Business
Everyone Got Duped By Sam Bankman-Fried’s Big Gamble
Sam Bankman-Fried was found guilty of stealing billions of dollars from his Bitcoin exchange FTX customers. It’s a dramatic setback for Silicon Valley’s disheveled wunderkind, who has met celebs such as Gisele Bündchen and Tom Brady.
Bankman-Fried did what he always did on November 7, 2022, when his enterprise began its dizzying, irreversible collapse: he evaluated the odds.
Earlier that day, a rival executive had aired concerns about Bankman-Fried’s crypto exchange’s finances on social media, scaring clients into a multi-billion dollar bank run.
Bankman-Fried conferred with two of his top deputies via online chat. “To be clear, you think the tweet is net bad?” he inquired.
They deliberated about their alternatives. Was it feasible that his opponent would retract his criticism? Could this stop the bleeding? “Fairly unlikely,” wrote Bankman-Fried.
After a guilty verdict, Bankman-Fried risks decades in prison.
It was the kind of calculation Bankman-Fried had been doing for years, the fast computations colleagues said he employed in almost every situation – weighing a break-up, evaluating a dangerous trade.
That strategy worked for a while. Bankman-Fried amassed an estimated $26 billion in personal wealth, multiple magazine covers, and broad political influence as the cryptocurrency’s boy wonder. The flameout was significantly more rapid.
As previously said, the tweet was a flop. In less than five days, billions of dollars poured out of the site. When it was all said and done, more than $8 billion in customer funds had gone missing, and the corporation had gone bankrupt. Five weeks later, prosecutors in Manhattan charged Bankman-Fried, who had already resigned, with wire fraud, securities fraud, commodities fraud, and money laundering.
Two contradicting stories emerged during the four weeks of trial. In one, the erstwhile mogul was a brilliant but clueless genius whose faults as CEO enabled tremendous fraud to take place right under his nose. On the other, with the help of former members of his inner circle, Bankman-Fried stole billions of dollars from customers, betting he’d never be found.
Both accounts show how closely FTX’s fortunes were related to the image of its creator, whose eccentric charisma pulled previous presidents, celebrities, and corporate giants into his sphere and his multibillion-dollar bet.
Bankman-Fried was open about his desire to get wealthy. According to him, he wanted to make all those billions solely to give them away.
After a guilty verdict, Bankman-Fried risks decades in prison.
Bankman-Fried and his younger brother were taught at a young age about utilitarianism, which holds that the most ethical choice is the one that does the most good for the greatest Number of people.
Bankman-Fried attended a seminar by Will MacAskill, a 25-year-old doctorate student at Oxford and the originator of effective altruism, a utilitarian-tinged ideology that uses mathematics to determine how individuals might maximize their philanthropic influence.
Mr. MacAskill advised that to achieve the best, Bankman-Fried should take his enormous brain to profitable Wall Street and contribute most of his pay to worthy organizations.
Bankman-Fried was purchased. In 2014, he applied his degree to Jane Street, a high-frequency trading firm, and reportedly donated around half of his earnings to charitable organizations.
Three years later, Bankman-Fried discovered an industry that may make him wealthy than traditional trading: cryptocurrency.
He launched Alameda Research, a crypto investment firm, at 25 after finding that Bitcoin values fluctuated significantly across countries. Alameda reportedly gained $20 million from arbitrage trading in just three weeks.
In 2019, he established FTX, a Hong Kong-based cryptocurrency exchange for international investors. Like Elizabeth Holmes, another Silicon Valley entrepreneur whose star fell, he got big-name investors to contribute to the company not only money but also credibility.
After a guilty verdict, Bankman-Fried risks decades in prison.
Within months, the daily trading volume on FTX had surpassed $300 million. With a fortune of $22.5 billion, he appeared on the Forbes 400, the magazine’s annual ranking of the wealthiest Americans, in 2021.
Some credit his extraordinary achievement to an exceptionally high-risk tolerance, a willingness to risk severe consequences for a large gain.
“He would be happy to flip a coin if it came up tails and the world was destroyed,” his ex-girlfriend and former CEO of Alameda Research, Caroline Ellison, testified at trial. “As long as if it came up heads the world would be more than twice as good.”
According to internal sources, life at FTX may be likened to a grown-up maths camp, populated by a diverse group of smart misfits and headed by the constantly rumpled Bankman-Fried.
