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Caroline Ellison, former chief executive officer of Alameda Research LLC, center, arrives at court in New York, US, on Tuesday, Oct. 10, 2023. 

Yuki Iwamura | Bloomberg | Getty Images

In sentencing FTX founder Sam Bankman-Fried to a 25-year prison sentence on Thursday, Judge Lewis Kaplan cited testimony from Caroline Ellison, an ex-girlfriend of the defendant and early recruit into his crypto enterprise.

“I keep coming back to Ms. Ellison’s testimony that he knew it was wrong,” Kaplan said at the sentencing hearing in downtown Manhattan. “He knew it was criminal.”

Ellison was the star witness for the Department of Justice in its prosecution of Bankman-Fried. She agreed to a plea deal in December 2022, a month after FTX spiraled into bankruptcy.

As part of her testimony at the criminal trial late last year, Ellison supplied the government and the jury with text messages, documents and secret recordings that ultimately helped lead to Bankman-Fried’s conviction on all seven charges against him.

Sam Bankman-Fried's family on sentencing: We are heartbroken and will continue to fight for our son

Manhattan U.S. Attorney Damian Williams said in a statement after the sentencing on Thursday that Bankman-Fried’s “deliberate and ongoing lies demonstrated a brazen disregard for his customers’ expectations and disrespect for the rule of law, all so that he could secretly use his customers’ money to expand his own power and influence.”

Ellison, who ran FTX’s sister hedge fund Alameda Research, pleaded guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.

Though Ellison faces similar sentencing guidelines to Bankman-Fried, she’s expected to receive a far more lenient sentence due to her role as a cooperating witness.

Caroline Ellison is questioned as Sam Bankman-Fried watches during his fraud trial before U.S. District Judge Lewis Kaplan over the collapse of FTX, the bankrupt cryptocurrency exchange, at Federal Court in New York City, October 11, 2023 in this courtroom sketch.

Jane Rosenberg | Reuters

Ellison’s complicated ties to SBF

Ellison jumped into Bankman-Fried’s crypto orbit in 2017.

She’d been working as a trader at Jane Street, where Bankman-Fried got his start in finance. Bankman-Fried had reportedly convinced the Stanford graduate to ditch her Wall Street gig and join Alameda, when the hedge fund was still in its original Bay Area office.

Ellison spent years as Bankman-Fried’s on-again, off-again girlfriend and, at times, his roommate. She followed Bankman-Fried from California to Hong Kong and ultimately to the Bahamas, as Bankman-Fried repeatedly shifted headquarters for his crypto companies.

Michael Lewis wrote about Ellison in his book, “Going Infinite,” which covered Bankman-Fried’s rise and fall. In 2021, Ellison was promoted to CEO of Alameda, a job for which, according to Lewis’s reporting, neither Ellison nor Bankman-Fried found her particularly well suited.

“Caroline sensed that, even as Sam promoted her to CEO of Alameda Research, he disapproved of her job performance — and she shared his opinion,” Lewis wrote.

Lewis shared an excerpt from one of the memos that Ellison had sent Bankman-Fried. “It feels like I’m doing a much worse job managing Alameda than you would if you were working on it full-time,” she wrote.

In April 2021, Ellison tweeted about “regular amphetamine use” in a thread that also talked about the “herculean” effort it took for her to get off of her couch and go for a hike.  

Court filings show that Ellison’s compensation paled in comparison to other top executives. Of the $3.2 billion in payouts to the exchange’s founders and other senior employees, FTX’s head of engineering, Nishad Singh, received $587 million, co-founder Gary Wang got $246 million and $2.2 billion went to Bankman-Fried. Ellison received $6 million.

Sam Bankman-Fried faces up to 50 years in prison at sentencing hearing

Some of Ellison’s private diary entries were leaked by Bankman-Fried to The New York Times, which published a report about them last July, months before the trial. The act ultimately landed Bankman-Fried back in jail after Kaplan revoked his bail for alleged witness tampering.

