementation and expansion to include additional items.

Let the Bankers Worry

Following Trudeau’s announcement, traders in overnight swap markets reduced their bets that the Bank of Canada will drop interest rates by 50 basis points for the second time in December, lowering the odds to fewer than 25% by the end of Thursday. As of late Friday morning, the odds were less than 17%.

The announcement also encouraged several experts to improve their short-term projections for Canada’s GDP. Analysts at the Bank of Montreal predict that the country’s GDP will increase at a 2.5% annualized rate in the first three months of 2025, up from 1.7%.

Speaking to reporters on Friday, Trudeau praised his government’s approach to program expenditure, claiming it fosters optimism and possibilities for families and the middle class.

“We’re focusing on Canadians. “Let the bankers worry about the economy,” Trudeau stated.

Related:

Canada’s Budgetary Watchdog Warns Over Trudeau’s Spending

Canada’s Budgetary Watchdog Warns Over Trudeau’s Spending

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Forced Sale Google Chrome Could Fetch $20 Billion

Published

3 days ago

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2024-11-21

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Sale Google Chrome

Antitrust officials in the US could force the sale of Google’s Chrome browser for up to $20 billion, demonstrating the tremendous worth of the world’s most popular web browser.

Bloomberg Intelligence attributes Chrome’s projected worth to its more than 3 billion monthly active users. The US Department of Justice is preparing to request a federal judge order the browser’s separation from Google’s parent company, Alphabet.

Chrome’s worth comes from its overwhelming 61% market share and its crucial role in Google’s advertising ecosystem. User data enables businesses to better target adverts, and the browser also acts as an important distribution mechanism for Google’s AI technologies.

Industry analysts think it may be difficult to find a suitable buyer. While tech behemoths like Amazon could finance the purchase, they would likely face regulatory scrutiny.

AI businesses, such as OpenAI, may emerge as more viable contenders. They could potentially leverage Chrome to broaden their reach and develop an advertising business.

“It’s not directly monetizable,” one analyst told Bloomberg. “It functions as a gateway to other things. It’s unclear how you would assess that in terms of pure revenue generation.”

Google opposes prospective sales, claiming that they will hamper innovation. The firm does not break out Chrome’s revenue individually in its financial filings, even though the browser’s user data plays an important part in the company’s principal revenue stream, advertising.

The DOJ’s suggestion follows Judge Amit Mehta’s August decision that Google had illegally monopolized the search industry. The judge will consider the recommended remedies at a two-week hearing in April 2024, with a final judgment due in August 2025.

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Bitcoin Has Set a New Record And Is Approaching $100,000.

Published

4 days ago

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2024-11-21

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Bitcoin

(VOR News) – Bitcoin broke beyond the $98,000 mark for the first time on Thursday as investors awaited Donald Trump’s second term as president. All of this happened during the day. As such, cryptocurrency has reached a significant turning point.

According to Coin Metrics, the top cryptocurrency was trading at $97,541.61 during the most recent trading session. Merchants provided this information. This suggests a price gain of more than three percent during the previous trading session.

When the period began, Bitcoin peaked at $98,367.00.

During the premarket trading session, MicroStrategy, a platform that facilitates cryptocurrency foreign exchange trading and serves as a bitcoin proxy, saw a 13% gain. Coinbase, on the other hand, had a 2% rise during that period. Furthermore, all of these increases occurred simultaneously.

The market value of Mara Holdings increased by 9%, which helped raise the valuation of mining companies overall. This was among the factors that led to the total rise.

Because of the widespread belief that President Trump will usher in a new era of prosperity for cryptocurrencies, one marked by more favorable laws and the possible creation of a national strategic bitcoin reserve, the price of Bitcoin has been rising steadily this month.

The most recent change brought about by the increase was the consequence of higher financing rates and more open interest in the futures market during Asian trading hours. The rise was the catalyst for this change. This action was prompted by the ensuing rush.

Throughout its lifespan, this legislation was the catalyst for this change for a variety of reasons. At the same time, spot market premiums decreased, according to CryptoQuant statistics. All of this happened at the same time.

Furthermore, a number of short liquidations have been sparked by the recent spikes in Bitcoin’s price, which has caused the price to rise overnight. As a result, the price has gone up much more. As a result, the total number of short liquidations has increased.

According to CoinGlass, these liquidations have effectively produced more than $88 million in capital during the last 24 hours.

Rob Ginsberg, an analyst at Wolfe Research, noted in a study released on Wednesday that “historically, following previous movements of this magnitude, Bitcoin has either entered a consolidation phase or disregarded the overbought condition as investors accumulate.” This phrase relates to the fact that this particular move has happened before.

Ginsberg stated this in reference to the evolution of Bitcoin over time.

Ginsberg’s answer makes reference to Bitcoin’s propensity to go through a period of consolidation. The comment also made reference to this.

He said, “Considering we are emerging from an extended consolidation phase and the price has reached a new high, it suggests that the pursuit is underway.”

The crucial psychological milestone of $100,000 is expected to be reached in the upcoming weeks, and this breakthrough could happen as early as Thursday. It seems likely that this level will be reached. There is a chance that this new development will take place.

This task will be carried out against the backdrop of this historical era. In addition, if Trump were to win a second term, federal budget deficits would increase, inflation would likely increase, and the dollar’s position in international affairs would change.

The administration that Trump would run during his presidency would be responsible for these consequences. All of these characteristics would positively impact the value of Bitcoin as a currency if they were taken into account in the order that they are presented.

The price of bitcoin had risen by more than 130% by the beginning of 2024.

SOUREC: CNBC

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