Does the extradition of one crypto’s highest-profile players mean digital currencies are fundamentally unsound?

Published

2 years ago

December 22, 2022

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As a symbol of the year in crypto, the sight of Sam Bankman-Fried being hustled out of court in Nassau to a blacked-out SUV that would take him to an airfield, and an extradition flight to New York, takes some beating.

For the highest-profile player in cryptocurrency, 2022 has come to an abrupt and unforgiving end.

The man who received celebrities, prime ministers and presidents in shorts and a T-shirt is no longer the quirky nerd whose genius might unlock the potential to earn digital billions.

Instead, he’s the face of a massive fraud, accused of using customers’ money in the crypto exchange FTX to cover his bad bets and fund a Bahamian penthouse lifestyle while he preached a doctrine of altruism, in which his millions were earned in the service of the less fortunate.

Prosecutors revealed on Wednesday that his closest partners in the business, his co-founder and the some-time girlfriend who ran his crypto hedge fund, have turned, pleading guilty to wrongdoing and providing evidence against him.

SBF, as he is sometimes known, has insisted that none of this was intentional, that the siphoning of customer money to his private accounts is a function of incompetence rather than venality.

But with tens of millions of those dollars having been directed to political donations, Washington is as embarrassed as celebrities like Tom Brady – who beamed their endorsements in FTX’s lavish marketing campaigns – and the outlook is bleak.

Was it inevitable?

The question for the crypto industry, and the wider field of digital assets, is whether FTX’s collapse is an inevitable symptom of a sector that, in promising to magic value out of the electronic ether, has always been short on trust and credibility, and fertile ground for corruption.

Or is SBF, as his successor as chief executive of FTX alleges, simply an old-fashioned embezzler whose alleged crimes were sophisticated only in the way they were hidden in plain view? And if so, do digital assets have a future not forever mired in wild volatility of questionable assets, sudden collapses, and cons?

It had already been a chastening year with a series of summer collapses, of crypto lender Celsius and the Terra-Luna network, a scandal with its own fugitive from justice, Do Kwon, subject of an arrest warrant in South Korea, and an Interpol red notice.

These collapses wiped out billions, and a 75% slump in the value of the original cryptocurrency Bitcoin took a few more, much of it from retail investors whose willingness to exchange real money for digital ciphers is the fuel that keeps the crypto machine running.

Frances Coppola, an economist and noted crypto-sceptic, says these episodes are a consequence of the fundamentally unsound nature of the products, hastened by the wider economic climate in which cheap money is no longer available to top up the punchbowl.

“In the time crypto’s been in existence it has promised much and delivered very little, except a lot of bubbles which have then spectacularly burst,” she says. “We are now in our third major bursting of a crypto bubble in its short timeframe and it’s not at all clear when or if it will recover from this.

“I think FTX and the rest, Terra, Luna, Celsius, are a phenomenon of the crypto bubble that we’ve seen in the last two years. It’s not greatly surprising that it all came to grief when the Fed [US Federal Reserve] started to tighten monetary policy along with other central banks, and the withdrawal from the global economy of all the money that had been pumped in during the pandemic.”

Wild volatility part of Crypto’s appeal

The wild volatility that has been so costly this year appears to be a fundamental part of crypto’s appeal. Speculation and the ability to massively leverage bets by borrowing from exchanges feels like it has more in common with gambling than an investment, a retail version of the wild derivatives trading exposed to public view at horrible cost in 2008.

That has not stopped mainstream investors from taking a greater interest in crypto. Some of the biggest venture capital funds in America lost money in FTX, and banks are responding to demand from institutional investors unwilling to leave an estimated trillion dollars in new digital assets on the table.

Waqar Chaudry, of Standard Chartered bank, told me the next two years will be pivotal for mainstream engagement with digital finance: “We believe digital assets are here to stay for the long term. The primary job for a bank is to provide services to the clients where they need it.

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“From an institutional banking point of view, there is demand where large institutions are moving into cryptocurrencies. So where they are moving into that world they need service providers who have pedigree in financial services, and they are talking to us about what their plans are and what they look like for the next 12 to 24 months.”

The corporate world meanwhile is looking hard at the technology that lies beneath. These ‘distributed digital ledgers’, in which watertight cryptography and a public network of scrutineers replacing a clearing house or intermediary, have long appeared to have transformational potential.

For years blockchain has seemed like an answer awaiting the right question, but numerous routes are becoming clear.

The economy of things

Philip Skipper, Vodafone’s head of technology for the internet of things, says they are crucial to the next step in digital living, ‘the economy of things’.

“We already have devices that you can communicate with. The economy of things is when these devices communicate and transact with each other.

