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Business

Exclusive: FTX’s former top lawyer aided U.S. authorities in Bankman-Fried case

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Jan 5 (Reuters) – FTX’s former top lawyer Daniel Friedberg has cooperated with U.S. prosecutors as they investigate the crypto firm’s collapse, a source familiar with the matter said, adding pressure on founder Sam Bankman-Fried who was arrested on criminal fraud charges last month.

Friedberg gave details about FTX in a Nov. 22 meeting with two dozen investigators, the person said. The meeting, held at the U.S. Attorney for the Southern District of New York’s office included officials from the Justice Department, Federal Bureau of Investigation, and the U.S. Securities and Exchange Commission, the source said. Emails between attendees scheduling the meeting with those agencies were seen by Reuters.

At the meeting, he told prosecutors what he knew of Bankman-Fried’s use of customer funds to finance his business empire, the source said. Friedberg recounted conversations he had with other top executives on the subject and provided details of how Bankman-Fried’s hedge fund Alameda Research functioned, the source said.

Friedberg’s cooperation has not been previously reported. He has not been charged and has not been told he is under criminal investigation, the source said. Instead, he expects to be called as a government witness in Bankman-Fried’s October trial, the person said.

Friedberg’s lawyer, Telemachus Kasulis, the FBI and FTX did not respond to requests for comment on his cooperation. The SEC, the Department of Justice and Bankman-Fried’s spokesman declined to comment.

Bankman-Fried is accused of diverting billions of dollars in FTX client funds to Alameda to bankroll venture investments, luxury real estate purchases, and political donations. On Tuesday, he pleaded not guilty in Manhattan federal court.

Manhattan U.S. Attorney Damian Williams, who is leading the criminal case against now bankrupt FTX, said last month: “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it.”

Two of Bankman-Fried’s closest associates, Caroline Ellison, Alameda’s former chief executive, and Gary Wang, FTX’s former chief technology officer, pleaded guilty to fraud and agreed to cooperate. A lawyer for Ellison didn’t respond to a request for comment. Wang’s lawyer declined to comment.

MEETING WITH PROSECUTORS

FTX filed for bankruptcy protection on Nov. 11. A few days later, on Nov. 14, Friedberg received a call from two FBI agents based in New York. He told them he was willing to share information but needed to ask FTX to waive his attorney-client privilege, according to a person familiar with the matter and emails viewed by Reuters.

Friedberg wrote to FTX the next day asking the company to waive his privilege so he could cooperate with prosecutors, according to the email seen by Reuters. FTX did not do so, but agreed with Friedberg on the points he could disclose to investigators, the person said.

Friedberg then wrote back to the two FBI agents, telling them in an email reviewed by Reuters: “I want to cooperate in all respects.”

The U.S. Attorney’s Office set up a meeting where Friedberg signed so-called proffer letters prepared for him by the SEC and other agencies, according to the source and an email exchanged by participants. Proffer letters typically describe a potential agreement between authorities and individuals who are witnesses or subjects of an investigation.

“THROUGH THICK AND THIN”

Prior to his work advising FTX, Friedberg advised a mix of banking, fintech, and online gaming companies.

One of his previous employers, a Canadian online gaming firm named Excapsa Software, where he was general counsel, also drew controversy due to a cheating scandal involving a poker site it operated called Ultimate Bet. A Canadian gaming commission in 2008 fined Ultimate Bet $1.5 million for failing to enforce measures to prevent fraudulent activities. Excapsa has since dissolved.

According to an audio recording available on the website PokerNews, Friedberg and some other Ultimate Bet associates privately discussed that year how to handle the scandal and minimize the amount of refunds owed to players. Friedberg previously told NBC News that the audio was illegally recorded but NBC’s article did not say that Friedberg challenged its authenticity.

Friedberg first represented Bankman-Fried in 2017 as outside counsel while at U.S. law firm Fenwick & West, where he chaired its payment systems group, the source familiar with the matter said. At the time, the source said Friedberg advised Bankman-Fried on running Alameda, which he founded that year.

