The demise of Sam Bankman-Fried and his billion-dollar crypto companies could have been triggered by a single tweet from his business rival.
Simply days earlier than the collapse of FTX and its sister agency, Alameda Analysis, the pinnacle of competitor Binance, Changpeng Zhao, introduced his firm would divest from Bankman-Fried’s companies.
He made the announcement on Twitter and cited ‘current revelations’ in regards to the well being of FTX. These revelations had been detailed in an Alameda steadiness sheet which was leaked days earlier and indicated the monetary mess Bankman-Fried’s companies had been in.
Zhao mentioned Binance would liquidate its FTT tokens. FTT is a cryptocurrency which was issued by FTX – and the Binance determination to promote its stake brought about widespread panic amongst customers of Bankman-Fried’s platform.
The Binance announcement triggered a run on the financial institution at FTX – however the firm did not manage to pay for to pay buyers who wished to withdraw their property. Clients tried to withdraw $6 billion in 72 hours.
The demise of Sam Bankman-Fried (pictured left) and his billion-dollar crypto companies could have been triggered by a single tweet from his business rival, Changpeng Zhao (pictured proper)
The disaster finally uncovered FTX’s fraudulent practices – and Bankman-Fried was charged with wire fraud on December 2, lower than a month after Zhao’s tweet.
Zhao had tweeted on November 6: ‘As a part of Binance’s exit from FTX fairness final 12 months, Binance acquired roughly $2.1 billion USD equal in money (BUSD and FTT). As a consequence of current revelations which have got here to gentle, we now have determined to liquidate any remaining FTT on our books.’
In three follow-up tweets, he mentioned Binance would attempt to promote its holdings ‘in a means that minimizes market affect’ and the method would take ‘a number of months to finish’.
Inside XX, the crypto markets had collapsed as buyers bought their stakes in droves because of the FTX failure.
Zhao additionally instantly tried to dispel the speculation that it was a concerted effort to harm a rival firm, including: ‘Binance at all times encourages collaboration between business gamers. Concerning any hypothesis as as to if it is a transfer towards a competitor, it isn’t. Our business is in it is nascency and each time a undertaking publicly fails it hurts each person and each platform.’
He additionally remarked in one other tweet a number of weeks later that ‘no wholesome enterprise may be destroyed by a tweet’. Zhao adopted that up with the accusation that Bankman-Fried is ‘one of many best fraudsters in historical past’.
Prosecutors have alleged Bankman-Fried knowingly stole cash from prospects of his FTX platform.
‘This isn’t about complicated problems with cryptocurrencies,’ prosecutor Nicolas Roos advised the jury on Wednesday, after a number of days of withering cross-examination of the fallen crypto king.
Simply days earlier than the collapse of FTX and its sister agency, Alameda Analysis, the pinnacle of competitor Binance, Changpeng Zhao, introduced his firm would divest from Bankman-Fried’s companies
He made the announcement on Twitter and cited ‘current revelations’ in regards to the well being of FTX. These revelations had been detailed in an Alameda steadiness sheet which was leaked days earlier and indicated the monetary mess Bankman-Fried’s companies had been in
Joseph Bankman and Barbara Fried arrive at Manhattan Federal Courtroom Wednesday
‘It is about deception. It is about lies. It is about stealing. It is about greed,’ he mentioned of the 31-year-old who was estimated to be price $26 billion {dollars} on the top of his fame. FTX was estimated to be price $32 billion at its top.
Bankman-Fried was on trial in New York for siphoning funds invested by unknowing prospects on his FTX cryptocurrency change platform, as soon as the second largest change for crypto buyers.
He faces a long time in jail.
As much as $14 billion of consumer cash fueled the transactions and enterprise investments of Alameda Analysis, Bankman-Fried’s personally owned hedge fund.
The jury is confronted with the query of whether or not ‘the defendant knew taking the cash was flawed,’ Roos mentioned.
‘He knew it was flawed. He did it anyway (and) thought as a result of he was good he might get away with it,’ the prosecutor argued.
To imagine in any other case, ‘you’d need to imagine that the defendant was truly clueless. You sat by way of this trial and you recognize that none of it’s true’.
Already weakened through the first three weeks of the trial, the 31-year-old did not flip issues round throughout his a number of days of testimony.
Zhao mentioned Binance would liquidate its FTT tokens. FTT is a cryptocurrency which was issued by FTX – and the Binance determination to promote its stake brought about widespread panic amongst customers of Bankman-Fried’s platform
Witness Caroline Ellison leaves Manhattan Federal Courtroom in October
‘He lied to you,’ the prosecutor mentioned of Bankman-Fried’s repeated makes an attempt to say he didn’t know of Alameda’s dire straits or keep in mind false statements that each one was advantageous at his firm.
However within the two hours of closing arguments, the prosecution mentioned Bankman-Fried acquired a number of warnings relating to Alameda’s funds, nicely earlier than its collapse late final 12 months.
‘Each time, he selected to double down, to dig the outlet deeper,’ Roos advised the jury.
In the course of the trial that started on October 3, the Massachusetts Institute of Expertise graduate admitted he made ‘errors’ in managing his crypto empire, however that he by no means dedicated fraud.
He depicted himself as a younger entrepreneur swamped with work who solely grew to become conscious of the difficulty at Alameda when it was too late.
He mentioned the issues at Alameda arose as a result of his instructions had been ignored by employees, together with his former girlfriend Caroline Ellison, whom he picked to run Alameda.
The trial has revealed Alameda was approved to borrow as much as $65 billion from FTX through a software program ‘again door’, utilizing the cash for dangerous investments, political donations, and the acquisition of swishy actual property.
However the clean examine turned bitter when the cryptocurrency business succumbed to a sequence of defaults in 2022, inflicting the worth of nearly all digital currencies and Alameda’s property to plummet.
Cryptocurrency change Binance founder and CEO Changpeng Zhao speaks at a Binance fifth anniversary occasion in Paris
Bankman-Fried’s mother and father are amongst many who’re ready for the decision on their son
In accordance with prosecutors, on the time of the chapter of FTX, simply over $8 billion belonging to prospects vanished into dangerous investments at Alameda.
Bankman-Fried’s protection lawyer advised jurors on Wednesday that prosecutors in his fraud trial sought to painting him as a ‘villain’ and a ‘monster’ as a result of they might not show he stole billions of {dollars} from the cryptocurrency change’s prospects.
Legal professional Mark Cohen started his closing arguments in Bankman-Fried’s trial in Manhattan federal courtroom after the prosecution made its arguments to the 12 jurors for conviction.
Cohen mentioned prosecutors elicited testimony about Bankman-Fried’s intercourse life and look – the previous billionaire was identified for his unkempt mop of curly locks and carrying shorts and T-shirts – to attempt to get the jury to dislike him.
‘Each film wants a villain,’ Cohen mentioned. ‘And let’s face it, a clumsy highschool math nerd does not look notably villainous. So what did they do? They wrote him into the film as a villain.’
‘Repeatedly, the federal government has sought to show Sam into some kind of villain, some kind of monster,’ Cohen added.