“So you can be driving down the road and your electric car could be communicating with a traffic light, you can be buying access to a congestion charge for the next 50 yards. It’s the ability of these devices to connect and transact together. That is the economy of things. Underpinning that is how you link all those plays together and that’s where blockchain has the key role.”

Global supply chains, so disrupted by COVID, could be transformed by the technology too. The combination of blockchain and stable digital currency opens the door to smart money, which could link payments to quality and delivery at each stage of a production process.

The flip side of this notion is state-controlled money which limits a citizen’s ability to spend as and when they choose. Imagine welfare payments paid only in approved digital coins that would only unlock for approved products.

The potential of these technologies for good and ill makes the role of regulators and government central, as well as the importance of public debate about what exactly we want from our money.

That absence of regulation is a common theme to the catastrophic failures in crypto this year. Ironically for a technology that promised to bypass mainstream institutions, they will be central to shaping the future of crypto and blockchain.

Business

Poundland to stop paying rent at hundreds of stores in rescue deal

Published

13 hours ago

June 16, 2025

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Poundland to stop paying rent at hundreds of stores in rescue deal

Poundland will halt rent payments at hundreds of its shops if a restructuring of the ailing discount retailer is approved by creditors later this summer.

Sky News has learnt that Poundland’s new owner, the investment firm Gordon Brothers, is proposing to halt all rent payments at so-called Category C shops across the country.

According to a letter sent to creditors in the last few days, roughly 250 shops have been classed as Category C sites, with rent payments “reduced to nil”.

Poundland will have the right to terminate leases with 30 days’ notice at roughly 70 of these loss-making stores – classed as C2 – after the restructuring plan is approved, and with 60 days’ notice at about 180 more C2 sites.

The plan also raises the prospect of landlords activating break clauses in their contracts at the earliest possible opportunity if they can secure alternative retail tenants.

In addition to the zero-rent proposal, hundreds of Poundland’s stores would see rent payments reduced by between 15% and 75% if the restructuring plan is approved.

The document leaves open the question of how many shops will ultimately close under its new owners.

A convening hearing has been scheduled for next month, while a sanction hearing, at which creditors will vote on the plan, is due to occur on or around August 26, according to one source.

The discounter was sold last week for a nominal sum to Gordon Brothers, the former owner of Laura Ashley, amid mounting losses suffered by its Warsaw-listed owner, Pepco Group.

Poundland declined to comment.

Business

Israel-Iran conflict poses new cost of living threat – here’s why

Published

18 hours ago

June 16, 2025

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Israel-Iran conflict poses new cost of living threat - here's why

The UK’s cost of living crisis hangover is facing fresh pressure from the Israel-Iran conflict and growing tensions across the Middle East.

Whenever the region, particularly a major oil-producing country, is embroiled in some kind of fracas, the potential consequences are first seen in global oil prices.

The Middle East accounts for a third of world output.

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Iran’s share of the total is only about 3%, but it is the second-largest supplier of natural gas.

Add to that its control of the key Strait of Hormuz shipping route, and you can understand why any military action involving Iran has huge implications for the global economy at a time when a US-inspired global trade war is already playing out.

What’s happened to oil prices?

Global oil prices jumped by up to 13% on Friday as the Israel-Iran conflict ramped up.

It was the biggest one-day leap seen since Russia invaded Ukraine in February 2022, which gave birth to the energy-driven cost-of-living crisis.

From lows of $64 (£47) a barrel for Brent crude, the international benchmark, earlier this month, the cost is currently 15% higher.

Iran ships all its oil to China because of Western sanctions, so the world’s second-largest economy would have the most to lose in the event of disruption.

Should that happen, China would need to replace that oil by buying elsewhere on the international market, threatening higher prices.

How are natural gas prices holding up?

UK day-ahead prices are 15% up over the past week alone.

Europe is more dependent on Middle East liquefied natural gas (LNG) these days because of sanctions against Russia.

The UK is particularly exposed due to the fact that we have low storage capacity and rely so much on gas-fired power to keep the lights on and for heating.

Israel-Iran latest: Tehran threatens to leave nuclear treaty

The day-ahead price, measured in pence per therm (I won’t go into that), is at 93p on Monday.

It sounds rather meaningless until you compare it with the price seen less than a week ago – 81p.

The higher sum was last seen over the winter – when demand is at its strongest.

What are the risks to these prices?

Market experts say Brent crude would easily exceed $100 (£74) a barrel in the event of any Iranian threats to supplies through the Strait of Hormuz – the 30-mile wide shipping lane controlled by both Iran and Oman.

While Iran has a history of disrupting trade, analysts believe it will not want to risk its oil and gas income through any blockade.

What do these price increases mean for the UK?

