NEW YORK/WILMINGTON, Del., Jan 11 (Reuters) – Crypto exchange FTX has recovered more than $5 billion in liquid assets but the extent of customer losses in the collapse of the company founded by Sam Bankman-Fried is still unknown, an attorney for the company told a U.S. bankruptcy court on Wednesday.
The company, which was valued a year ago at $32 billion, filed for bankruptcy protection in November and U.S. prosecutors accused Bankman-Fried of orchestrating an “epic” fraud that may have cost investors, customers and lenders billions of dollars.
“We have located over $5 billion of cash, liquid cryptocurrency and liquid investment securities,” Andy Dietderich, an attorney for FTX, told U.S. Bankruptcy Judge John Dorsey in Delaware at the start of Wednesday’s hearing.
Dietderich also said the company plans to sell nonstrategic investments that had a book value of $4.6 billion.
However, Dietderich said the legal team is still working to create accurate internal records and the actual customer shortfall remains unknown. The U.S. Commodities Futures Trading Commission has estimated missing customer funds at more than $8 billion.
Dietderich said the $5 billion recovered does not include assets seized by the Securities Commission of the Bahamas, where the company was headquartered and Bankman-Fried resided.
FTX’s attorney estimated the seized assets were worth as little as $170 million while Bahamian authorities put the figure as high as $3.5 billion. The seized assets are largely comprised of FTX’s proprietary and illiquid FTT token, which is highly volatile in price, Dietderich said.
ASSET SALES
FTX could raise additional funds in the coming months for the benefit of customers after Dorsey approved FTX’s request for procedures to explore sales of affiliates at Wednesday’s hearing.
The affiliates — LedgerX, Embed, FTX Japan and FTX Europe — are relatively independent from the broader FTX group, and each has its own segregated customer accounts and separate management teams, according to FTX court filings.
The crypto exchange has said it is not committed to selling any of the companies, but that it received dozens of unsolicited offers and plans to hold auctions beginning next month.
The U.S. Trustee, a government bankruptcy watchdog, opposed selling the affiliates before the extent of the alleged FTX fraud is fully investigated.
In part to preserve the value of its businesses, FTX also sought Dorsey’s approval to keep secret 9 million FTX customer names. The company has said that privacy is needed to prevent rivals from poaching users but also to prevent identity theft and to comply with privacy laws.
Dorsey allowed the names to remain under wraps for only three months, not six months as FTX wanted.
“The difficulty here is that I don’t know who’s a customer and who’s not,” Dorsey said. He set a hearing for Jan. 20 to discuss how FTX will distinguish between customers and said he wants FTX to return in three months to give more explanation on the risk of identity theft if customer names are made public.
Media companies and the U.S. Trustee had argued that U.S. bankruptcy law requires disclosure of creditor details to ensure transparency and fairness.
In addition to selling affiliates, a company lawyer on Wednesday said FTX will end its 19-year $135 million sponsorship deal with the NBA’s Miami Heat and a 7-year about $89 million deal with the League of Legends video game.
FTX’s founder, Bankman-Fried, 30, was indicted on two counts of wire fraud and six conspiracy counts last month in Manhattan federal court for allegedly stealing customer deposits to pay debts from his hedge fund, Alameda Research, and lying to equity investors about FTX’s financial condition. He has pleaded not guilty.
Bankman-Fried has acknowledged shortcomings in FTX’s risk management practices, but the one-time billionaire has said he does not believe he is criminally liable.
In addition to customer funds lost, the collapse of the company has also likely wiped out equity investors.
Some of those investors were disclosed in a Monday court filing, including American football star Tom Brady, Brady’s former wife supermodel Gisele Bündchen and New England Patriots owner Robert Kraft.
Reporting by Dietrich Knauth in New York and Tom Hals in Wilmington, Del.; Editing by Alexia Garamfalvi, Mark Porter, Matthew Lewis and Anna Driver
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Thomson Reuters
Award-winning reporter with more than two decades of experience in international news, focusing on high-stakes legal battles over everything from government policy to corporate dealmaking.
Jan 7 (Reuters) – A U.S. Trustee filed an objection on Saturday to plans by bankrupt crypto exchange FTX to sell its digital currency futures and clearinghouse LedgerX, as well as units in Japan and Europe, according to a court filing.
