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FTX back in bankruptcy court as Sam Bankman-Fried tries again for bail in the Bahamas

Before his surprise Monday night arrest, Sam Bankman-Fried had apologized for everything he could think of, to everyone who would listen. In a leaked draft of his aborted House testimony, he wrote that he was truly, for his entire adult life, “sad.” He “f—– up,” he tweeted, and wrote, and said.

He told Bahamas regulators he was “deeply sorry for ending up in this position.” But when Bankman-Fried was escorted out of his penthouse apartment in Nassau in handcuffs, it still wasn’t clear what he was apologizing for, having stridently denied committing fraud to CNBC’s Andrew Ross Sorkin, ABC News’ George Stephanopoulos, and across Twitter for weeks.

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But the day after his arrest, federal prosecutors and regulators unsealed dozens of pages of filings and charges that accused Bankman-Fried of not just having perpetrated a fraud, but having done so “from the start,” according to a filing from the Securities Exchange Commission

Far from having “f—– up,” SEC and Commodity Futures Trading Commission regulators, alongside federal prosecutors from the United States Attorney’s Office for the Southern District of New York, allege that Bankman-Fried was at the heart — indeed, the driver — of “one of the biggest financial frauds in American history,” in the words of U.S. Attorney Damian Williams. The allegations against Bankman-Fried were assembled with stunning speed, but offer insight into one of the highest-profile fraud prosecutions since Enron.

Bankman-Fried founded his crypto hedge fund Alameda Research in November 2017, renting office space in Berkeley, California. The scion of two Stanford law professors, Bankman-Fried had graduated from MIT, worked at the prestigious quantitative trading firm Jane Street Capital, and had broken into cryptocurrencies with a MIT classmate, Gary Wang.

Alameda Research was essentially an arbitrage shop, purchasing bitcoin at a lower price from one exchange and selling it for a higher price at another. Price differences in South Korea versus the rest of the world allowed Bankman-Fried and Wang to profit tremendously from what was nicknamed “the kimchi swap.”

In April 2019, Bankman-Fried and Wang — along with U.C. Berkeley graduate Nishad Singh — founded FTX.com, an international cryptocurrency exchange that offered customers innovative trading features, a responsive platform, and a reliable experience.

Federal regulators at the CFTC say that just a month after founding FTX.com, Bankman-Fried, “unbeknownst to all but a small circle of insiders,” was leveraging customer assets — specifically, customers’ personal cryptocurrency deposits — for Alameda’s own bets. 

Rehypothecation is the term for when businesses legally use customer assets to speculate and invest. But Bankman-Fried didn’t have permission from customers to gamble with their funds. FTX’s own terms of use specifically forbade him, or Alameda, from using customer money for anything — unless the customer allowed it.

And from FTX’s inception, there was a lot of customer money. The CFTC cited 2019 reports from FTX which pegged the futures volume alone as often exceeding $100 million every day.

Using customer money for Alameda’s bets constituted fraud, the CFTC alleges. In the Southern District of New York, where Bankman-Fried was indicted by a grand jury, Bankman-Fried faces criminal fraud charges as well. From the very genesis of FTX, regulators allege, Bankman-Fried was using customer funds to bankroll his speculative investments.

It is a swift fall from grace for the one-time king of crypto, who as recently as two months ago was hailed as the savior of the industry. Now, Bankman-Fried heads to a Bahamian court on Monday to surrender himself to the U.S. extradition process, according to a person familiar with the matter. A criminal trial awaits him once he is back on U.S. soil.

Attorneys for Bankman-Fried, and attorneys for his former companies, did not immediately return requests for comment. A representative for Bankman-Fried declined to comment.

Sam Bankman-Fried ordered back to prison after bail denied

The rise of the Alameda-FTX empire

FTX quickly rose, launching its own token, FTT, in July 2019 and snagging an equity investment from Binance in November of that year.

By 2021, according to the CFTC filing, FTX and its subsidiaries held roughly $15 billion worth of assets, and accounted for 10% of global digital transaction volume, clearing $16 billion worth of customer trades every day.