“He was super disorganised, he was always in cargo shorts, he was always sloppy,” a former FTX employee told the BBC. “He would walk around the office in bare feet.”
According to the employee, those at the top were a close-knit group who sometimes unthinkingly listened to Sam. “It could be cult-like.”
Natalie Tien, who oversaw public relations and Bankman-Fried’s schedule at FTX for almost two years, claimed he was charismatic to the point where the company seemed “toxic” at times.
“We just trusted him 100%,” she told the BBC. “To a degree that we kind of worried [about] speaking up for ourselves.”
The company’s employees were not the only ones who were captivated.
Appearing in shorts and ill-fitting T-shirts with Bill Clinton, Tony Blair, Gisele Bundchen, and Katy Perry, he became a type of spokesperson for the crypto business as a whole just as it began to reach new heights.
Part of the mystery stemmed from the fact that Bankman-Fried seemed to forego the amount of luxury that his money could have bought. During the trial, his defense attorneys said he did not own a yacht. He drove an old Toyota Corolla. Meanwhile, he spoke before Congress, calling for greater regulation of the cryptocurrency business, distinguishing himself from many of his contemporaries.
“In a weird way, he seemed kind of like the grown-up in the crypto world,” said Zeke Faux, an investigative journalist and the author of Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall.
And then there was the proclaimed final goal: Bankman-Fried would give it all away.
“It was a great story, everybody loved it,” Mr Faux remarked. “People loved it in Congress, the VCs loved it, the bankers loved it.”
“The problem with his story is that it was not true,” he told me.
Sequoia Financing, a venture financing firm, published a breathless profile on Bankman-Fried in their magazine in September 2022. FTX was worth $32 billion at the time.
Author Adam Fisher detailed Bankman-Fried’s efforts to maximize his fortune in order to maximize his impact on the world in the now-deleted essay FTX’s SBF Has a Saviour Complex, and Maybe You Should Too. Fisher wrote that it was risky. “But the maths couldn’t be clearer.”
“To do the most good for the world,” he said, “SBF needed to find a path on which he’d be a coin toss away from going totally bust.”
A month and a half later, industry news site CoinDesk released a shocking story claiming that Alameda had invested more than half of its $15 billion portfolio in FTT, the crypto coin issued by FTX. The announcement sparked concerns about the true worth of Alameda’s interests, as well as the apparent conflict of interest between Alameda and FTX, who are separate entities.
Then, on November 6, industry rival Binance CEO Changpeng Zhao, CZ, said that he would liquidate his own substantial FTT holdings.
On November 11, FTX imploded, taking the story of cryptocurrency’s prodigy.
The fall was not unexpected for some watchers of the crypto boom and Bankman-Fried’s spectacular climb to prominence.
SOURCE – (BBC)
LONDON —Shein, an online fast-fashion retailer, has been placed on the European Union’s list of major platforms that require heightened examination. This will subject the company to the bloc’s most stringent digital restrictions.
The European Union’s Executive Commission has officially categorized Shein as a “very large online platform” by the Digital Services Act, a comprehensive set of regulations aimed at improving the safety of online platforms and protecting internet users.
AP – VOR News Image
Online Retailer Shein Is Latest To Face Strict European Union Digital Regulations
Shein is an affordable e-commerce company that originated in China but is currently headquartered in Singapore. Its primary means of reaching clients is through its application. The corporation committed to actively collaborating to establish a secure and lawful environment for our online community.
Leonard Lin, Shein’s worldwide head of public relations, agreed with the Commission’s goal of providing European Union consumers with a secure online shopping experience. He affirmed Shein’s dedication to contributing to this objective. “We also have a shared dedication to the fundamental values of openness and responsibility that form the foundation of the DSA.”
Shein has grown rapidly in the Western market by providing affordable clothing and household products, focusing on younger women. This has been achieved through collaborations with online influencers and celebrities on social media platforms.
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Online Retailer Shein Is Latest To Face Strict European Union Digital Regulations
With its user base exceeding 45 million in Europe, Shein is obligated to comply with the most rigorous regulations by August. The company implements efforts to safeguard online users and addresses and reduces any potential “systemic risks” associated with its services, such as restricting the sale of unlawful or counterfeit items.