FTX filed for bankruptcy protection in November and said last month it planned to sell its LedgerX, Embed, FTX Japan and FTX Europe businesses. On Tuesday, FTX founder Sam Bankman-Fried pleaded not guilty to criminal charges that he cheated investors and caused billions of dollars in losses, in what prosecutors have called an “epic” fraud.
The filing by U.S. Trustee Andrew Vara called for an independent investigation before the sale of the units, arguing that the companies may have information related to FTX’s bankruptcy.
“The sale of potentially valuable causes of action against the Debtors’ directors, officers and employees, or any other person or entity, should not be permitted until there has been a full and independent investigation into all persons and entities that may have been involved in any malfeasance, negligence or other actionable conduct,” the filing said.
FTX said in a court filing last month that the companies it planned to sell are relatively independent from the broader FTX group, and that each has its own segregated customer accounts and separate management teams.
Reporting by Anirudh Saligrama in Bengaluru
Editing by Matthew Lewis
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Dec 20 (Reuters) – Microsoft Corp (MSFT.O) was hit on Tuesday in U.S. court with a private consumer lawsuit claiming the technology company’s $69 billion bid to purchase “Call of Duty” maker Activision Blizzard Inc (ATVI.O) will unlawfully squelch competition in the video game industry.
The complaint filed in federal court in California comes about two weeks after the U.S. Federal Trade Commission filed a case with an administrative law judge seeking to stop Microsoft, owner of the Xbox console, from completing the largest-ever acquisition in the video-gaming market.
The private lawsuit also seeks an order blocking Microsoft from acquiring Activision. It was filed on behalf of 10 video game players in California, New Mexico and New Jersey.
The proposed acquisition would give Microsoft “far-outsized market power in the video game industry,” the complaint alleged, “with the ability to foreclose rivals, limit output, reduce consumer choice, raise prices, and further inhibit competition.”
Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard logo in this illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration
A Microsoft representative on Tuesday defended the deal, saying in a statement that it “will expand competition and create more opportunities for gamers and game developers.” After the FTC sued, Microsoft President Brad Smith said, “We have complete confidence in our case and welcome the opportunity to present our case in court.”
In a statement, plaintiffs’ attorney Joseph Saveri in San Francisco said, “As the video game industry continues to grow and evolve, it’s critical that we protect the market from monopolistic mergers that will harm consumers in the long run.”
Private plaintiffs can pursue antitrust claims in U.S. court, even while a related U.S. agency case is pending. The takeover, announced in January, also faces antitrust scrutiny in the European Union.
The FTC previously said it sued to stop “Microsoft from gaining control over a leading independent game studio.” The agency said the merger would harm competition among rival gaming platforms from Nintendo Co Ltd (7974.T) and Sony Group Corp (6758.T).
Reporting by Mike Scarcella; editing by Leigh Jones, Cynthia Osterman and Jonathan Oatis
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Dec 16 (Reuters) – Elon Musk’s team has reached out to investors to raise new funds for his struggling social media platform Twitter, one of the investors said.
Ross Gerber, president and CEO at Gerber Kawasaki Wealth & Investment Management, told Reuters that he was contacted by a Musk representative about offering more shares at the same price, $54.20, that Musk paid to take the company private in October.
Jared Birchall, the managing director of Elon Musk’s family office reached out to potential investors this week, news platform Semafor reported on Friday, citing two people familiar with the fundraising effort.
Twitter and Musk did not respond to Reuters requests for comments.
Twitter has seen advertisers flee amid worries about Musk’s approach to policing tweets, hitting revenues and its ability to pay interest on the $13 billion debt that Musk took on to buy the social media company.
Musk sold another $3.6 billion worth of shares in Tesla earlier this week, making it nearly $40 billion worth of shares in the electric-vehicle company sold this year.
Tesla shares on Friday posted their worst weekly loss since March 2020, with investors increasingly concerned about Musk being distracted by Twitter and the slowing global economy.
Reporting by Hyunjoo Jin in San Francisco, Priyamvada C in Bengaluru; Editing by Shounak Dasgupta and Michael Perry
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SAN JOSE, Calif./ WASHINGTON, Dec 8 (Reuters) – The Biden administration on Thursday accused Meta Platforms Inc (META.O) of trying to buy its way to dominance in the metaverse, kicking off a high-profile trial to try to prevent the Facebook parent from buying virtual reality app developer Within Inc.
