Jan 20 (Reuters) – Federal prosecutors have seized nearly $700 million in assets from FTX founder Sam Bankman-Fried in January, largely in the form of Robinhood stock, according to a Friday court filing.
Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto-focused hedge fund, has pleaded not guilty to fraud charges. He is scheduled to face trial in October.
The Department of Justice revealed the seizure of Robinhood shares earlier this month, but it provided a more complete list of seized assets Friday, including cash held at various banks and assets deposited at crypto exchange Binance.
The ownership of the seized Robinhood shares, valued at about $525 million, has been the subject of disputes between Bankman-Fried, FTX, and bankrupt crypto lender BlockFi.
The most recent asset seizure reported by the DOJ took place on Thursday, when prosecutors seized $94.5 million in cash from an account at Silvergate Bank which was associated with FTX Digital Markets, FTX’s subsidiary in the Bahamas. The DOJ seized more than $7 million from other Silvergate accounts associated with Bankman-Fried and FTX.
The DOJ previously seized nearly $50 million from an FTX Digital Markets account at Moonstone Bank, a small bank in Washington state.
DOJ also said that assets in three Binance accounts associated with Bankman-Fried were subject to criminal forfeiture, but did not provide an estimate of the value in those accounts.
Reporting by Dietrich Knauth; Editing by Noeleen Walder and Daniel Wallis
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Jan 20 (Reuters) – The lending unit of crypto firm Genesis filed for U.S. bankruptcy protection on Thursday, owing creditors at least $3.4 billion, after being toppled by a market rout along with the likes of exchange FTX and lender BlockFi.
Genesis Global Capital, one of the largest crypto lenders, froze customer redemptions on Nov. 16 after the collapse of major exchange FTX sent shockwaves through the crypto asset industry, fuelling concern that other companies could implode.
Genesis is owned by venture capital firm Digital Currency Group (DCG).
Its bankruptcy filing is the latest in a string of crypto failures triggered by a market collapse that wiped about $1.3 trillion off the value of crypto tokens last year. While bitcoin has rallied so far in 2023, the impact of the market collapse has continued to hit companies in the highly interconnected sector.
The bankruptcy “doesn’t come as a shock to the markets,” said Ivan Kachkovski, currency and crypto strategist at UBS. “It remains to be seen if the chain effect would go on.”
“However, given that the funds have already been frozen for over two months and no other large crypto company reported an associated weakness, it’s likely that the contagion would be limited.”
Genesis’ lending unit said it had both assets and liabilities in the range of $1 billion to $10 billion, and estimated it had more than 100,000 creditors in its filing with the U.S. Bankruptcy Court for the Southern District of New York.
Genesis Global Holdco, the parent group of Genesis Global Capital, also filed for bankruptcy protection, along with another lending unit Genesis Asia Pacific.
Genesis Global Holdco said in a statement that it would contemplate a potential sale, or a stock-related transaction, to pay creditors, and that it had $150 million in cash to support the restructuring.
It added that Genesis’ derivatives and spot trading, broker dealer and custody businesses were not part of the bankruptcy process, and would continue their client trading operations.
CREDITORS’ CLAIMS
Genesis owes its 50 biggest creditors $3.4 billion, according to Reuters’ calculations from the bankruptcy filing. Its largest creditor is crypto exchange Gemini, which it owes $765.9 million. Gemini was founded by the identical twin cryptocurrency pioneers Cameron and Tyler Winklevoss.
Genesis was already locked in a dispute with Gemini over a crypto lending product called Earn that the two firms jointly offered to Gemini customers.
The Winklevoss twins have said Genesis owed more than $900 million to some 340,000 Earn investors. On Jan. 10, Cameron Winklevoss called for the removal of Barry Silbert as the chief executive of Digital Currency Group.
Representations of cryptocurrencies are seen in front of displayed decreasing stock graph in this illustration taken November 10, 2022. REUTERS/Dado Ruvic/Illustration
About an hour after the bankruptcy filing, Cameron Winklevoss tweeted that Silbert and Digital Currency Group continued to deny creditors a fair deal.
“Unless Barry (Silbert) and DCG come to their senses and make a fair offer to creditors, we will be filing a lawsuit against Barry and DCG imminently,” Winklevoss said in his tweet thread.
DCG did not immediately respond to a Reuters request for comment on the tweets.
Amsterdam-based crypto exchange Bitvavo, said in December it was trying to recover 280 million euros ($302.93 million) which it had lent to Genesis.