In a Google document from February 2022 shared with the Times, Ellison wrote, “I have been feeling pretty unhappy and overwhelmed with my job. … At the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all.”

She added, “It doesn’t really feel like there’s an end in sight.”

‘Trying to fix problems’

But it was in the courtroom that jurors got to hear Ellison for the first time.

U.S. Attorney Thane Rehn said during the trial that Bankman-Fried “was using her as a front” when “in reality, he was still calling the shots at Alameda.” Over the course of her multi-day testimony, Ellison helped prosecutors build a narrative that she was acting at the direction of Bankman-Fried in helping him steal customer money from FTX and using it to help prop up Alameda, which was suffering in the wake of the crypto winter.

Ellison said Bankman-Fried was still CEO of Alameda when the funneling of money began. She said she was under the impression that it was FTX customer money because the sums exceeded the exchange’s profits and the amount of capital it had raised.

In mid-2021, when FTX bought equity in the company back from rival exchange and early investor Binance, FTX used $1 billion in customer funds for the transaction, Ellison testified.

Ellison said she considered resigning from Alameda at various points from 2019 to November 2022.

On one of her Google Docs, Ellison had a section entitled “limiting factors in scaling,” which she said referred to things that were holding back Alameda. The first thing she listed was management, including a comment on her former co-CEO Sam Trabucco.

“I feel like neither Trabucco nor I has been doing a great job of pushing on stuff,” she wrote. “We’re in the mode of maintaining status quo and trying to fix problems.”

In terms of the commingling of operations between FTX and Alameda, Ellison admitted on the witness stand that the two firms didn’t have a proper “Chinese wall” separating the businesses.

During her testimony, Ellison mostly avoided eye contact with Bankman-Fried, staring down at her hands between questions and frequently flipping her hair over her left shoulder. Bankman-Fried also often looked away, with hands clenched.

Ellison told the jury that her breakup with Bankman-Fried in the spring of 2022 affected communications between the two of them. They would talk mostly over Signal despite living in the same apartment, and they largely avoided each other outside of work.

Danielle Sassoon, the assistant U.S. attorney representing the government, told Kaplan several times “the defendant has laughed, visibly shaken his head, and scoffed,” which she said could be having an effect on Ellison “given the history of this relationship, the prior attempts to intimidate her, the power dynamic, their romantic relationship.”

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

Secret recordings and texts

Of the hundreds of items entered into evidence during the trial, a bank of messages on encrypted app Signal was among the most calamitous for Bankman-Fried.

The government presented a series of Signal exchanges involving Bankman-Fried, Ellison, Wang and other top execs. In one such exchange, from Nov. 8, 2022, Ellison appealed to Bankman-Fried and other members of the inner circle, asking for help on optics and public messaging.

Prosecutors relied heavily on text messages sent among FTX and Alameda Research executives in the case against Sam Bankman-Fried.

Source: SDNY

She wrote, “multiple people internally asking me whether they should continue to make statements to external parties like ‘Alameda is solvent.’ should i suggest they stall instead? just stall on responding to their messages? or what?”

That day, FTX issued a pause on all customer withdrawals.

The following day, Ellison again looked to the group for guidance about how to handle an all-hands meeting for Alameda’s roughly 30 employees.

Ellison’s proposal was to tell them, “Alameda is probably going to wind down” and that there was “no pressure” to stay but help with “stuff like making sure our lenders get paid” would be “super appreciated.”

Bankman-Fried suggested she say something about there “being a future of some sort for those who are excited.”

Prosecutors relied heavily on text messages sent among FTX and Alameda Research executives in the case against Sam Bankman-Fried.

Source: SDNY

Ellison ended up divulging a lot more than that in the staff meeting, a secret recording of which was played for the jury.

“Alameda borrowed a bunch of money,” which it used to make investments, Ellison said at the meeting. But as crypto prices fell, “FTX had a shortfall of user funds” and then “users started withdrawing their funds” and they “realized they would not be able to continue.”