There are implications for the whole economy at a time when the chancellor can least afford it, as she bets big on public sector-led growth for the economy.

We can expect higher oil, gas and fuel costs to be passed on down supply chains – from the refinery and factory – to the end user, consumers. It could affect anything from foodstuffs to even fake tan.

Increases at the pumps are usually the first to appear – probably within the next 10 days. Prices are always quick to rise and slow to reflect easing wholesale costs.

Energy bills will also take in the gas spike, particularly if the wholesale price rises are sustained.

The energy price cap from September – and new fixed-term price deals – will first reflect these increases.

How does this all play out in the coming months?

So much depends on events ahead.

But energy price rises are an inflation risk and a potential threat to future interest rate cuts.

While LSEG data shows financial markets continuing to expect a further two interest rate cuts by the Bank of England this year, the rate-setting committee will be reluctant to cut if the pace of price growth is led higher than had been expected.

At a time when employers are grappling with higher taxes and minimum pay thresholds, and consumers a surge in bills following the ‘awful April’ hikes to council tax, water and other essentials, a fresh energy-linked inflation spike is the last thing anyone needs.

Business

Farming: Cost of rural crime in Wales at its highest in more than a decade

Published

24 hours ago

June 16, 2025

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Farming: Cost of rural crime in Wales at its highest in more than a decade

The cost of rural crime in Wales is at its highest in more than a decade, a new report has revealed.

Last year, rural crime cost an estimated £2.8m in Wales, according to insurance provider NFU Mutual.

That’s an 18% increase on the previous year, with Wales the only UK nation to have seen a rise.

For farmers like Caryl Davies, that makes their work harder.

The 21-year-old farms on a beef and sheep farm in Pembrokeshire.

She told Sky News that having the quad bike stolen from her family farm last August had made them feel “really unsafe at home”.

The fact it happened in such a rural area was a “really big shock” for Ms Davies and her family.

“We’d rely on the bike day in day out, to look after our cows and sheep, and it’s had a really negative impact on us,” she said.

The cost of replacing a bike exactly like theirs would be “close to £10,000”.

“They’re a really expensive piece of kit, but you can’t be without them, especially in these rural areas where we’ve got the mountain and maybe places that aren’t very accessible,” she added.

“The bike is totally crucial for our day-to-day running of the farm.”

The incident was caught on camera in the calving shed, but the Davies family have since invested in an enhanced CCTV system. That comes at an additional cost.

“For some farmers, this is spare money that we haven’t really got,” Ms Davies added.

“Farming is hard enough as it is, without people stealing your things and having to spend this extra money on making your home farm safe.”

The total cost of rural crime across the UK has fallen since 2023 – down from £52.8m to £44.1m.

Quad bike and All Terrain Vehicles (ATVs) remained the top target for thieves during the past year, NFU Mutual’s figures show.

James Bourne farms in Pontypool, Torfaen, and claims to have had over 200 sheep stolen from common land adjoining his farm over a four-year period.

The 32-year-old told Sky News that losing sheep from his herd was a “big hit” on his business as well as the young family he is trying to support.

“The way agriculture is at the moment anyway, we’re struggling to make ends meet, and any profit that is in it is obviously being taken from me,” he said.

“So I really need to try and find out and get to the bottom of where they’re going because obviously it’s an ongoing issue.”

Andrew Chalk, from NFU Mutual, told Sky News that while there had been a “significant drop” across the UK, there were “worrying signs”.

“In Wales, especially, rural crime’s gone up which just shows that organised criminals are looking for ways to target the countryside again and again,” he said.

“What we’ve found increasingly is that organised criminals are targeting certain areas of the countryside, so they’re hitting multiple farms in one night.

“They’re raiding them, they’re moving away to another area and then hitting multiple farms there. So it is hugely concerning.”

Mr Chalk said NFU Mutual had also heard reports of criminals using drones and other equipment to “look at the lay of the land”.

“What it does show is that organised criminals are always going to find new ways to target rural crime and that’s why we need to be on top of it and to work together to actually disrupt them,” he added.

Police forces in Wales say they are aware of the “significant impact” that rural crimes have on those affected.

A Dyfed-Powys Police spokesperson said the force had acquired new technology to help combat rural crime, including “advanced DNA asset-marking kits” and hopes to “empower farmers with effective tools and advice”.

The spokesperson acknowledged the difficulty of patrolling the entire police force area, “given the huge area” it has to cover, and thanked rural communities for their “continuing vigilance and for reporting any suspicious activity”.

Temporary Chief Superintendent Jason White, from Gwent Police, said the force would be “increasing resources” within the rural crime team throughout this financial year and urged anyone in a rural area who believes they have been a victim of crime to get in touch.