The FTC sued in July to stop the deal, saying Meta’s acquisition of Within would “tend to create a monopoly” in the market for virtual reality (VR) fitness apps. It has asked the judge to order a preliminary injunction that would halt the proposed transaction.
In an opening statement, FTC lawyer Abby Dennis said the Within acquisition was part of Meta’s bid to acquire new and more diverse virtual reality users, including customers of Within’s popular subscription-based virtual reality workout app Supernatural.
That would complement Meta’s existing virtual reality users, who tend to skew young and male, and be more focused on gaming, Dennis added.
“Meta could have chosen to use all its vast resources and capabilities to build its own dedicated VR fitness app, and it was planning on doing that before it acquired Within,” Dennis said, pointing to a plan from early 2021.
The plan, Operation Twinkie, involved expanding a rhythm game app called Beat Saber that the company acquired in 2019 into the fitness space via a proposed partnership with digital fitness company Peloton (PTON.O), Dennis said.
She cited an email from Chief Executive Mark Zuckerberg saying he was “bullish” on fitness and calling the proposed partnership with Peloton “awesome.”
Lawyers for Meta and Within argued that the FTC did a poor job of defining the relevant market and said the companies compete with a range of fitness content, not just VR-dedicated fitness apps.
Meta’s lawyers also disputed that plans for a Meta-owned VR fitness app had proceeded beyond low-level “brainstorming” and argued that the FTC underestimated the competition in the market it had defined, citing the potential for fellow tech giants Apple Inc (AAPL.O), Alphabet Inc’s (GOOGL.O) Google and Bytedance to join the fray.
Rade Stojsavljevic, who manages Meta’s in-house VR app developer studios, testified that he had proposed the tie-up between Beat Saber and Peloton but did not develop a formal plan and never discussed the idea with either party.
Internal documents from early 2021 that were displayed in court showed Stojsavljevic proposing acquisitions of VR developers before they could be “cannibalized” by competitors and discussing pressure from Zuckerberg to “get aggressive” in response to reports of a prospective Apple headset.
The trial, scheduled through Dec. 20, will serve as a test of the FTC’s bid to head off what it sees as a repeat of the company acquiring small upcoming would-be rivals and effectively buying its way to dominance, this time in the nascent virtual and augmented reality markets.
The FTC is separately trying to force Meta to unwind two previous acquisitions, Instagram and WhatsApp, in a lawsuit filed in 2020. Both were in relatively new markets at the time the companies were purchased.
PRESSURE TO PRODUCE HIT APPS
A government victory could crimp Meta’s ability to maneuver in an area of emerging technology – virtual and augmented reality – that Zuckerberg has identified as the “next generation of computing.”
If blocked from making acquisitions in the space, Meta would face greater pressure to produce its own hit apps and would give up the gains – in terms of revenue, talent, data and control – associated with bringing innovative developers in-house.
Within developed Supernatural, which it advertises as a “complete fitness service” with “expert coaches,” “beautiful destinations” and “workouts choreographed to the best music available.”
It is available only on Meta’s Quest devices, which are headsets offering immersive digital visuals and audio that market research firm IDC estimates capture 90% of global shipments in the virtual reality hardware market.
The majority of the more than 400 apps available in the Quest app store are produced by external developers. Meta owns the most popular virtual reality app in the Quest app store, Beat Saber, the app it was considering expanding with the Peloton partnership.
The social media company agreed to buy Within in October 2021, a day after changing its name from Facebook to Meta, signalling its ambition to build an immersive virtual environment known as the metaverse.
Zuckerberg will be a witness in the trial. Other potential witnesses are Within CEO Chris Milk and Meta Chief Technology Officer Andrew Bosworth, who runs the company’s metaverse-oriented Reality Labs unit.
The trial is at the U.S. District Court for the Northern District of California.
Reporting by Diane Bartz in Washington and Katie Paul in San Jose, Calif.; Editing by Alexandra Alper, Matthew Lewis and Cynthia Osterman
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Thomson Reuters
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Nov 23 (Reuters) – The U.S. Federal Trade Commission (FTC) is likely to file an antitrust lawsuit to block Microsoft Corp’s (MSFT.O) $69 billion takeover bid for video game publisher Activision Blizzard Inc (ATVI.O), Politico reported on Wednesday, citing people familiar with the matter.
