Sam Bankman-Fried sentence: After years of ‘hubris, incompetence and greed’, crypto king’s jail term is end of an era

Published

1 month ago

March 29, 2024

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Sam Bankman-Fried was breathlessly described as a wunderkind – a boy wonder transforming the world of finance.

Renowned for his messy hair and unkempt appearance, he graced the covers of Forbes and Fortune, who pondered whether he could become the next Warren Buffett.

The 32-year-old was the founder of FTX, which had quickly become the world’s second-largest cryptocurrency exchange – a place where investors could buy and sell digital assets like Bitcoin.

Star-studded adverts featuring the tennis player Naomi Osaka and the comedian Larry David added to its allure – with eye-watering sums spent on sponsorship deals.

But in November 2022, Bankman-Fried’s crypto empire came crashing down after it emerged that customer funds worth $10bn (£7.9bn) was missing.

A year later, a jury convicted the fallen entrepreneur of fraud and money laundering after just five hours of deliberations – based on evidence from close colleagues who had turned against him.

Now, “SBF” is beginning a lengthy prison sentence of 25 years for what prosecutors have described as “one of the biggest financial frauds in American history”.

His punishment may be little comfort to five million FTX customers who were suddenly locked out of their accounts as the company entered bankruptcy – and are yet to receive any compensation.

An estimated 80,000 of Bankman-Fried’s victims were based in the UK. Some of them had millions of pounds tied up in the company after entrusting him with their life savings.

While slick marketing campaigns had presented FTX as a safe way to invest in volatile cryptocurrencies, the reality behind the scenes couldn’t have been more different.

Secret back doors had been established that allowed SBF’s other company, Alameda Research, to access money belonging to FTX customers and make risky bets without their knowledge.

Meanwhile, executives were spending lavishly. Private jets ferried Amazon orders from Miami to the firm’s headquarters in the Bahamas, £12m was spent on luxury hotel stays in just nine months, and employees in the US were allowed to order £160 of food deliveries each a day.

The fallout from FTX’s demise also reaches as far as the White House. Bankman-Fried was one of the largest donors to Joe Biden’s campaign in 2020, with the president subsequently facing pressure to return millions of dollars.

A new chief executive has been tasked with untangling where all the money went. Soon after FTX went under, he said: “Never in my career have I seen such a complete failure of corporate controls.”

Unusually, and thankfully, FTX victims are expected to be compensated in full eventually – kind of.

The payouts they receive will be based on what cryptocurrencies were worth in November 2022. But Bitcoin was trading at £16,000 back then and is now worth £55,500.

Bizarre plans to bring FTX out of bankruptcy and reopen the exchange have also been abandoned.

Other entrepreneurs in this space – who had loyal, cult-like followings and huge profiles – are also facing jail time.

Changpeng Zhao, who ran the world’s biggest crypto exchange Binance, sensationally resigned last year after pleading guilty to money laundering violations in the US.

His company had allowed individuals in Syria, Iran and Russian-occupied parts of Ukraine to evade economic sanctions – and allegedly made it easy for terrorists and criminals to move money.

The billionaire faces jail time when he is sentenced next month.

Do Kwon created two cryptocurrencies that spectacularly collapsed in May 2022, with investors losing an estimated $40bn (£31.7bn) in a matter of days.

He later went on the run but was captured in Montenegro last year after attempting to fly to Dubai using a fake passport.

A civil fraud trial against Kwon and his company Terraform Labs began this week, with prosecutors warning: “Terra was a fraud, a house of cards, and when it collapsed, investors nearly lost everything.”

In a way, Bankman-Fried’s sentence marks the end of an era for crypto – when extravagant excesses and a lack of regulatory oversight were the norm.

Bitcoin’s recent gains have been driven by regulated products that allow investors to gain exposure to the cryptocurrency’s price without owning it directly.

And many of these products are offered by established, traditional finance firms like BlackRock, which is the world’s largest asset management company.

A damning report described the rise and fall of FTX as a tale of “hubris, incompetence and greed” – with Bankman-Fried and his inner circle showing little regard for the financial wellbeing of his customers.

Millions of people had their fingers burned, and many will be put off from ever investing in cryptocurrencies again.

But while the industry has learned some lessons, the crypto market’s rapid surge in recent months mean there’s a real risk of another bubble forming – and new bad actors taking advantage of investors looking for a piece of the action.

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California mocked over ‘billion-dollar’ bridge to nowhere

Published

1 hour ago

May 5, 2024

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California mocked over 'billion-dollar' bridge to nowhere

Authorities in California have been mocked over a “billion-dollar” bridge to nowhere.

The state government of California has long planned for a Los Angeles to San Francisco high-speed rail project.

Despite initial funding being approved back in 2008, the line is still a long way off and expected to cost over $100bn in total.

So far, construction has only begun on the earliest phase and further funding has been used on environmental planning ahead in the Phase I System.

However, the California High-Speed Rail Authority recently publicised one of the completed sections of construction – finished back in 2018 and reported to cost $1bn on its own.

This is a 0.3-mile stretch of bridge, called The Fresno River Viaduct in Madera County, and it has attracted ridicule for going from nowhere to nowhere.

Pictures shared by the authority of the bridge show it connected to nothing at either end with some claiming it is indicative of the wider project.

It runs above a road and close to a number of houses – parallel to another rail track – but currently serves no purpose.

Elon Musk poked fun at the recent X post of the construction, with the billionaire posting a crying emoji in response to news of the project.

Others waded in as well on social media.

However, a number of those criticising it made false claims of the viaduct, its cost and time it took to complete it.