The firm’s “years-long” fraud didn’t just extend to playing with customer money, according to the SEC. 

FTX was able to operate so effectively, clear such massive volume, and generate such interest because it had a designated market maker (DMM) of its own. In traditional finance, a DMM is a firm that will buy and sell securities to and from customers, hoping to clear a profit in any difference in price, called the spread.

From FTX’s 2019 founding, Alameda was that market maker, snapping up and releasing cryptocurrencies on the exchange. Alameda and FTX’s symbiotic relationship proved advantageous for both ends of Bankman-Fried’s growing empire.

As FTX matured, other market makers came online to offer liquidity. But Alameda was, and remained, FTX’s largest liquidity provider, easing platform function at “Bankman-Fried’s direction,” the SEC alleges.

Unlike those other market makers or power users, Alameda had a set of powerful tools at its disposal. 

In August 2019, the SEC alleges, Bankman-Fried directed his team at FTX to program an exception into the exchange’s code, allowing Alameda to “maintain a negative balance in its account, untethered from any collateral requirements.”

“No other customer account at FTX was permitted to maintain a negative balance,” the SEC filing continues. The negative balance meant that Alameda was allegedly effectively backstopped by customer assets while making trades.

Former Alameda CEO Caroline Ellison once alluded to this in a widely disseminated interview. 

“We tend not to have things like stop losses,” Ellison said.

In traditional finance, a stop-loss order helps traders limit exposure to a potentially losing trade. When an asset (a stock, for example) reaches a pre-determined lower limit, the stop-loss order will automatically sell off the asset to prevent losses from spiraling out of control.

Not content with what would eventually become a “virtually unlimited” line of credit from investors — his own customers — Bankman-Fried conspired to stack the deck in Alameda’s favor, regulators say.

FTX offered power users access to an API — an interface that allowed the user to bypass FTX’s front-end platform and communicate directly with FTX’s back-end systems. Normal users were still subjected to common-sense checks: verifying that they had enough money in their account, for example.

Alameda traders could access a fast-lane which let them shunt past other users and shave “several milliseconds” off their trade execution times, according to the CFTC. The kind of high-frequency trading that FTX users engaged in made that invaluable.

I didn't ever try to commit fraud on anyone: Sam Bankman-Fried

A lousy crypto hedge fund

Despite the deck being stacked in Alameda’s favor, the hedge fund offered terrible returns. A court filing indicated that Alameda lost over $3.7 billion over its lifetime, despite public statements by FTX leaders touting how profitable the trading arm was.

Alameda’s losses and lending structure were a critical component of FTX’s eventual collapse.

Alameda didn’t just play fast and loose with customer money. The hedge fund borrowed aggressively from multiple lenders, including Voyager Digital and BlockFi Lending. Both those companies entered Chapter 11 bankruptcy proceedings this year, and FTX targeted both for acquisition.

Alameda secured its loans from Voyager and BlockFi with FTT tokens, which FTX minted itself. Bankman-Fried’s empire controlled the vast majority of the available currency, with only a small amount of FTT actually circulating at any time.

Alameda should have acknowledged the fact that its tokens couldn’t be sold at the price that they claimed they were worth, the CFTC alleges in its complaint. 

This was because any attempt by Alameda to sell off their FTT tokens would crater FTT’s price, given how much of the available supply Alameda controlled.

Instead of correctly marking its tokens to market, though, Alameda recorded their entire hoard of FTT as being worth the prevailing market price.

Alameda used this methodology with other coins as well, including Solana and Serum (a token created and promoted by FTX and Alameda), using them to collateralize billions in loans to other crypto players. Industry insiders even had a nickname for those tokens — “Sam coins.”

The tables turned after the collapse of Luna, a stablecoin whose implosion and subsequent crash devastated other lenders and crypto firms and sent crypto prices plunging. Major Alameda lenders, like Voyager, declared bankruptcy. Remaining lenders began to execute margin calls or liquidate open positions with customers, including Alameda.

