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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

Geoff Thomas is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills and deep understanding of SEO, he consistently delivers high-quality, engaging content that resonates with readers. Thomas' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.

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Ford Recalls Maverick Pickups In US Because Tail Lights Can Go Dark, Increasing The Risk Of A Crash

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Dearborn, Michigan – Ford recalls almost 243,000 Maverick compact pickup trucks in the United States because their taillights may not glow.

According to the firm, a computer can mistakenly identify too much electricity in one or both tail lamps, forcing them to remain dark while the vehicles are driving. This can increase the likelihood of a crash.

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Ford Recalls Maverick Pickups In US Because Tail Lights Can Go Dark, Increasing The Risk Of A Crash

The recall applies to certain pickups from the 2022 to 2024 model years.

Ford said it has received no reports of crashes or injuries due to the problem. Headlights, turn signals, and brake lights will continue to work.

According to documents uploaded Wednesday on the National Highway Traffic Safety Administration website, dealers will update software to resolve the issue at no cost to owners. Notification letters will be mailed beginning May 20.

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AP – VOR News Image

Ford Recalls Maverick Pickups In US Because Tail Lights Can Go Dark, Increasing The Risk Of A Crash

Ford trucks are renowned for their rugged durability and reliable performance. They’re designed to tackle the toughest jobs, whether hauling heavy loads or navigating challenging terrain.

With a wide range of powerful engines and robust chassis, Ford’s truck lineup offers the muscle and capability needed for demanding tasks.

These trucks boast tough body-on-frame construction and high-strength steel frames, ensuring they can withstand the rigors of hard work. From the iconic F-150 to the heavy-duty Super Duty series, Ford’s trucks deliver impressive towing and payload capacities, making them ideal for contractors, ranchers, and anyone with serious hauling needs.

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The Globe – VOR News Image

Ford Recalls Maverick Pickups In US Because Tail Lights Can Go Dark, Increasing The Risk Of A Crash

Inside, Ford trucks prioritize functionality and comfort. The spacious cabins offer ample room for crew and gear, while user-friendly tech and convenience features enhance productivity. With their legendary Ford Tough attitude, these trucks are ready to do the job right, day in and day out.

SOURCE – (AP)

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What Marijuana Reclassification Means For The United States

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Washington — The United States Narcotic Enforcement Administration is considering reclassifying marijuana as a less harmful narcotic. The Justice Department’s proposal would recognize cannabis’ medical purposes but not legalize it for recreational use.

The proposal would shift marijuana from the “Schedule I” category to the less stringent “Schedule III.”

So, what does this mean, and what are the implications?

Technically, nothing has happened. The White House Office of Management and Budget must first examine the idea, followed by a public comment period and an administrative judge’s assessment, which could be a lengthy process.

Nonetheless, the change is considered “paradigm-shifting, and it’s very exciting,” Vince Sliwoski, a Portland, Oregon-based cannabis and psychedelics attorney who runs well-known legal blogs on those topics, told The Associated Press when the federal Health and Human Services Department recommended it.

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What Marijuana Reclassification Means For The United States

“I can’t emphasize enough how big of news it is,” he said.

It came after President Joe Biden last year requested that HHS and the attorney general, who controls the DEA, investigate how marijuana was classified. Schedule I legalized it alongside heroin, LSD, quaaludes, and ecstasy, among other substances.

Biden, a Democrat, is in favor of legalizing medical marijuana “where appropriate, consistent with medical and scientific evidence,” White House press secretary Karine Jean-Pierre said on Thursday. “That is why it is important for this independent review to go through.”

No. Schedule III medicines, such as ketamine, anabolic steroids, and several acetaminophen-codeine combos, are still considered controlled narcotics.

marijuana

AP – VOR News Image

What Marijuana Reclassification Means For The United States

They are subject to a variety of restrictions that allow for some medical usage as well as federal criminal punishment of anyone who traffics in the medications illegally.

Medical marijuana programs, which are already regulated in 38 states, and legal recreational cannabis markets in 23 states are expected to remain unchanged, but they are unlikely to meet federal production, record-keeping, prescribing, and other Schedule III drug criteria.

There haven’t been many federal prosecutions for simply possessing marijuana in recent years, even with marijuana’s existing Schedule I designation, but reclassification would have no immediate impact on those currently in the criminal justice system.

“Put simply, this shift from Schedule I to Schedule III is not keeping people out of jail,” said David Culver, senior vice president of public relations of the United States Cannabis Council.

However, rescheduling would have an impact, especially on research and marijuana business taxes.

Because marijuana is classified as a Schedule I substance, it has been extremely difficult to undertake permitted clinical trials involving its administration. This has produced a Catch-22 situation: there is a need for further study, but there are hurdles to doing so. (Sometimes, scientists rely on people’s claims of marijuana use.)

