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Sam's days in court 🍵
Courtroom drama with SBF: Accusations fly, tea spills, but the truth's still MIA. Gensler's wishing Halloween. Crypto thefts down, exit scams on the rise and social media's playing the villain.
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Sam Bankman-Fried is wrapping up his time in court.
It's been a roller coaster ride with accusations, revelations, and a lot of courtroom tea being spilled.
But with an array of "yup's," "yep's," and evasive answers, many are left wondering where the truth lies.
The Allegations and The Defense
How the jury will decide remains uncertain, but the rest of the implicated FTX clan, including Ryan Salame, Gary Wang, Nishad Singh, and Caroline Ellison, have all confessed guilt.
Let's just say, they weren't handing out friendship bracelets.
Ellison, once SBF's flame, spilled beans about some shady business involving bribes and more.
Read here: Caroline speaks up 🔈
And Wang? He contradicted SBF big time.
Read here: Wang spills the beans 🙊
Both sides have proposed specific instructions for Judge Kaplan to deliver:
Defense's Stance 🛡️
Emphasize that FTX's terms of service don't create a fiduciary trust between the exchange and its users.
This argument is central to refuting the prosecution's claim that SBF unlawfully used customer funds in a fraudulent scheme. The defense posits that misappropriation can only occur in established trust relationships, something the Terms of Service do not establish.
Prosecution's Viewpoint ⚔️
Clarify that SBF's intention to eventually reimburse customers doesn't absolve him of potential guilt.
Exclude "effective altruism" (SBF's personal philosophy) as a viable defense. Prosecutors argue that an individual's motive for committing an alleged crime doesn't influence their guilt or innocence.
Discrepancies and Doubts❓
Nishad Singh and developer Adam Yedidia, say they had discussions with SBF regarding significant negative balances.
These balances represented customer funds borrowed but never returned.
However, SBF's recounting is different. He asserts that he was only made aware of these issues in October 2022.
When asked about a prior "fiat@" account, he claimed he only "overheard" discussions but wasn't informed directly.
Further complicating matters, Sassoon produced evidence suggesting that SBF might have had a clearer understanding of the financial crisis than he previously admitted.
Tokens, Liquidity, and Realities 💸
A primary focal point was the $3.9 billion in FTT tokens listed as Alameda's liquid assets in a spreadsheet.
When probed, SBF acknowledged that liquidating such a large volume of tokens would undoubtedly crash the market.
Interestingly, in a chat group, SBF estimated Alameda could liquidate up to $3.9 billion of assets within a week.
Yet, they needed $8 billion.
Moreover, records indicate that Alameda only had a cash reserve of around $449 million.
Sassoon also shed light on Bankman-Fried's questionable attempts to win favour with the Bahamian government, including overtures to Prime Minister Philip Davies, such as offering to shoulder the country's debt.
This episode, chronicled in Michael Lewis' "Going Infinite," was apparently forgotten by Bankman-Fried during the trial.
“There is a conversation described in Michael Lewis' book that is sourced to the defendant,” US Assistant Attorney Danielle Sassoon explained.
“We consider [it] a false exculpatory and inadmissible hearsay.”
Furthermore, a Google document believed to be crafted by Bankman-Fried gave insight into his mindset post the FTX meltdown, where he speculated about the decisions of his former colleagues to admit guilt.
Disregarding Red Flags 🚩
According to communications on X, FTX team members actively reported issues to SBF. Despite this, he is said to have overlooked their alerts.
On the matter of being informed about an account glitch, SBF admitted, “Yes and I agreed with them. I did not follow up.”
He also noted that FTX top executives - Gary Wang, Nishad Singh, and Ryan Salame - cautioned him about a potential exploit. However, he dismissed their concerns at the time, stating, “That was a messy situation. Gary, Nishad & Ryan Salame told me an account could be trying to exploit FTX. I overrode the risk procedures. They were right.”
Bankman-Fried's willingness to converse with the press varied widely, sometimes being as brief as half a minute or as extended as an hour prior to interviews.
Judge Kaplan's Decision 🏛️
As the trial intensifies, Judge Kaplan pondered over the decision to allow jurors to take a weekend break, remarking, “Tomorrow. I might send the jurors home. Or I might not.”
Here's a good read:
TTD Blockquotes 🎙️
Gary Gensler, the SEC Chair.
"If Satoshi Nakamoto went as Satoshi Nakamoto for Halloween, would we be able to tell?"
Gary wishes you happy Halloween.
On Bitcoin's 15th anniversary, Gary Gensler took to X, cleverly using the Halloween theme to send a message to the cryptocurrency community.
On October 31, 2008, the mysterious Satoshi Nakamoto introduced the world to the concept of Bitcoin through the seminal white paper, Bitcoin: A Peer-to-Peer Electronic Cash System.
This paper laid out a revolutionary idea of enabling payments without involving any financial intermediaries.
Under Gensler's leadership, the SEC has notably escalated its regulatory actions against key players in the crypto industry, with lawsuits being filed against giants like Binance, Coinbase, and Kraken.
The primary contention of the SEC is that many of these firms have been marketing and selling what are essentially unregistered securities in the form of coins or tokens.