When she was asked by a staffer whose idea it was to plug Alameda’s loan losses with FTX customer money, she said, “Um, Sam, I guess,” and giggled.

“FTX basically always allowed Alameda to, like, borrow user funds, as far as I know,” Ellison said.

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Ukraine’s attacks on Russian oil refineries shows the growing threat AI drones pose to energy markets

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Ukraine’s attacks on Russian oil refineries shows the growing threat AI drones pose to energy markets

Smoke billows after Ukraine’s SBU drone strikes a refinery, amid Russia’s attack on Ukraine, in Ryazan, Ryazan Region, Russia, in this screen grab from a video obtained by Reuters, March 13, 2024. 

Video Obtained By Reuters | Via Reuters

Ukraine’s campaign of attacks against Russian oil refineries is demonstrating how relatively cheap drones that utilize artificial intelligence could pose a major threat to global energy markets.

Ukraine-launched drones have hit 18 Russian oil refineries this year with a combined capacity of 3.9 million barrels per day, according to report published by JPMorgan earlier this month. Some 670,000 bpd of Russian refining capacity is currently offline due to the strikes, according to the bank.

Ukraine’s capabilities are growing with its drones now demonstrating a substantially longer range. Earlier this month, Kyiv hit Russia’s third-largest oil refinery, Taneco, which is located up to 1,300 kilometers — roughly 800 miles — from the frontlines, according to JPMorgan.

Ukraine is increasingly using drones that are enabled with AI, which helps the weapons navigate and avoid jamming, according to the bank.

“The AI guidance also delivers strike precision, maximizing the impact of the strikes by targeting specific areas like distillation towers, repairs of which requires Western technology,” Natasha Kaneva, head of global commodities strategy at JPMorgan, told clients in the April report. “This makes the repairs costly and often require equipment that the country is not able to produce.”

U.S. Defense Secretary Lloyd Austin made clear Tuesday that the Biden administration is worried about the strikes in a rare airing of public disagreement with U.S. allies in Kyiv.

“Certainly, those attacks could have a knock-on effect in terms of the global energy situation,” Austin told the Senate Armed Services Committee. “Quite frankly, I think Ukraine is better served in going after tactical and operational targets that can directly influence the current fight.”

The U.S. has urged Ukraine to stop the attacks on Russian energy infrastructure out of concern that they could drive up crude oil prices and instigate retaliation from Moscow, three people familiar with the discussions told the Financial Times last month.

The losses to Russian refining capacity could worsen as Ukraine aims to build a full-fledge drone industry and produce a million units domestically this year, according to the JPMorgan report. If Kyiv is able to extend the drones’ range to 1,500 kilometers (about 932 miles), they could potentially hit 21 refineries with more than 4.4 million bpd of refined capacity, according to the report.

“There’s room for this to become a bigger problem, because we’ve come to count on Russian supply getting to the global market, which allows other non-Russian supply to go to other places,” said John Kilduff, an energy expert and founding partner at Again Capital.

The deployment of AI drones also has broader implications for global energy markets, according to Bob Brackett, a senior research analyst at Bernstein. The drones are cheap to produce compared to the millions of dollars in damage they can cause and could empower nonstate actors to challenge superior fighting forces, Brackett told clients in Friday note.

“These drones can easily and asymmetrically disrupt global seaborne trade,” Brackett wrote, warning that oil exporters such as Russia aren’t the only countries that need to be worried. Oil importers, like China and India, will now have to worry about disruptions to crude flows from drone attacks, he said.

Impact on oil, gasoline prices

Ukraine’s campaign of drone strikes comes at the same time as tensions are running red hot in the Middle East, with OPEC member Iran and Israel now teetering on the brink of a direct confrontation.

U.S. crude oil has rallied nearly 20% this year, while the global benchmark Brent has gained 17% as the wars in Middle East and Eastern Europe rage against the backdrop of rising crude demand and tightening supply. Gasoline futures have surged about 33% since the year began.

