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Dec 27 (Reuters) - FTX customers filed a class action lawsuit against the failed crypto exchange and its former top executives including Sam Bankman-Fried on Tuesday, seeking a declaration that the company's holdings of digital assets belong to customers. The proposed class, which wants to represent more than 1 million FTX customers in the United States and abroad, seeks a declaration that traceable customer assets are not FTX property. The customer class also wants the court to find specifically that property held at Alameda that is traceable to customers is not Alameda property, according to the complaint. The lawsuit seeks a declaration from the court that funds held in FTX U.S. accounts for U.S. customers and in FTX Trading accounts for non-U.S. customers or other traceable customer assets are not FTX property. If the court determines it is FTX property, then the customers seek a ruling that they have a priority right to repayment over other creditors.

☆ FTX Collapse Puts Pressure on SEC’s Crypto Enforcement Strategy
▼ + stars: | 2022-12-22 | by ( Paul Kiernan | ) www.wsj.com time to read: 1 min

Securities and Exchange Commission Chair Gary Gensler is pushing to hold the cryptocurrency firms to the same rules that apply to stocks and bonds, rather than write a raft of new regulation for the troubled sector. That puts him at odds with some lawmakers who say the collapse of Sam Bankman-Fried’s FTX trading platform shows that crypto needs its own set of guardrails and point out that Mr. Gensler’s enforcement strategy moved too slowly to stop FTX from imploding.

☆ Prosecutors charge two top executives in connection with FTX collapse
▼ + stars: | 2022-12-22 | by ( ) www.reuters.com time to read: +1 min

WASHINGTON, Dec 21 (Reuters) - Federal prosecutors on Wednesday said they have charged Caroline Ellison, the former CEO of Alameda Research, and Zixiao (Gary) Wang, the former Chief Technology Officer of FTX Trading Ltd. (FTX) with defrauding investors in the crypto trading platform. U.S. Attorney Damian Williams said in a video statement that both Wang and Ellison have pleaded guilty to the charges and have agreed to cooperate with prosecutors. He said that Sam Bankman-Fried, founder of FTX, is now in FBI custody and is on his way to the United States. Williams also gave a stark warning in the video: "If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it. Reporting by Chris Prentice and Luc Cohen; Editing by Megan Davies & Shri NavaratnamOur Standards: The Thomson Reuters Trust Principles.

☆ SEC Chair Gary Gensler tees up changes to how the stock market operates
▼ + stars: | 2022-12-13 | by ( Bob Pisani | ) www.cnbc.com time to read: +8 min

These wholesalers may send the orders to exchanges, but often match the orders against their own internal order flow. However, Gensler has claimed that pension funds and other institutional investors are not able to interact with that retail order flow. Execution quality disclosure Market participants are required to submit monthly reports indicating how well they are executing client orders. Gensler has said investors today need a better understanding of how well their trading orders are being executed. Gensler's broad agenda The proposals on market structure are part of a broad agenda Gensler has undertaken this year.

Attorneys Office for the Southern District of New York charged the disgraced crypto executive with eight criminal counts: conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, money laundering and conspiracy to avoid campaign finance regulations. "This is really just old fashioned embezzlement. Old school, old school." The Senate Banking Committee had also asked Bankman-Fried to testify at a Wednesday hearing that he previously refused to attend. Ryan Salame, the co-CEO of FTX Digital Markets, donated another $23 million, with the majority of his contributions heading toward Republicans.

The Commodity Futures Trading Commission announced new charges against Bankman-Fried, FTX and Alameda Research, alleging that FTX commingled customer funds and that the onetime crypto billionaire violated the Commodities Exchange Act. From the founding of FTX in 2019, the CFTC alleged, Alameda "accessed and used FTX customer funds for Alameda's own operations and activities, including to fund its trading, investment, and borrowing/lending activities." The CFTC filing echoed charges that the SEC unveiled earlier Tuesday, which said Bankman-Fried operated his empire as a fraud "from the start." FTX allowed Alameda access to massive amounts of liquidity, backstopping risky bets on crypto assets and derivatives, the CFTC alleged. "At Bankman-Fried's direction, FTX executives created features in the underlying code for FTX that allowed Alameda to maintain an essentially unlimited line of credit on FTX," the CFTC alleged.

