FTX founder Sam Bankman-Fried leaves US Federal Court in New York City on March 30, 2023.
Kyle Mazza | Anadolu Agency | Getty Images
FTX founder Sam Bankman-Fried resumed his testimony on Monday, and used his time on the stand to blame his former close friends and colleagues for the downfall of his crypto empire.
As his criminal fraud trial enters what’s expected to be its last week, Bankman-Fried is trying to undermine the prosecution’s key witnesses, who placed the FTX founder at the center of the crypto exchange’s misuse of customer funds and its ultimate demise.
Bankman-Fried, 31, faces a potential life sentence if convicted of fraud charges stemming from the collapse in November of FTX and sister hedge fund Alameda Research. He has pleaded not guilty.
On Monday, Mark Cohen, Bankman-Fried’s lead defense attorney, allowed his client to take aim at Caroline Ellison, who ran Alameda and is also Bankman-Fried’s ex-girlfriend. The primary theme was Bankman-Fried’s concern, expressed in conversations between June and September 2022, about whether Alameda was properly hedged given the crash in crypto prices. He said he was notably concerned about the decline in Alameda’s net asset value from $40 billion the prior year to $10 billion.
The market had already dropped 70% and if it fell another 50%, he was afraid the firm would be insolvent, Bankman-Fried told the jury.
“She started crying,” Bankman-Fried said, regarding Ellison’s reaction when he told her that. “She agreed.”
Ellison, who took a plea deal and is cooperating with the government, also said Alameda shouldn’t have made some venture investments, Bankman-Fried testified. He said she offered to step down and said he told her that this wasn’t about blame or past failures, but that Alameda should urgently be putting on hedges. He said he hadn’t intended for her to resign.
In September, he checked in again with Ellison about the hedging activity, Bankman-Fried testified. She said Alameda had hedged. He asked about the scale of the trades and said his instinct was that they could have been twice the size. After Ellison sent him spreadsheets about the trades, she agreed there was more room to hedge and she did so, Bankman-Fried said.
Caroline Ellison, former chief executive officer of Alameda Research LLC, arrives to court in New York, US, on Thursday, Oct. 12, 2023.
Bloomberg | Bloomberg | Getty Images
Bankman-Fried’s testimony on Monday follows his initial appearance on the stand at the end of last week. He told jurors then that he didn’t commit fraud, and that he thought the crypto exchange’s outside expenditures, like paying for the naming rights at a sports arena and its venture investments, came out of company profits.
The majority of the four-week trial so far has been highlighted by prosecutors walking former leaders of Bankman-Fried’s businesses through specific actions taken by their boss that resulted in clients losing billions of dollars last year. Several of the witnesses have pleaded guilty to multiple charges and are cooperating with the government.
Bad hedging, troubled personal loans
As questioning continued on Monday, Bankman-Fried said his analysis suggested that net asset value at Alameda was still $10 billion.
The defense then walked Bankman-Fried through activities from Nov. 1 to Nov. 11, covering the period of FTX’s rapid collapse and its immediate aftermath.
Bankman-Fried said Gary Wang, a co-founder who previously testified on behalf of the prosecution, told him that the backlog of withdrawal demands had to do with a backlog of bitcoin withdrawals and that he was making a fix in the code.
FTX’s engineering director Nishad Singh, who was also called as a government witness, had a problematic personal financial situation, Bankman-Fried testified. He said Singh was suicidal and had a therapist on call 24/7 to watch over him. Bankman-Fried said he was trying to comfort him about his loans and expenses and to prevent him from hurting himself.
Bankman-Fried then blamed Can Sun, who was FTX’s general counsel. He said they had a talk before Bankman-Fried’s follow-up call with investment fund Apollo. The spreadsheet provided to Apollo did have the $8 billion liability included, Bankman-Fried said. He told the court that he spoke with Sun and told Apollo about his best understanding of the framework around the fiat account.