In 2020, when Bankman-Fried launched a separate exchange for U.S. customers called FTX.US, Friedberg moved in-house as FTX’s chief regulatory officer.

In a now-deleted blog post published that year on FTX’s website, Bankman-Fried wrote that Friedberg was FTX’s legal advisor “from the very beginning,” noting he had been “with us through thick and thin.”

Friedberg resigned from his position on Nov. 8, a day after Bankman-Fried disclosed to top executives that FTX was almost out of money, according to the source and three other people briefed on the talks, along with text messages his legal team exchanged at the time.

Additional reporting by Hannah Lang; editing by Megan Davies and Anna Driver

Our Standards: The Thomson Reuters Trust Principles.

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US

Criminal justice postgrad charged with murdering 4 Idaho university students

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Dec 30 (Reuters) – A grad student seeking a criminal justice degree from Washington State University has been arrested and charged with first-degree murder in the stabbing deaths of four University of Idaho students more than six weeks ago, officials said on Friday.

Police in eastern Pennsylvania acting on a fugitive arrest warrant took Bryan Christopher Kohberger, 28, into custody on Thursday night, according to James Fry, chief of police in Moscow, Idaho, where the University of Idaho campus is located. Fry said Kohberger resides in Pennsylvania.

Kohberger was arraigned in Pennsylvania and remained jailed without bond awaiting a hearing on Tuesday to determine whether he will waive extradition and return voluntarily to Idaho to face charges in the high-profile case, said Latah County, Idaho, prosecutor Bill Thompson.

Thompson said Kohberger was charged with four counts of first-degree murder and felony burglary in a crime that unnerved the small college town in Idaho’s northwest panhandle where the four victims – three women and a man in their early 20s – were slain.

The four were all found fatally stabbed on the morning of Nov. 13 inside the off-campus house where the three women lived, two of them staying in one room, and one sharing her room with the fourth victim, her boyfriend.

Two other female roommates in the house at the time were unharmed, apparently sleeping through the killings. Police said the cellphone of one of the survivors was used to call emergency-911 when the bodies were first discovered.

“This is not the end of this investigation. In fact it is a new beginning,” Thompson told a news conference.

The victims – identified as Ethan Chapin, 20, of Conway, Washington; Xana Kernodle, 20, of Avondale, Arizona; Madison Mogen, 21, of Coeur d’Alene, Idaho; and Kaylee Goncalves, 21, of Rathdrum, Idaho – all suffered multiple stab wounds, Fry said. Some of the bodies also showed defensive wounds, Fry said, suggesting they had tried to fend off their attacker.

NIGHT OUT BEFORE KILLINGS

[1/5] The Sigma Chi fraternity house, where victim Ethan Chapin was a member, is pictured after four University of Idaho students were found killed in their residence on November 13 in Moscow, Idaho, U.S., November 30, 2022. REUTERS/Lindsey Wasson

Chapin and his girlfriend, Kernodle, had attended a fraternity party the night before, while Mogen and Goncalves, who were best friends, had visited a local bar and food truck. Both pairs returned to the house shortly before 2 a.m. The two other roommates had gotten home about an hour earlier.

Authorities say they believe the slayings occurred between 3 and 4 a.m. on Nov. 13.

The victims appeared to have been killed with a knife or some other “edged” weapon, police have said. Fry said the murder weapon has not been recovered, though police had found a car they were searching for in connection with the killings.

Authorities said Kohberger was a graduate student at Washington State University (WSU) in Pullman, Washington, about 10 miles from the University of Idaho campus.

WSU issued a statement on Friday saying its police department and Idaho law enforcement officers searched both Kohberger’s apartment residence and his office on campus.

It said Kohberger “had completed his first semester as a PhD student in WSU’s criminal justice program earlier this month,” suggesting he had remained on campus, just miles away from the crime scene across the Idaho state line, for a number of weeks before returning to Pennsylvania.