Schedule III medications are easier to study, although reclassification would take time to remove all hurdles to research.

“It’s going to be really confusing for a long time,” says Ziva Cooper, director of the University of California, Los Angeles Center for Cannabis and Cannabinoids. “When the dust has settled, I don’t know how many years from now, research will be easier.”

Among the unknowns include whether academics will be permitted to study marijuana from state-licensed shops and how the federal Food and Drug Administration would regulate this.

Some researchers remain optimistic.

“Reducing the schedule to schedule 3 will allow us to conduct research with human subjects using cannabis,” said Susan Ferguson, director of the University of Washington’s Addictions, Drug, and Alcohol Institute in Seattle.

Firms involved in “trafficking” marijuana or any other Schedule I or II substance are not allowed to deduct rent, payroll, or other expenses that other firms can. (Yes, despite the federal government’s prohibition on marijuana, at least some cannabis firms, particularly those permitted by states, pay federal taxes.) According to industry associations, tax rates frequently reach 70% or more.

The deduction regulation does not apply to Schedule III medications, so the proposed amendment would significantly reduce cannabis companies’ taxes.

They claim it would treat them like other industries and let them compete with unlawful competitors that frustrate licensees and officials in locations like New York.

“You’re going to make these state-legal programs stronger,” says Adam Goers, an executive at Columbia Care, a medicinal and recreational cannabis provider. He co-chairs a group of corporate and other stakeholders advocating for rescheduling.

According to Beau Kilmer, co-director of the RAND Drug Policy Center, deducting those expenditures could result in greater cannabis marketing and advertising.

Rescheduling would have no direct impact on another marijuana business issue: limited access to banks, particularly for loans, due to federally regulated institutions’ concerns about the drug’s legal status. Instead, the sector has focused on the SAFE Banking Act. It has frequently passed the House but is stuck in the Senate.

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AP – VOR News Image

What Marijuana Reclassification Means For The United States

Yes, there are, notably the national anti-legalization organization Smart Approaches to Marijuana. President Kevin Sabet, a former Obama administration drug policy official, said the HHS suggestion “flies in the face of science, reeks of politics” and gives a disappointing nod to an industry “desperately looking for legitimacy.”

Some legalization supporters argue that rescheduling marijuana is too modest. They want to keep the focus on totally removing it from the controlled substances list, which does not include alcohol or tobacco (although they are regulated).

According to Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws, simply reclassifying marijuana would be “perpetuating the existing divide between state and federal marijuana policies.” According to Kaliko Castille, President of the Minority Cannabis Business Association, rescheduling simply “re-brands prohibition,” rather than giving state licensees the green light and bringing an end to decades of arrests that disproportionately affected people of color.

“Schedule III is going to leave it in this kind of amorphous, mucky middle where people are not going to understand the danger of it still being federally illegal,” the senator stated.

Peltz reported from New York. Associated Press writers Colleen Long in Washington and Carla K. Johnson in Seattle contributed to this story.

SOURCE – (AP)

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Judge Holds Trump In Contempt, Fines Him $9,000 And Raises Threat Of Jail In Hush Money Trial

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New York: On Tuesday, Donald Trump was found in contempt of court and was imposed a fine of $9,000 for persistently disregarding a gag order that prohibited him from publicly discussing anybody involved in his New York hush money case, including witnesses and jurors. The judge cautioned that he may face imprisonment if he repeats the offense.

New York Judge Juan M. Merchan determined that there were nine infractions, although prosecutors had initially claimed there were ten. Trump gazed downward at the table before him while the judge pronounced the ruling, displaying a faint frown.

The verdict served as a strong criticism of the Republican former president’s claim that he was using his freedom of expression, and as a reminder that he is a defendant in a criminal case and must adhere to the strict procedures of a trial. The judge’s implicit warning to incarcerate a former president indicated that Trump’s already tenuous legal position could deteriorate further based on his conduct throughout the trial.

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Judge Holds Trump In Contempt, Fines Him $9,000 And Raises Threat Of Jail In Hush Money Trial

Merchan expressed a strong awareness and defense of Trump’s First Amendment rights, especially considering his campaign for the presidency.

“Preserving the defendant’s lawful freedom of speech is of utmost significance. It is imperative that he is allowed to actively engage in campaigning for the office he aspires to, and that he has the opportunity to counter and protect himself from political assaults,” expressed Merchan.

However, he cautioned that the court would not tolerate deliberate breaches of its legal directives and that, if deemed necessary and suitable given the circumstances, it would impose a punitive measure involving imprisonment.

By making that statement, the court brought the possibility of Trump being the first former president of the United States to be imprisoned closer.

Trump is accustomed to having uninterrupted access to his social media platform to criticize opponents and express his thoughts. Following his ban from Twitter in the aftermath of the January 6, 2021, Capitol incident, Trump established his platform to ensure that his messages would not be subject to blocking or restrictions.

