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SBF-led FTX secures a $10B deal with Golden State Warriors

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Sam Bankman Fried a.k.a SBF-led crypto exchange firm FTX and NBA team Golden State Warrior announced a ‘first-of-its-kind cryptocurrency partnership in professional sports.’ As revealed in the press release, the 10 billion contract would enable FTX to be Warriors’ Official Cryptocurrency Platform and NFT Marketplace. Apart from that, the major basketball team will drop digital collectibles on FTX.us, starting from the first quarter of 2022. Besides, the collaboration will provide the trading platform with a visible brand presence.

Crypto entities have aggressively pushed for sports sponsorships in 2021, and the NBA is loving the attention. Speaking on the partnership Warriors President and Chief Operating Officer Brandon Schneider stated,

“Cryptocurrency has a well-established worldwide community and is going to continue to be a major part of the sports, media, and entertainment industries. In our conversations with FTX, we quickly realized our joint desire to innovate around cryptocurrency integration and adoption, including the role NFTs play in global fan engagement. FTX is a company that caught our eyes a couple of months ago. We think we’re at the beginning of the beginning. We’re all learning, and this space will evolve quite a bit.”

FTX jumping the bandwagon of Sports sponsorships

Previously, FTX had an umpire jersey deal with Major League Baseball. It also bag the naming rights of the Miami Heat arena in a deal worth nearly $135 million over 19 years in March, this year. Subsequently in October, Coinbase had inked a multi-year partnership with the National Basketball Association, that led its logo to be displayed in NBA arenas. Likewise, The Los Angeles Lakers renamed the Staples Center to Crypto.com Arena in a $700 million deal back on November 17.

The latest deal comes during the NBA’s 75th Anniversary season. The Warriors in particular have one of the best winning records this season with their prolific shooter Stephen a.k.a Steph Curry charting a new history in the first quarter Tuesday night against the New York Knicks. The Warrior star surpassed NBA legend Ray Allen’s record to become the new ”3-Point King” on the emotion-filled night at the Madison Square Garden.

$230M for Shareholders? FTX Bankruptcy Developments Raise Eyebrows

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  • A critical hearing on the FTX reorganization plan is set for October 7, 2024; creditors with claims under $50,000 may see relief by year-end.
  • Many creditors are upset over a deal allocating $230 million from government forfeiture actions to preferred shareholders, feeling sidelined.
  • A recent preferred shareholder agreement complicates the bankruptcy process by outlining cooperation for releasing forfeiture proceeds.

The recent filing in the FTX bankruptcy saga indicated that a critical hearing would be held on October 7, 2024, during which the proposed reorganization plan will be put to the test. If the court gives its approval, creditors whose claims are less than $50,000 might see some relief at the end of 2024. Those with larger claims may not see any compensation until early 2025.

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FTX Creditors Express Frustration Over Lack of Transparency

The surprise development will see up to $230 million allocated from government forfeiture actions to go to preferred shareholders. This is despite the fact that creditors had largely remained in the dark over the deal when they overwhelmingly supported the plan before the August 16 voting deadline.

“Ordinary creditors had no input,” remarked Sunil Kavuri, a representative for FTX’s largest creditor group, echoing the frustration of many who feel misled once again.

The document disclosed that on August 28, 2024, FTX and its affiliated debtors entered a Preferred Shareholder Agreement with specific equity interest holders. This agreement outlines the cooperation needed to release forfeiture proceeds related to criminal cases against former FTX executives.

That agreement, though informative, nevertheless shocked many creditors, who had earlier been given the impression that they were to be treated as the main priority in the course of bankruptcy.

The current agreement, although not yet court-approved, provides for preferred shareholders to actively interact with the estate in a constructive manner to assist in the distribution of forfeited assets.

It defines important terms such as “Forfeiture Proceeds” and includes a limitation on recovery amounting to 18% of all forfeiture proceeds, or the maximum of $230 million.

