SkyBridge founder Anthony Scaramucci has criticized the decision by Sam Bankman-Fried’s defense to allow him to take the stand.
He says that the prosecutors will exploit weaknesses in his story and end up with a longer sentencing.
Anthony Scaramucci, the SkyBridge Capital founder, has voiced his opinions on the ongoing FTX case, saying Sam Bankman-Fried has run out of means to “out-fox” regulators. He added that the ex-CEO of the fallen exchange will be “skinned alive by the regulators.
Sam Bankman-Fried to take the stand in his trial case
In an Oct. 25 interview with CNBC, Anthony Scaramucci voiced his opinions on the ongoing case against FTX founder and EX-CEO Sam Bankman-Fried, saying that the Department of Justice will refer to all the contradictions he made, adding years to his eventual sentence.
He stated that the move by his defense to allow him to take the stand in his criminal trial is a “very bad move” as the prosecutors will have the chance to skin him alive without much resistance.
“He’s going to get skinned alive; there’s no way to escape. He thinks he will out-fox the prosecutors, but they’re very well experienced with this stuff.”
He added that he believes that Sam Bankman-Fried’s failed ambitions and excessive urge to out-trade everyone is the end of him. FTX Ventures had acquired a stake of 30% in SkyBridge, which the company is now trying to buy back from the now-bankrupt exchange.
However, only a little development has happened, as the exchange might be re-launched. Keep watching Fintech Express for more updates on this and other Fintech-related developments.
Bankrupt crypto lender BlockFi is working on blocking FTX and 3AC from retrieving millions in loan payback.
FTX and 3AC had lent money to BlockFi but underwent bankruptcy in 2022, necessitating the payback of loans given to the crypto lender.
In an August 21 filing in a New Jersey Bankruptcy Court, BlockFi claimed that its creditors should not be pushed as FTX’s creditors were harmed by the exchange’s misappropriation of $5 billion that BlockFi had lent it. It also added that bankrupt crypto hedge fund 3AC committed fraud with the money lent and thus should not be entitled to a potential repayment.
BlockFi tries to block 3AC and FTX from retrieving millions in payback
BlockFi, FTX, and 3AC were some of the largest crypto fraud and bankruptcy cases ever seen in the industry’s history. They “coincidentally” happened in the same year and conspicuously had ties to each other.
As such, there have been multiple tussles between these organizations as they try to repay their dues to creditors and refund users’ money simultaneously. BlockFi, a bankrupt crypto lender, has been pushing for long that FTX and 3AC not get paid from its liquidations as they may have misappropriated the money it lent.
Estimates show that BlockFi owes around $ 10 billion to over 100K creditors and $! Billion to three of its largest ones. In the mix of freditors comes 3AC and FTX. It owes 3AC about $220 million and FTX around $400 million. FTX and 3AC have been pushing to get these hundreds of millions back as they would make it much easier to repay their creditors.
However, a recent Court filing shows that BlockFi feels the two creditors are the real victims in the case. An excerpt from the filing reads:
“FTX seeks to recover on over $5 billion of claims filed against the BlockFi estates at the direct expense of the ultimate victims of FTX’s fraud: BlockFi’s clients and other legitimate creditors.”
“To prevent further injustice to the creditors of BlockFi’s estates, the Court should disallow the FTX claims under the doctrine of unclean hands,” BlockFi added.
BlockFi further indicates that the $400 million FTX gave wasn’t a standard loan as it was under an agreement to have a five-year term that would not activate until the firm supposedly matures. As such, BlockFi feels that it should be treated as a “gamble” for which it should not be liable.
Despite the ongoing skirmishes, creditors recently settled with BlockFi in July to proceed with the set repayment plan. However, it is still yet to be seen if it will work out as 3AC and FTX’s $1 billion loans would significantly affect its creditors’ payout. Keep watching Fintech Express for updates on this and other fintech-related developments.
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler says the regulator needs extra funding to keep up with emerging capital markets like crypto. He has supported President Biden’s request to add $2.4B in funding to the SEC to help crack down on crypto “misconduct.”
SEC seeking funding to continue cracking down on crypto
The U.S. SEC is all out to ‘streamline’ the crypto space by requesting an extra $2.4B in funding to help regulate the space. Its Chair, Gary Gensler, voiced his testimony on March 29, 2023, budget hearing with the House Appropriations Committee, saying that his commission needs more money to keep up with the ongoing innovation.
In his words, Gary Gensler said:
“Rapid technological innovation in the financial markets has led to misconduct in emerging and new areas, not least in the crypto space. Addressing this requires new tools, expertise, and resources.”
https://youtu.be/ZDDWLeeiHv4
He explained that the 2022 budget increase helped them bring staffing levels above what was recorded in 2016 for the first time. However, it is still not good enough, as the commission is finding it tough to match the growth rate of bad actors. He also revisited his previous comments calling crypto wild west once more.