In describing the swift downfall of FTX, Bankman-Fried said that customer withdrawals had quickly increased from $50 million a day to $1 billion a day. He said it was like a run on the bank and he was very concerned since the only way to withdraw all customer funds was to liquidate every open margin trade.
Bankman-Fried defended his tweets that were designed to cool customer concerns.
FTX founder Sam Bankman-Fried is questioned by defense lawyer Mark Cohen as he testifies in his fraud trial over the collapse of the bankrupt cryptocurrency exchange, at federal court in New York City, U.S., October 30, 2023 in this courtroom sketch.
Jane Rosenberg | Reuters
Regarding the “assets are fine” tweet he wrote during the panic, he said he thought Alameda’s net asset value was roughly $10 billion and that FTX didn’t have a hole in its balance sheet.
“My view was the exchange was OK and there was no holes in the assets,” he told the court.
On Nov. 8, he realized that Alameda was going to need to be shut down. He had calls with potential investors to try and secure “significant” outside capital due to the run on FTX.
After the defense wrapped up its questioning of Bankman-Fried, the focus turned back to the prosecution. Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities & Commodities Fraud Section and now a trial partner in Chicago with Bryan Cave Leighton Paisner, said he expects the cross-examination to be “devastating given SBF’s frequent prior statements about the issues in the case.”
“What we’ve heard so far has been the direct examination — the defense telling its story,” Mariotti told CNBC. “There were no big twists or shockers. The defense doesn’t appear to have an ace up its sleeve.”
Following the morning break, Assistant U.S. Attorney Danielle Sassoon started cross-examination of the defendant.
Bankman-Fried gave a number of very brief answers to questions, frequently saying “yep” or “I don’t recall.” In answering the question as to whether Bankman-Fried had marketed FTX’s global exchange as safe compared to other exchanges, he said “I’m not sure.”
In some instances, his answers were directly followed with a government exhibit, such as a tweet, interview transcript, congressional testimony or email, intended to dispute his answer.
For example, Sassoon asked Bankman-Fried if he assured people that Alameda played by the same rules as others on the FTX exchange. Bankman-Fried said he wasn’t sure. The government followed by showing a tweet from him directly addressing the topic along with an email in which he wrote that Alameda’s account is like everyone else’s.
Another notable disclosure was around Alameda being allowed to have a negative account balance. Bankman-Fried was asked if any other users were able to pledge outside investments as collateral. He said Crypto Lotus was allowed to do it to the tune of $100 million, but that information wasn’t disclosed publicly.
Sassoon asked Bankman Fried, “Would you agree you know how to tell a good story?”
He replied, “I don’t know. It depends on what metrics you use.”
Sasoon then got into the stories he told investors to raise more than $1 billion, including telling them about how FTX used automated liquidation protocols that set it apart.
Sasoon also brought up Bankman-Fried’s past profane comments about regulators. She referenced the direct messages that were published by Vox in mid-November. In one case, the reporter mentioned to Bankman-Fried that he’s said in the past he wanted to make good regulations, and asked if that was just public relations. His text response was, “Yeah, Just PR,” followed by “F— regulators.”
Bankman-Fried was asked to read that last part out loud to the court. And he admitted to referring to a subset of crypto twitter as “dumb motherf——.”
If you are having suicidal thoughts or are in distress, contact the Suicide & Crisis Lifeline at 988 for support and assistance from a trained counselor.
Due to Tesla still referring to them as “new, more affordable models”, many people believed that Tesla would still bring to market new, cheaper models.
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In fact, the automaker initially stated that it would arrive in the “first half of 2025.”
The new stripped-down Model Y is codenamed E41 and is expected to feature cheaper materials and fewer features than the normal Model Y, which starts at $45,000 in the US.
It is expected to be similar to what Tesla did with the new base Model 3 in Mexico, which features cloth materials instead of vegan leather, lacks a rear display, has no ambient lighting, and features a less advanced audio system.
However, we now learn that the new affordable Model Y will go further than a cheaper interior.
Green, a well-known Tesla hacker who often reveals new features in vehicles through looking deep in firmware updates, claims to have uncovered new details about the upcoming Model Y E41 through the latest Tesla firmware update.
