Sam Bankman-Fried’s top MPs sacked by company

(Bloomberg) — FTX announced it has fired three top deputies to former CEO Sam Bankman-Fried, the Wall Street Journal reported.

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Meanwhile, the collapse of the crypto empire is turning into a new political battlefront as Republicans highlight the ties between Democrats and their onetime benefactor Bankman-Fried.

Missouri Republican Sen. Josh Hawley on Friday sent a broad request for correspondence between federal agencies and Democrats, including the Biden administration and the House and Senate Democratic campaign committees, about the failed crypto exchange FTX and trading house Alameda Research . Hawley said he is trying to determine whether Bankman-Fried’s more than $37 million in political donations to Democrats may have pressured regulators to be lenient with the former crypto executive.

The chairman of a House committee is asking FTX to hand over documents and information by December 1 as part of its investigation into the collapse of the crypto platform.

Key stories and developments:

  • FTX bankruptcy bombs send crypto lenders back from bull run

  • Wall Street Beat: FTX Course To Get Funds With Debt And Tokens

  • FTX’s point of no return was Ellison’s tweet, Trade Data Show

  • Bankman-Fried’s Island Haven reviews audit after FTX’s death

  • FTX existential crisis fix. TMT’s Mega-Cap Problem (Podcast)

(Time references are New York unless otherwise noted.)

FTX Fires Top MPs Sam Bankman-Fried, WSJ Reports (10:07 PM)

FTX announced it has fired three top deputies to former CEO Sam Bankman-Fried, the Wall Street Journal reported.

FTX co-founder and chief technology officer Gary Wang, engineering director Nishad Singh and Caroline Ellison, who ran Alameda Research, were fired from their positions, the paper said, citing an FTX spokesperson late Friday. The newspaper did not say whether it had tried to reach the executives for comment.

They left those roles after FTX appointed John J. Ray to oversee the bankruptcy, according to the report. The newspaper previously reported that executives were aware of the decision to send client money to the Alameda trading company.

Hawley seeks Democrats’ emails as FTX collapse turns political (4:04 p.m.)

The collapse of the crypto empire founded by political mega-donor Sam Bankman-Fried is turning into a new political battlefront as Republicans highlight ties between Democrats and their onetime benefactor.

Missouri Republican Sen. Josh Hawley on Friday issued a broad request for correspondence between federal agencies and Democrats, saying he is trying to determine whether Bankman-Fried’s more than $37 million in political donations to Democrats may have pressured regulators to it is lenient with the former encryption. executive.

Short Sellers Boost Crypto Stocks Despite High Betting Costs (2:44 PM)

Short sellers have pounced on crypto-focused stocks as the digital asset space crumbles in the wake of FTX’s public meltdown.

Crypto stocks are nearly three times more shorted than the average stock, even as short sellers pay nearly eleven times more in financing costs to bet against them, according to data compiled by Ihor Dusaniwsky and Matthew Unterman at S3 Partners.

According to S3’s analysis, traders covering losses in a handful of crypto stocks, including Block Inc., Coinbase Global Inc., MicroStrategy Inc. and five others added $55 million worth of new shorts in the week through Friday. The total crypto interest for these eight stocks is over $4.5 billion.

Silvergate Shares Fall as FTX Fallout Attracts Short Sellers (1:16 PM)

Shares of Silvergate Capital Corp. tumbled, losing a quarter of their value this week, as investors chastised the bank for its links to the FTX bankruptcy.

Shares of the company, which held deposits for FTX, fell 9.9% to $25.14 at 1:03 p.m. in New York. Thursday’s nearly 11% drop triggered a short-selling circuit breaker. Data from S3 Partners shows short interest levels at Silvergate are around 11% of shares available for trading.

FTX Considers Years of Lawsuits to Recover Billions from Customers (1:12 PM)

FTX’s bankruptcy opens the door to potential lawsuits from creditors seeking to recover billions of dollars in assets that customers and insiders withdrew before the crypto firm’s abrupt Chapter 11 filing.

As the company’s advisers try to get its finances under control, they will have bankruptcy tools available that will allow them to try to pour capital back into the FTX empire to try to pay all creditors, though the efforts will likely take years.

Crypto Fallout Leaves US Retiree Benefits Mostly Unscathed (12:35 PM)

Most of the largest US state and local government pension funds have avoided the ongoing fallout from the FTX crypto exchange collapse by not investing directly in digital tokens. For pensions that have sunk into the risky asset class, the investments represent only a small amount of the pension funds’ portfolio, and much of the limited exposure is indirect through crypto-related stocks or other investment products.

Almost all of the top 10 US pension funds by assets said they are not invested in Bitcoin or other cryptocurrencies, according to an informal Bloomberg survey.

House Committee Seeks Documents to Investigate FTX Blowup (11:13 AM)

The chairman of a House panel is asking FTX to hand over documents and information by December 1 as part of its investigation into the collapse of the once-prominent crypto platform.

“FTX customers, former employees and the public deserve answers,” said Rep. Raja Krishnamoorthi, chairman of the House Oversight Subcommittee on Economic and Consumer Policy, in a letter Friday to former FTX CEO Sam Bankman-Fried and John J. Ray III. the new CEO and chief restructuring officer who oversaw the liquidation of Enron Corp.

He asked for details on the circumstances surrounding the crypto firm’s bankruptcy last week, including an explanation of the company’s liquidity issues, how those issues at the Bahamas-based parent company affected its US arm and details on how the funds were used. customer funds. The subcommittee is also seeking internal documents and communications.

FTX controller defends job as new CEO Blasts Financials (10:57am)

The auditors of FTX Trading Ltd. are defending their work, even as the doomed crypto exchange’s new management brought down auditors in a stunning bankruptcy filing.

“We believe that the financial statements of FTX Trading Ltd. as of 12/31/21 were fairly reported and we support our audit opinion,” New York-based accounting firm Prager Metis CPAs LLC said in a statement to Bloomberg Tax.

FTX CEO Bankman-Fried ousted by Paul Weiss due to conflicts (10:47 AM)

Paul Weiss said Friday that he has stopped representing cryptocurrency mogul Sam Bankman-Fried, citing conflicts of interest.

Bankman-Fried, the former chief executive of bankrupt FTX, is losing the company’s aid as US lawyers for the platform claim he is disrupting restructuring efforts through “incessant and disruptive tweeting”.

Fed’s Kashkari Says ‘Whole Crypto Concept Is Bullshit’ (9:55am)

Federal Reserve Bank of Minneapolis President Neel Kashkari said Friday that the whole idea of ​​cryptocurrency is “nonsense,” after the collapse of FTX Group exposed the industry’s weaknesses.

“This is not the case of 1 fraudulent company in a serious industry,” Kashkari said on Twitter, commenting on an article about how investors fell for FTX. “The whole concept of encryption is nonsense. Not useful 4 payments. No inflation compensation. No shortage. No tax authorities. Just a tool for profiteering and bigger idiots.”

–With help from Stephen Stapczynski.

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