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Crypto Exchange FTX Collapses, Files for Bankruptcy

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Crypto Exchange FTX Collapses, Files for Bankruptcy

FTX took less than a week to go from the world’s third-largest cryptocurrency exchange to bankruptcy. The embattled cryptocurrency exchange sought bankruptcy protection.

On Friday morning, FTX, the hedge fund Alameda Research, and dozens of other affiliated companies filed for bankruptcy in Delaware. FTX US, which was not expected to be part of any financial rescue, was also included in the company’s bankruptcy filing.

According to the company, CEO and founder Sam Bankman-Fried has resigned. Bankman-net Fried’s worth was recently estimated to be $23 billion, and he has been a major political donor to Democrats. According to Forbes and Bloomberg, which closely track the net worth of the world’s richest people, his net worth has vanished.

“I was shocked to see things unravel the way they did earlier this week,” Bankman-Fried wrote on Twitter.

The unravelling of FTX is causing ripple effects. Companies that backed FTX are already writing down their investments. Politicians and regulators are increasing their calls for stricter regulation of the cryptocurrency industry.

And the latest crisis has put downward pressure on bitcoin and other digital currency prices. According to CoinMarketCap.com, the total market value of all digital currencies fell by about $150 billion in the last week.

The failure of FTX extends beyond finance. The company also had major sports sponsorships, such as Formula One racing and a deal with Major League Baseball. Miami-Dade County decided to end its relationship with FTX on Friday, which means the venue where the Miami Heat play will no longer be known as FTX Arena.

Mercedes announced that FTX would be removed from its race cars this weekend.

Semafor, the high-profile news startup run by former BuzzFeed editor-in-chief and New York Times columnist Ben Smith, was also an early investor for FTX and Bankman-Fried, as well as his brother.

VOR NewsSEC Investigating FXT

Bankman-Fried also has other issues. According to a person familiar with the situation, the Department of Justice and the Securities and Exchange Commission are investigating FTX to determine whether any criminal activity or securities violations occurred. The person could not speak publicly about the investigations and spoke to The Associated Press on the condition of anonymity.

The inquiry is focused on the possibility that FTX used customer deposits to fund bets at Alameda Research. Brokers in traditional markets are expected to keep client funds separate from other company assets. Regulators have the authority to penalize violations. When MF Global intermingled client assets with its own bets roughly a decade ago, it effectively failed for a similar practice.

FTX listed more than 130 affiliated companies worldwide in its bankruptcy filing. The company estimated its assets to be worth $10 billion to $50 billion and its liabilities to be worth the same amount. The company named John Ray III as its new CEO, a long-time bankruptcy litigator best known for having to clean up the mess left by Enron’s demise.

The bankruptcy of FTX will undoubtedly be one of the most complicated bankruptcy cases in recent years. According to bankruptcy lawyers, the company listed more than 100,000 creditors in its filing, and because all of its customers are effectively creditors because they deposited their funds with FTX, determining who is owed what will take months.

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Cryptocurrency Not Protected

Cryptocurrencies are not legally protected, and politicians on both sides have issued statements opposing any Lehman Brothers-style bailout for cryptocurrency investors.

“Unlike in a case where there is (security insurance in the case of a brokerage failure) or where the FDIC steps in with a bank failure, these customers are completely exposed,” said Daniel Besikof, a partner at Loeb & Loeb LLP, specializes in bankruptcy law.

After experiencing the cryptocurrency equivalent of a bank run, FTX agreed earlier this week to sell itself to larger rival Binance. Customers abandoned the exchange after becoming concerned about FTX’s capital.

The cryptocurrency community had hoped that Binance, the world’s largest cryptocurrency exchange, would be able to save FTX and its depositors. However, after reviewing FTX’s books, Binance concluded that the smaller exchange’s problems were too large to solve and backed out of the deal.

FTX is the latest in a string of disasters rocking the crypto industry, which is now under intense pressure from collapsing prices and circling financial regulators. Its failure is already being felt across the cryptocurrency universe.

Sequoia Capital, a venture capital firm, announced Thursday that it is writing down its total investment in FTX of nearly $215 million.

VOR NewsBitcoin price drop

BlockFi, a cryptocurrency lender, announced late Thursday on Twitter that it is “unable to conduct business as usual” and has paused client withdrawals due to FTX’s demise.

BlockFi, bailed out by Bankman-FTX Fried’s early last summer, said it was “shocked and dismayed” by the news about FTX and Alameda in a letter posted late Thursday on its Twitter profile.

The company concluded by stating that future updates on its status “will be less frequent than what our clients and other stakeholders are accustomed to.”