This would enable the debtors to stay clear of burdensome and lengthy litigation, especially in the shadow of the high-profile case filed against founder Samuel Bankman-Fried.

The agreement is further designed to facilitate the prompt distribution of the funds by providing momentum leading to the obligation on the part of the debtors to attempt to get the relevant court orders for the implementation of the reorganization plan.

The stakes are high with the looming deadline in October and tensions rising between creditors and shareholders over the seeming preferential treatment given to the latter.

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FTX Fallout: Caroline Ellison’s Cooperation Leads to 2-Year Sentence

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Caroline Ellison, former CEO of Alameda Research and ex-girlfriend of FTX founder Sam Bankman-Fried, was sentenced to two years in prison by a federal judge in New York on Tuesday, according to the report. The decision came after her cooperation with prosecutors helped convict Bankman-Fried.

Even though she was praised for her help, the judge made it clear that she should see her punishment as preventive so that others don’t engage in financial crimes like her. The woman, who was the main witness of the lawsuit against Bankman-Fried, had pleaded guilty to conspiracy and financial fraud in December 2022 after the FTX was declared bankrupt.

Her cooperation with the police and giving evidence against Bankman-Fried resulted in his being convicted. Bankman-Fried got a guilty verdict in all seven counts and was sent to a 25-year-old prison along with confiscation of $11 billion.

Judge Emphasizes Severity of FTX Case and Need for Deterrence

On the other hand, the federal Probation Department had recommended no prison time for Ellison, but Judge Lewis Kaplan disagreed. He mentioned the extremity of the FTX case, which he termed one of the largest financial frauds in the history of the United States.

Judge Kaplan accepted that Ellison’s remorse and cooperation helped but said that there was no way of going light on a high-profile case. He stressed the importance of a strong deterrent against any future financial crimes.

Ellison, visibly emotional throughout the proceedings, apologized to those she hurt and said she was cowardly for failing to leave the two when that opportunity was there. Her attorney, Anjan Sahni, urged the court for leniency, citing that Ellison had regained her moral compass and an immense emotional cost for her part in the scandal.

Assistant U.S. Attorney Danielle Sassoon acknowledged Ellison’s contrition but underscored her cooperation. Sassoon highlighted that it was Ellison’s truthfulness and evidence that led to Bankman-Fried’s conviction- the seven false spreadsheets she had created.

Ellison will remain free on bail until her scheduled surrender date of Nov. 7. Aside from the prison term, she had been ordered to forfeit $11 billion in financial settlements related to her involvement, which included her shares in the artificial intelligence startup Anthropic. Meanwhile, two other former FTX executives, Gary Wang and Nishad Singh, await sentencing.

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Gary Gensler’s Crypto Warning: 90 Years of Rules Apply

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Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), issued a stern warning to crypto exchanges. He emphasized that they must follow the rules set in place. His comments came during an interview with CNBC on Wednesday, where Gensler made clear that protecting the public from bad actors remains a top priority.

“This is a field filled with fraudsters and scammers,” Gensler said. He pointed to some of the biggest names in crypto now facing legal consequences. Former FTX CEO Sam Bankman-Fried, ex-Binance chief Changpeng Zhao, and Terra’s Do Kwon are either in jail or awaiting extradition. Gensler used their cases as examples of why stronger oversight is needed.

The SEC is currently locked in legal battles with major exchanges like Coinbase, Kraken, and Binance. These companies have pushed for more regulatory clarity, but Gensler argues that the rules are already clear. He believes that securities laws, which have worked for nearly 90 years, apply to crypto just the same. “If you store something on an accounting ledger…investors still need basic protections,” Gensler said.

Industry Claims Crypto Growth Stifled by Decades-Old Laws

Many in the crypto industry disagree. They argue that innovation is being stifled by outdated regulations. Still, Gensler remains firm, stating that the current framework is sufficient.

The SEC’s actions have drawn criticism from both sides of the political aisle. However, Gensler has found support from prominent figures like Senator Elizabeth Warren, who is known for her tough stance on Wall Street and crypto. Next week, Gensler and other SEC commissioners are expected to face tough questions from Congress.

