Business

Sam Bankman-Fried’s shadow still looms over the crypto industry

Published

11 months ago

November 4, 2023

Cryptocurrency advocates might believe that FTX’s collapse was an anomaly — but they could have trouble convincing the public of the same.

Photo illustration of Sam Bankman-Fried in front of a graphic background of tumbling crypto coins.

During Sam Bankman-Fried’s monthlong fraud trial, prosecutors presented damning evidence that the fallen crypto founder knew full well what he was doing from the beginning. He knew that Alameda Research borrowed billions in customer funds from FTX. He knew his fellow executives fabricated balance sheets to send to lenders. He knew FTX wasn’t fine when he told customers it was.

In cryptoland, the response to these revelations was largely to condemn Bankman-Fried and FTX as an aberration. When the truth about FTX came out, Binance CEO Changpeng “CZ” Zhao slammed Bankman-Fried, saying he “lied to everyone.” Similarly, Coinbase CEO Brian Armstrong wrote on X (formerly Twitter) that “even the most gullible person should not believe Sam’s claim” that the missing funds stemmed from an accounting error.

But as Bankman-Fried awaits sentencing after being convicted on seven criminal counts, including wire fraud, the rest of the industry has been left to take stock of its future. FTX may have been one of the most brazen fraud operations in recent years, but it’s far from the only embarrassing crypto collapse. While some of the decisions Bankman-Fried made might have been unique to FTX, it’s one of the multiple cases where no one on the outside caught on until it was too late — and in the wake of Bankman-Fried’s trial, it may take work to convince the public he was an outlier.

Before his fall, Bankman-Fried was a poster child for an upstart industry. The 31-year-old power broker maintained the scruffy, somewhat quirky appearance of the kid in your computer science class that you would probably ask for help. (This particular look, according to his ex-girlfriend and former Alameda CEO, Caroline Ellison, was carefully crafted.) He became crypto’s golden boy, appearing on the cover of Fortune magazine and getting profiled in Forbes. He testified about his operation’s safety in front of Congress. While other firms collapsed last year, FTX appeared strong, with Bankman-Fried inviting comparisons to JP Morgan while bailing out other struggling firms.

Some media outlets continued to burnish his representation even after FTX crashed and burned. The Washington Post highlighted Bankman-Fried’s contributions to pandemic research (some of which apparently came from customer funds). Then, The Wall Street Journal focused on how Bankman-Fried’s “Plans to Save the World Went Down in Flames” and said FTX’s collapse “wiped out his wealth and ambitious philanthropic endeavors.” (The ambitions of FTX customers were presumably not headline material.) The information we know now lets us see past that persona — but it also gives the crypto-curious a lot to chew on.

Other crypto companies seem to think that picking out the one bad apple will be good for the rest of the industry. In a statement provided to CoinDesk, Paul Brody, the head of blockchain at financial consulting firm EY, calls the outcome of Bankman-Fried’s trial a “wonderful moment for crypto,” and Yat Siu, the chairman of blockchain gaming company Animoca Brands, says it marks a “new beginning” for the industry.

“Over the past year, our industry took a reputational hit in Washington, but Sam Bankman-Fried’s crimes had nothing to do with the technology underpinning digital assets,” Kristin Smith, the CEO of the Blockchain Association, tells The Verge. “The trial was about a crook — not crypto. And while the trial hasn’t been a net positive for the industry, it has refocused minds on the fundamental promise of decentralization.”

Indeed, a lot of Bankman-Fried’s misconduct is not inherently related to cryptocurrency — like falsifying his firm Alameda Research’s finances and spending other people’s money without permission.

But much of this appears to have been possible because there was so little meaningful oversight of the crypto industry and so much acceptance of companies playing fast and loose. It’s hard to say if the crypto companies left standing are free from all of FTX’s flaws, or how closely they’ve looked over their partners. And then there’s the simple, inconvenient fact that so many of them are under legal scrutiny.

Earlier this year, the Securities and Exchange Commission sued Terraform Labs, the crypto firm behind the stablecoin that vaporized billions in customer funds when it collapsed last year, for allegedly perpetuating “a fraudulent scheme.” After that, the Federal Trade Commission arrested the CEO of now-bankrupt crypto lending company Celsius over claims he made millions off the lies he spread about the firm’s token.

There’s also the crypto influencer Richard Heart, who the SEC accused of spending at least $12 million in customer funds to purchase sports cars, luxury watches, and a 555-carat black diamond. Other major firms, including Coinbase, Binance, Genesis, and Gemini, also face lawsuits from the SEC.

That I can so easily fill two paragraphs with an (incomplete) list of legal issues the crypto industry is facing doesn’t exactly inspire confidence. This uncertainty is already affecting regulations that the “good” companies in crypto want passed. The industry favors a bill that would limit the SEC’s oversight of the industry, for instance, while granting more power to the Commodity Futures Trading Commission. However, the outcome of Bankman-Fried’s trial could ultimately harm its success. Sen. Elizabeth Warren (D-MA) has told Politico that the industry “has serious problems with fraud, and the public no longer has confidence that it’s on the up and up.”