The CFTC alleges that between May and June 2022, Alameda was subjected to “a large number of margin calls and loan recalls.”

Unbeknownst to investors, lenders, or regulators, Alameda lacked enough liquid assets to service its loan obligations.

But while Alameda was illiquid, FTX’s customers — who had been constantly reassured that the exchange, and Bankman-Fried, were determined to protect their interests — were not. 

Sam Bankman-Fried in jail in the Bahamas till February as Senate FTX hearing kicks off

The fraud — exposed

Bankman-Fried stepped down from his leadership position at Alameda Research in Oct. 2021 in what CFTC regulators claim was a calculated bid to cultivate a false sense of separation between FTX and the hedge fund. But he continued to exercise control, regulators claim.

Bankman-Fried allegedly ordered Alameda to increase its use of customer assets, drawing down massively on its “unlimited” credit line at FTX.

“Alameda was able to rely on its undisclosed ordinary-course access to FTX credit and customer funds to facilitate these large withdrawals, which were several billion dollars in notional value,” the CFTC filing reads.

By the middle of 2022, Alameda owed FTX’s unwitting customers approximately $8 billion. Bankman-Fried had testified before the House that FTX boasted world-class risk management and compliance systems, but in reality, according to the firm’s own bankruptcy filings, it possessed almost nothing in the way of record-keeping.

Then, on Nov. 2, the first domino fell. Crypto trade publication CoinDesk publicized details on Alameda’s balance sheet which showed $14.6 billion in assets. Over $7 billion of those assets were either FTT tokens or Bankman-Fried-backed coins like Solana or Serum. Another $2 billion were locked away in equity investments.

For the first time ever, the secretive inner workings of Alameda Research were revealed to be a modern-day Potemkin village. Investors began to liquidate their FTT tokens and withdraw their holdings from FTX, a potentially calamitous situation for Bankman-Fried.

Alameda still had billions of collateralized loans outstanding — but if the value of their collateral, FTT, fell too far, their lenders would execute further margin calls, demanding full repayment of loans.

Allegedly, Alameda had already been unable to fulfill loan obligations over the summer without accessing customer funds. Now, with money flowing out of the exchange and FTT’s price slipping, Alameda and FTX faced a liquidity crunch.

In a now-deleted tweet, Bankman-Fried continued to claim FTX was fully funded and that customer assets were safe. But on Nov. 6, four days after the CoinDesk article, the crack widened into a chasm, thanks to an old investor-turned-rival, Changpeng “CZ” Zhao.

Zhao founded Binance in 2017, and it was the first outside investor in FTX, funding a Series A round in 2019. It had exited the investment by July 2021, the same year that FTX raised $1 billion from big names like Sequoia Capital and Thoma Bravo.

FTX bought out Binance with a combination of BUSD, BNB, and FTT, according to Zhao.

BUSD is Binance’s exchange-issued stablecoin, pegged to the value of the U.S. dollar. BNB is their exchange token, similar to FTX’s FTT, issued by Binance and used to pay transaction and trading fees on the exchange.

Zhao dropped the hammer with a tweet saying that because of “recent revelations that have came [sic] to light, we have decided to liquidate any remaining FTT on our books.”

FTX executives scrambled to contain potential damage. Ellison responded to Zhao offering to purchase Binance’s remaining FTT position for $22 per token.

Privately, Bankman-Fried ordered Alameda traders to liquidate Alameda’s investments and positions “to rapidly free up capital for FTT buybacks,” the CFTC filing states. Bankman-Fried was preparing to bet the house in an effort to maintain Ellison’s public support level of $22.

Alameda traders managed to fend off outflows for two days, holding the price of FTT at around $22.

Publicly, Bankman-Fried continued to operate as if all was well. “FTX is fine. Assets are fine,” he wrote in a tweet on Nov. 7 that has since been deleted. Bankman-Fried asserted that FTX did not invest client assets and that all redemptions would be processed.