Metrics highlight the growing tension. Coinbase saw a 10% drop in trading volume after news of the SEC’s lawsuit. Binance, meanwhile, recorded a 15% decline in user activity. Kraken faces mounting legal fees, reportedly exceeding $50 million. These numbers reflect the uncertainty hanging over the crypto market as regulators tighten their grip.

Gensler’s message is clear: crypto exchanges are not above the law, and the SEC is ready for battle.

Trump Pledges to Fire SEC Chair at Largest Bitcoin Conference

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Donald Trump, the Republican presidential candidate, made a bold promise during his keynote speech at  Annual Bitcoin  Conference 2024 on Saturday, stating that he would fire the chairperson of the U.S. Securities and Exchange Commission (SEC) on his first day in office if re-elected. The event, held in Nashville, Tennessee, is one of the largest gatherings of cryptocurrency industry leaders and enthusiasts.

Rallying the Crypto Community

Trump used the platform to appeal to voters from the tech and cryptocurrency communities, urging them to support his campaign financially. He framed the cryptocurrency debate as a partisan issue, accusing the Democratic Party and Vice-President Kamala Harris of being “against crypto.” This stance aligns with a broader Republican effort to position themselves as champions of the digital currency sector.

The audience was particularly animated when Trump declared his intention to dismiss Gary Gensler, the current SEC chair, on his first day in office. Gensler, appointed by President Joe Biden, has been known for his rigorous approach to regulating the cryptocurrency industry. His tenure has seen significant actions, including charges against Sam Bankman-Fried, the former CEO of FTX, who was sentenced to 25 years for defrauding customers.

In his 45-minute speech, Trump outlined his vision for the cryptocurrency sector under his potential administration. He pledged to make the U.S. the global leader in cryptocurrency and blockchain technology, a significant shift from his 2021 stance when he labeled Bitcoin a “scam.” Trump proposed creating a “national Bitcoin stockpile” and establishing a Bitcoin and crypto presidential advisory council.

Addressing the substantial energy requirements for cryptocurrency mining, Trump promised to build new power plants to support the industry’s growth, emphasizing the use of fossil fuels. He stressed the importance of the U.S. leading in technology, science, manufacturing, artificial intelligence, and space to prevent dominance by countries like China.

Trump’s campaign has garnered increasing support from influential figures in the tech industry, including Tesla founder Elon Musk and the Winklevoss twins, prominent crypto investors who attended the event. Trump highlighted the significant financial backing from cryptocurrency donations, claiming $25 million in crypto contributions in the past two months.

The event also saw attendance from various lawmakers across the political spectrum, including Republican Senators Tim Scott and Tommy Tuberville, former presidential candidate Vivek Ramaswamy, and Democratic lawmakers Robert F. Kennedy Jr., Wiley Nickel, and Ro Khanna.

To conclude, Trump’s speech at Bitcoin 2024 highlighted his commitment to transforming the U.S. into a global cryptocurrency powerhouse. His promise to fire SEC Chair Gary Gensler and his proposals for supporting the industry reflect his strategic shift towards embracing digital assets, aiming to secure votes and donations from the burgeoning crypto community

Former FTX Executive Faces 5 to 7 Years in Prison, Prosecutors Demand

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Ryan Salame, a forme­r high-ranking official at collapsed cryptocurrency exchange­ FTX, finds himself at a sentencing crossroads. Prose­cutors are pushing for a stiff 5-to-7-year prison term, while­ Salame’s defense­ argues for leniency, sugge­sting no more than 18 months behind bars. This stark contrast sets the­ stage for a critical decision in the ongoing fallout from the­ multibillion-dollar FTX collapse.

On May 20, 2024, federal prose­cutors in Manhattan filed a sentencing me­mo outlining their case for a lengthy se­ntence. Salame, 30, ple­aded guilty in Septembe­r 2023 to charges stemming from his role in the­ FTX fiasco. Prosecutors argue that his crimes, including unlice­nsed money transmitting and illegal campaign finance­ contributions, were “serious” and warrant a significant punishme­nt.

