Caroline speaks up 🔈
Ex-CEO spills $14 billion tea on Alameda's shady dealings. Arthur Hayes predicts a golden future by 2026. Trader Joe's calls checkout on 'Trader Joe'. Leave crypto fan tokens off the field?
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Sweet. Sweet. Sweet. Caroline👇
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Did you know that SBF once aspired to become the President of the United States?
Yesterday was nothing short of explosive as Caroline Ellison, the ex-CEO of Alameda Research, stood firmly against Sam Bankman-Fried, a former partner and romantic interest.
Ellison pulled no punches, asserting that Bankman-Fried masterminded a scheme to defraud FTX customers.
In her own words:
"He directed me to commit these crimes. Alameda took several billions of dollars from FTX customers and used it for investments."
The Numbers Speak
According to Ellison, Alameda didn't merely misappropriate a few bucks here and there.
They siphoned $14 billion from FTX customers.
Of this vast sum, $10 billion went towards settling debts to their lenders.
Ellison painted a concerning picture about Alameda's finances, touching upon the various risk assessments she undertook.
"I thought Alameda's position was risky."
The Mystery of Paper Bird Inc.
She implied that Bankman-Fried had proposed adding Paper Bird Inc. to the balance sheets—a move aimed at disguising Alameda's precarious financial situation.
Paper Bird Inc. plays a pivotal role in this legal drama.
When Alameda Research sought Chapter 11 bankruptcy protection, it was revealed that Paper Bird Inc. owed the firm $2.3 billion.
Continuing her testimony, Ellison estimated that in the event of a market downturn, Alameda only had a "30% chance" of clearing all its debts.
The prospects seemed even more bleak when factoring in the $3 billion locked in venture investments.
Prosecutors paint a picture of Bankman-Fried as a manipulator operating behind the scenes.
According to Prosecutor Thane Rane, while Ellison held the title of CEO, it was Bankman-Fried who was "calling the shots at Alameda."
Allegedly, Ellison was just a facade.
An insider's look at Alameda and FTX
Ellison's testimony didn't stop there.
She delved into the operations at Alameda, discussing their dealings with other prominent players in the crypto sphere.
This included the purchase of FTX Tokens (FTT) from crypto giant Binance at Bankman-Fried's behest, suggesting a looming threat if they failed to comply.
There was also talk of leveraging loans from Genesis as a funding mechanism in 2021.
Ellison gave the court an insight into her reservations about her role, confessing her feelings of inadequacy as the CEO of Alameda.
"Sam said I should do it," Ellison remarked, hinting at Bankman-Fried's strong influence over her.
This was further emphasised by her assertion that she sought approval from him for every move she made.
Ellison detailed Bankman-Fried's rather unorthodox approach to risk, which she encapsulated with his statement about flipping a coin, not minding if it led to global chaos as long as the potential rewards doubled.
How their paths crossed
The backdrop of this saga has roots in their shared professional history. Both Ellison and Bankman-Fried previously worked at Jane Street Capital.
It was here that Bankman-Fried persuaded Ellison to depart from the investment firm and become part of his crypto initiatives.
However, their relationship soured post the collapse of FTX in November 2022, with reports indicating that they distanced themselves from one another.
Ellison's private world
Ellison isn't a straightforward character herself.
She held peculiar views on race science and polyamory, as her Tumblr posts reveal. In private, she felt the collapse of FTX was justified and confessed to feeling ill-equipped to steer Alameda's ship.
With Bankman-Fried overseeing FTX and Ellison at the helm of Alameda, the legal contention is that Alameda inappropriately accessed user funds from FTX for various expenditures, including property acquisitions and political donations.
Read: Wang spills the beans
Gary Wang, FTX's co-founder and ex-chief technology officer, began his testimony on October 5th, reinforcing allegations of misconduct.
The defense
However, Bankman-Fried's legal team has been attempting to redirect some of the blame towards Ellison, suggesting her possible negligence in hedging Alameda's investments.
Bankman-Fried's defense team has expressed an intent to interrogate Ellison on two crucial aspects.
Her reliance on legal advice during her tenure as CEO of Alameda Research.
