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Sam Bankman-Fried’s perspective on FTX fall
Sam Bankman-Fried testified in court this week, denying any wrongdoing between FTX and Alameda Research despite admitting “big mistakes.“
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SBF refutes claims over political donations
Bankman-Fried denied having directed Ryan Salame, the former co-CEO of FTX Digital Markets, and Nishad Singh, the former director of engineering, to funnel millions of dollars in contributions to political campaigns. According to data available on OpenSecret, Singh gave $8 million to federal campaigns in the 2022 election cycle. Salame also donated $10 million to politicians via loans from Alameda Research. Even though Bankman-Fried denied instructing both to make political contributions, he recognized that lobbying in Washington, D.C., played a key role in his efforts to push a regulatory framework for crypto firms in the United States during 2021.“I came to believe that I could impact the world.“According to prosecutors, Bankman-Fried used funds from customers’ deposits on FTX to make more than $100 million in political campaign contributions ahead of the 2022 U.S. midterm elections. Bankman-Fried denied any wrongdoing during his testimony, asserting that FTX had more than $1 billion in revenue in 2021 and that political donations were made from the exchange’s own funds.
Maxine Waters is chairing the investigation into FTX https://t.co/oFMctH4rRh pic.twitter.com/Ox6O5w4nOl
— Jordan Schachtel @ dossier.today (@JordanSchachtel) November 17, 2022
The New York Times test
Bankman-Fried had a guideline for employees’ communication at FTX and Alameda Research: The New York Times test. Based on the informal test, employees should not write anything they wouldn’t be comfortable seeing on the front page of the newspaper. According to Bankman-Fried, even harmless things could “look pretty bad out of context,” so employees should be sure to always provide sufficient context in written messages. Bankman-Fried described the test as part of his explanation of why more than 200 channels on Signal had an autodelete policy that permanently deleted messages after a week. Prosecutors used evidence of the autodelete feature in the previous days to suggest that any wrongdoing between the companies was being covered up. According to Bankman-Fried, official communications and regulatory paperwork were handled through other channels, such as Slack or email, but Signal was the choice for daily communication within the companies.Alameda’s unique role on FTX
Bankman-Fried provided details about Alameda’s billionaire line of credit with FTX. According to his testimony, Alameda served as FTX’s payment provider for wire transactions while the exchange could not have its own account. Besides being a payment processor, Alameda was also the primary liquidity provider, market maker and client of FTX. As a liquidity provider and market maker, Alameda would have to step in and cover customer losses if FTX’s risk engine failed. During his testimony, Bankman-Fried provided an example of a failure of the risk engine that resulted in Alameda covering millions of dollars in losses in 2021. The nature of Alameda’s role in the exchange’s operations prompted custom features in FTX’s code, such as the ability to go negative via a line of credit without activating the risk engine. According to Bankman-Fried, the exemption was necessary to prevent Alameda’s potential liquidation, which would negatively impact the crypto markets. As a client of FTX, Alameda was also able to borrow funds by depositing collateral in the exchange. The terms of use of FTX allow borrowers to use funds for any purpose, which means Alameda could trade with the borrowed funds. Alameda’s line of credit with FTX grew in tandem with the crypto industry during the bull market.