Asked at the press conference in Moscow whether authorities there were seeking additional suspects, Fry said, “We have an individual in custody who committed these horrible crimes, and I do believe our community is safe.”

Fry said his department had received more than 19,000 tips from the public and had conducted more than 300 interviews as part of its investigation, assisted by state police and the FBI. He and Thompson urged anyone who knew anything about the accused killer to come forward.

He declined to offer a possible motive for the crime or to give any details about the investigation, such as how authorities traced Kohberger to Albrightsville, Pennsylvania, a small community in the Pocono Mountains resort region about 90 miles north of Philadelphia, where he was arrested.

Thompson said more details would emerge publicly from a probable-cause affidavit that summarizes the factual basis for the charges but remains under court seal until the suspect is physically back in Idaho to be served his arrest warrant.

Reporting by Rich McKay in Atlanta and Steve Gorman in Los Angeles; Additional reporting by Brendan O’Brien in Chicago and Jonathan Allen in New York; Editing by David Gregorio and Neil Fullick

Our Standards: The Thomson Reuters Trust Principles.

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Business

Sam Bankman-Fried to enter plea in FTX fraud case

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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

Our Standards: The Thomson Reuters Trust Principles.

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Business

Bankman-Fried, FTX execs received billions in hidden loans, ex-Alameda CEO says

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NEW YORK, Dec 23 (Reuters) – Sam Bankman-Fried and other FTX executives received billions of dollars in secret loans from the crypto mogul’s Alameda Research, the hedge fund’s former chief told a judge when she pleaded guilty to her role in the exchange’s collapse.

Caroline Ellison, former chief executive of Alameda Research, said she agreed with Bankman-Fried to hide from FTX’s investors, lenders and customers that the hedge fund could borrow unlimited sums from the exchange, according a transcript of her Dec. 19 plea hearing that was unsealed on Friday.

“We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” Ellison told U.S. District Judge Ronnie Abrams in Manhattan federal court, according to the transcript.

Ellison and FTX co-founder Gary Wang both pleaded guilty and are cooperating with prosecutors as part of their plea agreements. Their sworn statements offer a preview of how two of Bankman-Fried’s former associates might testify at trial against him as prosecution witnesses.

In a separate plea hearing, also on Dec. 19, Wang said he was directed to make changes to FTX’s code to give Alameda special privileges on the trading platform, while being aware that others were telling investors and customers that Alameda had no such privileges.

Wang did not specify who gave him those directions.

Nicolas Roos, a prosecutor, said in court on Thursday that Bankman-Fried’s trial would include evidence from “multiple cooperating witnesses.” Roos said Bankman-Fried carried out a “fraud of epic proportions” that led to the loss of billions of dollars of customer and investor funds.

Bankman-Fried has acknowledged risk-management failures at FTX but said he does not believe he has criminal liability. He has not yet entered a plea.

Bankman-Fried founded FTX in 2019 and rode a boom in the values of bitcoin and other digital assets to become a billionaire several times over as well as an influential donor to U.S. political campaigns.

A flurry of customer withdrawals in early November amid concerns about commingling of FTX funds with Alameda prompted FTX to declare bankruptcy on Nov. 11.

Bankman-Fried, 30, was released on Thursday on $250 million bond. His spokesperson declined to comment on Ellison and Wang’s statements.

Lawyers for Wang and Ellison declined to comment.

Ellison told the court that when investors in June 2022 recalled loans they had made to Alameda, she agreed with others to borrow billions of dollars in FTX customer funds to repay them, understanding that customers were not aware of the arrangement.

“I am truly sorry for what I did,” Ellison said, adding that she is helping to recover customer assets.

Wang also said he knew what he was doing was wrong.

The transcript of Ellison’s hearing was initially sealed out of concern that the disclosure of her cooperation could thwart prosecutors’ efforts to extradite Bankman-Fried from the Bahamas, where he lived and where FTX was based, court records showed.