A lawsuit challenging the deal is not guaranteed, and the FTC’s four commissioners have yet to vote out a complaint or meet with lawyers for the companies, the report said, adding that the FTC staff reviewing the deal are skeptical of the companies’ arguments.
The FTC did not immediately respond to requests for comment from Reuters.
“We are committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed, but won’t hesitate to fight to defend the transaction if required,” an Activision Blizzard spokesperson said. Any suggestion that the transaction could lead to anticompetitive effects is “completely absurd,” the spokesperson added.
Shares of Activision fell about 2% in extended trading after closing 1% higher.
Microsoft, maker of the Xbox game console, announced in January the deal to buy Activision, the maker of “Call of Duty” and “Candy Crush” games, in the biggest gaming industry deal in history as global technology giants staked their claims to a virtual future.
[1/4] Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard logo in this illustration taken January 18, 2022. REUTERS/Dado Ruvic/Illustration
Microsoft is betting on the acquisition to help it compete better with videogame leaders Tencent (0700.HK) and Sony (6758.T).
The deal is also facing scrutiny outside the U.S. The EU opened a full-scale investigation earlier this month. The EU competition enforcer said it would decide by March 23, 2023, whether to clear or block the deal.
Britain’s antitrust watchdog in September said it would launch a full-scale probe.
The acquisition could damage the industry if Microsoft refused to give rivals access to Activision’s best-selling games, Britain’s antitrust regulator has said.
The deal has drawn criticism from Sony, maker of the Playstation console, citing Microsoft’s control of games like “Call of Duty.”
“Sony, as the industry leader, says it is worried about ‘Call of Duty,’ but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation,” Microsoft President and Vice Chair Brad Smith has said.
A spokesperson for Microsoft said: “We are prepared to address the concerns of regulators, including the FTC, and Sony to ensure the deal closes with confidence. We’ll still trail Sony and Tencent in the market after the deal closes, and together Activision and Xbox will benefit gamers and developers and make the industry more competitive.”
Reporting by Tiyashi Dattaa and Mrinmay Dey in Bengaluru; Editing by Sriraj Kalluvila and Leslie Adler
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Nov 10 (Reuters) – (This story contains language some readers may find offensive in paragraph 2)
On Tuesday morning, Sam Bankman-Fried, owner of cryptocurrency exchange FTX, caught his employees off-guard with a somber message.
“I’m sorry,” he told them. “I fucked up.”
The reason for the mea culpa: His announcement half an hour earlier that FTX’s arch-rival, Binance, planned to mount a shock takeover of its main trading platform to save it from a “liquidity crunch.” Binance founder Changpeng “CZ” Zhao, whom the billionaire had accused of sabotage, would now be his White Knight.
The seeds of FTX’s downfall were sown months earlier, stemming from mistakes Bankman-Fried made after he stepped in to save other crypto firms as the crypto market collapsed amid rising interest rates, according to interviews with several people close to Bankman-Fried and communications from both companies that have not been previously reported.
Some of those deals involving Bankman-Fried’s trading firm, Alameda Research, led to a series of losses that eventually became his undoing, according to three people familiar with the company’s operations.
The interviews and messages also shine new light on the bitter rivalry between the two billionaires, who in recent months competed for market share and publicly accused each other of seeking to hurt the one another’s businesses. It culminated on Wednesday, with Binance pulling out of its deal and throwing FTX’s future into uncertainty.
Stuck without a buyer, Bankman-Fried was now searching for alternative backers, two people close to him said. After Binance pulled out, he told FTX staff in a message that Binance had not previously told them of any reservations about the deal and he was “exploring all options.”
Neither Binance nor FTX responded to requests for comment. Bankman-Fried told Reuters on Tuesday that “I’ll probably be too swamped” to do interviews. He didn’t respond to further messages.
Binance earlier said it decided to pull out of the deal as a result of its due diligence on FTX and news reports about U.S. investigations into the company.
Zhao’s unveiling of the planned takeover capped a stunning reversal for Bankman-Fried. The 30-year-old had set up Bahamas-based FTX in 2019 and led it to become one of the largest exchanges, accumulating a near $17 billion fortune.
News of the liquidity crunch at FTX – valued in January at $32 billion with investors including SoftBank and BlackRock – sent reverberations through the crypto world.