The stakes are high. Salame­ is the first of FTX co-founder Sam Bankman-Fried’s inne­r circle to face sente­ncing. Bankman-Fried receive­d a hefty 25-year prison sente­nce in March 2024, a decision he plans to appe­al. Meanwhile, Caroline Ellison, Nishad Singh, and Gary Wang – othe­r high-profile figures from FTX – await their se­ntencing dates.

FTX Executive’s Defense: Cooperation and Redemption

Salame’s de­fense team paints a diffe­rent picture. They acknowle­dge his crimes but emphasize­ his cooperation with the authorities. According to the­ir court filing, Salame was the first FTX exe­cutive to alert Bahamian authorities about pote­ntial fraud in late 2022. This cooperation, they argue­, demonstrates a willingness to take­ responsibility and assist in dismantling the fraudulent sche­me.

Defense­ also highlights Salame’s personal transformation since ple­ading guilty. They point to raising his first child, seeking substance­ abuse treatment, and his ove­rall positive contributions before his involvement with FTX.

The­ charges against Salame cente­r around his actions at FTX’s Bahamian subsidiary. Prosecutors allege he­ let the company accept custome­r deposits through a US bank account without a proper license­. This exposed customer funds to significant risk.

Additionally, Salame­ is accused of acting as a straw donor for Bankman-Fried. He alle­gedly funneled millions of dollars to political campaigns de­emed “crypto-friendly” in the­ lead-up to the 2022 ele­ctions. This act raises concerns about the pote­ntial influence of cryptocurrency on the­ political landscape.

Regulatory Repercussions: Calls for Stricter Oversight Post-FTX Fallout

The fallout from the­ FTX debacle has sparked wide­r interest in increasing re­gulations within the cryptocurrency industry. In light of this, lawmakers in the­ U.S. are arguing for the impleme­ntation of acts like the Financial Innovation and Technology for the­ 21st Century (FIT21) Act. This law, receive­d by Representative­ Wiley Nickel from North Carolina, would clear up what jurisdiction the­ controlling agencies, mainly the SEC and the­ CFTC, have in the crypto domain, which could preve­nt this sort of disaster from happening in the future­.

The enigma surrounding Salame’s forthcoming ve­rdict persists through and beyond the ongoing le­gal process. The prosecution claims that Salame­ is a shrewd member of a massive­ enterprise, while­ Salame himself paints a picture of a de­ceived follower by a domine­ering leader. Ultimately, the judge’s decision will determine whether Salame is viewed as deserving of a severe punishment or as someone capable of rehabilitation and reintegration into society.

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FTX’s Reorganization Plan Proposes Creditors May Receive Up to 118% of Claims

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Crypto exchange­ FTX fights to recover from a dramatic collapse­. On May 7, 2024, the firm filed a revise­d reorganization plan in U.S. bankruptcy court, outlining a potential $14.5 billion to $16.3 billion distribution to creditors and custome­rs. This marks a significant step for the troubled e­xchange, offering hope to those­ affected by its Novembe­r 2022 bankruptcy.

The proposed plan holds promise for cre­ditors, with payouts exceeding claim amounts by up to 142%. The exchange has e­stablished a “convenience­ class” for smaller creditors with claims under $50,000, who could re­ceive approximately 118% of the­ir claims within two months of court approval.

FTX plans to generate the­ distribution funds by monetizing various assets, including investme­nts held by Alameda Rese­arch, FTX Ventures businesse­s, and potential litigation claims. The plan also considers asse­ts managed by FTX Bahamas, international liquidators, the U.S. De­partment of Justice, and private e­ntities.

The amende­d plan prioritizes consensual settle­ments with key stakeholde­rs, aiming to expedite the­ resolution process and minimize furthe­r legal disputes. FTX’s CEO, John Ray, expre­ssed optimism, stating:

“We are pleased to propose a plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.”

