As Sam Bankman-Fried awaits prison sentence, FTX customers await a surprise: full repayment
Government exhibit in the case against former FTX CEO Sam Bankman-Fried.
Source: SDNY
As Sam Bankman-Fried prepares to face sentencing next month for his criminal fraud conviction tied to the epic collapse of FTX in 2022, former customers of the crypto exchange have reasons to believe they could actually recoup their money.
Bankman-Fried, who could spend the rest of his life behind bars, was found guilty in November on seven criminal counts after roughly $10 billion in customer funds from his company went missing. Some of that money went to pay for Bankman-Fried’s lavish lifestyle, but much of it went towards other investments that have, of late, appreciated dramatically in value.
Lawyers representing the bankruptcy estate of FTX told a judge in Delaware last week that they expect to fully repay customers and creditors with legitimate claims. Bankruptcy attorney Andrew Dietderich, who works with FTX’s new leadership team, said “there is still a great amount of work and risk” ahead in getting all the money back to clients, but that the team has a “strategy to achieve it.”
It’s a welcome development for the many thousands of customers (reportedly up to a million) who collectively lost billions of dollars in FTX’s collapse 15 months ago, when the crypto exchange spiraled into bankruptcy in a matter of days. Given the lightly regulated and unsecured nature of FTX — and the crypto industry at large — those clients faced the real possibility that the vast majority of their money had evaporated. Plenty of failed hedge funds and lenders lost virtually everything during the 2022 crypto winter.
Bankman-Fried never believed his company’s situation was that dire.
Even as regulators and federal prosecutors unearthed evidence showing that the 31-year-old entrepreneur and his top lieutenants had been pilfering billions of dollars from customer wallets for years, Bankman-Fried insisted that all the money was still somehow accessible.
“FTX US remains fully solvent,” Bankman-Fried wrote in a Substack post on Jan. 12, 2023, while he was under house arrest at his parents’ home in Palo Alto, California. He said the exchange “should be able to return all customers’ funds.”
In some ways, his narrative appears to be proving true.
Joseph Bankman and Barbara Fried arrive for the trial of their son, former FTX Chief Executive Sam Bankman-Fried, who is facing fraud charges over the collapse of the bankrupt cryptocurrency exchange, at Federal Court in New York City, U.S., October 26, 2023.
Brendan Mcdermid | Reuters
For months, FTX’s new CEO, John Ray III, and his team of restructuring advisors have been clawing back cash, luxury property, and crypto, as well as tracking down missing assets. They’ve already collected more than $7 billion, and that doesn’t include valuables like $26 million in gifts and property to Bankman-Fried’s parents, or the $700 million handed over to K5 Global and founder Michael Kives, who invested FTX cash in companies like SpaceX. Some of those investments have seen a precipitous rise in value.
FTX had been negotiating with bidders about a potential reboot of the company, but those efforts were scrapped last month.
Braden Perry, who was once a senior trial lawyer for the Commodity Futures Trading Commission, FTX’s only official U.S. regulator, told CNBC that the decision to repay users in full came after “the abandonment of efforts to restart the FTX crypto exchange,” in favor of “a focus on liquidating assets to make customers whole.”
Getting actual money back in the hands of customers still remains a challenge. While a lot of the value has been recouped and more is to come, divvying up large amounts of cash is a complex process in bankruptcies, particularly when so much of the money is in non-traditional and illiquid assets.
Even Ray was doubtful at the beginning of the process, noting in late 2022 that, “At the end of the day, we’re not going to be able to recover all the losses here.”
‘Sam coins’ soar
What Ray wasn’t banking on was a huge market rebound. When he made those remarks, crypto was mired in a bear market, with bitcoin trading at around $16,000. It’s now above $47,000.
In September, the bankruptcy team released a status report showing that FTX had $3.4 billion worth of digital assets, with over $1.1 billion coming from its Solana investment.
Solana fits into a category of so-called “Sam coins,” a group that also includes Serum, a token created and promoted by FTX and sister hedge fund Alameda Research. After the dust settled from FTX’s bankruptcy, Solana saw a huge run-up in its price, and it continued to rally after the September report. Since the end of that month, it’s spiked fivefold.