But at the same time Bankman-Fried was tweeting reassurances, internally, executives were growing more and more alarmed at the increasing shortfall, according to prosecutors. It was “not merely a matter of having sufficient liquid funds on hand to cover customer withdrawals,” the CFTC alleges.

Rather, Bankman-Fried and other executives admitted to each other that “FTX customer funds were irrevocably lost because Alameda had appropriated them.”

It was an admission that flew in the face of everything Bankman-Fried would claim publicly up through the day of his arrest, a month later.

By Nov. 8, the shortfall had grown from $1 billion to $8 billion. Bankman-Fried had been courting outside investors for a rescue package. “Numerous parties declined […] regardless of the favorable terms being offered,” the CFTC filing alleges. 

FTX issued a pause on all customer withdrawals that day. FTT’s price plummeted by over 75%. Bankman-Fried was in the midst of a high-tech, decentralized run on the bank. Out of options, he turned to Zhao, who announced that he’d signed a “non-binding” letter of intent to acquire FTX.com.

But just a day later, on Nov. 9, Binance said it would not go through with the acquisition, citing reports of “mishandled customer funds” and federal investigations.

Two days later, Bankman-Fried resigned as CEO of FTX and associated entities. FTX’s longtime attorneys at Sullivan & Cromwell approached John J. Ray, who oversaw Enron through its bankruptcy, to assume Bankman-Fried’s former position.

FTX filed for bankruptcy that same day, on Nov. 11. A month later, Bankman-Fried was arrested by Bahamian authorities, pending extradition on charges of fraud, conspiracy, and money laundering.

Bankman-Fried, a devotee of a philosophy known as “effective altruism,” was apparently driven by an obsessive need to quantify the impact he had on this world, measured in dollars and tokens. He drafted a spreadsheet which measured the influence that Alameda had on the planet (and determined it was nearly a net wash). 

Billions of dollars of customer money are now floating in venture funds, political war chests and charitable coffers — money now at risk of being clawed back, thanks to Bankman-Fried’s alleged crimes.

Almost a decade ago, Bankman-Fried posed a hypothetical question to his friends and family on his personal blog: Waxing poetic on effective altruism, he asked rhetorically, “Just how much impact can a dollar have?”

“Well, if you want a one-sentence answer, here it is: one two thousandth of a life,” he said.

The CFTC alleges that over $8 billion dollars of customer funds are missing. Some customers have doubtless lost their life savings, their kid’s college funds, their future down payments. By Bankman-Fried’s own math, his alleged misdeeds were worth four million lives.

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1,500 new Colorado homes will come with geothermal heat pumps

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1,500 new Colorado homes will come with geothermal heat pumps

Over the next two years, homebuilder Lennar is outfitting more than 1,500 new Colorado homes with Dandelion Energy’s geothermal systems in one of the largest residential geothermal rollouts in the US.

The big draw for homeowners is lower energy bills and cleaner heating and cooling. Dandelion claims Lennar homeowners with geothermal systems will collectively save around $30 million over the next 20 years compared to using air-source heat pumps. Geothermal heat pumps don’t need outdoor AC units or conventional heating systems, either.

Geothermal systems use the sustained temperature of the ground to heat or cool a home. A ground loop system absorbs heat energy (BTUs) from the earth so that it can be transferred to a heat pump and efficiently converted into warmth for a home. Dandelion says its ground loop systems are built to last for over 50 years and should require no maintenance.

Dandelion’s geothermal system uses a vertical ground closed-loop system that is installed using well-boring equipment and trenched back into the house to connect to a heat pump. The pipes circulate a mixture of water and propylene glycol, a food-grade antifreeze, that absorbs the ground’s temperature. A ground source heat pump circulates the liquid through the ground loops and it exchanges its heat energy in the heat pump with liquid refrigerant. The refrigerant is converted to vapor, compressed to increase its temperature, then passed through a heat exchanger to transfer heat to the air, which is circulated through a home’s HVAC ductwork.