☆ Alameda ex-CEO Caroline Ellison taps SEC's former top crypto regulator as lawyer in FTX investigation
▼ + stars: | 2022-12-10 | by ( Bethany Biron | ) www.businessinsider.com time to read: +3 min

Caroline Ellison hired Stephanie Avakian and law firm WilmerHale to represent her in the FTX investigation, per Bloomberg. Sources close to the matter told Bloomberg that Avakian, as well as fellow WilmerHale lawyers, will represent Ellison. Avakian and WilmerHale will represent Ellison during the federal probe into her former company, Alameda Research, the trading firm and corporate sibling of fallen cryptocurrency exchange, FTX. Ellison has remained an elusive figure in the collapse of FTX, staying mum and largely unreachable during its downfall. As noted by Bloomberg, while Bankman-Fried has publicly placed blame on Alameda in numerous interviews, Ellison has stayed silent.

☆ U.S. lawmakers press federal banking regulators on the industry’s exposure to crypto after Alameda stake in bank comes to light
▼ + stars: | 2022-12-08 | by ( Chelsey Cox | ) www.cnbc.com time to read: +3 min

Top Senate Democrats pressed key banking regulators on possible ties between the industry and digital currency exchanges following the bankruptcy of major cryptocurrency firm, FTX. "Banks' relationships with crypto firms raise questions about the safety and soundness of our banking system and highlight potential loopholes that crypto firms may try to exploit to gain further access." Silvergate Capital Corp., Provident Bancorp Inc., Metropolitan Commercial Bank, Signature Bank, Customers Bancorp Inc. are among several noted banks experiencing heightened volatility after the FTX failure. "Banks' relationships with crypto firms raise questions about the safety and soundness of our banking system and highlight potential loopholes that crypto firms may try to exploit to gain further access to banks," the senators wrote. To better understand the banking industry's exposure to crypto, the senators asked for responses to a roster of questions, including all business relationships between FTX, Alameda and Moonstone, by Dec. 21.

☆ Lawyers for FTX customers accuse debtors of failing to file full financial disclosures
▼ + stars: | 2022-12-07 | by ( Pete Syme | ) www.businessinsider.com time to read: +3 min

Lawyers at Eversheds Sutherland represent FTX's non-US customers – 98% of its 1.2 million users. The lawyers say that Chapter 11 debtors should file full financial disclosures. The law firm Eversheds Sutherland represents the Ad Hoc Committee of Non-US Customers of FTX.com, established to protect users outside the US. Erin Broderick, an attorney at Evershed Sutherland, said "Chapter 11 debtors are typically required to file full financial disclosures shortly after the bankruptcy filing." Adam Landis, the lawyer representing FTX and its entities, did not immediately respond to Insider's request for comment.

☆ Sam Bankman-Fried apologized to an FTX customer who said he lost his life savings of $2 million, and accused the former CEO of stealing it
▼ + stars: | 2022-12-01 | by ( Pete Syme | ) www.businessinsider.com time to read: +3 min

An FTX user wrote to the host interviewing Sam Bankman-Fried at a New York Times summit. He said he lost $2 million and accused SBF of stealing it. Andrew Ross Sorkin – the journalist hosting the summit – shared the email "from a gentleman who said he lost his life savings." It had the subject line: "Sam Bankman-Fried stole $2 million from me." The user wrote: "Andrew, can you please ask SBF why he decided to steal my life savings and the $10 billion more from customers to give to his hedge fund, Alameda?"

BlockFi lawyers said during the crypto lender's bankruptcy hearing on Tuesday that the firm plans to reopen withdrawals as part of an effort to "maximize client recoveries." FTX had arranged a rescue plan for BlockFi, but that fell apart when FTX faced its own liquidity crisis earlier this month and rapidly sank into bankruptcy. BlockFi loaned $671 million to Alameda, Sussberg said, and had an additional $355 million in digital assets that are currently frozen on the FTX platform. Exposure to both firms prompted client withdrawals, but it was FTX's plan to acquire BlockFi that ultimately led it into bankruptcy proceedings, the lawyer said. In the bankruptcy filing, BlockFi indicated it had more than 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion.

☆ FTX Disclosed Related-Party Transactions but Didn’t Name Names
▼ + stars: | 2022-11-18 | by ( Jonathan Weil | ) www.wsj.com time to read: 1 min

The saga of Sam Bankman-Fried ‘s bankrupt crypto empire isn’t just about collapsing tokens, missing billions and sunny offshore tax havens. There were also red flags in its books. At the core of FTX Trading Ltd.’s financial statements was a series of related-party transactions. But the company didn’t say who those parties were.

☆ If you lost money on FTX, 'there's a good chance of getting something back' says a 15-year IRS lawyer, who explains what customers should do immediately as bankruptcy proceedings unfold
▼ + stars: | 2022-11-18 | by ( Laila Maidan | ) www.businessinsider.com time to read: +5 min

You may need to file a proof of claim to be considered an FTX creditor, says Miles Fuller. As the dust settles after the collapse of crypto exchange FTX, depositors are left wondering whether they'll ever see their assets again. To add insult to injury, a hacker was able to swipe $600 million from the exchange, further depleting its assets. But recent news indicates FTX may have taken possession of those deposits, leaving customers as general unsecured creditors in the bankruptcy. Also know that during the bankruptcy proceeding, the debtor, which would be the exchange entity, may challenge those proof of claims.