Bob McNally, president of Rapidan Energy, said the drone strikes are not a major issue for oil prices right now because the attacks on refineries are primarily affecting Russia’s production of diesel at a time when the market is already glutted.

But Russia is also major exporter of a gasoline feedstock called naphtha. If naphta markets were to tighten because of the attacks it could have an impact on gas prices and balances, said McNally, who served as a senior energy official in the George W. Bush administration.

Goldman Sachs said in a research note last month that the strikes are bullish for diesel prices, but the impact on crude oil is mixed. Outages can lead to reduced oil demand from refineries, which is bearish for prices. But the market is worried Ukraine could increasingly hit oil production and transportation infrastructure, which would weigh on Russian crude exports, according to Goldman.

Bart Melek, head of commodity strategy at TD Securities, said the current strikes could have an indirect effect on oil markets. As Russian fuel exports decline due to the attacks, countries that rely on those exports then need to source fuel from refineries in other jurisdictions, Melek said. Those refiners need more crude to meet the demand which can stress oil supplies, he said.

Russian production already poses a problem for the Biden administration. Moscow has pledged to cut its oil output and exports by an additional 471,000 barrels per day in the second quarter to meet its commitments to OPEC+.

Those cuts could push the price of Brent crude to $100 by September, which will put pressure on the Biden administration just before the presidential election, according to a JPMorgan report last month.

The investment bank expects U.S. gas prices to hit $4 per gallon by May, the highest level since the summer of 2022.

“There are few issues that terrify a sitting American president in an election year more than surging gasoline prices,” said Rapidan’s McNally.

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MAN to build 200 hydrogen trucks — to prove that hydrogen doesn’t work?

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MAN to build 200 hydrogen trucks — to prove that hydrogen doesn't work?

Europe’s second-largest commercial truck maker is going to build 200 hydrogen-powered semi trucks, but remains skeptical about the viability of hydrogen as a transport fuel.

It’s a strange announcement, as far as these things go. MAN even went so far as to reiterate its commitment to battery-electric vehicles for “most” applications, strange for an announcement about a hydrogen-fueled product that the company plans to try and actually sell to a select number of customers who carry extra-heavy loads like timber or parts for offshore wind turbines. Other hydrogen strangeness includes claims that “it will still be a few years before the technology is truly market-ready and competitive.”

Those claims don’t come from MAN Truck’s notoriously hydrogen-skeptical CEO, Alexander Vlaskamp, who told reporters that it was, “impossible for hydrogen to effectively compete with battery electric trucks,” back in January. “Today you cannot buy hydrogen for less than 13 or 14 euros … and it is not green. And when we have green hydrogen it will be needed for the heavy industry of steel, cement, or plastic.”

So — if all that’s true, why is MAN continuing to invest in hydrogen-powered vehicle programs?
Only to test our hypothesis,” said Vlaskamp (emphasis mine). “We may use hydrogen for transportation in 2035, but only if there is enough green hydrogen at the right price and the necessary infrastructure is in place.”

MAN CEO expresses doubts about H

MAN CEO, Alexander Vlaskamp; via Expansión.
MAN CEO, Alexander Vlaskamp; via Expansión.

And, as noted above, Vlaskamp isn’t alone. MAN’s board member for research and development, Frederik Zohm, said that the company is the one saying hydrogen still has years to go. “(MAN) continues to research fuel cell technology based on battery electrics,” he said, in a statement quoted by Hydrogen Insight, before another board member added that, “we (MAN) expect that, in the future, we will be able to best serve the vast majority of our customers’ transport applications with battery-electric trucks.”

As far as the hydrogen trucks themselves go, the H2 combustion engine appears to have taken center stage in MAN’s hydrogen product road map, with the company’s previously stated plans to put its FCEV semi into limited production in 2025 seemingly pushed back to make way for this run.

Dubbed the MAN gTGX, the trucks are fitted with a 56 kg tank that it says can be filled with hydrogen compressed at 700 bar in 15 minutes. And, with tailpipe emissions coming in at less than 1kg of CO2 per km, the truck will be categorized as a “zero-emissions vehicle” under the EU’s road transport regulations.