The price of major coins plummeted, with bitcoin slumping to its lowest in almost two years, heaping further pain on a sector whose value has fallen about two-thirds this year as central banks tightened credit.
By ditching the deal, Binance had also avoided the regulatory scrutiny that would likely have accompanied the takeover, which Zhao had flagged as a likelihood in a memo to employees that he posted on Twitter.
Financial regulators around the world have issued warnings about Binance for operating without a license or violating money laundering laws. The U.S. Justice Department is investigating Binance for possible money laundering and criminal sanctions violations. Reuters reported last month that Binance had helped Iranian firms trade $8 billion since 2018 despite U.S. sanctions, part of a series of articles this year by the news agency on the exchange’s financial crime compliance.
RELATIONSHIP SOURS
Zhao and Bankman-Fried’s relationship began in 2019. Six months after FTX’s launch, Zhao bought 20% of the exchange for about $100 million, a person with direct knowledge of the deal said. At the time, Binance said the investment was “aimed to grow the crypto economy together.”
Within 18 months, however, their relationship had soured.
FTX had grown rapidly and Zhao now viewed it as a genuine competitor with global aspirations, former Binance employees said.
When FTX in May 2021 applied for a license in Gibraltar for a subsidiary, it had to submit information about its major shareholders, but Binance stonewalled FTX’s requests for help, according to messages and emails between the exchanges seen by Reuters.
Between May and July, FTX lawyers and advisors wrote to Binance at least 20 times for details on Zhao’s sources of wealth, banking relationships, and ownership of Binance, the messages show.
In June 2021, however, an FTX lawyer told Binance’s chief financial officer that Binance wasn’t “engaging with us properly” and they risked “severely disrupting an important project for us.” A Binance legal officer responded to FTX to say she was trying to get a response from Zhao’s personal assistant, but the requested information was “too general” and they may not provide everything.
By July of that year, Bankman-Fried had tired of waiting. He bought back Zhao’s stake in FTX for about $2 billion, the person with direct knowledge of the deal said. Two months later, with Binance no longer involved, Gibraltar’s regulator granted FTX a license.
That sum was paid to Binance, in part, in FTX’s own coin, FTT, Zhao said last Sunday – a holding he would later order Binance to sell, precipitating the crisis at FTX.
Reuters Graphics
“TRYING TO GO AFTER US”
This May and June, Bankman-Fried’s trading firm, Alameda Research, suffered a series of losses from deals, according to three people familiar with its operations. These included a $500-million loan agreement with failed crypto lender Voyager Digital, two of the people said. Voyager filed for bankruptcy protection the following month, with FTX’s U.S. arm paying $1.4 billion for its assets in a September auction. Reuters could not determine the full extent of losses Alameda suffered.
Seeking to prop up Alameda, which held almost $15 billion in assets, Bankman-Fried transferred at least $4 billion in FTX funds, secured by assets including FTT and shares in trading platform Robinhood Markets Inc, the people said. Alameda had disclosed a 7.6% share in Robinhood that May.
A portion of these FTX funds were customer deposits, two of the people said, though Reuters could not determine their value.
Bankman-Fried did not tell other FTX executives about the move to prop up Alameda, the people said, adding he was afraid that it could leak.
On Nov. 2, however, a report by news outlet CoinDesk detailed a leaked balance sheet that allegedly showed that much of Alameda’s $14.6 billion in assets were held in FTT. Alameda CEO Caroline Ellison tweeted that the balance sheet was merely for a “subset of our corporate entities,” with over $10 billion of assets not reflected. Ellison did not return requests for comment.
That failed to douse growing speculation over what Alameda’s financial health might mean for FTX.
Then Zhao said Binance would sell its entire share in the token, FTT, worth at least $580 million, “due to recent revelations that have come to light.” The token’s price collapsed 80% over the next two days and a torrent of outflows from the exchange gathered pace, blockchain data show.
WITHDRAWAL SURGE
In his message to staff this week, Bankman-Fried said the firm saw a “giant withdrawal surge” as users rushed to withdraw $6 billion in crypto tokens from FTX in just 72 hours. Daily withdrawals normally totaled tens of millions of dollars, Bankman-Fried told his employees.