Witness testimonies and a plethora of evidence have revealed a whole range of things that can and could’ve gone wrong. What would’ve happened if CoinDesk never published the article that revealed the massive hole in FTX’s balance sheet? Would Bankman-Fried continue to go about his business — doling out billions in stolen funds to save sinking crypto companies, donating to politicians, and sponsoring sports teams? Would he have kept spending FTX customers’ funds until it either all crashed for some other reason, or until one of his bets — like an investment in the AI company Anthropic — hit big enough to clear the books? Alameda’s unlimited amount of credit makes it seem like a possibility.

Sam Bankman-Fried wanted to prove the world could trust the cryptocurrency industry. Now, the industry hopes to leave him behind. But he might be far from the last bad actor cashing in on crypto — and the crypto world has yet to prove it can spot them before catastrophe strikes.

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Business

The #1 Skill I Look For When Hiring

Published

1 day ago

September 17, 2024

Nick Kossovan

File this column under “for what it’s worth.”

“Communication is one of the most important skills you require for a successful life.” — Catherine Pulsifer, author.

I’m one hundred percent in agreement with Pulsifer, which is why my evaluation of candidates begins with their writing skills. If a candidate’s writing skills and verbal communication skills, which I’ll assess when interviewing, aren’t well above average, I’ll pass on them regardless of their skills and experience.

Why?

Because business is fundamentally about getting other people to do things—getting employees to be productive, getting customers to buy your products or services, and getting vendors to agree to a counteroffer price. In business, as in life in general, you can’t make anything happen without effective communication; this is especially true when job searching when your writing is often an employer’s first impression of you.

Think of all the writing you engage in during a job search (resumes, cover letters, emails, texts) and all your other writing (LinkedIn profile, as well as posts and comments, blogs, articles, tweets, etc.) employers will read when they Google you to determine if you’re interview-worthy.

With so much of our communication today taking place via writing (email, text, collaboration platforms such as Microsoft Teams, Slack, ClickUp, WhatsApp and Rocket.Chat), the importance of proficient writing skills can’t be overstated.

When assessing a candidate’s writing skills, you probably think I’m looking for grammar and spelling errors. Although error-free writing is important—it shows professionalism and attention to detail—it’s not the primary reason I look at a candidate’s writing skills.

The way someone writes reveals how they think.

Clear writing = Clear thinking
Structured paragraphs = Structured mind
Impactful sentences = Impactful ideas

Effective writing isn’t about using sophisticated vocabulary. Hemingway demonstrated that deceptively simple, stripped-down prose can captivate readers. Effective writing takes intricate thoughts and presents them in a way that makes the reader think, “Damn! Why didn’t I see it that way?” A good writer is a dead giveaway for a good thinker. More than ever, the business world needs “good thinkers.”

Therefore, when I come across a candidate who’s a good writer, hence a good thinker, I know they’re likely to be able to write:

Emails that don’t get deleted immediately and are responded to
Simple, concise, and unambiguous instructions
Pitches that are likely to get read
Social media content that stops thumbs
Human-sounding website copy
Persuasively, while attuned to the reader’s possible sensitivities

Now, let’s talk about the elephant in the room: AI, which job seekers are using en masse. Earlier this year, I wrote that AI’s ability to hyper-increase an employee’s productivity—AI is still in its infancy; we’ve seen nothing yet—in certain professions, such as writing, sales and marketing, computer programming, office and admin, and customer service, makes it a “fewer employees needed” tool, which understandably greatly appeals to employers. In my opinion, the recent layoffs aren’t related to the economy; they’re due to employers adopting AI. Additionally, companies are trying to balance investing in AI with cost-cutting measures. CEOs who’ve previously said, “Our people are everything,” have arguably created today’s job market by obsessively focusing on AI to gain competitive advantages and reduce their largest expense, their payroll.

It wouldn’t be a stretch to assume that most AI usage involves generating written content, content that’s obvious to me, and likely to you as well, to have been written by AI. However, here’s the twist: I don’t particularly care.

Why?

Because the fundamental skill I’m looking for is the ability to organize thoughts and communicate effectively. What I care about is whether the candidate can take AI-generated content and transform it into something uniquely valuable. If they can, they’re demonstrating the skills of being a good thinker and communicator. It’s like being a great DJ; anyone can push play, but it takes skill to read a room and mix music that gets people pumped.

Using AI requires prompting effectively, which requires good writing skills to write clear and precise instructions that guide the AI to produce desired outcomes. Prompting AI effectively requires understanding structure, flow and impact. You need to know how to shape raw information, such as milestones throughout your career when you achieved quantitative results, into a compelling narrative.

So, what’s the best way to gain and enhance your writing skills? As with any skill, you’ve got to work at it.

Two rules guide my writing:

Use strong verbs and nouns instead of relying on adverbs, such as “She dashed to the store.” instead of “She ran quickly to the store.” or “He whispered to the child.” instead of “He spoke softly to the child.”
Avoid using long words when a shorter one will do, such as “use” instead of “utilize” or “ask” instead of “inquire.” As attention spans get shorter, I aim for clarity, simplicity and, most importantly, brevity in my writing.