Meanwhile, FTX’s bitcoin stash, which was worth $560 million at the time of the September report, is today valued north of $1 billion.
Bankman-Fried’s investments weren’t limited to crypto. He also used client money to back startups like Anthropic, the artificial intelligence company founded by ex-OpenAI employees. FTX invested $500 million in Anthropic in 2021, before the generative AI boom. Anthropic’s valuation hit $18 billion in December 2023, which would value FTX’s roughly 8% stake at about $1.4 billion.
During Bankman-Fried’s criminal trial in New York, Judge Lewis Kaplan denied the defense’s request that it be permitted to say that FTX’s investment in Anthropic was a smart bet. The bankruptcy estate of FTX has been looking to sell its Anthropic stake, according to a court filing this month.
Sam Bankman-Fried stands as forewoman reads the verdict to the court.
Artist: Elizabeth Williams
In his biography on Bankman-Fried titled “Going Infinite,” Michael Lewis said he was told by an investor interested in bidding for the venture portfolio that “if it was sold intelligently, it should go for at least $2 billion.” Lewis, who published his book late last year, wrote that, based on his back-of-the-envelope math, the $7.3 billion that Ray’s team had come up with didn’t include Serum, some large clawbacks and other venture investments that had appreciated in value.
For FTX customers, being made whole, according to a judge’s ruling, means getting the cash equivalent of what their crypto was worth in November 2022. In other words, they’re not seeing any of the upside of FTX’s investments or being given virtual coins that would allow them to cash out at higher valuations.
Still, some investors have found a way to participate in the FTX’s ongoing odyssey. The market for FTX IOUs lit up last year as it became clear that the bankruptcy estate was cobbling together a lucrative portfolio. One financial firm that had lost around $100 million initially sold its FTX debt for 6 cents on the dollar in a new secondary market out of concern that he may never get a better deal. As of December, those claims were going for more than 70 cents on the dollar.
If customers are eventually made whole, that could play a big role in Bankman-Fried’s appeal, likely following his sentencing, which is set to take place in Brooklyn on March 28. Perry said it could also affect how the judge handles sentencing in the first place.
“Under the federal sentencing guidelines, and even assuming no monetary loss, SBF still faces at least 70 months in prison based on his base level offense, number of victims, sophisticated means, and leadership role,” Perry said.
The massive losses that were originally expected would suggest 30 to years to life, Perry added.
Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities and Commodities Fraud Section, told CNBC that judges typically consider the amount of restitution paid to victims at sentencing.
“If the victim is made whole, that is a big plus for the defendant,” said Mariotti. He noted, however, that the extent of the fraud coupled with Bankman-Fried’s false testimony and violation of bond conditions could limit the reduction.
“I usually advise clients to pay restitution before sentencing if at all possible,” Mariotti said.
WATCH: Former SEC Chari discusses Bankman-Fried guilty verdict
If you ask the average American which country is doing the most to improve e-bike battery safety, most people probably wouldn’t guess China. But that’s exactly where the world’s strongest, most comprehensive lithium-ion safety rules are coming from – and the latest round just went into effect today.
Beginning December 1, China has officially banned the sale of all e-bikes built to the older national standard, replacing them with a new, far stricter rule set known as GB 17761-2024. Under the announcement from the State Administration for Market Regulation, any e-bike sold in China from today forward must carry a valid CCC certification under this brand-new standard. Older certificates are now invalid, and retailers caught selling non-compliant bikes face enforcement from local regulators.
The new rules go far beyond what most countries require. They tighten fire-resistance requirements, restrict the amount of plastic allowed on an e-bike, cap total vehicle weight, and mandate improved electrical safety. The regulations also work hand-in-hand with a second standard, the already-implemented GB 43854-2024, which sets some of the toughest lithium-ion battery testing requirements in the world, including mandatory over-charge protection, thermal abuse tests, puncture tests, and a ban on repurposed or second-hand cells, a major cause of past fires.