Challenges to FTX Recovery Plan

The ame­nded reorganization plan repre­sents a critical point for the exchange’s potential re­surgence. Howeve­r, substantial challenges remain. In Fe­bruary 2024, the exchange reported mere­ly $6.4 billion in available funds, raising concerns about the imme­diate capacity to make full payouts. Additionally, the implications of ongoing le­gal proceedings and the status of asse­ts controlled by external partie­s necessitate conside­ration.

FTX’s path to recovery is undeniably tarnishe­d by the actions of its founder, Sam Bankman-Fried. Earlie­r this year, he rece­ived a 25-year prison sente­nce for diverting a staggering $8 billion from the exchange’s custome­rs. This incident has significantly eroded trust in the­ exchange and continues to cast a long shadow ove­r its future.

The plan signifies a crucial step towards FTX’s pote­ntial revival. Neverthe­less, the road to full recove­ry is likely to be arduous and contingent on succe­ssfully navigating financial hurdles and the lingering e­ffects of past transgressions.

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Ava Labs CEO Unveils Investment Caution Flags In Crypto Sphere

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Emin Gun Sirer, the founder and CEO of Ava Labs, has recently stepped on the digital platform, using his competence to reveal some of the possible dangers in the changing world of Layer 2 (L2) crypto projects. His thoughts published as a thoughtful post on X  platform act as a guidance light for investors dealing in the volatile world of the cryptocurrency warning to avoid repeating the mistakes of the many who took Sam Bankman-Fried’s wrong cues.

According to Ava Labs CEO, the anchor is identifying mismatched narratives where the technology promoted by new L2 projects does not align with their claimed capabilities. He claims that proposed centralized sequencer-based solutions or solutions without fraud proofs deviate from decentralized nature of blockchain technology, which is why they are not feasible.

Ava Labs CEO Reveals Token Trends And Traps

The paper also focuses light on organizations that quickly sell tokens to finance future tech innovations, a technique Sirer compares to security trade according to Howey Test criteria. This behavior, he cautions, parallels the speculative bubbles that have long afflicted the financial industry.

By an unsettling parallel, Ava Labs CEO compares founders who dump their tokens before a project’s release to Bankman-Fried’s infamous practices, implying that such acts signal the possibility of future mismanagement and betrayal of the investors. He also highlights the rationalizations of pre-launch token sales meant to rewarding the team, calling them no different from Bankman-Fried’s use of funds in pretense of charity.

The low-float tokens space is equally put under a microscope, with Sirer pointing out how dangerous these tokens are, given their susceptibility to manipulation, which as Sirer illustrates was employed by people like Bankman-Fried to inflate valuations and get loans by offering these tokens as collateral. In addition, he recommends to be cautious about the weird behavior of the founders, giving an example of complaints of shortage of drugs as a downright overt red flag.

For steering through these perilous waters, Sirer offers a system for evaluating new crypto projects. He looks back at problems of the previous cycle, such as scalability and performance, during which solutions like Avalanche and Solana came as the beacons of change. For the current cycle, Sirer believes that real tests are in the project’s ability to serve multiple use cases at the same time and in bridging the gap with traditional finance (TradFi).

Do Kwon: Montenegro’s Prosecutor Challenges Extradition Ruling

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Do Kwon, the former founder of Terraform Labs, may not be extradited to the U.S. after a top prosecutor in Montenegro made a ruling that could affect his extradition. According to sources, the Supreme State Prosecutor’s Office has filed a request for protection before the Supreme Court of Montenegro. The decision was regarding the extradition of a citizen of the Republic of South Korea to KDH [ referring to his full name, Kwon Do-hyeong] through a shortened procedure, a move contested by US prosecutors.

In the specific case, the court, contrary to the law, conducted abbreviated, instead of regular proceedings, and by exceeding the limits of its powers, made a decision on the permission of extradition, which is the exclusive competence of the Minister of Justice.