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Daniel Yates, Dandelion Energy’s CEO, called the partnership with Lennar a “new benchmark for affordable, energy-efficient, and high-quality home heating and cooling.” By streamlining its installation process, Dandelion is making geothermal systems simpler and cheaper for homebuilders and homeowners to adopt.

This collaboration is happening at a time when Colorado is pushing hard to meet its clean energy targets. Governor Jared Polis is excited about the move, calling it a win for Coloradans’ wallets, air quality, and the state’s leadership on geothermal energy. Will Toor, executive director of the Colorado Energy Office, said that “ensuring affordable access to geothermal heating and cooling is essential to achieve net-zero emissions by 2050, and we’re excited to be part of such a huge effort to bring this technology to so many new Colorado homes.”

And it’s not just about cutting emissions – geothermal heat pumps help reduce peak electric demand. Analysis from the Department of Energy found that widespread adoption of these systems could save the US from needing 24,500 miles of new transmission lines. That’s like crossing the continental US eight times.

Colorado is making this transition a lot more attractive through state tax credits and Xcel Energy’s rebate programs. These incentives slash upfront costs for builders like Lennar, making geothermal installations more financially viable. The utility’s Clean Heat Plan and electrification strategy are working to keep energy bills low while meeting climate goals.

Read more: This will be the first geothermal energy storage system on the Texas grid


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Polestar 2 removed from Polestar’s US website alongside tariff announcement

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Polestar 2 removed from Polestar's US website alongside tariff announcement

Polestar has removed the Polestar 2 from its US website header in an early sign of how new tariffs will restrict choice and competition for American consumers, thus increasing prices.

The Polestar 2 is Polestar’s first full EV – the original Polestar 1 was a limited-edition plug-in hybrid.

It started production in 2020 in Luqiao, Zhejiang, China, where Polestar and Volvo’s parent corporation, Geely, was founded.

And there’s the rub: while Polestar’s newer EV, the 3 (which we just drove the new single motor version of last week), is built in South Carolina, the 2 is not.

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Unfortunately, that interacts with some news that has been getting a lot of play lately: tariffs.

The US has been gradually getting stupider and stupider on the issue of tariffs, apparently determined to increase prices for Americans and decrease the competitiveness of American manufacturing in a time of change for the auto industry.

It is widely acknowledged (by anyone who has given it a few seconds of thought) that tariffs increase prices and that trade barriers tend to reduce competition, leading to less innovation.

It started with 25% tariffs on various products from China, implemented in the 2018-2020 timeframe. Then, in 2024, President Biden implemented a 100% tariff on Chinese EVs, effectively stopping their sale in the US. These tariffs included some exceptions and credits based on Volvo’s other US manufacturing, which Polestar had used to keep the most expensive versions of the 2 on sale in the US, while restricting the lower-priced versions from sale. Nevertheless, they were a bad idea.

Now, in yet another step to make America less competitive and inflate the prices of goods more for Americans, we got more tariff announcements today from a senile ex-reality TV host who wandered into the White House rose garden (which he does not belong in). These tariffs do not include the same exceptions as the previously-announced Biden tariffs.

Apparently this has all been enough for Polestar, as even in advance of today’s tariff announcements, the company suddenly removed its Polestar 2 from its website header today.

The change can be seen at polestar.com/us, where only the Polestar 3 and 4 are listed in the header area. On other sites, like the company’s Norwegian website or British website, the car is still there. The Polestar 2 page is still up on the US website, but it isn’t linked to elsewhere on the site (we’ll see how long it stays up).

We reached out to Polestar for comment, but didn’t hear anything back before publication. We’ll update if we do.

It makes sense that the Polestar 2 would still be for sale elsewhere, as it only started production in 2020. Most car models are available for at least 7 years, so this is an earlier exit than expected.

So it’s likely that all of the tariff news is what had an effect in killing the Polestar 2.

Then again, this is also just the second day of a new fiscal quarter. Perhaps the timing offers Polestar an opportunity to make a clean break – especially now that the lower-priced version of its Polestar 3 is available.