Simplified model Y “E41” that was sighted live now appears in the firmware too. They will have two audio options: “essential” and “essential with commodity” Backup camera would lose a heater no “airwave” in console E41 fascia (performance will also get a fascia update)
The details are somewhat limited as he has to decode them from the firmware, but here’s the full list of what he has found out about the new cheaper Model Y:
“Essential” and “essential with commodity” audio packages
Backup camera without heater
No “air wave” in the center console, which likely means no air flow control for the second row
A new front fascia
Simplified fiberglass headliner
Simplified cabin lighting (footwell only)
Simplified seat controls (single axis)
No power mirror folding
No puddle lamps
No glass roof
No second row display
No Tire Pressure Monitoring System
Simplified 18″ wheels
Downgraded suspension
Tesla has yet to confirm when the new Model Y version will launch, but we previously reported that Tesla is likely waiting for Q4 as it is enjoying strong demand in Q3 from the end of the federal tax credit in the US.
Electrek’s Take
I like “simplified”. I don’t know if the term comes from Green or Tesla, but it certainly works better than “stripped-down,” even though it is also accurate based on what we are learning about the new version.
This didn’t work with the Cybertruck. Tesla quickly discontinued the “simplified” version, but the Cybertruck was already much less popular than Model Y.
I don’t know. This could work. It depends entirely on pricing. If it brings the base price down to $35,000, I can see some people going for it.
However, it will likely devalue Tesla’s “premium” brand and the Model Y significantly.
Also, most of the demand is likely going to come from Model Y buyers in the first place – cannibalizing Tesla’s own sales.
In short, it’s more of a placeholder to slow down the degradation of Tesla’s EV business amid its shift to autonomous driving and robotics, rather than a solution to return to EV growth. That’s a bummer.
Tesla needs brand-new EV models. It’s plain and simple.
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For decades, Briggs & Stratton has helped keep the lights on after the storm with its gas-powered generators. Now, the company is bringing that legacy into the modern electric era with a home backup battery — and a new partnership with EG4 is making it easier than ever to integrate Briggs’ batteries into your home solar setup.
That dependability makes the EG4 inverters favorites among “preppers” as well. Its 18KPV inverters are EMP-hardened, promising reliable performance even after Electromagnetic Pulse (EMP) events that would disable other electronics.
“Our collaboration with Briggs & Stratton combines EG4’s advanced energy storage systems with their proven generator and storage technologies to give customers more ways to achieve reliable, uninterrupted power,” said James Showalter, founder and CEO of EG4. “With this partnership we are making it easier than ever to build the right solution for energy independence.”
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Simplify, SimpliPHI
SimpliPHI battery storage; via Briggs & Stratton.
Briggs & Stratton’s SimpliPHI battery packages start with one, two or three SimpliPHI-branded 6.6 kW batteries, designed as modular components to deliver a range of power options tailored to how much of the home or business the user wants to keep powered power during an outage. Is that 25% of their normal energy usage? 100%? Just add more batteries.
The companies explain that, with a 200A pass-thru for easy integration into most homes’ main service panels, the Briggs & Stratton + EG4 home solar battery system can be scaled up to 18 batteries for 119.7 kWh of energy storage and a maximum continuous power of 84 kW, or up to 90 hours of power at 100% load.
“We are excited to expand our closed-loop integrations with EG4,” explains Sequoya Cross, vice president of energy storage for Briggs & Stratton Energy Solutions. “We have been consistently impressed with their approach to the market, innovative design choices and products that reliably serve their customers.”
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Porsche has announced a delay in some future EV models, which parent company VW says will cost it $6B in forward profits. It’s doing this amid a global boom in EV sales, instead committing to an inferior powertrain choice that will only make it more irrelevant as a company.
The world auto industry is currently electrifying rapidly. That electrification is largely being led, in this moment, by Chinese players, who are offering low-cost EVs with the latest battery and infotainment technology, not held back by a century of old-style combustion-engine thinking or by entities in government that are actively trying to kill their own country’s competitiveness.