The valuation and intricacies surrounding FTX's investment in Anthropic AI.
What on Anthropic AI: While the DOJ perceives the valuation as irrelevant, the defense emphasises the contextual importance of recent developments around Anthropic AI, given its recent fundraising activities.
This might suggest a higher expected value analysis for FTX's assets and is a potential avenue for larger compensations to FTX's creditors should the company decide to liquidate its stake in Anthropic.
Ellison revealed her hefty compensation package, with an annual salary of $200,000 and a bonus of $20 million in 2021.
Gary Wang, corroborated parts of Ellison's narrative, admitting to illegal undertakings alongside her and Nishad Singh, the former FTX engineering director.
TTD Blockquote 🎙️
Arthur Hayes, founder of BitMEX
Bitcoin price could hit $750000 to $1 million by 2026
In a recent interview on the 'Impact Theory' show with Tom Bilyeu, Arthur Hayes said that he expects Bitcoin to soar between $750,000 and $1 million by 2026.
Hayes's predictions:
A global financial crisis towards the end of the decade, potentially eclipsing the magnitude of the Great Depression.
A strong bull market across various sectors - from stocks and real estate to crypto and art - which he believes will be the most significant since World War II.
The root cause of this volatility? US government bailouts during economic downturns.
This reactive behavior, according to Hayes, disrupts the natural ebb and flow of the economy, leading to an unsustainable cycle of central bank money printing, inflation, and a distortion of the free market.
Bitcoin's Surge: Key catalysts
Hayes outlines a few vital factors that could propel Bitcoin to such astronomical figures:
Out of control inflation and debt
Mounting government debt and reduced productivity.
Inevitable money printing may lead to short-lived bull markets but eventually results in high inflation.
Dysfunctional US banking system
$7.75 trillion US debt needs addressing by 2026.
Previous primary buyers, like China and Japan, are now less interested.
Flawed regulatory landscape in 2021 led to banks investing in low-yield Treasurys.
Federal Reserve's commitment to quantitative tightening diminishes interest in US Treasurys, complicating the banking system.
“At a structural level, the US banking system cannot buy more debt because it cannot afford to because it is structurally insolvent. The Federal Reserve has committed to doing quantitative tightening, so it’s not accumulating more Treasurys.”
Bitcoin's Beacon
Hayes sees Bitcoin's price oscillating between $25,000 and $30,000 in the near term, but there's potential for significant appreciation.
By 2024, Hayes foresees one of two scenarios playing out: either a financial crisis pushes rates to near-zero, or the government steadily increases rates — though not as quickly as they spend.
Factors like the eventual approval of a spot Bitcoin ETF in major global markets, along with the halving event, might push Bitcoin to new heights of around $70,000 by mid-2024.
Post this, he anticipates the onset of a fierce bull market, propelling Bitcoin into the $750,000 to $1 million range.
TTD Sued ✍🏻
Trader Joe’s, the US grocery store chain, is suing the DeFi platform named "Trader Joe" for trademark infringement.
They demand all the DeFi platform's profits and want it permanently shut down. Last year, they tried and failed to win a similar case in the United Nations’ court.
The stakes are higher
Now, the grocery powerhouse is upping the ante. Trader Joe’s is demanding:
All profits earned by the Trader Joe DeFi platform.
Additional compensation to make up for their perceived brand dilution.
Further damages related to their previous unsuccessful legal bid.
Immediate seizure of all websites associated with the Trader Joe DeFi platform.
Permanent shutdown of the said platform.
The DeFi platform previously claimed they were named after a co-founder's brother, but later seemingly admitted it was named after the grocery store.
The grocery chain now alleges this was a false story.
In the previous year, Trader Joe's had filed a complaint with the United Nations' World Intellectual Property Organisation (WIPO) - to take control of the crypto trading website, Trader Joe, based on the argument that the platform was capitalising on the well-known “Trader Joe's” name, or a close variation of it.
In defense, Cheng Chieh Liu, one of the co-founders of the Trader Joe DeFi platform, argued that the platform had no connection with the food products sold by the grocery chain.
Liu claimed that the platform was named after his brother, Joe Liu. This defense was successful and led the United Nations to dismiss the case.