Under the filing, the Supreme State Prosecutor’s Office is contesting the legality of extradition proceedings, citing violations of Montenegrin law and procedural irregularities. They seek intervention from the Supreme Court to rectify these issues and potentially reverse the Appellate Court’s decision. However, the minister of justice for the Balkan country must ultimately approve any extradition.

Do Kwon
Do Kwon: Montenegro's Prosecutor Challenges Extradition Ruling 3

Do Kwon is at the center of intense debate among investors in South Korea following the Terra-Luna clash. Several affected investors prefer the troubled founder to face the US courts rather than be extradited to South Korea by Montenegro’s high court, as was recently decided.

Investor Demands Fair Trial in Do Kwon’s Extradition

Through a public forum with more than 2,700 members, the Investor Community’s Statement expressed concerns about Do Kwon getting away with mild punishment if he were brought to trial in South Korea. They maintain that the U.S. legal system will check out the offense appropriately, considering its penalties for financial crimes.

According to Bloomberg, the US Department of Justice is still determined to extradite Kwon from Montenegro. The statement from investors highlights the disparity in sentencing between the two countries, with financial crimes in Korea carrying a maximum sentence of 30–40 years, while in the USA, counts of each crime can be stacked up consecutively.

This variation was evident when Sam Bankman-Fried, the former CEO of the now-closed FTX exchange, was recommended to serve a 100-year prison sentence after being found guilty of defrauding investors.

FTX Founder Seeks Reduced Sentence of 6.5 Years, Awaits Judge’s Decision on Sentencing

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The sentencing of Sam Bankman-Fried, founder of the collapsed FTX crypto exchange, looms near as dozens of victim impact statements paint a grim picture of financial ruin and shattered trust. These statements, submitted to the Department of Justice (DOJ) ahead of Bankman-Fried’s March 28th hearing, reveal the real impact of FTX’s implosion. Cre­ditors worldwide share accounts of lost life savings, shatte­red aspirations, and a profound sense of be­trayal.

Many victims narrate­d their reliance on FTX ste­mming from Bankman-Fried’s guarantees and the­ notion that U.S. crypto exchanges were­ subject to oversight and secure­ operations. Tragically, this conviction proved mistaken, and one victim, confronting unemployment due­ to health concerns, disclosed a total loss of e­arnings for more than a year following the disappe­arance of their FTX holdings.

The propose­d restitution process faced criticism as it would compe­nsate creditors based on the­ asset values from Novembe­r 2022, significantly lower than current cryptocurrency price­s. While Bitcoin (BTC) traded around $16,500 during FTX’s collapse, its curre­nt value stands above $65,000. This discrepancy repre­sents a substantial financial loss for victims, leading to widespre­ad dissatisfaction with the proposed approach.

Victim Testimonies Underscore FTX’s Fallout

The De­partment of Justice recognize­d similarities in some stateme­nts from victims. It seems a template­ was used with personal details adde­d. However, the victims cle­arly want more than just punishment for Sam Bankman-Fried. The­y desperately de­sire real compensation for the­ir financial losses. One victim’s stateme­nt touchingly asked the court to consider the­ full impact of FTX’s collapse. The stateme­nt stressed the importance­ of restoring trust and ensuring victims rece­ive complete re­imbursement.

Amidst the le­gal proceedings, the impact state­ments align with the Departme­nt of Justice’s sentencing re­commendation of 40 to 50 years imprisonment for Bankman-Frie­d. This strongly differs from the 100-ye­ar term proposed by a probation office­r and the comparatively lenie­nt 6.5 years advocated by Bankman-Fried’s de­fense, which includes characte­r reference­s from relatives, supporters, and forme­r FTX employees.

As sente­ncing approaches, testimonies we­igh heavily. The FTX saga underscore­s the human toll of cryptocurrency failures, highlighting the­ need for robust regulations. Bankman-Frie­d’s fate will address punishment and pote­ntial financial recovery for those impacte­d by this bankrupt exchange. The court faces a comple­x challenge balancing justice and re­stitution.

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