By Stephen M. Lepore and Lewis Pennock For Dailymail.Com
23:54 02 Nov 2023, up to date 04:54 03 Nov 2023
- Simply days earlier than the collapse of FTX the top of competitor Binance, Changpeng Zhao, introduced his firm would divest from SBF’s companies
- The announcement triggered a run on the financial institution at FTX as prospects tried to withdraw $6 billion in simply 72 hours – however could not pay out
- The disaster finally uncovered FTX’s fraudulent practices and Bankman-Fried was charged lower than a month later
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 top of competitor Binance, Changpeng Zhao, introduced his firm would divest from Bankman-Fried’s companies.
He made the announcement on Twitter and cited ‘latest revelations’ concerning the well being of FTX. These revelations have been detailed in an Alameda stability sheet which was leaked days earlier and indicated the monetary mess Bankman-Fried’s companies have been in.
Zhao mentioned Binance would liquidate its FTT tokens. FTT is a cryptocurrency which was issued by FTX – and the Binance choice to promote its stake precipitated 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 have the funds for to pay buyers who wished to withdraw their belongings. Prospects tried to withdraw $6 billion in 72 hours.
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 yr, Binance acquired roughly $2.1 billion USD equal in money (BUSD and FTT). Resulting from latest revelations which have got here to gentle, we’ve got 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 method that minimizes market impression’ and the method would take ‘just a few months to finish’.
Inside days, the crypto markets had collapsed as buyers offered 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 whether it is a transfer in opposition to a competitor, it isn’t. Our business is in it is nascency and each time a undertaking publicly fails it hurts each consumer and each platform.’
He additionally remarked in one other tweet a number of weeks later that ‘no wholesome enterprise will be destroyed by a tweet’. Zhao adopted that up with the accusation that Bankman-Fried is ‘one of many best fraudsters in historical past’.
Bankman-Fried knowingly stole some $10billion 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.
‘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 value $26 billion {dollars} on the top of his fame. FTX was estimated to be value $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 greatest change for crypto buyers.
He was discovered responsible in lower than 5 hours of deliberation on Thursday evening and now faces as much as 115 years 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 sensible he may get away with it,’ the prosecutor argued.
To consider in any other case, ‘you’d need to consider that the defendant was really clueless. You sat by this trial and 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.
‘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 bear in mind false statements that each one was positive 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, properly earlier than its collapse late final yr.
‘Each time, he selected to double down, to dig the outlet deeper,’ Roos advised the jury.
Through the trial that started on October 3, the Massachusetts Institute of Know-how 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 turned conscious of the difficulty at Alameda when it was too late.
He mentioned the issues at Alameda arose as a result of his instructions have been ignored by workers, 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 by way of a software program ‘again door’, utilizing the cash for dangerous investments, political donations, and the acquisition of swishy actual property.
However the clean test turned bitter when the cryptocurrency business succumbed to a sequence of defaults in 2022, inflicting the worth of just about all digital currencies and Alameda’s belongings to plummet.
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 may not show he stole billions of {dollars} from the cryptocurrency change’s prospects.
Lawyer 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 sporting 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, an ungainly highschool math nerd would not look significantly 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 type of villain, some type of monster,’ Cohen added.