Despite the lower $67.5k base price of the new Polestar 3 variant, that represents a big increase in price for the brand, which had sold the base model Polestar 2 for around $50k originally, before all of these tariffs.

Update: Polestar got back to us with comment, but understandably, it doesn’t say much:

Polestar is a three-car company and Polestar 2 is available for customers now. There are a select number of Polestar 2s in stock at retailers that can be found on Polestar.com, but Polestar 3 and Polestar 4 will be the priority in the North American market.

Electrek’s Take

This isn’t the first car that America has been deprived of due to tariffs. The Volvo EX30, one of our most anticipated vehicles, and Electrek’s Vehicle of the Year for 2024, had its American availability pushed back due to tariffs.

Volvo decided to build the car in Belgium and export it to the US, but now that new tariffs apply to the EU as well, maybe that low-priced, awesome, fast, small EV will instead stay in Europe instead of being shipped overseas.

This shows how mercurial tariff fiats from an ignoramus are bad for manufacturing, as they mean that companies can’t make plans – and if they can’t make plans, eventually, they’ll probably just write the country making the random decisions out of their plans so they don’t have to deal with the nonsense.

And we’ve heard this from every businessperson or manufacturer representative we’ve talked to at any level of the automotive industry. Nobody thinks any of this is a good idea, because it objectively is not. All it does is make business harder, make the US less trustworthy, make things more expensive, and overall just harm America.

Yet another way that Americans are getting screwed by this stupid nonsense. 49% of you voted for inflation, and 100% of Americans are now getting it. Happy Inflation Day, everyone.


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Lucid (LCID) set another EV delivery record and the Gravity SUV is just getting started

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Lucid (LCID) set another EV delivery record and the Gravity SUV is just getting started

Lucid Motors (LCID) has now had six straight quarters with higher deliveries. The delivery record comes just as Lucid prepares to begin delivering its first electric SUV, the Gravity, to customers by the end of this month.

Lucid sets sixth straight delivery record in Q1 2025

Lucid delivered 3,109 vehicles in the first quarter, up 58% from last year and topping its previous record of 3,099 set in Q4 2024.

The company also produced 2,213 vehicles at its Casa Grande, Arizona, plant in the first three months of 2025, an increase of 28% from last year. Another 600 vehicles were in transit to Saudi Arabia, where they will be assembled at its new AMP-2 plant, Lucid’s first international manufacturing facility.

At this pace, Lucid will easily top the roughly 10,200 vehicles it delivered last year in 2025 at around 12,500. Lucid will likely see even more growth this year, with customer deliveries of its first electric SUV starting soon.

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During the Gravity SUV’s “celestial arrival” last week in NYC, Lucid’s interim CEO Marc Winterhoff said the EV maker is “nearly finished building all the vehicles that we wanted to build to put them into our studio and for test drives.”

Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Full-year 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Full-year 2024 Q1 2025
Lucid EV deliveries by quarter 1,932 1,406 1,404 1,457 1,734 6,001 1,967 2,394 2,781 3,099 10,241 3,109
Lucid (LCID) EV deliveries by quarter 2023 to Q1 2025

Winterhoff added, “by the end of April, we will resume customer deliveries of the Gravity.” Lucid delivered the first models in December, but they were for employees, friends, and family.

Lucid calls the Gravity a “no compromise” SUV with a range of up to 450 miles, 120 cubic feet of interior space, advanced technology, and sports car-like performance. The Gravity Grand Touring starts at $94,900, while the Touring model will arrive later this year at $79,900.

Lucid-EV-delivery-record
Lucid Gravity Grand Touring in Aurora Green (Source: Lucid)

The new delivery record comes after Winterhoff told Fox Business last week that Lucid has seen a “dramatic uptick over the past two months” in orders from former Tesla drivers.

Currently, “50% of all the orders we have are from former Tesla owners,” Lucid’s CEO said. Winterhoff added that many are “looking for an option to not continue having a Tesla.”

Will we see the trend continue? Tesla announced earlier today that it delivered 336,681 vehicles in the first quarter, far less than the 390,000 Wall Street analysts expected.

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