According to the Commission, Shein is required to modify its user interfaces and recommendation algorithms to mitigate any potential dangers to customers’ safety and well-being. Additionally, Shein must submit annual risk assessment reports that evaluate the potential harm to consumers, focusing on youngsters.
reuters – VOR News Image
Online Retailer Shein Is Latest To Face Strict European Union Digital Regulations
The European Union has already included 22 prominent technology companies, such as Facebook, TikTok, YouTube, Instagram, Amazon, and Google Search, on its roster of major online services that require the highest level of oversight since the implementation of the Digital Services Act (DSA) last year.
Other online services operating in the European Union are not exempt and must adhere to the law’s main criteria. Infractions can result in penalties of up to 6% of a corporation’s yearly global income.
SOURCE – (AP)
The location is Cape Canaveral, Florida. On Thursday, the two NASA astronauts designated for Boeing’s inaugural manned space mission arrived at the launch site approximately one week before their planned departure.
Butch Wilmore and Suni Williams have been selected as test pilots for Boeing’s Starliner capsule, marking its inaugural crewed mission following significant delays. On Thursday, they traveled by air from Houston to Kennedy Space Center.
AP – VOR News Image
NASA Astronauts Arrive For Boeing’s First Human Spaceflight
Scheduled for launch on May 6 using an Atlas rocket, the Starliner spacecraft will go to the International Space Station for a week-long test mission. Boeing is endeavoring to close the gap with SpaceX, which has been conducting manned space missions for NASA since 2020.
Boeing’s two earlier Starliner test flights were unmanned. The initial launch in 2019 was unsuccessful in reaching the space station due to software malfunctions and other technical issues. Boeing replicated the demonstration in 2022. In more recent times, the capsule encountered problems with its parachutes and had to address the issue of flammable tape that needed to be eliminated.
Wilmore emphasized that this is a test flight intended to uncover any anomalies.
AP – VOR News Image
NASA Astronauts Arrive For Boeing’s First Human Spaceflight
Do we anticipate flawless execution? “This is the inaugural manned voyage of the spacecraft,” he informed the press. “I am confident that we will discover information.” This is the reason why we engage in this activity.
NASA enlisted the services of SpaceX and Boeing ten years ago, allocating billions of dollars to facilitate the transportation of personnel to and from the space station. Despite the space station’s planned closure by 2030, the space agency remains enthusiastic about procuring capsules from two rival businesses to transport its astronauts.
“That is of utmost importance,” Wilmore remarked.
AP – VOR News Image
NASA Astronauts Arrive For Boeing’s First Human Spaceflight
Wilmore and Williams are set to become the inaugural astronauts to embark aboard an Atlas rocket since NASA’s Project Mercury in the early 1960s.
SOURCE – (AP)
Business
The TikTok Law Kicks Off A New Showdown Between Beijing And Washington. What’s Coming Next?
WASHINGTON – TikTok is preparing to engage in a legal battle against a U.S. legislation that would compel the social media platform to sever its connections with its China-based parent company. Chinese authorities likely support this action, as the intense rivalry between the United States and China jeopardizes the future of a highly popular online platform for young Americans to connect.
Beijing has indicated that TikTok should resist what it perceives as a “robbers” move by U.S. politicians who aim to seize all the valuable assets possessed by others. If a judicial challenge is unsuccessful, experts believe that Chinese authorities are unlikely to permit a sale, as this may be interpreted as yielding to Washington.
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The TikTok Law Kicks Off A New Showdown Between Beijing And Washington. What’s Coming Next?
Alex Capri, a senior lecturer at the National University of Singapore and research fellow at Hinrich Foundation, suggests that Beijing is concerned about the negative implications that the U.S. action against the popular short-form video platform could have, as it may establish an undesirable precedent. “If Beijing surrenders to the United States, what will be the ultimate outcome?”
Parent firm ByteDance issued its first formal comment on the new rule in a post on Toutiao, a Chinese news app owned by the company. The statement explicitly mentioned that ByteDance has no intention of selling TikTok. In response to media reports, the firm based in Beijing addressed the speculation around exploring potential possibilities for selling TikTok’s U.S. business.
The legislation that U.S. President Joe Biden signed this week may allow Washington to extend its reach to target other China-related apps, such as the well-known e-commerce platform Temu, according to Hu Xijin, a former editor-in-chief for the party-run newspaper Global Times. Furthermore, it could encourage U.S. allies to take similar actions.
According to Hu, a political commentator, TikTok, with its 170 million American users, should display more courage and determination by refusing to give up and fighting until the very end.