Balancing safety and convenience for existing owners, Chinese regulators also built in consumer protections. Bikes that were already purchased and registered under the old rules won’t be forced off the road. And companies are required to support repairs and spare parts for at least the next five years. But unregistered “old-standard” bikes must have been formally plated already, or they’ll no longer be legal to operate.
For a country often stereotyped as producing unsafe batteries, the reality is almost the opposite. China is now setting the global pace on e-bike safety – aggressively tightening standards, sharply reducing fire risks, and pushing manufacturers to meet levels of testing that most of Europe and the US still haven’t matched.
via: ITHOME
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Environment
Tesla Model 3/Y with Chinese LG batteries showing ‘catastrophic’ failure rates, repair shop warns
A prominent European EV repair specialist is sounding the alarm on Tesla Model 3 and Model Y vehicles equipped with LG battery cells manufactured in China, claiming they are seeing “catastrophic” failure rates and significantly shorter lifespans compared to Panasonic packs.
For years, the narrative around Tesla’s move to Chinese battery suppliers has been generally positive, with the LFP (Lithium Iron Phosphate) packs from CATL proving to be extremely durable.
However, Tesla also sources Nickel Manganese Cobalt (NMC) cells from LG Energy Solution’s Nanjing facility for its Long Range and Performance models in Europe and parts of Asia.
Now, EV Clinic, a Croatia-based independent research and repair facility known for diving deep into battery diagnostics, has issued a severe warning regarding these specific LG NCM811 packs.
According to the firm, data from its repair center suggests a stark difference in quality between Tesla’s two main higher-energy-density packs: the US-made Panasonic NCA packs and the Chinese-made LG NCM packs.
“We are raising serious concerns about Tesla Model 3/Y LG NCM811 battery packs (LGES Nanjing), which exhibit very high failure rates and significantly shorter lifespans compared to Panasonic NCA packs (Made in USA).”
The shop claims that while Panasonic packs are generally repairable and can last up to 250,000 miles before cell failure, the LG equivalents are approaching end-of-life at around 150,000 miles.
More concerning is the nature of the failure. EV Clinic states that in over 90% of the cases they see with LG packs, cell-level repair is “impossible.”
The issue appears to be widespread degradation across the modules rather than a single bad cell bringing down the pack. They found that LG cells often show extremely high internal resistance.
“A failing Panasonic cell hits roughly 28 mΩ, which is the measurement for LG cells when brand new… Out of 46 cells, it’s common to find 15 cells over 100 mΩ ACIR, and the remaining 30 cells above 50 mΩ ACIR.”
The lab shared an example from a Tesla battery module:
Because the degradation is so uniform and severe, replacing a single faulty module is described as “operationally unsustainable,” as the remaining weakened cells are likely to fail in a cascade shortly after.
The situation has become so problematic for the shop that they announced they are introducing a “feasibility fee” just to check if these specific packs can be repaired, noting that they are “losing over €20,000 each month” attempting to fix packs that are effectively dead.
At this moment, during ongoing experimental testing with real customers experiencing LG failures, we are losing over €20,000 per month in operational time while investigating whether LG’s Chinese NCM811 systems can be sustainably repaired. At this stage, we can confidently say: the cells are, to put it mildly, catastrophic. Panasonic has mostly single-cell failures at 250,000km, and it is repairable, whereas LG has multiple-cell failures.
Their advice to owners with failed LG packs? Swap it for a used Panasonic pack or go to Tesla for a full replacement.
Electrek’s Take
This is a pretty damning report from a shop that is well-respected in the aftermarket repair community for actually tearing these things apart and attempting to fix them rather than just swapping them out.
We know that Tesla has been diversifying its battery supply chain aggressively, and for the most part, it has worked out well. The CATL LFP packs are tanks, heavy, but durable. But the NCM chemistry is trickier, and if these findings from EV Clinic hold up across a larger sample size, it could be a headache for Tesla, especially in Europe, where many of the China-made NCM packs end up.