Bankman-Fried was arrested in the capital Nassau on Dec. 12 and arrived in the United States on Wednesday after consenting to extradition.

A magistrate judge ordered him confined to his parents’ California home until trial.

On Friday evening, Abrams recused herself from the case, saying in a court order that the law firm Davis Polk & Wardwell LLP, where her husband is a partner, advised FTX in 2021.

The firm also represented parties that could be adverse to FTX and Bankman-Fried in other proceedings, the judge said, and while her husband had no involvement in these matters, which “were confidential and their substance is unknown to the Court,” she was recusing herself to avoid a possible conflict.

Reporting by Luc Cohen in New York; Writing by Tom Hals in Wilmington, Del.; Editing by Noeleen Walder, Matthew Lewis and Daniel Wallis

Our Standards: The Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

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.

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US

Capitol riot panel’s final report sets out case to try Trump

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WASHINGTON, Dec 22 (Reuters) – The congressional panel probing the Jan. 6, 2021 attack on the U.S. Capitol released its final report late on Thursday, outlining its case that former U.S. President Donald Trump should face criminal charges of inciting the deadly riot.

The House of Representatives Select Committee also made public the transcripts of a number of its interviews and witness testimonies earlier on Thursday and on Wednesday.

The report, which runs to more than 800 pages, is based on nearly 1,200 interviews over 18 months and hundreds of thousands of documents, as well as the rulings of more than 60 federal and state courts.

The report lists 17 specific findings, discusses the legal implications of actions by Trump and some of his associates and includes criminal referrals to the Justice Department of Trump and other individuals, according to an executive summary released earlier this week. It report also lists legislative recommendations to help avert another such attack.

On Monday, the committee asked federal prosecutors to charge the Republican former president with four crimes, including obstruction and insurrection, for what they said were efforts to overturn results of the November 2020 election and sparking the attack on the seat of government.

“Rather than honor his constitutional obligation to ‘take care that the laws be faithfully executed,’ President Trump instead plotted to overturn the election outcome,” the House panel had said earlier in a 160-page summary of its report.

In comments posted on his Truth Social network after the final report’s release, Trump called it “highly partisan” and a “witch hunt”. He said it failed to “study the reason for the (Jan. 6) protest, election fraud.”

The request by the Democratic-led panel to the Justice Department does not compel federal prosecutors to act, but marked the first time in history that Congress had referred a former president for criminal prosecution. Trump announced in November that he would run for president again.

Among the transcripts released on Wednesday and Thursday was one that showed a former lawyer for ex-White House aide Cassidy Hutchinson told her to “downplay” her knowledge of events leading to the Capitol riot, telling her “the less you remember, the better.”

Attorney Stefan Passantino advised Hutchinson in preparing for a February deposition before the panel to say that she could not recall certain events, she told the committee in September, according to the transcript of her testimony.

Trump gave a fiery speech to his supporters near the White House the morning of Jan. 6, and publicly chastised his vice president, Mike Pence, for not going along with his plan to reject ballots cast for Democrat Joe Biden.

The former president then waited hours to make a public statement as thousands of his supporters raged through the Capitol, assaulting police and threatening to hang Pence.

The 2020 election results were being certified by Pence and lawmakers when the Capitol was attacked after weeks of false claims by Trump that he had won that election.

Reporting by Kanishka Singh in Washington; Editing by Kenneth Maxwell

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Business

Facebook parent Meta to settle Cambridge Analytica case for $725 million

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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.

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Business

Facebook parent Meta to settle Cambridge Analytica scandal case for $725 mln

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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.

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US

Trump will challenge NY sex abuse law in writer’s defamation lawsuit

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Dec 21 (Reuters) – Donald Trump plans to argue that a New York law allowing a writer to sue the former U.S. president over claims that he raped her decades ago is unconstitutional, according to a court filing.

Lawyers for Trump said in a filing made on Monday in Manhattan federal court that they would move to dismiss the lawsuit filed last month by E. Jean Carroll in part on grounds that the law spurred by the #MeToo movement is invalid.