The rapid rise in Chinese EVs has caught Western automakers by surprise, even though it has been clear for more than a decade that EVs are the way to go (as we’ve been saying here at Electrek for that entire time).
It’s resulting in huge disruptions in the global automotive market, with Western automakers being squeezed out of overseas markets, and even having trouble selling to their own domestic markets. Western countries have responded with emergency tariffs (a concept which never really helps), but Chinese brands continue to grow in Europe.
Remember: Xiaomi makes smartphones. Meanwhile, Porsche has been making cars for a century (and its founder even made a hybrid in 1902).
And so, in recognition of the fact that Chinese brands are eating their lunch, Porsche and VW have just announced that… they’re going to move even slower.
When competition moves too fast, keep up by… moving slower?
Porsche CEO Oliver Blume (who is also CEO of parent company VW) cited the “massive changes within the automotive environment,” on a call on Friday, some of which are detailed above in this article. His response to these massive changes, though, is to go in the opposite direction.
Porsche said it would slow down its EV rollout, delaying the launch of some EVs, and instead offering a planned ultra-luxury SUV positioned above the Cayenne as a combustion or hybrid model, rather than an electric one. An electric version may still come later, though.
Availability of current combustion engine models, including the Panamera, will be extended into the 2030s.
Porsche said as a result of these changes, its forward margin outlook would drop, and VW said that this would result in a reduction of around $6 billion in profits for 2025.
The move also reportedly has thrown the VW/Rivian software partnership for a loop, as VW’s new commitment to polluting combustion models means it will have to find another source for software, since Rivian’s software is meant for EVs, not combustion vehicles.
According to Manager Magazin, there is even a possibility that VW’s doomed internal software project, Cariad, will have to be tapped to build software for these combustion models.
Cariad was the darling of former VW CEO Herbert Diess, who was one of the industry’s most ardent EV advocates. But difficulties with Cariad resulted in Diess being ousted and replaced by Blume, who reorganized the division, adding significant irony to the situation that Cariad may now be thrust into increased relevance due to Blume’s delay in EV models.
Porsche is in opposite world on EV demand
Porsche says that “weak demand” for EVs is forcing it to make this move, even though EV demand continues to rise globally and specifically in Europe and Germany where Porsche calls home. EV sales are up 30% year-to-date in Europe and up 43% in Germany, along with being up 27% globally.
Porsche has seen sales declines itself this year, but those sales declines occurred in territories where EV sales are booming the most (Germany, China), and were driven by declines in sales of Porsche’s combustion models, not its EV models. In fact, electrified Porsche sales are up, while combustion-only sales are down.
CEO Oliver Blume said that he’s counting on “more flexibility” from the EU to soften its emissions standards and allow Porsche to keep putting these polluting vehicles on the road – vehicles which will continue to poison you well into the 2050s.
Blume says this despite the EU’s commitment last week to maintain the emissions targets Blume wants changed, and despite Blume’s cohort, Gernot Döllner who is CEO of Audi (also a VW subsidiary), correctly stating that bickering over emissions standards is “counterproductive” and that “the electric car is simply the better technology.” The EU did say it will review its 2035 zero-emission target early, but seemed open to only minor flexibility.
Meanwhile, climate change continues apace
Meanwhile, the background of all of this is that climate change (which transportation is the largest contributor to in rich countries) continues apace, and that polluting vehicles continue to poison humans globally in costly and destructive ways.
The world needs a solution to climate change, and the faster that solution comes the better. No matter how expensive it seems it might be to solve the problem that we collectively have spent the last century and a half causing (and have supercharged in the last 30 years), that cost will only get higher as time goes on and as more damage is done.
Many studies have pointed out that the faster we solve this problem, the cheaper it will be to fix, so every moment lost as a result of companies misjudging trends and committing to more-polluting models while hoping government will change to let them continue to pollute only represents more cost, death, and disruption for humanity and for all species on Earth.
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