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Sam Bankman-Fried built ‘pyramid of deceit’, jurors hear in closing arguments

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Sam Bankman-Fried’s crypto fraud trial neared its end with closing arguments on Wednesday in Manhattan federal court following weeks of testimony that lifted the veil of FTX’s stunning collapse – and a broader murkiness surrounding digital currency markets. The prosecution quickly painted Sam Bankman-Fried as an unabashed scammer rather than the image of the wayward math nerd proffered by the defense throughout the trial, saying he created a “pyramid of deceit” with his cryptocurrency exchange, FTX.

Assistant US attorney Nicholas Roos also used Bankman-Fried’s own testimony against him.

“FTX was bankrupt. Billions of dollars from thousands of people, gone,” Roos said. “He spent his customers’ money, and he lied about it.”

Just before 10am, Roos started his closing argument by describing the final days of FTX in November last year, which started with the crypto equivalent of a bank run.

Exchange customers learned in a Coin Desk article that Alameda Research, FTX’s sister hedge fund, held billions in FTX’s own cryptocurrency, FTT, and had used it as collateral for hefty loans. Following the report, the Binance chief executive, Changpeng Zhao, tweeted that his exchange would unload its $500m in FTT holdings. FTT crumbled, bringing FTX and Alameda down with it.

“With each day, the withdrawals grew – millions of dollars turned into hundreds of millions of dollars, which turned into billions of dollars. Thousands of people around the world were trying to withdraw their investments, their savings, their nest eggs for the future, but their withdrawals were not being processed. Money wasn’t being returned,” Roos told jurors.

“They were overcome with anxiety. With each additional click of the withdrawal button their dread turned into despair. Their money was gone.”

Bankman-Fried faces seven counts on conspiracy and fraud charges for allegedly siphoning FTX customer funds into Alameda; the prosecution contends that he did so to cover Alameda’s widening debt following the spring 2022 crypto crash. He has pleaded not guilty.

Roos described Bankman-Fried’s alleged antics as “a pyramid of deceit built by the defendant on a foundation of lies and false promises, all to get money. Eventually it collapsed, leaving countless victims in its wake.

“The defendant is responsible,” Roos said, pointing to Bankman-Fried at several points.

When Bankman-Fried’s lawyer, Mark Cohen, presented his closing, he in effect argued that the prosecutor’s case hinged too heavily on Bankman-Fried’s scruffiness rather than the substance of his actions. Cohen argued: “The government has sought to turn Sam into some sort of villain, some sort of monster.

“Testimony about his hair, his clothes, testimony about his sex life, photos of him with big hair, photos of him with messy hair, photos of him with playing cards,” Cohen said. “His appearance and his romantic relationships have nothing to do with whether he’s guilty to the specific charges in the indictment.”

“We’ll agree that there was a time when Sam was probably the worst-dressed CEO in the world and had the worst haircut … and we’ll agree that Sam would talk to just about everyone … and that made his life messy … but that’s not a crime,” Cohen said.

“The reason the government focused so much of its case on Sam’s appearance is because every movie needs a villain.”

Cohen repeatedly told jurors that Bankman-Fried was acting in good faith and insisted this was a defense to the charges in this case. The attorney said he wanted to show jurors “an alternative way to think” about what happened as well as Bankman-Fried’s behavior on the witness stand. He said that Bankman-Fried’s testimony before lawmakers showed that he wasn’t a cunning criminal.

“If he was a criminal mastermind, why in the world would he go in front of Congress and [be] subject to public questioning when he didn’t have to?” Cohen said. “The answer? He wouldn’t.”

Cohen also rejected the government’s contention that Bankman-Fried lined his pockets and bolstered a luxe lifestyle using customer money.

While the government portrayed Bankman-Fried’s spending hundreds of millions in marketing as an “aha!” moment, to purportedly show his misuse of this money, Cohen said, he thought marketing costs were in keeping with the industry.

Cohen also addressed the sprawling Bahamas properties, including a $30m apartment Bankman-Fried lived in with top FTX execs, downplaying their purpose as workmanlike.

“Why did Sam purchase these properties? Why did FTX purchase them? “ Cohen said.” Sam is clear on this in his testimony – the Bahamas real estate was corporate housing for FTX employees.”

FTX, he said, was trying to court top professionals who “uprooted their lives” to move there when they could just have easily gone to work at Google or Facebook.

The prosecution also argued in closing that Bankman-Fried’s decision to testify in his own defense last week – a rare move for criminal defendants, given the perils of cross-examination – was not worth the risk.

“The defendant took the stand and he told a story – and he lied to you,” Roos said of Bankman-Fried’s direct testimony. “Did you see on Friday how his testimony was smooth like, it’d been rehearsed a bunch of times?”

Roos noted that Bankman-Fried testified about “a bunch of things that didn’t really matter” for the case – like his bookish living situation at MIT. And when it came to explaining various things during direct examination, he appeared to have “perfect memory”.

“He never said he couldn’t recall,” Roos said, but when it was prosecutors’ turn, this professed lack of memory “happened over 140 times during his cross-examination”.

“He had to be asked and re-asked. He looked away. He lied about big things and he lied about little things,” Roos argued. “He asked for terms to be defined that he used freely on direct examination earlier.

“He approached every question like up was down and down was up … he came up with a tale that was conveniently put together in a story that excluded him from a fraud,” Roos continued.

Cohen tried to downplay Bankman-Fried repeatedly saying he didn’t recall facts during cross-examination. He said, “if he remembered something he told you, if he didn’t remember something he told you as well.”

The prosecutor argued that Bankman-Fried used hi-tech subterfuge to cheat customers who trusted that FTX was as safe as he claimed – and treated their money as “his personal piggy bank”.

Alameda, FTX’s sister hedge fund, was able to borrow exchange customer money and rack up debt on a whopping $65bn line of credit, unlike other exchange clients.

“He set up a system, a public system, for everyone and a secret system just for Alameda, and he directed others to make it work that way,” Roos said. “No other customer had a set-up like Alameda.”

There was also the liquidity issue. FTX had a system that barred customers from continued margin trading when their liquidity dipped below a certain level; this was not the case with his hedge fund.

“He know that Alameda was exempt from the rules that applied to all the other customers,” Roos said. “What is the result of Alameda’s secret exemption? The defendant took billions of dollars of customer funds, leaving an enormous gap between what it said it had … and what it actually had in cryptocurrency wallets.”

All the while, Bankman-Fried was peddling a false sense of security, Roos argued.

“He ran ads saying FTX was safe, the safest and easiest way to buy and sell cryptocurrency he told Congress and the public by, quote, ‘logging into a customer account at FTX customers can immediately view assets they own held in custody at FTX,” Roos said. “That last part is critical – assets they own, held in custody by FTX.

“That wasn’t true. When customers logged into their account they saw a balance. Behind the scenes, that money wasn’t there.” Ads featuring the Seinfeld creator Larry David and football legend Tom Brady were part of this web of deception.

Roos also argued: “He was taking money from FTX customers when he was saying something different publicly – that makes him guilty of fraud.”

 

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

The Canadian Press. All rights reserved.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

The Canadian Press. All rights reserved.

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