It’s worth noting that this applies specifically to the LG NCM811 packs from Nanjing. Many US Tesla owners have Panasonic packs, which this report actually praises as highly durable and repairable.
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Thanksgiving may be over, and the official Black Friday date may have passed, but that doesn’t mean savings have slowed down any, with us now having shifted over into Cyber Monday sales. Many of the previous Black Friday Green Deals we spotted up until today are continuing – some ending tonight with the holiday, while others are continuing on through the rest of the week. If you didn’t jump on these deals last week, you still have time to score the best prices of the year across e-bikes, EVs, power stations, tools, eco-friendly appliances, and much more. We’ve thrown all the best deals into this one-stop shopping hub for all your greener needs and will continue updating it throughout the week. Head below to browse all the best Cyber Monday Green Deals while they last.
Cyber Monday Green Deals
Cyber Monday EV Green Deals
- Lectric’s Black Friday/Cyber Monday Sale offers up to $893 bundles with e-bikes starting from $999
- Lectric launches Black Friday accessory flash sale with up to 40% discounts for add-on gear starting from $14
- Cash in during Lectric’s Black Friday battery sale with up to 30% off new and legacy models starting from $250
- Lectric’s XP4 e-bikes get best bundles of up to $514 in FREE gear for Black Friday starting from $999
- Upgrade off-road commutes and adventures with Lectric’s XPeak 2.0 e-bikes and up to $583 in FREE gear from $1,499
- Score $518 in FREE gear and commute up to 60 miles on Lectric’s XPress 750 long-range e-bike at $1,299
- MOD Bikes offers rare Black Friday/Cyber Monday e-bike discounts to lows starting from $1,799 (Up to $400 off)
- Tesla’s Universal Wall Connector with dual NACS + J1772 connectors and customizable 48A speeds retains $50 cut to $600
- Segway’s official Black Friday sale now live: Best price of the year on latest e-scooters, e-bikes, more starting from $150
- Segway’s feature-packed E3 Pro electric scooter with Apple Find My hits new $500 Black Friday low (Save $200)
- Rad Power expands Black Friday e-bike lineup and increases savings to new lows starting from $999
- Autel’s MaxiCharger AC Lite level 2 EV charger grants up to 50A speeds at new $398 Black Friday low (Save $171)
- Schumacher’s 12A level 1 portable EV charger is perfect for stowing in trunks at a $110 Black Friday low (Save $50)
- Aventon takes up to $400 off new e-bikes: Security-packed Pace 4 smart cruiser at new $1,599 low (Reg. $1,799)
- Aventon’s Level 3 smart commuter e-bike gets a first-time early Black Friday discount to $1,699 (Reg. $1,899)
- Hop on Aventon’s latest Aventure 3 all-terrain smart e-bike with first-time savings to $1,799 (Reg. $1,999)
- Save up to 41% on Navee’s smart e-scooters, like the flagship ST3 Pro at its second-ever $660 low, more from $315
- Heybike’s new-gen Ranger 3.0 Pro folding commuter e-bike gets first post-launch cut to $1,399 low for Black Friday
- Heybike drops new Mars 3.0 folding e-bike back to its $1,199 low during Black Friday sale for first time since launch
- Heybike increases Black Friday savings on its Hero 750W mid-drive all-terrain e-bike to a new $2,099 low, more
- Get up to 85 miles of pedal-assisted cargo carrying on Heybike’s dual-battery Hauler e-bike at a new $1,099 low (Reg. $1,899)
- Heybike is clearing stock of its Tyson uni-body folding e-bike with an $800 price cut to a new $999 low
- Velotric’s Black Friday Sale switches gears with up to $750 increased savings and new lows starting from $999
- Score up to 47% Black Friday savings on NIU EVs, like the 2025 KQi 200F e-scooter at its $529 low (Reg. $799), more from $279
- Leviton’s 48A level 2 smart hardwired EV charger falls to new $479 Black Friday low (Save $270), more from $400