Bitcoin fell immediately after the letter was published and is now trading below $17,000. Bitcoin, the original cryptocurrency, had been hovering around $20,000 for months before FTX’s problems were revealed this week, sending it briefly down to around $15,500.

Shares of Coinbase, a publicly traded cryptocurrency exchange, and Robinhood, an online trading platform, rose nearly 12%.

Meanwhile, institutional investors were already turning against cryptocurrencies before this week. Sam Bankman-FTX.com Fried’s abrupt demise may have permanently harmed their chances of inclusion in mainstream portfolios.

While there are still many industry zealots, many professional money managers believe the case for cryptocurrency as a portfolio diversifier or digital gold has been debunked. They claim that the losses are too great and the market structure is too risky.

“It has become clear that it will not find a home in institutional asset allocation,” Hani Redha, multi-asset portfolio manager at Pinebridge Investments in London, said. “There was a time when it was regarded as a potential asset class that every investor should include in their strategic asset allocation, and that is no longer the case.”

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Tiger Global and SoftBank are facing new FTX losses.

The recent explosions and scandals have demolished the key arguments of crypto supporters, effectively erasing the notion of Bitcoin as a safe haven in turbulent times. But none of those events, from the TerraUSD collapse to the Celsius bankruptcy, were as damning as the discovery that even FTX, once considered one of the most reliable names in crypto, was insolvent.

Salman Ahmed, the chief investment strategist at Fidelity International, which manages $646 billion from London, said the FTX collapse is “raising questions about the viability of the crypto ecosystem.” “It was always difficult to make a case for including crypto, but the setup has come under increased scrutiny.”

In February, his firm launched a Bitcoin exchange-traded product aimed at professional European investors. Since its inception, it has lost approximately 55% of its value.

Only a year ago, cryptomania was at its peak, with Bitcoin reaching $67,000. Bridgewater estimated in January that institutional investors owned 5% of Bitcoin.

Back then, frothy predictions were everywhere. JPMorgan Chase & Co. strategist Nikolaos Panigirtzoglou wrote that Bitcoin could theoretically reach $146,000 in the long run by crowding out gold. According to a PWC survey conducted in April, 42% of crypto hedge funds expect Bitcoin to trade between $75,000 and $100,000 by the end of 2022.

Investors’ perspectives are becoming more restrained. In a recent report, Panigirtzoglou predicted that Bitcoin would return to its summer lows of $13,000. On Friday, Bitcoin was trading below $17,000.

“The argument for investing in cryptocurrency for diversification died a long time ago,” he said in an interview.

Bitcoin has previously crashed and recovered. Some believers believe market hubris is being flushed out, putting the industry on a path to maturity. According to Mike Cyprys, an analyst at Morgan Stanley, FTX’s problems may benefit established companies with a track record of risk management, such as the Nasdaq Stock Market and CBOE Global Markets Inc.

According to Mark Dowding, chief investment officer at BlueBay Asset Management, the case for Bitcoin becoming a digital gold version is bogus. He believes it’s only time before more investors flee and crypto prices plummet.

“It should have been obvious that an industry that was producing nothing, burning cash, and promising alluring returns was doomed to fail,” he said.

VOR News, Bloomberg, AP

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United CEO Tries To Reassure Customers Following Multiple Safety Incidents

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United Airlines is attempting to reassure passengers following a spate of accidents on its Boeing jets this year. In a statement to customers, the airline states that safety is “at the center of everything that we do.”

“While they are all unrelated, I want you to know that these incidents have captured our attention and sharpened our focus,” CEO Scott Kirby wrote in a Monday morning statement to customers.

united

United CEO Tries To Reassure Customers Following Multiple Safety Incidents

On Friday, a United Boeing 737-800 landed in Medford, Oregon, missing an underside fuselage panel.

Earlier this month, United experienced four mishaps, all involving Boeing jets. A United Boeing 737-900ER blew flames from its engine after takeoff from Houston, a Boeing 777 lost a wheel during takeoff from San Francisco, a Boeing 737 Max slipped off a runway in Houston, and a United Boeing 777 trailed hydraulic fluid as it left Sydney.

“Our team is reviewing the details of each case to understand what happened and using those insights to inform our safety training and procedures across all employee groups,” Kirby continued.

The airline is extending pilot training by one day, retooling training for new mechanics, and “dedicating more resources to supplier network management.”

Passengers witnessing a run of negative articles about the airline and its Boeing jets may consider booking elsewhere. In its letter, the airline is attempting to keep consumers from departing. As of the end of last year, 81% of the jets used on United’s mainline operations were manufactured by Boeing, compared to little more than half of the jets in rivals Delta and American Airlines’ mainline fleets.