Trump has denied Carroll’s claim that he raped her in a dressing room in a Bergdorf Goodman department store 27 years ago. The former Elle magazine columnist is suing Trump for defamation and battery under New York’s Adult Survivors Act.

The law created a one-year period that began last month when adult victims of alleged sexual abuse can file lawsuits that otherwise would have been barred because the cases were too old.

Trump’s lawyers in the filing said the law “is an improper ‘claim revival’ statute which violates the United States Constitution and the New York State Constitution.”

Roberta Kaplan, a lawyer for Carroll, declined to comment.

U.S. District Judge Lewis Kaplan in an order on Wednesday gave Trump until Feb. 23 to file a motion to dismiss the lawsuit.

Carroll had sued Trump for defamation in 2019 for denying her allegations, and a trial is scheduled in that case for April.

Lawyers for Carroll have asked Kaplan to send the newer claims to trial at the same time, but Trump’s lawyers have said that would be improper.

Reporting by Daniel Wiessner in Albany, New York; Editing by David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

Daniel Wiessner

Thomson Reuters

Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.

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Technology

Video gamers sue Microsoft in U.S. court to stop Activision takeover

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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

Our Standards: The Thomson Reuters Trust Principles.

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Business

In sweltering Bahamas courtroom, Bankman-Fried fights incarceration

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NASSAU, Dec 13 (Reuters) – Cordoned-off roads, a sweltering courtroom and numerous delays marked Sam Bankman-Fried’s first in-person public appearance since his crypto company collapsed.

The Bahamas courtroom hearing, conducted over the course of six hours, saw Bankman-Fried, dressed in a suit rather than his typical t-shirt attire, seeking bail to dispute his extradition to the U.S. He was ultimately refused and faces possible extradition to the United States.

It was a stunning fall from grace for the crypto boss, once estimated by Forbes as worth as much as $26.5 billion.

“I’m not waiving,” Bankman-Fried said when asked if he would seek to waive his right to an extradition hearing.

It was a rare comment in a hearing that was largely taken up with lawyers discussing process. In another comment, Bankman-Fried referred to the night of his arrest as “hectic.”

There was high anticipation ahead of the appearance by Bankman-Fried, who has done numerous media interviews since his firm collapsed but not been widely seen in public.

The day started with Bankman-Fried ushered into court away from the main entrance and photographers and reporters who crowded to get a shot.

Bahamas Chief Magistrate JoyAnn Ferguson-Pratt contributed witty asides that often left the courtroom chuckling, once quipping “I wasn’t born yesterday” at the defense counsel’s interpretation of the law.

Ferguson-Pratt’s repeatedly forgetting the defendant’s last name led to laughter.

“Samuel,” she said before trailing off, with the once-billionaire crypto magnate reminding her of his name: “Bankman-Fried.”

People in the courtroom fanned themselves to keep cool in the tropical heat as sun shone through the windows.

The hearing was adjourned twice, once to consult about the court’s jurisdiction to grant bail, and again in the afternoon.

It also included an extensive discussion of Bankman-Fried’s medication, which his lawyer said was for conditions including depression, insomnia and attention deficit disorder.

At the start of the proceedings, Bankman-Fried asked to change an Emsam patch, a medical strip applied to the skin that is used to treat adult depression. He asked to briefly leave the court room to take the medication.

Bankman-Fried acknowledged that he had not taken his medications with him when he was arrested, which he attributed to having had a “hectic night”.

His parents, Joseph Bankman and Barbara Fried, at times seemed frustrated with the arguments made by the prosecution, which described him as a flight risk.

Bankman-Fried’s defense counsel pointed out that Bankman-Fried had spent weeks in The Bahamas after his business collapsed without attempting to leave the country.

At the end of the hearing, his head lowered, he hugged his parents. A van outside the court waited to take him away.

Reporting by Jared Higgs in Nassau and Brian Ellsworth in Miami; editing by Megan Davies, Noeleen Walder and Sam Holmes

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