According to former Alameda Research CEO Caroline Ellison, a single tweet from Binance CEO Changpeng “CZ” Zhao contributed to the failure of cryptocurrency exchange FTX.
Testifying in Sam “SBF” Bankman-Fried’s criminal trial on Oct. 12, Ellison reportedly placed part of the blame for the collapse of FTX on CZ’s social media activity. In the now famous tweet on X (formerly Twitter) from Nov. 6, 2022, CZ announced that Binance would be liquidating its holdings of FTX Token (FTT) “due to recent revelations that have came to light.”
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
According to many reports, the liquidation of the tokens caused retail investors to follow Binance’s example and withdraw funds from FTX. The run on the platform led to FTX halting withdrawals and filing for bankruptcy on Nov. 11.
According to Ellison, although the tweet “contributed” to FTX’s collapse, the main reason was Alameda borrowing $10 billion from the exchange “it couldn’t repay.” She first took the stand in SBF’s trial on Oct. 10, testifying that Bankman-Fried directed her to have Alameda take billions of dollars from FTX without users’ consent.
CZ pushed back against claims that one of his tweets “destroyed FTX” in a Dec. 6 thread, saying, “No healthy business can be destroyed by a tweet.” He pointed to Ellison’s own social media activity from Nov. 6, claiming Alameda’s offer to buy Binance’s FTT holdings “was the real cause for people to dump” the tokens.
4. “CZ’s tweet destroyed FTX”
No healthy business can be destroyed by a tweet.
However, there was a tweet that may have, Caroline’s tweet 16 minutes after mine on Nov 6. Data shows it was the real cause for people to dump FTT:https://t.co/yWFqKvbqMU
The information provided by the former Alameda CEO at trial included Bankman-Fried’s apparent ambition to become the president of the United States, creating multiple “alternative” spreadsheets of Alameda’s financials to present to Genesis, and SBF looking to Saudi Crown Prince Mohammed bin Salman as a potential backer of the exchange. Her testimony on cross-examination from defense counsel Mark Cohen seemed to focus on Bankman-Fried’s knowledge of Alameda’s operations.
On questioning from Cohen, Ellison testified that she “might have said that [SBF] might not have known” about her concerns “putting FTX customers’ funds at risk.” Assistant U.S. Attorney Danielle Sassoon called the claim “vague.”
Ellison took the stand on the seventh day of SBF’s criminal trial, which began on Oct. 3. She was one of the first FTX and Alameda insiders to plead guilty as part of an agreement with U.S. authorities for her testimony.
Bankman-Fried has pleaded not guilty to seven criminal charges in his first trial, expected to run through November. He will face an additional five counts in a March 2024 trial.
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The UK must rebuild its military and get the whole country ready for war as the threat of conflict with a nuclear power like Russia or China is real, a major defence review warns.
It described what might happen should a hostile state start a fight, saying this could include missile strikes against military sites and power stations across the UK, sabotage of railway lines and other critical infrastructure and attacks on the armed forces.
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3:12
PM challenged on NATO, defence and Gaza
In a devastating verdict on the state of Britain’s defences, the Strategic Defence Review (SDR) said today’s armed forces are “not currently optimised for warfare”, with inadequate stockpiles of weapons, poor recruitment and crumbling morale.
“The international chessboard has been tipped over,” a team of three experts that led the review wrote in a foreword to their 140-page document.
“In a world where the impossible today is becoming the inevitable tomorrow, there can be no complacency about defending our country.”
Image: British soldiers from the 16 Air Assault Brigade training in North Macedonia. Pic: AP
Sir Keir Starmer, who commissioned the review, described a “new era” of threat that required a “new era for defence and security”.
“Every part of society, every citizen of this country, has a role to play because we have to recognise that things have changed,” the prime minister said.
The review made a list of more than 60 recommendations to enable the UK to “pivot to a new way of war”.
They include:
Increasing the size of the army by 3,000 soldiers to 76,000 troops in the next parliament. The review also aims to boost the “lethality” of the Army ten-fold, using drones and other technology.
A 20% expansion in volunteer reserve forces but only when funding permits and likely not until the 2030s.
Reviving a force of tens of thousands of veterans to fight in a crisis. The government used to run annual training for the so-called Strategic Reserve in the Cold War but that no longer happens.
Embracing new technologies such as artificial intelligence, robots and lasers. The paper said the UK must develop ways to defend against emerging threats such as biological weapons, warning of “pathogens and other weapons of mass destruction”.
The possibility of the UK buying warplanes that could carry American nuclear bombs to bolster the NATO alliance’s nuclear capabilities. The review said: “Defence should commence discussions with the United States and NATO on the potential benefits and feasibility of enhanced UK participation in NATO’s nuclear mission.”
The expansion of a cadet force of children by 30% and offering a “gap year” to people interested in sampling military life.
New investment in long-range weapons, submarines, munitions factories and cyber warfare capabilities.
General Sir Richard Barrons, part of the review team and a former senior military officer, described the vision as “the most profound change” to UK defences in 150 years.
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This includes only a brief mention of bolstering the UK’s ability to defend against cruise and ballistic missiles – a key weakness but one that would be very expensive to fix.
Earlier, Sir Keir said the review was a “blueprint to make Britain safer and stronger, a battle-ready armour-clad nation, with the strongest alliances and the most advanced capabilities, equipped for the decades to come”.
Defence Secretary John Healey, writing in a foreword to the document, said “up to” £1bn would be invested in “homeland air and missile defence” as well as the creation of a new cyber and electromagnetic warfare command.
The review was drawn up with the expectation that defence spending would rise to 2.5% of GDP this parliament – up from around 2.3% now – and then to 3% by 2034. The government has pledged to hit 2.5% by 2027 but is yet to make 3% a cast iron commitment.
The reviewers said their recommendations could be delivered in 10 years if that spending target is reached but they gave a strong signal that they would like this to happen much sooner.
“As we live in such turbulent times it may be necessary to go faster,” the team said.
“The plan we have put forward can be accelerated for either greater assurance or for mobilisation of defence in a crisis.”
The review described the threat posed by Russia as “immediate and pressing”.
It said China, by contrast, is a “sophisticated and persistent challenge”.
It pointed to Beijing’s growing missile capability that can reach the UK and said the Chinese military’s nuclear arsenal is expected to double to 1,000 nuclear warheads by 2030.
The other two reviewers were Lord George Robertson, a former Labour defence secretary, and Fiona Hill, a Russia expert and former foreign policy adviser to Donald Trump.
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The review team warned the post Cold War-era of relative peace has ended and a time of contest, tension and conflict has returned.
Adding to the pressure, the US – by far the most powerful member of the NATO alliance – is focusing more on the threat it sees from China.
“Changes in the strategic context mean that NATO allies may be drawn into war with – or be subject to coercion by – another nuclear armed state,” the review said.
“With the US clear that the security of Europe is no longer its primary international focus, the UK and European allies must step up their efforts”.
The review set out how defence is not only the responsibility of the armed forces because countries – not just the professional military – fight wars.
It said: “Everyone has a role to play and a national conversation on how we do it is required… As the old saying goes, ‘If you want peace, prepare for war’.”
Sky News and Tortoise will launch a new podcast series – The Wargame – on 10 June that simulates a Russian attack on the UK to test Britain’s defences, with former ministers and military chiefs playing the part of the British government.