Prominent figures in the crypto industry, as well as some lawmakers, have voiced their concerns about Gensler's approach. They believe the SEC, under his helm, is not providing sufficient clarity in terms of regulations.
Critics argue that Gensler's strategy is predominantly about "regulating by enforcement" which may stifle innovation and push it out of the US.
TTD Safe 🔐
The spotlight's on Unibot.
Everyone's favourite Telegram trading tool, for an unexpected reason—a whopping $640,000 exploit.
This morning, the Unibot crew sent out an urgent telegraph (pun intended) to their users.
The message? "Your keys and wallets are safe."
But, of course, there was a catch—their new router faced a dodgy moment, known as the "token approval exploit."
For the uninitiated, this is like giving a burglar the keys to your mansion, but only letting them steal the silverware.
The silverware, in this case, being a cool $640,000, quickly converted to Ethereum.
Unibot: More Than Just a Bot 🤖
Unibot, the popular Telegram sensation, made waves by letting users trade crypto like they're sending memes to friends.
With MEV-protected trading, it skyrocketed in the digital ranks, with its token price peaking at a jaw-dropping $236 in August.
But like any dramatic chartbuster, the high note was followed by a low.
News of the exploit struck a discord, sending the token from $57.56 down to $32.94.
At the moment, our little token is trying to climb back up, trading at $45.7.
Post-theft, the exploiters waltzed over to Uniswap, the decentralised dance floor, and then sashayed through the Tornado Cash exit.
The approval of a Bitcoin exchange-traded fund (ETF) could have both positive and negative effects on the crypto industry👇🏻
There's a growing chorus of discontent among news publications.
Their complaint? Those AI chatbots, everyone's talking about, might just be moonlighting as news thieves.
On October 30th, the News Media Alliance dropped a 77-page exposé.
In the white paper, the NMA has highlighted its concerns.
The essence is that AI models might be using significant chunks of news publisher content without due permissions, thereby directly competing with the original publishers.
With this alleged borrowed knowledge, these AI models generate content that is eerily similar to what publishers produce.
Effects on the News Front 📰
The Newsy Bunch lament that while they're on the front lines, investing money and taking on risks to get the scoop, the AI developers sit back and reap the rewards.
We're talking big wins in user base, brand creation, data collection, and sweet, sweet advertising dollars.
The aftermath? Dwindling revenues, missed job opportunities, and let's not forget – an audience that's questioning their originality.
Recommendations to the Rescue?
To address these pressing concerns, the NMA has approached the Copyright Office. They've put forth several suggestions.
Officially recogniSe the harm to publishers when AI systems monetiSe using copyrighted content.
Introduce robust licensing models and transparency standards.
Enhance measures to prevent unauthorised use of copyrighted content on third-party sites.
Despite the critique, the NMA does acknowledge the utility of AI in assisting news publications in tasks such as proofreading and SEO optimisation.
TTD Scams 🦹🏻
Blockchain security firm CertiK reported a drop in Web3 thefts, with losses amounting to $32.2 million across 38 incidents.
Notably, none of these incidents exceeded $7 million in losses.
In contrast, the cumulative losses for 2023 stand at a whopping $1.4 billion.
October's losses are about a quarter of the average monthly losses for the year.
The decline in October is not indicative of a consistent downward trend but a lack of major incidents for that month.
October saw a surge, with incidents four times higher than September.
The most significant exit scam of the year was in May, where the Fintoch crypto project led to a loss of nearly $32 million.
September was marred by the Mixin Network's loss of $200 million due to a breach in its cloud service provider.
July also faced substantial losses, primarily attributed to the Multichain MPC bridge.
Social media's role in crypto crime is becoming increasingly evident.
CertiK emphasized the rise of scams on these platforms, with data from the US Federal Trade Commission showing that nearly half of the cryptocurrency scams in the last 18 months were linked to social media platforms.
Lastly, North Korea's Lazarus Group continues to be a significant concern, having been identified by CertiK as the primary "threat actor" in the crypto crime space.
MetaMask's Security Ambitions
MetaMask, the popular Ethereum wallet and browser extension, is taking a proactive approach to user security.
Partnering with Web3 security firm Blockaid, they've launched a feature aimed at preventing billions in potential thefts from users' funds.
The new feature offers opt-in, privacy-preserving security alerts for the MetaMask extension. It plans to roll this feature out to mobile app users come November.
While currently available under an experimental setting, the goal is for this feature to become default by March 2024.
Earlier in February, MetaMask tried to bolster its security by introducing a phishing detection feature.
But this move was met with skepticism from the community, as it required access to users' IP addresses, thereby compromising on privacy.
Addressing these concerns, MetaMask's latest feature ensures that user privacy remains intact.
TTD Surfer 🏄
Solana Labs has launched GameShift, a toolkit designed to help developers integrate Solana into video games.
Hong Kong-based crypto exchange HashKey has launched its app for retail trading, targeting both professional investors and retail users.
Amir Bruno Elmaani, the founder of Oyster Protocol, has been sentenced to four years in prison for tax evasion.
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