After Zhao’s tweet that Binance would sell its FTT holding, Bankman-Fried projected confidence that FTX would weather its rival’s attacks. He told staff on Slack that withdrawals were “not shockingly, way up,” but they were able to process the requests.
“We’re chugging along,” he wrote. “Obviously, Binance is trying to go after us. So be it.”
But by Monday the situation became dire. Unable to quickly find a backer, or sell other illiquid assets short-notice, Bankman-Fried contacted Zhao, according to a person familiar with the call. Zhao later confirmed that Bankman-Fried had called him.
Bankman-Fried signed a non-binding letter of intent for Binance to buy FTX’s non-U.S. assets. This valued FTX at several billion dollars, two people familiar with the letter said – enough for the exchange to cover all withdrawal requests but a fraction of its January valuation.
Zhao announced the potential deal several hours later, with Bankman-Fried tweeting “a huge thank you to CZ.”
“Let’s live to fight another day,” Bankman-Fried told staff on Slack.
His employees were shocked. Even executives had been in the dark about the Alameda shortfall and takeover plan until Bankman-Fried informed them that morning, two people working with him said. Both people said they had been unaware that the withdrawal situation was so serious.
Then came Binance’s announcement on Wednesday scrapping the takeover. “The issues are beyond our control or ability to help,” Binance said. Zhao tweeted “Sad day. Tried,” with a crying emoji.
Reporting by Angus Berwick in New York and Tom Wilson in London; additional reporting by Hannah Lang in Washington and Elizabeth Howcroft in London; Editing by Paritosh Bansal and Chris Sanders
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WASHINGTON/LONDON, Nov 8 (Reuters) – Crypto giant Binance signed a nonbinding agreement to buy rival FTX’s non-U.S. unit, FTX.com, to help cover a “liquidity crunch” at the cryptocurrency exchange, the companies said on Tuesday, in a surprise move that raised fresh concerns about the risks investors face in the volatile crypto market.
Binance CEO Changpeng Zhao said in a tweet that FTX, run by billionaire Sam Bankman-Fried, had “asked for our help” after “a significant liquidity crunch.”
He said Binance, the world’s biggest crypto exchange, will be conducting due diligence in the coming days as the next step toward an acquisition of FTX.com. The U.S. operations of Binance and FTX are not part of the deal, Bankman-Fried said in a separate tweet.
“It has been an open secret for a while now that FTX and Binance were in existential competition; the only surprise today is that things have escalated so quickly to a seeming conclusion,” said Joseph Edwards, investment adviser at Securitize Capital. “The move should provide relief to consumers in the short-term, but creates question in the long run.”
The deal is the latest emergency rescue in the world of cryptocurrencies this year, as investors pulled out from riskier assets amid rising interest rates. The cryptocurrency market has fallen by about two-thirds from its peak to $1.07 trillion.
It also underscores an abrupt reversal of fortune for Bankman-Fried, who had positioned himself as the industry’s saviour by rescuing rivals who had gotten into trouble earlier in the year.
“Liquidity crunch issues continue to haunt the crypto market,” said Dan Raju, CEO of Tradier, financial services provider and brokerage. “It’s scary to think that FTX, which is one of the largest crypto exchanges in the world, was bitten by liquidity concerns and Binance, their biggest rival, is coming to their rescue. This will make for some strange bedfellows.”
FTX had seen around $6 billion of withdrawals in the 72 hours before Tuesday morning, according to a message to staff sent by Bankman-Fried that was seen by Reuters.
“On an average day, we have tens of millions of dollars of net in/outflows. Things were mostly average until this weekend, a few days ago,” Bankman-Fried wrote in the message to staff sent on Tuesday morning. “In the last 72 hours, we’ve had roughly $6b of net withdrawals from FTX.”
Withdrawals at FTX.com are “effectively paused,” he wrote, adding that would be resolved in “the near future.”
FTX did not immediately respond to a request for comment on the message to staff.
‘LEGITIMATE REASON TO WORRY’
The deal comes after the in-house token of crypto exchange FTX slumped, losing one-third of its value and dragging down other major digital assets, amid talk of pressure on FTX’s financials.
Binance, which dominates the crypto industry, with over 120 million users, is currently under investigation by the U.S. Justice Department into possible violations of money-laundering rules, Reuters reported last week.
A spokesperson for the U.S. Commodity Futures Trading Commission said the agency is monitoring the situation.