☆ An executive at an FTX affiliate threw up when he learnt of the crypto exchange's impending collapse, report says
▼ + stars: | 2022-11-17 | by ( Grace Dean | ) www.businessinsider.com time to read: +3 min

FTX Digital Markets' co-CEO threw up when he learnt of FTX's problems, sources told the WSJ. A former EY senior tax account, Salame joined Alameda in 2019 before helping him set up FTX parent company FTX Trading Ltd. In September 2021 Salame became co-CEO of FTX Digital Markets, which describes itself as the Bahamian subsidiary of FTX Trading Ltd. "FTX Digital Markets offers users regulated access to FTX's industry-leading derivatives, options, volatility products, and other FTX products and services," it says on its LinkedIn page. FTX Digital Markets filed for Chapter 15 bankruptcy protection on Tuesday in the Southern District of New York.

☆ The fallout of Sam Bankman-Fried's FTX spreads as Gemini Earn and Genesis Global Capital suspend withdrawals
▼ + stars: | 2022-11-16 | by ( Phil Rosen | ) www.businessinsider.com time to read: +2 min

The crypto lending arm of Genesis Global Trading is suspending customer withdrawals, days after Sam Bankman-Fried's FTX filed for bankruptcy. Gemini Earn, run by the Winklevoss brothers, said it also paused withdrawals on its lending program. Genesis Global Capital is the lending partner of the Gemini Earn program, which lets users to lend their crypto to institutional borrowers. Genesis Global Capital, which is the crypto-lending arm of Genesis Global Trading, cited "the extreme market dislocation and loss of industry confidence caused by the FTX implosion," according to CoinDesk. Genesis Global Trading is capitalized separately and continues to provide full trading and custody services.

☆ FTX In Contact With Prosecutors As Bankruptcy May Touch One Million Customers
▼ + stars: | 2022-11-15 | by ( Alexander Gladstone | ) www.wsj.com time to read: 1 min

FTX Trading Ltd. said in court papers Monday that over the past 72 hours it has been in contact with the U.S. Attorney’s Office and dozens of federal, state and international regulatory agencies, and that up to a million customers may be affected by its sudden collapse into bankruptcy. The bankrupt cryptocurrency exchange said that its newly-appointed chief executive, John J. Ray III, has begun working to secure customer assets and FTX property around the world, including by halting trading and withdrawal functions on its exchanges and moving as many digital assets as possible to a new “cold wallet” custodian.

Nov 15 (Reuters) - FTX Trading's new CEO John J. Ray III, a lawyer tapped to lead the collapsed crypto exchange's restructuring, previously oversaw the $23 billion bankruptcy of energy firm Enron Corp and has a reputation for boosting creditor recoveries. Ray, 63, on Monday declined to comment on his initial priorities as FTX's CEO. Serving as Enron's CEO throughout its years-long bankruptcy, Ray's work resulted in major settlements with banks accused of helping Enron deceive investors, including a $1.66 billion settlement with Citigroup in 2008. Mark Lichtenstein, an attorney who worked on Enron's bankruptcy, saw many parallels between FTX and that case. "You’ve got such a meltdown, similar to Enron, sort of a run on the bank," Lichtenstein said.

☆ What to Watch in the FTX Bankruptcy as Details Remain Scarce
▼ + stars: | 2022-11-14 | by ( Becky Yerak | ) www.wsj.com time to read: 1 min

Details are scarce in the multibillion dollar free-fall of cryptocurrency firm FTX, and the crypto industry is grappling with what bankruptcy means for companies in a relatively unregulated sector. Here is what to watch in bankruptcy court as the case unfolds. Who filed for bankruptcy? More than 130 FTX entities have filed for bankruptcy including FTX Trading Ltd., the company presiding over the global trading website FTX.com. In bankruptcy, all of the action will eventually be consolidated under one entity.

☆ FTX is just the tip of the iceberg. Meet 16 lawyers whose bankruptcy battles, from Revlon to JCPenney, are setting them up for a boom in business
▼ + stars: | 2022-11-14 | by ( Sindhu Sundar | ) www.businessinsider.com time to read: +3 min

Despite the economic downturn, just 312 corporations filed for bankruptcy this year as of October. Here are 16 lawyers who may benefit as more companies negotiate with lenders and restructure their debt. FTX filed for Chapter 11 bankruptcy on Friday after questions were raised about its capital, leading customers to flee the exchange. Despite the high-profile nature of FTX's bankruptcy, such filings actually fell to a new low in 2022. As of end of October, there were just 312 corporate bankruptcy filings, down from 410 filings in 2021, and 640 in 2020, according to an S&P Global Market Intelligence report.