Bitvavo said in a blog post on Friday that talks on the repayment “have not yet led to an overall agreement that works for all parties concerned” and that it would continue to negotiate.
The bankruptcy filing “brings the process of negotiations to calmer waters,” Bitvavo said.
LENDING BUSINESS
Genesis brokered digital assets for financial institutions such as hedge funds and asset managers and had almost $3 billion in total active loans at the end of the third quarter, down from $11.1 billion a year earlier, according to its website.
Last year, Genesis extended $130.6 billion in crypto loans and traded $116.5 billion in assets, according to its website.
Its two biggest borrowers were Three Arrows Capital, a Singapore-based crypto hedge fund, and Alameda Research, a trading company closely affiliated with FTX, a source told Reuters. Both are in bankruptcy proceedings.
Three Arrows debt to Genesis was assumed by its parent company Digital Currency Group (DCG), which then filed a claim against Three Arrows. DCG’s portfolio companies also include crypto asset manager Grayscale and news service CoinDesk.
Crypto lenders, which acted as the de facto banks, boomed during the pandemic. But unlike traditional banks, they are not required to hold capital cushions. Earlier this year, a shortfall of collateral forced some lenders – and their customers – to shoulder large losses.
($1 = 0.9243 euros)
Reporting by Tom Hals in Wilmington, Delaware, Akanksha Khushi, and Elizabeth Howcroft in London; Editing by Lananh Nguyen, Clarence Fernandez, Kim Coghill, Ira Iosebashvili and Sharon Singleton
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Jan 17 (Reuters) – A 2016 video that Tesla (TSLA.O) used to promote its self-driving technology was staged to show capabilities like stopping at a red light and accelerating at a green light that the system did not have, according to testimony by a senior engineer.
The video, which remains archived on Tesla’s website, was released in October 2016 and promoted on Twitter by Chief Executive Elon Musk as evidence that “Tesla drives itself.”
But the Model X was not driving itself with technology Tesla had deployed, Ashok Elluswamy, director of Autopilot software at Tesla, said in the transcript of a July deposition taken as evidence in a lawsuit against Tesla for a 2018 fatal crash involving a former Apple (AAPL.O) engineer.
The previously unreported testimony by Elluswamy represents the first time a Tesla employee has confirmed and detailed how the video was produced.
The video carries a tagline saying: “The person in the driver’s seat is only there for legal reasons. He is not doing anything. The car is driving itself.”
Elluswamy said Tesla’s Autopilot team set out to engineer and record a “demonstration of the system’s capabilities” at the request of Musk.
Elluswamy, Musk and Tesla did not respond to a request for comment. However, the company has warned drivers that they must keep their hands on the wheel and maintain control of their vehicles while using Autopilot.
The Tesla technology is designed to assist with steering, braking, speed and lane changes but its features “do not make the vehicle autonomous,” the company says on its website.
To create the video, the Tesla used 3D mapping on a predetermined route from a house in Menlo Park, California, to Tesla’s then-headquarters in Palo Alto, he said.
Drivers intervened to take control in test runs, he said. When trying to show the Model X could park itself with no driver, a test car crashed into a fence in Tesla’s parking lot, he said.
“The intent of the video was not to accurately portray what was available for customers in 2016. It was to portray what was possible to build into the system,” Elluswamy said, according to a transcript of his testimony seen by Reuters.
When Tesla released the video, Musk tweeted, “Tesla drives itself (no human input at all) thru urban streets to highway to streets, then finds a parking spot.”
Tesla faces lawsuits and regulatory scrutiny over its driver assistance systems.
The U.S. Department of Justice began a criminal investigation into Tesla’s claims that its electric vehicles can drive themselves in 2021, after a number of crashes, some of them fatal, involving Autopilot, Reuters has reported.
The New York Times reported in 2021 that Tesla engineers had created the 2016 video to promote Autopilot without disclosing that the route had been mapped in advance or that a car had crashed in trying to complete the shoot, citing anonymous sources.
When asked if the 2016 video showed the performance of the Tesla Autopilot system available in a production car at the time, Elluswamy said, “It does not.”
Elluswamy was deposed in a lawsuit against Tesla over a 2018 crash in Mountain View, California, that killed Apple engineer Walter Huang.
Andrew McDevitt, the lawyer who represents Huang’s wife and who questioned Elluswamy’s in July, told Reuters it was “obviously misleading to feature that video without any disclaimer or asterisk.”