SEC wants to become busier with the crypto space
The SEC has been busy in the past few months as it has been seen charging individuals and crypto organizations openly. It has charged Kraken, Justin Sun Linsay Lohan, Jake Paul, Beaxy crypto exchange, FTX, SBF, Terraform labs, Do Kwon, Gemini, Genesis, and others.
Today we charged crypto entrepreneur Justin Sun and three of his wholly-owned companies for the unregistered offer and sale of crypto asset securities Tronix and BitTorrent.
— U.S. Securities and Exchange Commission (@SECGov) March 22, 2023
The commission also warned about charging Coinbase for offering some ‘questionable’ services in the U.S. without its approval. Now, its Chair has expressed interest in going further with its efforts by asking for more funding.
In the budget hearing, Gensler explained that they had received 35,000 separate tips and complaints in 2022. These tips helped them serve over 750 enforcement actions and orders for over $6.4B in penalties and disgorgements. He added that a third of these complaints were connected to the crypto space, which shows an increased need for regulation.
Investments in crypto asset securities can be exceptionally volatile & speculative, & the platforms where investors buy, sell, borrow/lend these securities may lack important protections for investors. @SEC_Investor_Ed to investors: exercise caution w/ crypto asset securities.
— U.S. Securities and Exchange Commission (@SECGov) March 23, 2023
Keep watching Fintech Express for updates on regulation and other finance-related developments
A Delaware bankruptcy judge has ruled to allow FTX to sell Sequoia Capital Fund to the Abu Dhabi investment arm.
Abu Dhabi Investment arm to purchase FTX related Sequoia Capital Fund
A Delaware judge has approved the sale of Sequoia Capital Fund to the Abu Dhabi investment arm, according to a March 28, 2023, court filing. The ruling was made to answer a declaration request filed by FTX on March 8.
Judge John Dorsey has declared that the sale of the Capital Fund to Al Nawwar Investments RSC limited has satisfied all the required standards per the US bankruptcy law that prevents the unduly hasty sale of assets and thus should proceed.
FTX also requested the judge to offer an indefinite delay to the sale of its stock-clearing business, Embed. Embed was initially used as a solution to facilitate a quick raise of funds for outstanding creditors. The hearing for the sale of Embedd has been scheduled for March 27 but is now on hold “until further notice.”
FTX was plagued by too high withdrawal requests than its treasuries had in November 2022, leading to the company filing for Chapter 11 bankruptcy proceedings to help protect its assets and liquidate them. The developments led to investigations that saw its CEO, Sam Bankman-Fried, arrested and charged with one of the most prominent cases in the US.
The case against Sam Bankman-Fried is continuing in tandem with the bankruptcy proceedings. Keep watching Fintech Express for updates on these and other finance-related news.
On Thursday, Coinbase CEO Brian Armstrong shared a Twitter post saying the US SEC had plots to do away with crypto staking. His Twitter thread sparked mixed reactions as the crypto community took it as a potential attack on the innovation.
Armstrong condemns SEC attack on crypto staking
In his Twitter thread, Armstrong said that they are hearing rumors the SEC would like to do away with crypto staking in the US. He said that the main target of such enforcement would be the retail investors and added that he hopes it’s not the case as it would be a terrible path for the US.
1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.
Armstrong expressed how staking is an important innovation in the crypto space, meaning it would be catastrophic if it were to be overlooked. He explained that it allows users to participate directly in open crypto networks. He stated that it brings different positive improvements to the industry, like scalability, security, and a lower carbon footprint. As such, he believes staking is not a security.
2/ Staking is a really important innovation in crypto. It allows users to participate directly in running open crypto networks. Staking brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints.
He said that the crypto community needs to ensure that technologies and innovations are encouraged and welcomed in the US and not smothered by a lack of clear rules. He added that if such financial and Web 3 tools were to be built outside the country, it could be a matter of national security.
4/ We need to make sure that new technologies are encouraged to grow in the US, and not stifled by lack of clear rules. When it comes to financial services and web3, it's a matter of national security that these capabilities be built out in the U.S.
In his thread, Armstrong said there are better ways out than regulation by enforcement. He said it encourages companies to operate offshore, like in the case of FTX, which could be a danger to the finance sector as they cannot be adequately monitored.
He added that he hoped all stakeholders could work together to develop clear rules governing the industry. He said such rules should be sensible solutions to protect consumers and preserve innovation and national security interests in the US.
His comments attracted mixed reactions. Cardano Co-Founder Charles Hoskinson responded and claimed that ETH staking is problematic. He explained that temporarily giving someone else your unregulated assets to help them get a return does not look good. He said a lack of good innovation that allows for staked money to be accessed and decentralized could end up lumping all betting together.