MAN says its H2 combustion engine will deliver a massive 1800+ lb-ft. of torque (2500 Nm), enough to haul more 220,000 lbs. (100 tonnes) of payload.

Electrek’s Take

This whole thing is strange, right? Imagine RAM trucks announcing a new diesel pickup and including quotes from several executives about the technology being a step or two behind the electric trucks from Ford and Tesla. It would be bizarre.

That said, the message here seems to be that, if Europe wants to keep spending money on hydrogen trucks, MAN will be happy to take it. That’s what I’m getting, anyway — what about you guys? Scroll on down to the comments and let us know.

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Monarch delivers first 70 hp electric tractor to City of Berkeley

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Monarch delivers first 70 hp electric tractor to City of Berkeley

In a move set to align with a new state mandate to transition to a zero-emission off-road equipment and vehicle fleet by 2035, the City of Berkeley, California becomes the first to take delivery of a a 70 hp Monarch MK-V electric tractor.

It’s been a rough week for fans of electric farm tractors, with news that California-based Solectrac has been evicted from their Sonoma County R&D facility and word that a number of ag equipment dealers have soured on the brand, stating that, “(the Solectrac) is a nice tractor but really about a 75 horsepower tractor is what people look at.”

It seems like someone at Monarch agreed, because their electric tractor is available with 70 all-electric hp and enough instant torque for the brand’s reps to be able to confidently claim that their horses are bigger than most. And, almost as if in direct response to the comments from dealers, they seem to have business and public sector customers ready to give them a shot — starting with the City of Berkeley.

“We (City of Berkeley) have been slowly but surely purchasing electrical equipment for our operations,” says Melissa Marizette-Green, Senior Landscape Gardener Supervisor, City of Berkeley Parks Division. “The MK-V is going to be the largest piece.”

It’s worth noting, too, that Marizette-Green chose the Monarch tractor intentionally, and not simply because it was electric. “We had seen another electric tractor here in California, but it didn’t meet our needs,” she explains, stopping just short of calling out Solectrac by name. “That tractor was not powerful enough to use the attachments that we use in our operations. The Monarch was everything we needed.”

The City of Berkeley was able to take advantage of California’s Clean Off-Road Equipment (CORE) incentive program, which enables customers to purchase the Monarch MK-V for a minimum of 65% off the retail price, effectively making its purchase price equal to a similar-sized diesel tractor while offering significantly reduced operating costs.

The Monarch MK-V is currently in production at the Foxconn-owned Lordstown factory in Ohio, with early deliveries reaching customers as I type this. The Monarch electric tractor offers a proven runtime of up to 14 hours, swappable li-ion battery technology, compatibility with a number of current, industry-standard implements, and a suite of autonomous tech.

Electrek’s Take

Melissa Marizette-Green, City of Berkeley Parks Division, takes delivery of a MK-V; via Monarch.

While this is good news for electric tractors and, I think, humanity and agriculture as-a-whole, it makes me a bit sad for Solectrac. I’m a huge fan of those guys, and have been a fan of their founder, Steve Heckeroth, since the days of US Electricar.

I was invited to moderate a fireside chat on the subject of electric tractors at last year’s Electrify Expo Industry Day event in Long Beach, CA with Monarch CEO, Praveen Penmetsa, and Steve Heckeroth that focused on agriculture’s role in reducing global greenhouse gas emissions.

It’s titled “Field of Dreams: From the Farm to the Open Road, and Higher,” and you can watch it for yourself on YouTube, below.

Coinciding with the earliest days of the automobile, America’s farms and ranches saw new possibilities for tending to crops and land with tractors and other rugged vehicles. Today, data and automation that provide safety on our highways often come from work in rows of produce destined for the dinner table and travel far beyond our cities. Let’s visit with the pioneers of these new proving grounds and the launchpads of tomorrow.

PS: you’re wrong. The Stetson was a fantastic choice.

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