The National Transportation Safety Board concluded in 2020 that Huang’s fatal crash was likely caused by his distraction and the limitations of Autopilot. It said Tesla’s “ineffective monitoring of driver engagement” had contributed to the crash.
Elluswamy said drivers could “fool the system,” making a Tesla system believe that they were paying attention based on feedback from the steering wheel when they were not. But he said he saw no safety issue with Autopilot if drivers were paying attention.
Reporting by Hyunjoo Jin; Editing by Kevin Krolicki and Lisa Shumaker
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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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Tom Hals
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 6 (Reuters) – Twitter Inc CEO Elon Musk said in an email to Reuters on Friday that hiring law firm Perkins Coie to defend the company in a California federal lawsuit this week was a mistake it would not make again.
Reuters reported earlier that lawyers from Perkins Coie entered court appearances for Twitter in the case on Wednesday even though Musk has denounced the firm on the social media platform, including in a tweet last month related to its past work for former Democratic U.S. presidential nominee Hillary Clinton.
Musk’s email said hiring Perkins Coie was “an error on the part of a member of the Twitter team.”
“Perkins will not be representing Twitter on future cases,” he said.
He did not immediately respond to follow-up questions on Friday, including whether Perkins Coie will stay on as counsel for Twitter in at least six other lawsuits predating Musk’s ownership. A Perkins Coie spokesperson did not immediately respond to a request for comment.
Musk’s finger-pointing follows months of internal tensions over Twitter’s legal staffing and priorities since he acquired the company for $44 billion and took over as CEO in October.
Musk has fired Vijaya Gadde, Twitter’s legal affairs and policy officer, and other senior employees as he seeks to undo what he has criticized as past censorship and partisan bias at the company.
Twitter has also shaken up its outside legal teams, with attorneys from Quinn Emanuel Urquhart & Sullivan stepping in for other firms in several cases.
Musk tweeted on Dec. 8 that Twitter “isn’t using Perkins Coie” as outside counsel and urged other companies to boycott the firm. He singled out a former Perkins Coie lawyer, Michael Sussmann, who advised Clinton’s 2016 presidential campaign while at the firm.
Sussmann was acquitted in May after denying federal charges that he falsely told the FBI he was not working on Clinton’s behalf when he gave the agency purported evidence of cyber links between the Trump Organization and a Russia-based bank.
“No company should use them until they make amends for Sussmann’s attempt to corrupt a Presidential election,” Musk wrote in December, referring to Perkins Coie.
In May, Musk tweeted that Perkins Coie and another large law firm were made up of “white-shoe lawyers” who “thrive on corruption.”
The case that Perkins Coie signed on to for Twitter this week was brought last year by Laura Loomer, a far-right activist who was banned from the site in 2018.
The San Francisco lawsuit claims social media giants, corporations and the U.S. government conspired to “unlawfully censor conservative voices and interfere with American elections.” Twitter and its former CEO Jack Dorsey have denied the claims.
Reporting by David Thomas in Chicago
Editing by David Bario and Leslie Adler
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David Thomas
Thomson Reuters
David Thomas reports on the business of law, including law firm strategy, hiring, mergers and litigation. He is based out of Chicago. He can be reached at d.thomas@thomsonreuters.com and on Twitter @DaveThomas5150.
NEW YORK, Dec 28 (Reuters) – Sam Bankman-Fried is expected to enter a plea next week to criminal charges he defrauded investors and looted billions of dollars in customer funds at his failed FTX cryptocurrency exchange.
The 30-year-old is expected to be arraigned on the afternoon of Jan. 3, 2023, before U.S. District Judge Lewis Kaplan in Manhattan federal court, court records on Wednesday showed.
Kaplan was assigned to the case on Tuesday, after the original judge recused herself because her husband’s law firm had advised FTX before its collapse.
Prosecutors have accused Bankman-Fried of engaging in a years-long “fraud of epic proportions,” by using customer deposits to support his Alameda Research hedge fund firm, buy real estate and make political contributions.
Bankman-Fried is charged with two counts of wire fraud and six counts of conspiracy, including to launder money and commit campaign finance violations, and if convicted could spend decades in prison.
Before his Dec. 12 arrest, Bankman-Fried acknowledged risk-management failures at FTX, but said he did not believe he was criminally liable.
Two of his associates, former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang, have pleaded guilty over their roles in FTX’s collapse and agreed to cooperate with prosecutors.
A lawyer for Bankman-Fried did not immediately respond to requests for comment.
Bankman-Fried was released on Dec. 22 on a $250 million bond and ordered to stay with his parents in Palo Alto, California, where they teach at Stanford Law School. He is subject to electronic monitoring.
