John Ray, chief executive officer of FTX Cryptocurrency Derivatives Exchange, arrives at bankruptcy court in Wilmington, Delaware, US, on Tuesday, Nov. 22, 2022.
Eric Lee | Bloomberg | Getty Images
The Department of Justice has requested that an independent examiner be appointed to review “substantial and serious allegations of fraud, dishonesty” and “incompetence” after the implosion of Sam Bankman-Fried’s crypto empire. It could be one way for the DOJ to gather evidence of alleged fraud.
In a filing in Delaware federal bankruptcy court, Andrew Vara, a U.S. bankruptcy trustee, told the court that the allegations of corporate misconduct and complete failure merited an immediate and speedy examination of the events leading up to FTX’s stunning collapse three weeks ago.
Vara said there’s a substantial basis to believe that Bankman-Fried and other managers mismanaged FTX or engaged in fraudulent conduct.
“It seems to me that the DOJ is trying to use the bankruptcy process as a way of getting evidence,” former federal prosecutor Renato Mariotti told CNBC.
“Many times, the Department of Justice and bankruptcy estates in fraud cases work together in compiling potential restitution or other types of actions to make victims whole,” he said. The DOJ “will likely be part of the asset recovery and potentially having a Victims Fund with money going to those that lost money and what the Department of Justice potentially will view as a fraud.”
“It just shows a level of interest and attention that they’re paying to this that should be troubling to Mr. Bankman-Fried.”
Vara said an examination is preferable to an internal investigation because of the wider implications the company’s collapse may have on the crypto industry.
Another legal expert said that there could be other factors at play too, including the extensive political donations that FTX executives were involved in on both sides of the aisle.
There have been “campaign donations on both sides of the aisle from FTX and there have been political overtones and undertones in this case,” said Braden Perry, former senior trial attorney at the Commodities Futures Trading Commission and Kennyhertz Perry partner.
“I think that this is just out of prudence and out of caution to make sure that whatever is happening is done at an independent level,” Perry continued.
It’s not unusual to appoint a bankruptcy examiner. There was one to oversee the crypto bankruptcy process of Celsius Network, for example.
Bankruptcies above a certain size require an examiner. In this case, the U.S. Trustee said that an examiner is mandatory because FTX’s fixed, liquidated and unsecured debts to customers exceed the $5 million threshold.
FTX’s November collapse left creditors reeling over the loss of hundreds of millions of dollars, in some cases, and has rocked the wider crypto world. BlockFi, a crypto lender, filed for bankruptcy protection in New Jersey last week.
Elon Musk, chief executive officer of Tesla Inc., during a fireside discussion on artificial intelligence risks with Rishi Sunak, UK prime minister, not pictured, in London, UK, on Thursday, Nov. 2, 2023. Sunak convened this week’s AI summit in an effort to position the UK at the forefront of global efforts to stave off the risks presented by the rapidly-advancing technology, which in the prime minister’s own words, could extend as far as human extinction. Photographer: Tolga Akmen/EPA/Bloomberg via Getty Images
“I would not vote for Biden,” Musk said during a wide-ranging interview with Andrew Ross Sorkin at the DealBook Summit in New York. “I’m not saying I’d vote for Trump.”
When asked what he’d do if those were the two nominees, Musk said, “This is definitely a difficult choice here.”
Musk, who says he supported Barack Obama’s candidacy, has moved rightward in his politics in recent years, writing in a tweet last year that “today’s Democratic Party has been hijacked by extremists.”
While he hasn’t endorsed a specific candidate for the 2024 election, Musk said last year that Florida Governor Ron DeSantis was his preferred choice at the time. He also hosted DeSantis’s campaign launch on X, formerly Twitter. More recently, Musk has said that Vivek Ramaswamy is “looking like a strong candidate.”
Musk told Sorkin on Wednesday that he disagrees with Ramaswamy on climate issues, but he shares some of the candidate’s views on government overreach and censorship. DeSantis’s name did not come up in the interview.
When asked if he could support Nikki Haley among the Republicans, Musk said no and described the former South Carolina governor as a “pro-censorship candidate.”
In terms of which party is more favorable towards freedom of speech, Musk said that “on balance, the Democrats appear to be more pro-censorship than Republicans,” which he characterized as a change from the past.
“We certainly get more complaints from the left than the right,” Musk said.
Tesla and SpaceX’s CEO Elon Musk reacts during an in-conversation event with British Prime Minister Rishi Sunak in London, Britain, Thursday, Nov. 2, 2023.
Kirsty Wigglesworth | Reuters
Speaking at the 2023 DealBook Summit in New York on Wednesday, Elon Musk, the owner of social media site X (formerly Twitter), scoffed at advertisers threatening to leave the platform because of antisemitic posts he amplified there.
“If somebody’s gonna try to blackmail me with advertising? Blackmail me with money? Go f—yourself.” He added, “Don’t advertise.”
He also implied that fans of his, and of X, would boycott those advertisers in kind. He specifically took aim at Disney.
“The whole world will know that those advertisers killed the company and we will document it in great detail,” Musk threatened.
He also told interviewer Andrew Ross Sorkin, “I have no problem being hated. Hate away.”
In recent weeks, Musk has promoted and sometimes verbally endorsed what the White House called “antisemitic and racist hate” on X, formerly Twitter, the social media platform he owns and runs as CTO.
He called those tweets, “one of the most foolish if not the most foolish thing I’ve ever done on the platform.”