- Tenways launches new Wayfarer e-bike with 85-mile range, Apple Find My, and $577 savings at $1,899
- Ride1Up’s early Black Friday Sale gives us first savings on the latest TrailRush German mid-drive e-bike at $1,995
- Get up to 53% Black Friday savings + bonus discounts on Hiboy e-scooters and e-bikes at lows starting from $150
- Gift the kids Hover-1’s Neo I Foldable Electric Scooter this Christmas, it’s only $105 for Black Friday (Reg. $280)
Cyber Monday Power Station Green Deals
- EcoFlow launches next Black Friday Sale phase with up to 80% off expanded lineup – starts from $149
- Score up to $13,289 exclusive Cyber Monday savings on EcoFlow’s DELTA Pro Ultra X power station + bundles, more from $174
- Save up to 67% on 2x EcoFlow DELTA 2 power stations at $698 low + three accessory bundles from $799 for Cyber Monday
- EcoFlow launches DELTA 3 1000 Air power station and bundles with up to $640 early-bird savings starting from $299
- EcoFlow’s newest 10,000mAh to 27,650mAh RAPID power banks with up to 53% Black Friday savings at new lows from $66
- Anker’s extended SOLIX Black Friday Sale increases power station savings up to 70% with new lows starting from $150
- Anker’s SOLIX C300X 90,000mAh portable power station + solar bundle option at new Black Friday lows from $160
- Anker’s popular PowerCore Reserve 192Wh power station with a pop-up light drops to $80 for Black Friday (Save $70)
- Get up to 54% exclusive savings on these Anker SOLIX F3800 units + EverFrost 2 cooler at new lows starting from $699
- Jackery’s Explorer 1000, 2000, 3000 V2 + 5000 Plus power stations are all hitting new Black Friday lows from $332
- Get a 256Wh LiFePO4 capacity in a 6.9-pound unit with Jackery’s Explorer 240D power station at a new $132 low (Reg. $209)
- Jackery’s Black Friday power station sale offers up to 65% discounts with bonus 5% + 7% savings starting from $79
- Bluetti’s Black Friday Sale takes up to 55% off power stations with exclusive bonus savings to new lows from $209
- Bluetti launches new Elite 400 ‘luggage’ power station with up to 53% exclusive savings starting from $1,409
- Pick up Bluetti’s new Pioneer Na(Sodium) power station + bundles at lowest prices with exclusive savings from $735
- Mango Power’s Black Friday Sale takes up to 75% off its lineup of Power E station/bundles + bonus savings – all starting from $1,099
- DJI’s 2,048Wh modular power station hits new $699 Black Friday low ($600+ off) + gimbals, cameras, more from $55
- Take the two-pound ALLPOWERS SOLAX P100 mini power station anywhere at a new $55 low (Reg. $89)
- Save up to 34% on ALLPOWERS’ new Volix P300 256Wh power station and bundles starting from $132
Cyber Monday Appliance and Device Green Deals
- Anker’s eufy solar security cameras, smart locks, more get up to 50% Black Friday savings to new lows starting from $50
- Autel’s new outdoor cams pack a punch with solar design, local storage, and HDMI with kits from $249 (Up to $245 off)
- Save thousands for Black Friday on Samsung smart washer/dryers, refrigerators, ovens, and more starting from $269
- GE’s 2-in-1 Profile smart ventless electric washer/dryer combo with heat pump at $2,000 (Reg. $2,700)
- Aiper’s Black Friday Sale offers up to 50% savings on robot pool cleaners, skimmers, monitors, more from $120
- AeroGarden’s 6-plant Harvest Elite 360 indoor hydroponic system hits new $62 Black Friday low, more from $29
- Jump car batteries with GOOLOO’s GP4000 or use as a 24,000mAh power bank with $60 Black Friday savings at a new $80 low
- Cross Whisker’s Litter-Robots off your shopping list with up to $152 Black Friday savings and lows from $599
- Govee’s indoor and outdoor ambient lighting devices hit new lows with up to 50% Black Friday savings from $24
- Save up to 49% on Govee’s smart appliances, like the electric kitchen composter at its $200 low ($103 off), more
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