News of the deal initially buoyed major cryptocurrencies, but those gains were quickly erased.
FTX token – which gives holders discounts on FTX trading fees – was last trading at 11.83, down 47%.
Bitcoin , the biggest digital token, was down 6%.
“People have a legitimate reason to worry about the security of their digital assets if one of the world’s largest centralized exchanges ends up in financial difficulties,” said Pascal Gauthier, CEO and Chairman of crypto security firm Ledger. “It’s time for an honest, industry-wide reckoning on the importance of crypto custody.”
Crypto users raised questions on Twitter last week about FTX’s token following a report by news website CoinDesk on a leaked balance sheet from Alameda Research, a trading firm founded by Bankman-Fried that has close ties with FTX.
On Sunday, Zhao said his firm would liquidate its holdings of the FTX token due to unspecified “recent revelations.”
Bankman-Fried had initially said the exchange was “fine” and that concerns were “false rumours.”
In a tweet on Tuesday, he said his teams were working on clearing out the withdrawal backlog: “This will clear out liquidity crunches. This is one of the main reasons we’ve asked Binance to come in.”
“A *huge* thank you to CZ, Binance,” Bankman-Fried wrote, referring to the rival CEO who goes by his initials.
Reporting by Tom Wilson in London and Hannah Lang in Washington
Additional reporting by Tom Westbrook in Singapore, Prentice in Washington and Angus Berwick in New York
Editing by Megan Davies, Catherine Evans and Matthew Lewis
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ROSEMONT, Illinois, Nov 4 (Reuters) – U.S. President Joe Biden said on Friday that Elon Musk had purchased a social media platform in Twitter that spews lies across the world.
Twitter laid off half its workforce on Friday but said cuts were smaller in the team responsible for preventing the spread of misinformation, as advertisers pulled spending amid concerns about content moderation.
Biden said at a fundraiser: “And now what are we all worried about: Elon Musk goes out and buys an outfit that sends – that spews lies all across the world… There’s no editors anymore in America. There’s no editors. How do we expect kids to be able to understand what is at stake?”
White House Press Secretary Karine Jean-Pierre told reporters earlier that Biden had been clear about the need to reduce hate speech and misinformation.
“That belief extends to Twitter, it extends to Facebook and any other social media platforms where users can spread misinformation,” she said.
Musk has promised to restore free speech while preventing Twitter from descending into a “hellscape.” But major advertisers have expressed apprehension about his takeover for months.
Reporting by Trevor Hunnicutt and Costas Pitas; Editing by William Mallard
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Oct 29 (Reuters) – Dogecoin surged more than 70% on Saturday, extending this week’s gains after Elon Musk sealed a $44-billion deal to take over Twitter last week.
The Tesla Inc (TSLA.O) CEO, a vocal proponent of cryptocurrencies, has heavily influenced prices of dogecoin and bitcoin.
Tesla started accepting dogecoin as payment for its merchandise early this year, and Musk’s newly launched perfume brand can also be bought with dogecoin.
Cryptocurrency exchange Binance which has invested $500 million into Musk’s buyout of Twitter, said it is brainstorming strategies on how blockchain and crypto could be helpful to Twitter.
Twitter had begun exploring ways to incorporate blockchain technology under co-founder and former CEO Jack Dorsey, who has been a proponent of bitcoin.
Musk tweeted this month that he is buying Twitter to create an “everything app”. The idea of an everything app originated in Asia with companies like WeChat, which lets users not only send messages but also make payments, shop online or hail a taxi.
Musk’s tweets on dogecoin, including the one where he called it the “people’s crypto,” have turned the once-obscure digital currency, which began as a social media joke, into a speculator’s dream.
Musk who has promised to restore free speech on Twitter is being deluged with pleas and demands to reinstate accounts of banned account holders and world leaders.
He tweeted on Friday that Twitter will form a content moderation council “with widely diverse viewpoints,” and said no major content decisions or account reinstatements will happen before the council convenes.
The billionaire in a tweet on Saturday said that Twitter users could in future choose a version of the social media platform they like by providing ratings on their tweets.
“Being able to select which version of Twitter you want is probably better, much as it would be for a movie maturity rating,” he said.
Reporting by Baranjot Kaur and Akanksha Khushi in Bengaluru; editing by Clelia Oziel and Nick Zieminski
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