“I’m sorry for that tweet or post,” he said. He added, “I tried my best to clarify, six ways to Sunday, but you know at least I think over time it will be obvious that in fact, far from being antisemitic, I am in fact philosemitic.”
His inflammatory posts on the social media platform led large advertisers, including Disney, Apple, and many others, to suspend campaigns there, and drove some famous users away from the platform, including Paris Mayor Anne Hidalgo.
Musk, who is also the CEO of Tesla and SpaceX, has denied that he is antisemitic, and said that on X, “Clear calls for extreme violence are against our terms of service and will result in suspension.”
He also traveled to Israel this week, where he met and spoke with Prime Minister Benjamin Netanyahu. When Netanyahu said he wanted to “deradicalize” and “rebuild” Gaza, Musk offered to help. Musk told Sorkin on stage that his visit to Israel was planned before his tweets, and were not part of an “apology tour.” Previously, Musk had said he wanted to bring SpaceX satellite communications service to Israel and humanitarian organizations in Gaza.
Musk’s personal account on X currently displays a follower count of more than 164 million — though tech blog Mashable reported in August that a majority of Musk’s listed followers appeared to be inauthentic or inactive accounts.
Musk espoused negative general views about unions and said they create a “lords and peasants” atmosphere at companies, and “naturally try to create negativity,” pitting workers against management.
He said, “Many people at Tesla have come up, gone from workign on the line to being in senior management and there is no lords and peasants — everyone eats at the same table.”
He also added, “If Tesla gets unionized, it will be because we deserve it and we failed in some way.”
At one point, Sorkin asked, “Do you feel like anybody has leverage over you?”
Musk replied, “If we make bad products that people don’t want to use, the users will vote with their resources and use something else. My companies are overseen by regulators. SpaceX, Starlink, Tesla – are overseen by cumulatively by…a few hundred regulators because we’re in 55 countries.”
Later, he noted that he complies with nearly all the regulations levied upon his companies, but “once in awhile” he disagrees with a regulation and would object to it and disobey. “I’m incredibly rule-following,” he claimed.
Sorkin asked, “How do you think about the leverage that the Chinese have over you?” alluding to Tesla’s factory there and the company’s reliance on Chinese consumers for a percentage of its sales. Sorkin added, “Is it hypocritical for you to be doing business in China, or other countries, as it relates to X and other things that don’t follow this free speech path that you have espoused?”
The CEO replied, “The best that the platform can do is adhere to the laws of any given country. Do you think there’s something more we can do than that?”
He later added that he believes the Chinese electric car companies are extremely competitive, and said that many people believe the top ten EV companies in the world will be Tesla and nine Chinese makers.
On OpenAI and its recent boardroom struggles, Musk said he had talked to a lot of people but had not found out what precisely led to the recent firing and then re-hiring of CEO Sam Altman. He also said he has “mixed feelings” about Altman personally, hinting that he feels like the OpenAI CEO has too much power. “The ring of power can corrupt.”
When it was founded, OpenAI’s original board included both Altman and Musk, but Musk left in 2018 after poaching a star engineer from the company to run Autopilot software engineering at Tesla.
Musk also said that he’s worried about the danger of AI harming humanity, and that he was “having trouble sleeping at night” because of it.
This is breaking news. Please check back for updates.
Federal Trade Commission Chair Lina Khan speaks during The New York Times annual DealBook Summit in New York City on Nov. 29, 2023.
Michael M. Santiago | Getty Images
Federal Trade Commission Chair Lina Khan defended her track record in court when it comes to blocking mergers, saying she believes the agency should take big swings and she’s “quite pleased” with the work it has done so far under her tenure, which started in June 2021.
Speaking at The New York Times DealBook Summit on Wednesday, Khan said that whenever the FTC brings a case, “you want to win it,” but that whenever there’s a loss, the agency will “try to figure out what went wrong.”
The FTC has had some high-profile losses during Khan’s tenure, including a failed attempt to block Facebook parent Meta from buying virtual reality company Within Unlimited. It also lost a fight to stop Microsoft‘s $69 billion acquisition of gaming giant Activision Blizzard, though the agency is still appealing the court ruling.
Under her leadership, Khan said the FTC has brought 11 cases against mergers, and in five instances, the companies abandoned their plans after the agency filed suit. There were 14 deals that were dropped during the FTC’s investigation, she added.
“Big picture, of course the two cases that we lost we would’ve wanted to win, but we’re quite pleased overall with our efforts,” Khan said on stage.
Khan is in the middle of what could be a career-defining antitrust case. In September, the FTC and 17 states sued Amazon, accusing the retail giant of wielding its “monopoly power” to artificially rise prices, degrade quality for shoppers and stifle competition. The lawsuit was long anticipated, as Khan rose to prominence for her 2017 Yale Law Journal article, “Amazon’s Antitrust Paradox.”
Khan argued in the piece that the prevailing antitrust framework at the time, which focused primarily on monopolies’ harm to consumers, failed to capture the ways tech giants such as Amazon are able to dominate in the digital world even while offering lower prices and more selection to consumers.
The agency has also taken aim at Amazon’s Prime service, alleging it tricked users into signing up for the program and intentionally complicated the cancellation process. Amazon has disputed both of the FTC’s lawsuits, calling them “wrong on the facts and the law.”
In the interview Wednesday, Khan said she doesn’t subscribe to Prime, which costs $139 a year and includes perks such as free shipping, access to streaming content and discounts on Whole Foods groceries.
Asked why she hasn’t subscribed to Prime, Khan replied, “I just haven’t.”