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Sam Bankman-Fried’s former friends pleaded guilty and are cooperating in the FTX fraud case

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Former FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison are facing up to 50 years and 110 years in prison, respectively.

 

FTX Founder Sam Bankman-Fried Returns To Court In The Bahamas

a:hover]:text-gray-63 text-gray-63 dark:[&>a:hover]:text-gray-bd dark:text-gray-bd dark:[&>a]:text-gray-bd [&>a]:shadow-underline-gray-63 [&>a:hover]:shadow-underline-black dark:[&>a]:shadow-underline-gray dark:[&>a:hover]:shadow-underline-gray”>Photo by Joe Raedle/Getty Images

Caroline Ellison and Zixiao “Gary” Wang, two executives in Sam Bankman-Fried’s fallen crypto empire, have pleaded guilty to federal charges and are cooperating with prosecutors. The news was announced late Wednesday by Damian Williams, the US Attorney for the Southern District of New York.

Williams didn’t specify the charges the two pled to but said the guilty pleas were related to their roles as insiders at FTX and its sister company Alameda Research. Wang was a co-founder of the FTX cryptocurrency exchange and owned 10 percent of Alameda Research. (Bankman-Fried owned the other 90 percent.) Ellison served as CEO of Bankman-Fried’s trading company Alameda Research.

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Ellison pleaded guilty to seven counts, according to The Washington Post. She faces up to 110 years in prison, WaPo says. Wang pleaded guilty to four counts and faces up to 50 years in prison.

At its peak, FTX moved $20 billion daily in trades, according to the CFTC. Bankman-Fried and a select group of insiders, including Ellison and Wang, are alleged to be the only people who knew that FTX was engaging in fraud. The cases against Bankman-Fried are both criminal and civil and have been brought by the SDNY, the CFTC, and the SEC. Allegedly, FTX customer funds were used for loans to executives, risky trading by Alameda Research, political donations, and lavish spending on everything from beachfront homes to private jet flights.

The  US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have already filed updated civil suits, including details on Wang and Ellison’s roles. “Wang, with Ellison’s knowledge and consent, exempted Alameda from the risk mitigation measures” FTX used, providing Alameda Research with a “virtually unlimited ‘line of credit,’” according to the updated SEC complaint.

The SEC complaint outlines how “Bankman-Fried and Wang thus gave Alameda and Ellison carte blanche to use FTX customer assets for Alameda’s trading operations and for whatever other purposes Bankman-Fried and Ellison saw fit.”

Ellison, acting on Bankman-Fried’s orders, borrowed billions of dollars from lenders, according to the SEC suit. Those loans were backed “in significant part” by the FTT token, which was issued by FTX and given to Alameda for free, the SEC wrote. Ellison’s job was to buy FTT tokens on various platforms in order to increase the price, thus making the FTT that was collateral against Alameda’s loans more valuable. That, in turn, made it possible for Alameda to borrow even more.

“As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards,” said SEC Chair Gary Gensler in a statement.

The fraud came to light after a blockbuster CoinDesk article reported that Alameda Research’s balance sheet consisted mostly of the FTT token, which kicked off a series of events that ended in FTX’s bankruptcy. During that time, Binance’s CEO Changpeng Zhao said he would sell his FTT holdings; Ellison tweeted that Alameda would buy at $22 a token.

In an attempt to stave off a collapse of the FTT token price, Ellison and Bankman-Fried began to liquidate Alameda Research’s investments — freeing up cash for buybacks, according to the CFTC complaint. It wasn’t enough. During that period, Bankman-Fried, Ellison, and a third, unnamed FTX executive expressed surprise that the price of Bitcoin hadn’t fallen more.

As panicked FTX customers began to withdraw their money from the exchange, Ellison and Bankman-Fried directed Alameda researchers to “generally do anything possible to quickly obtain billions of dollars of capital to send to FTX,” according to the CFTC complaint. It wasn’t enough.

In a meeting on November 9th, Ellison told staff the truth about Alameda’s misappropriation of FTX customer funds, the CFTC says.

In response to a staff question, “Ellison also acknowledged that her November 6 tweet to the Binance CEO offering to buy his FTT holdings at $22 per token was ‘kind of a misleading thing to tweet’ and expressed remorse,” according to the CFTC complaint. Most of the staff resigned after that.

In the filing for bankruptcy, the new CEO of FTX, John J. Ray, said the company was worse than Enron — and he’d know, since he was charged with cleaning up after the fraud there.

In May, when the price of crypto began to crater, the lenders wanted their money back. To keep them happy, Bankman-Fried directed that customer deposits be sent to the lenders. Ellison used that money to pay Alameda’s debts.

“Even in November 2022, faced with billions of dollars in customer withdrawal demands that FTX could not fulfill, Bankman-Fried and Ellison, with Wang’s knowledge, misled investors from whom they needed money to plug a multi-billion-dollar hole,” the SEC wrote in its suit.

But customer funds had also been diverted from the start, the SEC wrote in its suit. This was echoed by the CFTC suit.

Alameda got ahold of FTX customer funds in two ways: first, by the “line of credit” but also by directing customers to deposit fiat currency into accounts controlled by Alameda. “As a result, there was no meaningful distinction between FTX customer funds and Alameda’s own funds,” the SEC suit says. “Bankman-Fried and Wang thus gave Alameda and Ellison carte blanche to use FTX customer assets for Alameda’s trading operations and for whatever other purposes Bankman-Fried and Ellison saw fit.”