Where’s ETF?🚨
The SEC has extended the comment period for spot bitcoin exchange-traded funds (ETFs), leading to a delay in the approval process.👇🏻
TTD UK 🇬🇧
The Blame Game
The UK's Culture, Media, and Sports Committee gave a big thumbs down to crypto fan tokens in sports as an authentic fan engagement tool.
Why?
“The promotion of crypto assets in professional sport is putting supporters at risk of financial harm and potentially damaging the reputations of clubs,”
They want government to ban fan tokens in football as a club’s metric of engagement with its supporters.
Reasons?
Price volatility.
Supporters’ lack of confidence in investing in these projects.
They believe many are just baiting loyal fans with shiny perks that might just vanish before you say, "Goal."
The committee's solution is clear: Team up with NFT platforms to create a code of conduct. This should protect creators, consumers, and sellers from dodgy dealings and copyright breaches.
There's no denying it: Fan tokens can be a goldmine.
Binance and their recent offer where point holders could rub shoulders with their sport idols.
The Chiliz (CHZ) token? It's the star player for the Socios platform, allowing fans to have a say in their favourite team's big decisions.
FC Porto recently gave fans a golden ticket last year to hang out with their top players.
Manchester City teamed up with OKX for a metaverse project, unlocking a virtual treasure chest of exclusive goodies for fans.
Binance's UK partner gets the red flag
The UK's Financial Conduct Authority (FCA) has placed restrictions on Rebuildingsociety, the peer-to-peer lending platform that partnered with Binance for compliance with the FCA's marketing regime.
Binance: The world-renowned crypto exchange, which isn't registered with the FCA.
Rebuildingsociety: A peer-to-peer lending platform that partnered with Binance to stay compliant with the FCA's marketing regulations.
The FCA stated that Rebuildingsociety was not authorised to approve the content of any financial promotion for a qualifying crypto asset and needed to withdraw any existing approvals.
The FCA didn't stop at just the notice.
They told Rebuildingsociety to:
Inform their clients (yes, that likely includes Binance) that they can't approve any financial promotions for certain crypto assets.
Pull back any ads that offer to approve such promotions.
Put it in writing to the FCA that they're playing by the rules.
TTD WTF 🙄
On September 14, a unique "vendor" was stationed right in front of the SEC in Manhattan’s Financial District.
The product? A spread of doormats, each urging you to "pull." Butr, these mats weren’t for sale.
They formed part of Nelson Saiers' guerilla installation called "Rug Pull."
The artwork aims to shed light on victims of crypto scams (rug pulls) and the SEC's perceived inaction.
Meet Nelson Saiers:
A former hedge fund manager, now a New York artist.
Dubbed the “Warhol of Wall Street” and hailed as crypto’s leading creative voice.
Born in Ethiopia, moved to the US at age 5.
Bagged his Ph.D. in mathematics from the University of Virginia by 23.
Ditched a successful finance career to chase his passion for art after feeling more drawn to art than financial indexes.
Saiers jumped into the crypto scene during the chilly crypto winter of 2018. He's only ever held Bitcoin and remains a supporter of the crypto community.
“While they have a very difficult job, it seems they were too lax in some ways but also too aggressive in others. I feel their rejection of certain investments may have unfortunately led some investors into more fraudulent products.” - Saiers.
His work isn’t limited to the crypto domain. He's tackled issues from unjust imprisonments to the intersection of art and math.
2014: Saiers displayed his first major exhibition at Studio Vendome, NYC.
2016: He critiqued the American prison system's lengthy sentences with an art show on Alcatraz Island.
2018: Saiers made headlines with his inflatable "crypto rat" in Manhattan, taking a playful jab at the Federal Reserve and Warren Buffet's crypto critiques.
TTD Surfer 🏄
Galxe, a cryptocurrency firm, has announced that it will replace 110% of the funds lost by users in a recent front-end hack.
Israeli authorities, in collaboration with Binance, have frozen multiple crypto accounts suspected to be linked to Hamas.
The European Securities and Markets Authority (ESMA) has released a report on decentralised finance (DeFi) and its risks to the EU market.
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