FTX filed for bankruptcy protection on Nov. 11. Its new chief executive, John Ray, told Congress on Dec. 13 that the exchange lost $8 billion of customer money while being run by “grossly inexperienced, non-sophisticated individuals.”
Reporting by Jonathan Stempel in New York
Editing by Matthew Lewis
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Dec 23 (Reuters) – Facebook owner Meta Platforms Inc (META.O) has agreed to pay $725 million to resolve a class-action lawsuit accusing the social media giant of allowing third parties, including Cambridge Analytica, to access users’ personal information.
The proposed settlement, which was disclosed in a court filing late on Thursday, would resolve a long-running lawsuit prompted by revelations in 2018 that Facebook had allowed the British political consulting firm Cambridge Analytica to access data of as many as 87 million users.
Lawyers for the plaintiffs called the proposed settlement the largest to ever be achieved in a U.S. data privacy class action and the most that Meta has ever paid to resolve a class action lawsuit.
“This historic settlement will provide meaningful relief to the class in this complex and novel privacy case,” the lead lawyers for the plaintiffs, Derek Loeser and Lesley Weaver, said in a joint statement.
Meta did not admit wrongdoing as part of the settlement, which is subject to the approval of a federal judge in San Francisco. The company said in a statement settling was “in the best interest of our community and shareholders.”
“Over the last three years we revamped our approach to privacy and implemented a comprehensive privacy program,” Meta said.
Cambridge Analytica, now defunct, worked for Donald Trump’s successful presidential campaign in 2016, and gained access to the personal information from millions of Facebook accounts for the purposes of voter profiling and targeting.
Cambridge Analytica obtained that information without users’ consent from a researcher who had been allowed by Facebook to deploy an app on its social media network that harvested data from millions of its users.
The ensuing Cambridge Analytica scandal fueled government investigations into its privacy practices, lawsuits and a high-profile U.S. congressional hearing where Meta Chief Executive Mark Zuckerberg was grilled by lawmakers.
In 2019, Facebook agreed to pay $5 billion to resolve a Federal Trade Commission probe into its privacy practices and $100 million to settle U.S. Securities and Exchange Commission claims that it misled investors about the misuse of users’ data.
Investigations by state attorneys general are ongoing, and the company is fighting a lawsuit by the attorney general for Washington, D.C.
Thursday’s settlement resolved claims by Facebook users that the company violated various federal and state laws by letting app developers and business partners harvest their personal data without their consent on a widespread basis.
The users’ lawyers alleged that Facebook misled them into thinking they could keep control over personal data, when in fact it let thousands of preferred outsiders gain access.
Facebook argued its users have no legitimate privacy interest in information they shared with friends on social media. But U.S. District Judge Vince Chhabria called that view “so wrong” and in 2019 largely allowed the case to move forward.
Reporting by Nate Raymond in Boston; Editing by Muralikumar Anantharaman
Our Standards: The Thomson Reuters Trust Principles.
Nate Raymond
Thomson Reuters
Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.
Dec 23 (Reuters) – Facebook owner Meta Platforms Inc (META.O) has agreed to pay $725 million to resolve a class-action lawsuit accusing the social media giant of allowing third parties, including Cambridge Analytica, to access users’ personal information.
The proposed settlement, which was disclosed in a court filing late on Thursday, would resolve a long-running lawsuit prompted by revelations in 2018 that Facebook had allowed the British political consulting firm Cambridge Analytica to access data of as many as 87 million users.
Lawyers for the plaintiffs called the proposed settlement the largest to ever be achieved in a U.S. data privacy class action and the most that Meta has ever paid to resolve a class action lawsuit.
“This historic settlement will provide meaningful relief to the class in this complex and novel privacy case,” the lead lawyers for the plaintiffs, Derek Loeser and Lesley Weaver, said in a joint statement.
Meta did not admit wrongdoing as part of the settlement, which is subject to the approval of a federal judge in San Francisco. The company said in a statement settling was “in the best interest of our community and shareholders.”
“Over the last three years we revamped our approach to privacy and implemented a comprehensive privacy program,” Meta said.
Cambridge Analytica, now defunct, worked for Donald Trump’s successful presidential campaign in 2016, and gained access to the personal information from millions of Facebook accounts for the purposes of voter profiling and targeting.
Cambridge Analytica obtained that information without users’ consent from a researcher who had been allowed by Facebook to deploy an app on its social media network that harvested data from millions of its users.
