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Bankman-Fried faces more criminal charges, allegedly hid political donations
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Former FTX chief executive Sam Bankman-Fried leaves the Manhattan federal court, in New York, on Feb. 16.EDUARDO MUNOZ/Reuters
Sam Bankman-Fried was hit with new criminal charges on Thursday, in an expanded indictment accusing the founder of the now-bankrupt FTX cryptocurrency exchange of conspiring to make more than 300 illegal political donations.
Mr. Bankman-Fried now faces 12 criminal charges, including four for fraud and eight for conspiracy, up from eight charges in an earlier indictment, to which he has pleaded not guilty.
Prosecutors have accused Mr. Bankman-Fried of stealing billions of dollars in FTX customer funds to plug losses at Alameda Research, his crypto-focused hedge fund.
The new charges add to pressure on the 30-year-old former billionaire, who has seen two of his former top lieutenants plead guilty.
Mr. Bankman-Fried is also trying to stay out of jail, after his online activity since his arrest prompted U.S. District Judge Lewis Kaplan, who oversees the case, to signal a willingness to revoke his US$250-million bail package.
A spokesman for Mr. Bankman-Fried declined to comment.
Mr. Bankman-Fried’s trial is slated for October. Justice Kaplan on Thursday extended a temporary ban on Mr. Bankman-Fried’s contacting FTX and Alameda employees to March 3 from Feb. 24.
The new indictment said Mr. Bankman-Fried conspired with two former FTX executives to donate tens of millions of dollars in order to influence lawmakers to pass legislation favourable to the company.
Those donations were unlawful because they were made with “straw” donors or corporate funds, enabling Mr. Bankman-Fried – one of the largest donors to Democrats in the 2022 midterm elections – to evade contribution limits, prosecutors said.
Prosecutors said Mr. Bankman-Fried directed one executive to donate primarily to left-leaning candidates and organizations and the other to Republicans, with many donations funded by Alameda and including FTX customer funds.
That executive gave more than $1-million to a pro-LGBTQ group at Mr. Bankman-Fried’s direction, the indictment said.
Federal Election Commission records show that Nishad Singh, FTX’s former engineering chief, contributed US$1.1-million on July 7, 2022, to the LGBTQ Victory Fund, a national organization dedicated to electing openly LGBTQ people.
In a statement, the group said it has “set aside funds and will take appropriate action once we receive guidance from authorities.”
A lawyer for Mr. Singh did not immediately respond to a request for comment.
After founding FTX in 2019, Mr. Bankman-Fried rode a boom in the value of Bitcoin and other digital assets to attain an estimated US$26-billion fortune.
His exchange collapsed in November amid a flurry of customer withdrawals over concerns the exchange was commingling assets with Alameda.
When it became clear FTX could not meet withdrawal demands, Mr. Bankman-Fried directed Alameda to sell assets to pay the exchange’s customers, prosecutors said.
The indictment said that on Nov. 6, five days before FTX’s bankruptcy filing, Mr. Bankman-Fried forwarded CC-1 a message from Caroline Ellison, then Alameda’s chief executive.
“I just had an increasing dread of this day that was weighing on me for a long time,” Ms. Ellison wrote, “and now that it’s actually happening it just feels great to get it over with one way or another.”
Ms. Ellison and former FTX technology chief Gary Wang pleaded guilty to fraud charges in December and agreed to co-operate with prosecutors.
The new charges against Mr. Bankman-Fried include conspiracies to commit bank fraud and operate an unlicensed money transmitting business.
Prosecutors said Mr. Bankman-Fried told an unnamed California bank he wanted to open an account for a trading company, but intended the account to process deposits and withdrawals for FTX customers.
The bank had previously told Mr. Bankman-Fried it was unwilling to process such transactions, the indictment read.
Tesla has promised to start selling cheaper models next year, days after a Reuters report revealed that the company had shelved its plans for an all-new Tesla that would cost only $25,000.
The news that Tesla was scrapping the Model 2 came amid a drop in sales and profits, and a decision to slash a tenth of the company’s global workforce. Reuters also noted increased competition from Chinese EV makers.
Tesla’s deliveries slumped in the first quarter for the first annual drop since the start of the pandemic in 2020, missing analyst forecasts by a mile in a sign that even price cuts haven’t been able to stave off an increasingly heated competition on the EV market.
Profits dropped by 50%, disappointing investors and leading to a slump in the company’s share prices, which made any good news urgently needed. Tesla delivered: it said it would bring forward the date for the release of new, lower-cost models. These would be produced on its existing platform and rolled out in the second half of 2025, per the BBC.
Reuters cited the company as warning that this change of plans could “result in achieving less cost reduction than previously expected,” however. This suggests the price tag of the new models is unlikely to be as small as the $25,000 promised for the Model 2.