Alameda fails to hedge
Bankman-Fried discussed hedging strategies with Caroline Ellison, former CEO of Alameda Research, in 2021 and 2022 while seeking to shield the trading platform from a possible market downturn. According to his testimony, Bankman-Fried asked Ellison to hedge $2 billion in Bitcoin (BTC) against a possible price decline in 2021. The strategy was never implemented, he told jurors. Ellison’s notes, which were shared as evidence by prosecutors, reveal that Bankman-Fried was “freaking out” about hedging in early 2022. The defense used the evidence to illustrate that hedging was one of Bankman-Fried’s highest concerns and that he discussed it with Ellison frequently. Without appropriate hedging, Alameda was significantly harmed by the Terra ecosystem collapse and decline in crypto prices. In September 2022, Bankman-Fried learned the liability between the companies had grown from $2 billion a year before to over $8 billion. “I was very surprised,” he claimed in court, stating that he believed Alameda’s assets outweighed its liabilities by nearly $10 billion.Clawback provision in terms of use
According to Bankman-Fried, FTX’s terms of use include a clawback provision that would socialize losses among customers using margin trade and futures contracts if the exchange’s risk engine fails. The document presented in court states that:"[...] your account balance may be subject to clawback due to losses suffered by other users.”If FTX could not cover losses related to spot margins and futures, damages would be shared among all customers. Defense lawyers used the provision to argue that customers trading on FTX were aware of the risks involved. bitcoin crypto btc crypto
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One city held a mass passport-getting event
A New Orleans congressman organized a way for people to apply for their passports en masse.
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While the number of Americans who do not have a passport has dropped steadily from more than 80% in 1990 to just over 50% now, a lack of knowledge around passport requirements still keeps a significant portion of the population away from international travel.
Over the four years that passed since the start of covid-19, passport offices have also been dealing with significant backlog due to the high numbers of people who were looking to get a passport post-pandemic.
Related: Here is why it is (still) taking forever to get a passport
To deal with these concurrent issues, the U.S. State Department recently held a mass passport-getting event in the city of New Orleans. Called the "Passport Acceptance Event," the gathering was held at a local auditorium and invited residents of Louisiana’s 2nd Congressional District to complete a passport application on-site with the help of staff and government workers.
'Come apply for your passport, no appointment is required'
"Hey #LA02," Rep. Troy A. Carter Sr. (D-LA), whose office co-hosted the event alongside the city of New Orleans, wrote to his followers on Instagram (META) . "My office is providing passport services at our #PassportAcceptance event. Come apply for your passport, no appointment is required."
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The event was held on March 14 from 10 a.m. to 1 p.m. While it was designed for those who are already eligible for U.S. citizenship rather than as a way to help non-citizens with immigration questions, it helped those completing the application for the first time fill out forms and make sure they have the photographs and identity documents they need. The passport offices in New Orleans where one would normally have to bring already-completed forms have also been dealing with lines and would require one to book spots weeks in advance.
These are the countries with the highest-ranking passports in 2024
According to Carter Sr.'s communications team, those who submitted their passport application at the event also received expedited processing of two to three weeks (according to the State Department's website, times for regular processing are currently six to eight weeks).
While Carter Sr.'s office has not released the numbers of people who applied for a passport on March 14, photos from the event show that many took advantage of the opportunity to apply for a passport in a group setting and get expedited processing.
Every couple of months, a new ranking agency puts together a list of the most and least powerful passports in the world based on factors such as visa-free travel and opportunities for cross-border business.
In January, global citizenship and financial advisory firm Arton Capital identified United Arab Emirates as having the most powerful passport in 2024. While the United States topped the list of one such ranking in 2014, worsening relations with a number of countries as well as stricter immigration rules even as other countries have taken strides to create opportunities for investors and digital nomads caused the American passport to slip in recent years.
A UAE passport grants holders visa-free or visa-on-arrival access to 180 of the world’s 198 countries (this calculation includes disputed territories such as Kosovo and Western Sahara) while Americans currently have the same access to 151 countries.
stocks pandemic covid-19 grantsUncategorized
Fast-food chain closes restaurants after Chapter 11 bankruptcy
Several major fast-food chains recently have struggled to keep restaurants open.
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Competition in the fast-food space has been brutal as operators deal with inflation, consumers who are worried about the economy and their jobs and, in recent months, the falling cost of eating at home.
Add in that many fast-food chains took on more debt during the covid pandemic and that labor costs are rising, and you have a perfect storm of problems.
It's a situation where Restaurant Brands International (QSR) has suffered as much as any company.