The ensuing Cambridge Analytica scandal fueled government investigations into its privacy practices, lawsuits and a high-profile U.S. congressional hearing where Meta Chief Executive Mark Zuckerberg was grilled by lawmakers.
In 2019, Facebook agreed to pay $5 billion to resolve a Federal Trade Commission probe into its privacy practices and $100 million to settle U.S. Securities and Exchange Commission claims that it misled investors about the misuse of users’ data.
Investigations by state attorneys general are ongoing, and the company is fighting a lawsuit by the attorney general for Washington, D.C.
Thursday’s settlement resolved claims by Facebook users that the company violated various federal and state laws by letting app developers and business partners harvest their personal data without their consent on a widespread basis.
The users’ lawyers alleged that Facebook misled them into thinking they could keep control over personal data, when in fact it let thousands of preferred outsiders gain access.
Facebook argued its users have no legitimate privacy interest in information they shared with friends on social media. But U.S. District Judge Vince Chhabria called that view “so wrong” and in 2019 largely allowed the case to move forward.
Reporting by Nate Raymond in Boston; Editing by Muralikumar Anantharaman
Our Standards: The Thomson Reuters Trust Principles.
Nate Raymond
Thomson Reuters
Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.
Dec 21 (Reuters) – Core Scientific Inc (CORZ.O), one of the biggest publicly traded cryptocurrency mining companies in the United States, said on Wednesday it filed for Chapter 11 bankruptcy protection, the latest in a string of failures to hit the sector.
Austin, Texas-based Core Scientific attributed its bankruptcy to slumping bitcoin prices, rising energy costs for bitcoin mining and a $7 million unpaid debt from U.S. crypto lender Celsius Network, one of its biggest customers.
Core Scientific said in court filings that it had suffered a net loss of $434.8 million for the three months ending September 30, 2022, and had just $4 million in liquidity at the time of its bankruptcy filing.
The company engaged restructuring advisers in October and has been negotiating with creditors about a potential bankruptcy filing since that time.
More than a trillion dollars in value has been wiped out from the crypto sector this year with rising interest rates exacerbating worries of an economic downturn. The crash has eliminated key industry players such as crypto hedge fund Three Arrows Capital and Celsius.
The biggest blow came after major crypto exchange FTX filed for bankruptcy protection last month. Its swift fall has sparked tough regulatory scrutiny of how crypto firms hold funds and conduct business operations.
After rapid growth in 2020 and 2021, bitcoin – the most popular digital currency by far – is down more than 60% this year, pressuring the crypto mining sector.
Processing bitcoin transactions and “mining” new tokens is done by powerful computers, hooked up to a global network, that compete against others to solve complex mathematical puzzles.
Bitcoins are seen in this illustration picture taken September 27, 2017. REUTERS/Dado Ruvic
But the business has become less profitable as the price of bitcoin has slumped, while energy costs have soared.
Celsius, which filed for Chapter 11 bankruptcy protection in July, owns several bitcoin mining rigs hosted at Core Scientific’s facilities. Celsius’s bankruptcy has prevented Core Scientific from collecting on higher energy bills that the company is racking up at a rate of $900,000 per month, according to court filings.
Core Scientific said it would not liquidate, and intends to pursue a restructuring backed by creditors who hold over 50% of the company’s convertible notes.
Those creditors have agreed to provide up to $56 million in debtor-in-possession financing, and convertible noteholders would ultimately end up with 97% of Core Scientific’s equity shares if the restructuring is approved in court.
The company’s shares have lost roughly 98% of their value so far in 2022, shrinking its market cap to about $78 million.
The stock fell another 50% in trading on Wednesday. Shares of other crypto miners including Riot Blockchain (RIOT.O), Marathon Digital (MARA.O) and Hut 8 Mining Corp have all shed more than 80% this year.
In its bankruptcy petition, Core Scientific said it has $1 billion to $10 billion in assets and liabilities, and between 1,000 and 5,000 creditors.
Core Scientific went public in 2021 through a merger with a blank-check company in a deal that at the time valued the miner at $4.3 billion.
Core Scientific’s first bankruptcy court hearing has been set for Dec. 21 at 0915 CT (1515 GMT).
Reporting by Siddharth Jindal, Maria Ponnezhath, Akriti Sharma and Manya Saini in Bengaluru, and Dietrich Knauth in New York and Hannah Lang in Washington; editing by Uttaresh.V, Maju Samuel, Alexia Garamfalvi and Deepa Babington
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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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