The Trump campaign was already soliciting donations based on the breaches. He has consistently attempted to disassociate himself from problematic comments that he has shared with his large number of followers by claiming that they are only “retweets.”

However, he does possess prior knowledge and familiarity with gag orders, as they were previously enforced during his civil fraud prosecution. Upon being discovered to have breached those directives, he remitted fines exceeding $15,000.

The ruling was issued on Tuesday, marking the beginning of the second week of testimony in the landmark case. Manhattan prosecutors contend that Trump and his allies engaged in an illicit plot to manipulate the 2016 presidential campaign by buying and subsequently suppressing unfavorable reports. He has entered a plea of not guilty.

Trump was instructed to remit the penalty by the end of Friday’s working day. Merchan also decreed that he must delete seven objectionable posts from his Truth Social account and two from his campaign website by 2:15 p.m. EDT on Tuesday, as stated by Merchan. The judge is considering more purported breaches of Trump’s gag order and will listen to arguments on Thursday.

Out of the 10 posts, the one that Merchan had authority over and was not considered a violation was made on April 10. This particular post referred to witnesses Michael Cohen and Stormy Daniels as “sleaze bags.” Merchan expressed that Trump’s claim of responding to previous posts by Cohen gives him enough reason to hesitate and question whether the post was a violation.

Merchan determined that Trump’s statement, in which he quoted Fox News commentator Jesse Watters’ assertion that liberal activists were dishonestly joining the jury, clearly breached the gag order. Merchan observed that the statements in Trump’s post on April 17 in quotation marks inaccurately represented what Watters truly said.

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Judge Holds Trump In Contempt, Fines Him $9,000 And Raises Threat Of Jail In Hush Money Trial

“Therefore, according to the court’s perspective, this post represents the defendant’s own words,” Merchan wrote.

Merchan warned against the misuse of the gag order, emphasizing that it should not be employed as a weapon rather than a defense by possible witnesses. He further stated that if individuals, such as Cohen, who are safeguarded by the order, persist in attacking Trump, it becomes evident that they no longer require the protection provided by the gag order. Cohen has stated his intention to abstain from making any remarks about Trump until he gives testimony during the trial.

Testimony continued on Tuesday with Gary Farro, a banker who assisted Cohen, Trump’s previous lawyer, in establishing accounts, including one that Cohen utilized to purchase the confidentiality of adult entertainer Stormy Daniels. She claimed to have had a sexual encounter with Trump in 2006, an allegation that he denies. Farro testified on Friday, recounting how Cohen requested the establishment of two accounts, but one was never officially opened.

Shortly after establishing a second account under Essential Consultants LLC in October 2016, Michael Cohen transferred $130,000 from his home equity loan to this account. Within the same day, he wired the exact amount of $130,000 to Keith Davidson, who was, as evidenced by the paperwork, an attorney representing Daniels at the time. The 2016 presidential election took place on November 8.

Farro stated that Cohen suggested the transaction was connected to a real estate deal rather than being associated with a political candidate, an adult film star, or the acquisition of a possible media story.

“That could be perceived as a reputational risk,” he stated.

Thus far, the jurors have been presented with testimony from two additional witnesses. Rhona Graff, Trump’s former executive assistant, remembered seeing Daniels at Trump’s office suite in Trump Tower and assumed she was a prospective candidate for one of Trump’s “Apprentice” shows.

Former National Enquirer publisher David Pecker disclosed his agreement to act as the Trump campaign’s informant, responsible for suppressing unfavorable rumors and allegations against Trump and women. Pecker detailed his payment of $180,000 to acquire and withhold reports from a doorman and former Playboy model Karen McDougal, but he did not participate in the payment to Daniels.

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AP – VOR News Image

Judge Holds Trump In Contempt, Fines Him $9,000 And Raises Threat Of Jail In Hush Money Trial

Trump asserts that all of the stories bought were untrue. The defense lawyers employed cross-examination to imply that Trump’s true intention was to safeguard his reputation and his family rather than to manipulate the presidential election result.

Trump is facing 34 criminal charges for manipulating corporate documents about the hush money payments. He has refuted any misconduct and entered a plea of not guilty.

The comprehensive evidence regarding corporate transactions and bank accounts prepares the groundwork for Cohen’s testimony. Cohen, who was incarcerated following his guilty plea in 2018 for campaign finance violations and other offenses, will provide his story. The timing of his testimony remains uncertain.

The trial, the first of Trump’s four criminal matters to be presented to a jury, is anticipated to continue for at least another month. As Trump spends more time in court, his frustration intensifies as the November election draws nearer.

Trump has been engaging in campaign activities during his free time. However, he is obligated to attend court sessions four days a week. On Tuesday, he again expressed his disapproval of the matter outside the courtroom.

“This is a case that should never have been initiated,” he stated.

SOURCE – (AP)

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