TikTok has pledged to contest the recently enacted U.S. legislation that mandates ByteDance to sell off its ownership interests within a one-year timeframe in order to prevent a ban. The corporation has described the regulation as a violation of the freedom of expression of its users, the majority of whom utilize the program for amusement purposes.
The company expressed confidence in its position, stating that it firmly thinks the facts and the law support its case, and they are confident in its ultimate victory.
The dispute around TikTok has escalated the tensions between the United States and China, as both countries have pledged to safeguard their economic and national security concerns. U.S. legislators are apprehensive about the Chinese ownership of the application, as it may potentially enable Beijing to exercise undesirable influence on the United States, particularly on the impressionable minds of young individuals.
Washington has achieved a series of triumphs in reducing the influence of Chinese corporations through bans, export controls, and forced divestitures. This has led to protests from Beijing, who believe that the U.S. is intentionally trying to suppress China’s economic growth through coercion.
AP – VOR News Image
The TikTok Law Kicks Off A New Showdown Between Beijing And Washington. What’s Coming Next?
The United States has previously compelled Chinese corporations to sell off their assets. For instance, in 2020, Beijing Kunlun, a Chinese mobile video game company, agreed to divest itself of the gay dating app Grindr following a directive from the federal government. However, TikTok, which was developed by a Chinese corporation exclusively for the international market, serves as a prominent example of China’s technological prowess on a worldwide scale. Beijing is determined not to relinquish control over this influential platform.
Gabriel Wildau, managing director of Teneo, a consultancy and advisory firm based in New York, stated that national dignity is at risk and may be prioritized over the financial interests of ByteDance investors, especially global investors with a 60% stake in the company.
The corporation is anticipated to mount a legal battle that will heavily rely on First Amendment considerations and has the potential to be protracted for several years. Analysts assert that Beijing is relying on a favorable legal outcome.
The course of action to be taken if TikTok fails to succeed is currently under discussion with the Chinese authorities, according to Dominic Chiu, an analyst with Eurasia Group. Chiu stated that President Xi Jinping, who has the authority to approve or disallow the transaction, has likely yet to make the definitive choice.
Fortunately for Xi, Beijing does not face any immediate pressure to decide, according to Sun Yun, the director of the China program at the Stimson Center in Washington. “There is a possibility for numerous alterations,” she stated.
If lawmakers’ desire for a sale of TikTok is fulfilled, the procedure is expected to be complicated for the company. TikTok would need to separate its activities in the United States from all other aspects of its business.
Firstly, the cost of acquiring TikTok’s U.S. operations, although undisclosed, is anticipated to be substantial enough to significantly restrict the number of potential investors and companies capable of affording it. Several investors, including former Treasury Secretary Steve Mnuchin, have already positioned themselves as potential purchasers of a U.S. iteration of TikTok. According to market tracker Pitchbook, ByteDance, a privately held company, has a valuation of $220 billion.
There is now a lack of clarity on the fate of the TikTok algorithm, which is the secret formula responsible for delivering personalized short videos to users depending on their preferences. This algorithm has played a significant role in establishing TikTok as a dominant force in popular culture.
ByteDance would be prohibited from having control over the algorithm of a U.S. subsidiary of TikTok. According to many experts, Chinese authorities are likely to prohibit the sale of the technology that appears in people’s TikTok feeds, based on the amended export regulations of 2020. After the federal courts blocked former President Donald Trump’s attempt to outlaw TikTok through an executive order, this revision took place.
AP- VOR News Image
The TikTok Law Kicks Off A New Showdown Between Beijing And Washington. What’s Coming Next?
According to certain individuals, including Mnuchin, it is necessary to reconstruct TikTok in the United States by employing novel technology. However, it is uncertain how this will manifest or how effectively it will replicate the kind of video suggestions that viewers have become accustomed to.
According to Robin Burke, a professor of information science at the University of Colorado Boulder, certain elements of the algorithm might potentially be duplicated by individuals within the company. However, he also observed that TikTok has certain areas where it outperforms its competition, making it difficult to replicate.
“TikTok possesses extensive experience and a wealth of data,” Burke stated. “I believe it is improbable for a U.S. company, without inheriting the technology from its parent company, to construct something of equal caliber.” Definitely not immediately.
SOURCE – (AP)
Online Retailer Shein Is Latest To Face Strict European Union Digital Regulations
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