☆ FTX collapse being scrutinized by Bahamas authorities
▼ + stars: | 2022-11-13 | by ( Jasper Ward | ) www.reuters.com time to read: +4 min

[1/3] The logo of FTX is seen at the entrance of the FTX Arena in Miami, Florida, U.S., November 12, 2022. REUTERS/Marco BelloNASSAU, Bahamas, Nov 13 (Reuters) - The collapse of cryptocurrency exchange FTX is the subject of scrutiny from government investigators in the Bahamas, who are looking at whether any "criminal misconduct occurred," the Royal Bahamas Police said on Sunday. Bankman-Fried had transferred $10 billion of customer funds to his trading company, Alameda Research, the sources said. Blockchain analytics firm Nansen said on Saturday it saw $659 million in outflows from FTX International and FTX U.S. in the preceding 24 hours. In its bankruptcy petition, FTX Trading said it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors.

loadingIn a follow-up tweet, FTX said subsidiaries LedgerX LLC, FTX Digital Markets, FTX Australia Pte Ltd, FTX Capital Markets, Embed Financial Technologies and Embed Clearing were not included in the Chapter 11 filings. People familiar with the matter told Reuters at least $1 billion of customer funds have vanished from FTX. The nine days of turmoil hit already-struggling cryptocurrency markets, sending bitcoin to two-year lows . Its CEO Brian Armstrong told CNBC crypto markets need regulation to avoid more washouts like FTX. This is the primary way financial markets could suffer, as it may have further minor implications for portfolio shocks in a volatile macro regime."

The firm's founder Sam Bankman-Fried had transferred $10 billion of customer funds to his trading company, Alameda Research, the sources said. Blockchain analytics firm Nansen said it saw $659 million in outflows from FTX International and FTX U.S. in the last 24 hours. In January, FTX had raised $400 million from investors at a $32 billion valuation. "Over four years, FTX raised $1.8 billion from venture capital and pension funds. In its bankruptcy petition, FTX Trading said it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors.

He is seeking the remainder from other funds, including current investors in FTX such as venture capital fund Sequoia Capital, the source added. Tether's chief technology officer, Paolo Ardoino, tweeted that it had "no plans to invest in or lend assets to FTX." FTX also got hit by the Bahamas Securities Commission, where the company is based, freezing assets of FTX Digital Markets "and related parties". In a tweet, FTX said it had reached a deal with Tron to establish a special facility that would allow clients to swap some crypto assets from FTX to external wallets. Bankman-Fried told investors that Alameda owes FTX about $10 billion, the Wall Street Journal reported.

☆ The future of FTX and Sam Bankman-Fried is now in the hands of these 3 lawyers who have worked for Enron, Michael Milken, and Elon Musk
▼ + stars: | 2022-11-11 | by ( Jack Newsham | ) www.businessinsider.com time to read: +7 min

A senior Paul Weiss lawyer has been hired to defend FTX founder and ex-CEO Sam Bankman-Fried. FTX said on Twitter that a sprawling group of companies founded by Bankman-Fried, known as SBF, filed for Chapter 11 bankruptcy in Delaware. The new CEO of FTX is John J. Ray III, a lawyer-turned-executive with a colorful past leading troubled companies, most notably Enron. The firm Paul Weiss and its lawyer Martin Flumenbaum, who represented the junk-bonds king Michael Milken, are representing Bankman-Fried personally. John J. Ray IIIRay joined FTX as CEO just in time to sign its bankruptcy filing.

☆ FTX's Sam Bankman-Fried lost billions and the company filed for bankruptcy—it could signal the 'demise' of crypto, expert says
▼ + stars: | 2022-11-11 | by ( Cheyenne Devon | ) www.cnbc.com time to read: +2 min

The company filed for bankruptcy on Nov. 11 after competing offshore crypto exchange, Binance, backed out of a deal to acquire it and users withdrew around $6 billion in funds. FTX's Sam Bankman-Fried, who often goes by SBF, stepped down as CEO on Friday. He saw his estimated net worth drop by billions virtually overnight as his cryptocurrency exchange platform teeters on the brink of collapse. Zhao was paid about $2.1 billion worth of FTT, the native crypto token that gives users access to the FTX trading platform. What happens to crypto traders on the FTX platform if it collapses?

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