Aside from the problems on  flights, the most dramatic Boeing incident this year featured an Alaska Airlines Boeing 737 Max 9, which lost a door stopper on a January 5 flight, resulting in a gaping hole in the plane’s side. And last week, a Latam Airlines flight from Sydney, Australia, to Auckland, New Zealand, fell unexpectedly, throwing some passengers to the cabin ceiling.

united

United CEO Tries To Reassure Customers Following Multiple Safety Incidents

Investigators are still investigating the causes of both events, but a preliminary report from the National Transportation Safety Board showed Boeing left the bolts required to keep the door plug in place on the 10-week-old Alaska Air jet. Boeing asserted that an incident in the cockpit rather than a problem with the aircraft’s systems may have caused the Latam accident.

The age of the aircraft in the United incidents suggests that the problem could be with their staff rather than Boeing’s well-documented quality faults. For example, Boeing purchased the jet that lost its panel on a Friday trip in 1998. So, Boeing’s quality difficulties are likely unrelated to that occurrence.

However, Boeing’s issues have impeded United’s operations. Due to the FAA’s production slowdown, it has halted hiring a new class of pilots since it will receive fewer new planes from Boeing this year, as previously promised. In January, the Alaska Air incident grounded its 737 Max 9 jets for three weeks.

united

United CEO Tries To Reassure Customers Following Multiple Safety Incidents

Furthermore, approval of a new generation of Boeing jets, the 737 Max 10, ordered by United, has been delayed due to the company’s quality and safety issues.

Kirby told investors last week that United is considering purchasing more jets from Boeing competitor Airbus. He also stated earlier this year that the Alaska Air incident was the “straw that broke the camel’s back” on United’s plans to receive deliveries of the Max 10 in the near future.’

SOURCE – (CNN)

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Hey YouTube Creators, It’s Time To Start Labeling AI-Generated Content In Your Videos

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YouTube Slowdown: The Culprit Might be Adblock Plus

Beginning Monday, YouTube producers must indicate when realistic-looking videos were created using artificial intelligence as part of the company’s larger attempt to be transparent about content that may otherwise confuse or mislead users.

When a user uploads a video to the site, they are presented with a checklist that questions whether their content causes a real person to say or do something they did not do, modifies footage of a genuine place or event, or presents a realistic-looking scene that did not occur.

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Hey YouTube Creators, It’s Time To Start Labeling AI-Generated Content In Your Videos

The disclosure is intended to help users avoid being deceived by synthetic content amid a flood of new, consumer-facing generative AI tools that make it quick and easy to create captivating text, images, video, and music that are frequently difficult to discern from the real thing. Online safety experts have warned that the development of AI-generated material could confuse and mislead internet users, particularly ahead of elections in the United States and worldwide in 2024.

YouTube creators will be forced to identify when their films contain AI-generated or otherwise modified information that appears realistic so that YouTube can attach a label for viewers. If they fail to do so regularly, they may face sanctions.

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Hey YouTube Creators, It’s Time To Start Labeling AI-Generated Content In Your Videos

The platform indicated that the upgrade would be available in the fall as part of a bigger deployment of updated AI policies.

When a YouTube creator discloses that their video contains AI-produced content, YouTube will add a label in the description to indicate that it contains “altered or synthetic content” and that the “sound or visuals were significantly edited or digitally generated.” Videos about “sensitive” issues, such as politics, will display the label more prominently on the screen.

The firm announced last year that content made with YouTube’s generative AI tools, which were released in September, would also be prominently identified.

YouTube will only require creators to label realistic AI-generated videos that may mislead users into thinking it is real.

youtube

Hey YouTube Creators, It’s Time To Start Labeling AI-Generated Content In Your Videos

Creators will not be required to reveal synthetic or AI-generated content that is manifestly unrealistic or “inconsequential,” such as AI-generated animations, lighting, or colour changes. According to the platform, creators will not be required “to disclose if generative AI was used for productivity, like generating scripts, content ideas, or automatic captions.”

Creators who repeatedly fail to utilize the new label on synthetic content that should be declared may face penalties such as content removal or suspension from YouTube’s Partner Program, which allows them to monetize their content.

source – (CNN)

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Fox News Sued By Family Of Ukrainian Journalist Killed While Covering War Over ‘Reckless And Negligent Conduct’

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Fox News is the target of yet another explosive lawsuit.

On the second anniversary of the attack in Ukraine that killed Fox News photojournalist Pierre Zakrzewski and contractor Oleksandra “Sasha” Kuvshynova, the network was accused Thursday of being responsible for the fatal incident by engaging in “reckless and negligent conduct” that put the crew in danger.