These uses weren’t authorized by customers, as the CFTC suit makes clear. (It echoes the SEC suit’s allegations about how customer funds were improperly used by Alameda.) Indeed, FTX’s terms of service explicitly forbid this kind of thing, the CFTC suit says. So that means the executives were aware that it was important to keep customer assets safe and segregated from other funds — important for establishing intent, which is crucial for proving fraud charges.

That made Alameda Bankman-Fried’s ”personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses.“

Earlier on Wednesday, the Bahamas extradited Sam Bankman-Fried and sent him on his way back to the US. Williams confirmed Bankman-Fried is now in FBI custody and said he would be transported directly to New York to appear before a judge “as soon as possible.”

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'Not telling us the truth': NSP customers complain utility isn't transparent about outages – CBC.ca

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‘Not telling us the truth’: NSP customers complain utility isn’t transparent about outages  CBC.caView Full Coverage on Google News

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Tiny wines find home in B.C.’s market, as Canadians consider reducing consumption

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VANCOUVER — Wine lovers have growing options on the shelf to enjoy their favourite beverage as producers in B.C. offer smaller container sizes.

Multiple British Columbia wineries over the last several years have begun offering their product in smaller, single-serve cans and bottles.

Along with making wine more attractive to those looking to toss some in a backpack or sip on the golf course, the petite containers leave wineries with options for a potential shift in mindset as Canadians discuss the health benefits of reducing alcohol consumption.

Vancouver-based wine consultant Kurtis Kolt said he’s watched the segment of the wine industry offering smaller bottles and cans “explode” over the last several years, particularly during the COVID-19 pandemic when people were meeting outdoors in parks and beaches and looking for something more portable to take with them.

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“You’re not taking a hit on quality, you know? In fact, if someone is only going to be having a glass or two, you’re cracking a can and it’s completely fresh, guaranteed,” he said.

It’s also an advantage for people who want to drink less, he said.

“It’s much less of a commitment to crack open a can or a small bottle or a smaller vessel than it is to open a bottle,” he said.

“Then you have to decide how quickly you’re going to go through it or end up dumping some out if you don’t finish it.”

Last month, the Canadian Centre on Substance Use and Addiction released a report funded by Health Canada saying no amount of alcohol is safe and those who consume up to two standard drinks per week face a low health risk.

That’s a significant change from the centre’s 2011 advice that said having 15 drinks per week for men and 10 drinks per week for women was low risk.

Health Canada has said it is reviewing the report.

Charlie Baessler, the managing partner at Corcelettes Estate Winery in the southern Interior, said his winery’s Santé en Cannette sparkling wine in a can was released in 2020 as a reduced alcohol, reduced sugar, low-calorie option.

“We’ve kind of gone above and beyond to attract a bit of a younger, millennial-type market segment with a fun design concept of the can and sparkling, low alcohol — all these things that have been recently a big item on the news,” he said.

Santé en Cannette is a nine per cent wine and reducing the alcohol was a way to reduce its calories, he said. The can also makes it attractive for events like a picnic or golf, is recyclable, and makes it easier for restaurants that might want to offer sparkling wine by the glass without opening an entire bottle.

At the same time, the lower alcohol content makes it an option for people who might want a glass of wine without feeling the same effect that comes from a higher alcohol content, he said.

“So the health is clearly one incentive, but I think more importantly, so was being able to enjoy a locally made product of B.C. from a boutique winery, dare I say, with a mimosa at 11 o’clock and not ruin your day,” he said.

Baessler said the winery has doubled production since the product was first released to about 30,000 cans a year, which they expect to match this year.

He said there’s naturally a market for the product but he doesn’t expect it to compete with the higher-alcohol wine.

“So this isn’t our Holy Grail. This is something that we do for fun and we’ll never compete, or never distract, from what is our core line of riper, higher-alcohol wine,” he said.

Jeff Guignard, executive director of B.C.’s Alliance of Beverage Licensees, which represents bars, pubs and private liquor stores, said the industry has seen a shift in consumers wanting options that are more convenient.

“It’s not a massive change in consumer behaviour but it is a definitely a noticeable one, which is why you see big companies responding to it,” he said.

Guignard said the latest CCSA report is creating an increased awareness and desire to become educated about responsible consumption choices, which is a good thing, but he adds it’s important for people to look at the relative risk of what they’re doing.

“If you’re eating fast food three meals a day, I don’t think having a beer or not is going to be the single most important determinant of your health,” he said.

“But from a consumer perspective, as consumer preferences change, of course beverage manufacturers respond with different packaging or different products, the same way you’ve seen in the last five years, a large number of low-alcohol or no-alcohol beverages being introduced to the market.”

While he won’t predict how much the market share could grow, Guignard said non-alcoholic beverages and low-alcoholic beverages will continue to be a significant piece of the market.

“I don’t know if it’s reached its peak or if it will grow. I just expect it to be part of the market for now on.”

This report by The Canadian Press was first published Feb. 5, 2023.

 

Ashley Joannou, The Canadian Press

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NL Hydro Reports Record High Demand – VOCM

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  1. NL Hydro Reports Record High Demand  VOCM
  2. Electricity consumption reaches all-time peak, says N.L. Hydro  CBC.ca
  3. Hydro Close To Hitting ‘All-Time High’ On Demand Amid Arctic Blast  VOCM
  4. View Full Coverage on Google News

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