Related: Wendy's menu drops a fan favorite item, adds something new
Three major Burger King franchise operators filed for bankruptcy in 2023, and the chain saw hundreds of stores close. It also saw multiple Popeyes franchisees move into bankruptcy, with dozens of locations closing.
RBI also stepped in and purchased one of its key franchisees.
"Carrols is the largest Burger King franchisee in the United States today, operating 1,022 Burger King restaurants in 23 states that generated approximately $1.8 billion of system sales during the 12 months ended Sept. 30, 2023," RBI said in a news release. Carrols also owns and operates 60 Popeyes restaurants in six states."
The multichain company made the move after two of its large franchisees, Premier Kings and Meridian, saw multiple locations not purchased when they reached auction after Chapter 11 bankruptcy filings. In that case, RBI bought select locations but allowed others to close.
Image source: Chen Jianli/Xinhua via Getty
Another fast-food chain faces bankruptcy problems
Bojangles may not be as big a name as Burger King or Popeye's, but it's a popular chain with more than 800 restaurants in eight states.
"Bojangles is a Carolina-born restaurant chain specializing in craveable Southern chicken, biscuits and tea made fresh daily from real recipes, and with a friendly smile," the chain says on its website. "Founded in 1977 as a single location in Charlotte, our beloved brand continues to grow nationwide."
Like RBI, Bojangles uses a franchise model, which makes it dependent on the financial health of its operators. The company ultimately saw all its Maryland locations close due to the financial situation of one of its franchisees.
Unlike. RBI, Bojangles is not public — it was taken private by Durational Capital Management LP and Jordan Co. in 2018 — which means the company does not disclose its financial information to the public.
That makes it hard to know whether overall softness for the brand contributed to the chain seeing its five Maryland locations after a Chapter 11 bankruptcy filing.
Bojangles has a messy bankruptcy situation
Even though the locations still appear on the Bojangles website, they have been shuttered since late 2023. The locations were operated by Salim Kakakhail and Yavir Akbar Durranni. The partners operated under a variety of LLCs, including ABS Network, according to local news channel WUSA9.
The station reported that the owners face a state investigation over complaints of wage theft and fraudulent W2s. In November Durranni and ABS Network filed for bankruptcy in New Jersey, WUSA9 reported.
"Not only do former employees say these men owe them money, WUSA9 learned the former owners owe the state, too, and have over $69,000 in back property taxes."
Former employees also say that the restaurant would regularly purchase fried chicken from Popeyes and Safeway when it ran out in their stores, the station reported.
Bojangles sent the station a comment on the situation.
"The franchisee is no longer in the Bojangles system," the company said. "However, it is important to note in your coverage that franchisees are independent business owners who are licensed to operate a brand but have autonomy over many aspects of their business, including hiring employees and payroll responsibilities."
Kakakhail and Durranni did not respond to multiple requests for comment from WUSA9.
bankruptcy pandemicUncategorized
Industrial Production Increased 0.1% in February
From the Fed: Industrial Production and Capacity Utilization
Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 p…
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Industrial production edged up 0.1 percent in February after declining 0.5 percent in January. In February, the output of manufacturing rose 0.8 percent and the index for mining climbed 2.2 percent. Both gains partly reflected recoveries from weather-related declines in January. The index for utilities fell 7.5 percent in February because of warmer-than-typical temperatures. At 102.3 percent of its 2017 average, total industrial production in February was 0.2 percent below its year-earlier level. Capacity utilization for the industrial sector remained at 78.3 percent in February, a rate that is 1.3 percentage points below its long-run (1972–2023) average.Click on graph for larger image.
emphasis added
This graph shows Capacity Utilization. This series is up from the record low set in April 2020, and above the level in February 2020 (pre-pandemic).
Capacity utilization at 78.3% is 1.3% below the average from 1972 to 2022. This was below consensus expectations.
Note: y-axis doesn't start at zero to better show the change.
The second graph shows industrial production since 1967.Industrial production increased to 102.3. This is above the pre-pandemic level.
Industrial production was above consensus expectations.
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