The network was also accused of carrying out “a campaign of material misrepresentations and omissions to hide its own accountability for the disaster and shift blame” to then-security contractor Shane Thomson, who allegedly warned the crew against entering the dangerous zone near Kyiv, where they were killed.

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Fox News Sued By Family Of Ukrainian Journalist Killed While Covering War Over ‘Reckless And Negligent Conduct’

Kuvshynova’s parents and Thomson filed the lawsuit in New York State Court, naming Fox News as a defendant as well as Fox Corporation Chairman Emeritus Rupert Murdoch, Fox News Chief Executive Suzanne Scott, and correspondent Benjamin Hall, who was severely injured but survived the attack.

Scott announced both deaths at the time, claiming that the team’s van was targeted while they were reporting. Anton Gerashchenko, an adviser to Ukraine’s interior minister, blamed Russian forces for artillery bombardment.

However, the lawsuit claims that Thomson and Kuvshynova’s parents’ attorneys conducted a thorough investigation to ascertain what transpired on March 14, 2022, and they found the circumstances that led to the 2022 catastrophe.

Their investigation revealed that the incident’s events were set in motion when the Fox News team ignored advice to avoid the Irpin-Hostomel area near Kyiv. According to the lawsuit, the mayor of Irpin prevented journalists from entering the city, and Thomson, the security contractor, denied the concept of reporting from there.

Disregarding such security warnings would be unusual in a combat zone, and Fox News correspondent Trey Yingst, who was also reporting from the scene at the time, had stated days before the incident that the network’s journalists were following policy. According to the lawsuit, travelling to the location was deemed so risky that the Ukrainian driver working with the Fox News team “refused” to transport them there, forcing the crew to “find a different driver.”

When the crew got in the zone, they met up with a few Ukrainian soldiers who had earlier guided The New York Times reporters into the area. According to the lawsuit, they understood that the truck the soldiers were driving was “not large enough to carry all” of them. According to the lawsuit, the team opted to leave their security consultant behind.

“The absence of the security contractor was vital, as the crew made fatal mistakes,” according to the complaint.

The Fox News crew eventually came to a stop at an abandoned roadblock and were attacked. The claim states that the “car caught fire, and Sasha was burned to ashes inside it, causing her death.” The lawsuit stated that Zakrzewski “managed to escape the car but bled to death on the side of the road from a small puncture wound in his leg.” According to the lawsuit, “the bleeding could easily have been stemmed to save his life if the security contractor trained in battlefield first aid had been present.”

Hall survived the attack and was “later found grievously injured” before being transferred to an emergency medical facility.

Following the incident, the complaint claimed that Fox News attempted to cover up and hide its failures from the public.

According to the lawsuit, Fox News confiscated any electronic equipment that survived the attack and failed to document any evaluation or re-examination of the crew’s assignment. Hall’s description of the attack, as recorded in his HarperCollins book, was “misleading.” According to the lawsuit, Fox News “has attempted to impose non-disclosure and non-disparagement agreements on all surviving family members.”

fox

Fox News Sued By Family Of Ukrainian Journalist Killed While Covering War Over ‘Reckless And Negligent Conduct’

The lawsuit also claimed that following the fatal incident, Fox News charged Thomson with delivering Zakrzewski’s body across the Polish border to his widow. According to the lawsuit, Thomson protested the task but was informed he had to finish it and was then “let go from his employment without explanation.”

According to the lawsuit, the combination of witnessing the deaths of his coworkers, moving his friend’s body, and then losing his job severely traumatized him. “Shane regularly asked Fox for help with the trauma. Fox did not reply, even after Shane tried suicide by hanging.

The lawsuit claimed that Thomson has had difficulty obtaining work because he is “frequently associated with the Fox News disaster of being the security advisor for the crew that was killed in Irpin the day after journalists were banned from the area.” The lawsuit also claimed that Fox News personnel circulated a false narrative that he had a “drinking problem in Kyiv at the time of the fatal incident, insinuating that this was the cause of the disastrous assignment in which Pierre and Sasha were killed.”

fox

Fox News Sued By Family Of Ukrainian Journalist Killed While Covering War Over ‘Reckless And Negligent Conduct’

Kuvshynova’s parents and Thomson seek unspecified punitive damages.

“Sasha Kuvshynova’s final text message — responding to her parents, who were highly alarmed by the dangerousness of the situation unfolding on March 14, with Russian forces closing in on Kyiv — was not to worry,” according to the lawsuit, “because Fox was a professional news organization that knew what it was doing and would not expose her to unnecessary danger.”

SOURCE – (CNN)

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