Don’t just string words together; learn to organize your thoughts, think critically, and communicate clearly. Solid writing skills will significantly set you apart from your competition, giving you an advantage in your job search and career.

_____________________________________________________________________

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

Business

Politics likely pushed Air Canada toward deal with ‘unheard of’ gains for pilots

Published

2 days ago

September 16, 2024

Anne Joseph

MONTREAL – Politics, public opinion and salary hikes south of the border helped push Air Canada toward a deal that secures major pay gains for pilots, experts say.

Hammered out over the weekend, the would-be agreement includes a cumulative wage hike of nearly 42 per cent over four years — an enormous bump by historical standards — according to one source who was not authorized to speak publicly on the matter. The previous 10-year contract granted increases of just two per cent annually.

The federal government’s stated unwillingness to step in paved the way for a deal, noted John Gradek, after Prime Minister Justin Trudeau made it plain the two sides should hash one out themselves.

“Public opinion basically pressed the federal cabinet, including the prime minister, to keep their hands clear of negotiations and looking at imposing a settlement,” said Gradek, who teaches aviation management at McGill University.

After late-night talks at a hotel near Toronto’s Pearson airport, the country’s biggest airline and the union representing 5,200-plus aviators announced early Sunday morning they had reached a tentative agreement, averting a strike that would have grounded flights and affected some 110,000 passengers daily.

The relative precariousness of the Liberal minority government as well as a push to appear more pro-labour underlay the prime minister’s hands-off approach to the negotiations.

Trudeau said Friday the government would not step in to fix the impasse — unlike during a massive railway work stoppage last month and a strike by WestJet mechanics over the Canada Day long weekend that workers claimed road roughshod over their constitutional right to collective bargaining. Trudeau said the government respects the right to strike and would only intervene if it became apparent no negotiated deal was possible.

“They felt that they really didn’t want to try for a third attempt at intervention and basically said, ‘Let’s let the airline decide how they want to deal with this one,'” said Gradek.

“Air Canada ran out of support as the week wore on, and by the time they got to Friday night, Saturday morning, there was nothing left for them to do but to basically try to get a deal set up and accepted by ALPA (Air Line Pilots Association).”

Trudeau’s government was also unlikely to consider back-to-work legislation after the NDP tore up its agreement to support the Liberal minority in Parliament, Gradek said. Conservative Leader Pierre Poilievre, whose party has traditionally toed a more pro-business line, also said last week that Tories “stand with the pilots” and swore off “pre-empting” the negotiations.

Air Canada CEO Michael Rousseau had asked Ottawa on Thursday to impose binding arbitration pre-emptively — “before any travel disruption starts” — if talks failed. Backed by business leaders, he’d hoped for an effective repeat of the Conservatives’ move to head off a strike in 2012 by legislating Air Canada pilots and ground crew to stick to their posts before any work stoppage could start.

The request may have fallen flat, however. Gradek said he believes there was less anxiety over the fallout from an airline strike than from the countrywide railway shutdown.

He also speculated that public frustration over thousands of cancelled flights would have flowed toward Air Canada rather than Ottawa, prompting the carrier to concede to a deal yielding “unheard of” gains for employees.

“It really was a total collapse of the Air Canada bargaining position,” he said.

Pilots are slated to vote in the coming weeks on the four-year contract.

Last year, pilots at Delta Air Lines, United Airlines and American Airlines secured agreements that included four-year pay boosts ranging from 34 per cent to 40 per cent, ramping up pressure on other carriers to raise wages.

After more than a year of bargaining, Air Canada put forward an offer in August centred around a 30 per cent wage hike over four years.

But the final deal, should union members approve it, grants a 26 per cent increase in the first year alone, retroactive to September 2023, according to the source. Three wage bumps of four per cent would follow in 2024 through 2026.

Passengers may wind up shouldering some of that financial load, one expert noted.

“At the end of the day, it’s all us consumers who are paying,” said Barry Prentice, who heads the University of Manitoba’s transport institute.

Higher fares may be mitigated by the persistence of budget carrier Flair Airlines and the rapid expansion of Porter Airlines — a growing Air Canada rival — as well as waning demand for leisure trips. Corporate travel also remains below pre-COVID-19 levels.

Air Canada said Sunday the tentative contract “recognizes the contributions and professionalism of Air Canada’s pilot group, while providing a framework for the future growth of the airline.”

The union issued a statement saying that, if ratified, the agreement will generate about $1.9 billion of additional value for Air Canada pilots over the course of the deal.

Meanwhile, labour tension with cabin crew looms on the horizon. Air Canada is poised to kick off negotiations with the union representing more than 10,000 flight attendants this year before the contract expires on March 31.

This report by The Canadian Press was first published Sept. 16, 2024.

Companies in this story: (TSX:AC)

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Business

Federal $500M bailout for Muskrat Falls power delays to keep N.S. rate hikes in check

Published

2 days ago

September 16, 2024

Anne Joseph

HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.

Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.

Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”

Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.

The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.

Those delays forced Nova Scotia Power to spend more on generating its own electricity.

This report by The Canadian Press was first published Sept. 16, 2024.

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