The decision is based on a substantially reduced risk appetite in Tesla’s management, likely affected by the recent financial results and the intensifying competition with Chinese EV makers. Shelving the Model 2 and opting instead for cars to be produced on existing manufacturing lines is the safer move in these “uncertain times”, per the company.
Tesla is also cutting prices, as many other EV makers are doing amid a palpable decline in sales in key markets such as Europe, where the phaseout of subsidies has hit demand for EVs seriously. The cut is of about $2,000 on all models that Tesla currently sells.
By Charles Kennedy for Oilprice.com
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Divisions within the Bank of Canada over the timing of a much-anticipated cut to its key overnight interest rate stem from concerns of some members of the central bank’s governing council that progress on taming inflation could stall in the face of stronger domestic demand — or even pick up again in the event of “new surprises.”
“Some members emphasized that, with the economy performing well, the risk had diminished that restrictive monetary policy would slow the economy more than necessary to return inflation to target,” according to a summary of deliberations for the April 10 rate decision that were published Wednesday. “They felt more reassurance was needed to reduce the risk that the downward progress on core inflation would stall, and to avoid jeopardizing the progress made thus far.”
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Others argued that there were additional risks from keeping monetary policy too tight in light of progress already made to tame inflation, which had come down “significantly” across most goods and services.
Some pointed out that the distribution of inflation rates across components of the consumer price index had approached normal, despite outsized price increases and decreases in certain components.
“Coupled with indicators that the economy was in excess supply and with a base case projection showing the output gap starting to close only next year, they felt there was a risk of keeping monetary policy more restrictive than needed.”
In the end, though, the central bankers agreed to hold the rate at five per cent because inflation remained too high and there were still upside risks to the outlook, albeit “less acute” than in the past couple of years.
Despite the “diversity of views” about when conditions will warrant cutting the interest rate, central bank officials agreed that monetary policy easing would probably be gradual, given risks to the outlook and the slow path for returning inflation to target, according to the summary of deliberations.
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They considered a number of potential risks to the outlook for economic growth and inflation, including housing and immigration, according to summary of deliberations.
The central bankers discussed the risk that housing market activity could accelerate and further boost shelter prices and acknowledged that easing monetary policy could increase the likelihood of this risk materializing. They concluded that their focus on measures such as CPI-trim, which strips out extreme movements in price changes, allowed them to effectively look through mortgage interest costs while capturing other shelter prices such as rent that are more reflective of supply and demand in housing.
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They also agreed to keep a close eye on immigration in the coming quarters due to uncertainty around recent announcements by the federal government.
“The projection incorporated continued strong population growth in the first half of 2024 followed by much softer growth, in line with the federal government’s target for reducing the share of non-permanent residents,” the summary said. “But details of how these plans will be implemented had not been announced. Governing council recognized that there was some uncertainty about future population growth and agreed it would be important to update the population forecast each quarter.”
• Email: bshecter@nationalpost.com
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Shares in US tech giant Meta have sunk in US after-hours trading despite better-than-expected earnings.
The Facebook and Instagram owner said expenses would be higher this year as it spends heavily on artificial intelligence (AI).
Its shares fell more than 15% after it said it expected to spend billions of dollars more than it had previously predicted in 2024.
Meta has been updating its ad-buying products with AI tools to boost earnings growth.
It has also been introducing more AI features on its social media platforms such as chat assistants.
The firm said it now expected to spend between $35bn and $40bn, (£28bn-32bn) in 2024, up from an earlier prediction of $30-$37bn.
Its shares fell despite it beating expectations on its earnings.
First quarter revenue rose 27% to $36.46bn, while analysts had expected earnings of $36.16bn.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said its spending plans were “aggressive”.
She said Meta’s “substantial investment” in AI has helped it get people to spend time on its platforms, so advertisers are willing to spend more money “in a time when digital advertising uncertainty remains rife”.
More than 50 countries are due to have elections this year, she said, “which hugely increases uncertainty” and can spook advertisers.
She added that Meta’s “fortunes are probably also being bolstered by TikTok’s uncertain future in the US”.
Meta’s rival has said it will fight an “unconstitutional” law that could result in TikTok being sold or banned in the US.
President Biden has signed into law a bill which gives the social media platform’s Chinese owner, ByteDance, nine months to sell off the app or it will be blocked in the US.
Ms Lund-Yates said that “looking further ahead, the biggest risk [for Meta] remains regulatory”.
Last year, Meta was fined €1.2bn (£1bn) by Ireland’s data authorities for mishandling people’s data when transferring it between Europe and the US.
And in February of this year, Meta chief executive Mark Zuckerberg faced blistering criticism from US lawmakers and was pushed to apologise to families of victims of child sexual exploitation.
Ms Lund-Yates added that the firm has “more than enough resources to throw at legal challenges, but that doesn’t rule out the risks of ups and downs in market sentiment”.
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