Since it was finished six years ago, after three years of construction, dozens more structures have been completed and there are over a hundred miles in active construction across the project.

Due to the vast scale of high-speed rails, they are often complex, expensive and lengthy projects – with the California High Speed Rail being no different.

The rail would come into use some time in the early 2030s but scrapping it reportedly remains a possibility.

California High Speed Rail has been approached for comment.

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In Washington DC and Gaza two very different families are united by one very rare disease

Published

6 hours ago

May 5, 2024

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In Washington DC and Gaza two very different families are united by one very rare disease

It is a paradox that humanity at its very worst so often also brings out its very best too.

This is a story about the kindness of strangers. It’s a story about hope over hopelessness. It’s about the war in Gaza but also about the rarest of diseases.

It is about two families in worlds far apart. It is a story about two little girls, Julia and Annabel.

I don’t yet know how it will end. But this is how it started.

It was two weeks ago when my phone pinged: a message on Instagram from a friend-of-a-friend. Her name is Nina Frost.

Nina and I first met a few years ago at a party in Washington DC where she had told me about her daughter Annabel, a little girl with an ultra-rare genetic disorder called AHC.

I remember Nina explaining how it was a disease like no other.

‘The human time bomb disease’ she had called it, based on the all-consuming parental nightmare that their little girl could have a fatal seizure at any moment.

I’ve followed Nina’s Instagram, @HopeForAnnabel since we first met.

The good news is that Annabel is doing well, albeit with that eternal danger hanging over her. She requires constant care, attention and love.

Nina’s message to me wasn’t about her own daughter. It was about another little girl, in Gaza.

Rare diseases like AHC, which stands for Alternating Hemiplegia of Childhood, generate tight networks; the families living with the condition. Only about 1,000 people worldwide have been diagnosed with AHC. It really is rare.

“There is a little girl stuck in Gaza with the disease,” Nina wrote to me.

“Julia is three – after the last few months she has become paralyzed and unable to eat as her symptoms have worsened dramatically. We are desperate to help as she is massively vulnerable – literally on the brink of death.”

Nina told me how she and her husband, Simon, are trying to organise the impossible: to get specialist drugs into Gaza and, ultimately, to try to get Julia and her family out.

Nina was modest about an endeavour that I now know has been all-consuming and expensive.

To tell this remarkable story of kindness and hope, I asked Nina to share with me Julia’s father’s number. Our local colleagues in Gaza then tracked the family down to a tent in the southern city of Rafah.

Julia Abu Zaiter is from northern Gaza originally. But with her father Amjad, her mother Maha and her older sister Sham, she was forced south by the Israeli military.

“My girl is three and a half years old. I want her to go out and play with the other children. Now, she cannot move at all,” Julia’s mother told our team, cradling her severely disabled little girl.

Rafah is on Gaza’s southern border with Egypt. Safety is so close and yet beyond reach unless the right strings are pulled with different authorities and governments in a labyrinth of wartime bureaucracy.

The images filmed by our team confirm what Nina had feared in her message to me.

Julia and her family are in the toughest of conditions. The house next to the tent was bombed a few days before our team visited.

The Abu Zaiters are now stuck in the city that could be the next battlefield and with a daughter whose condition is compounded by just the slightest stress, a little girl with, as Nina had told me, the ‘time bomb disease’.

“I told myself ‘it’s over, my girl is gone’,” Julia’s mother told our Gaza team, showing them Julia’s semi-paralysed state.

“Then a man named Simon contacted us and told us he will see if he can help, because his daughter’s situation is similar to mine.”

Five thousand miles away, and a world apart, in a leafy northwest suburb of Washington DC, I am now sitting with Simon, Nina and Annabel.

It is humbling to listen to their words – about their own daughter, but about their fight for a stranger too.

“Annabel lives with the most challenging condition that we can imagine – a neurological degeneration – and she lives with it with a smile on her face,” Simon says. “And we’re imagining the same for Julia in the most dire of circumstances.”

We look at videos of Julia which Amjad has sent to Simon.

“Our kids are all so similar… we feel a sense of connection to so many families and our world of rare disease,” Nina tells me.

“This is like that but on steroids. I mean, we feel so distressed for the situation that they’re facing.”

“Julia’s circumstances are exponentially worse, but I think we’ve always embraced the idea that we can do something to help, we must do something to help and that we should. I mean, I think it’s always been if not us, then who?” Nina adds.

Amjad’s message highlights concerns he has about his daughter. He is looking for reassurance from Simon.

Julia is experiencing some severe paralysis and via a translated SMS and a few photos, Amjad wants some encouragement which Simon can’t give.

“They don’t have the medicines they need and the doctors that they need to really treat and properly prevent episodes and to address them when she has them,” Simon says.

“So we’ve been trying to gather a group that can support her. It’s been constant communication and really difficult with the translation issues,” Simon tells me.

Over in Gaza, Julia’s mum is desperate. “Our conditions due to the war are below zero.

“Our situation is horrible. I cannot provide my daughter with any food or drinks. I can get medications through lots of difficulty, and I tell myself that getting these medications is more important than getting food for us.”

Against the odds, Simon has managed to coordinate with the right people to get the right medication into Gaza for Julia.

Through the tight AHC network, one doctor has prompted another who knows another and another. That’s how this works. Threads of kindness stitched together.

Now the challenge is getting Julia out to Egypt and then on a medical flight to Abu Dhabi. It will be hard, maybe impossible.

“And it seems like she’s really declined,” Nina says looking at the latest videos of Julia.

“I mean, it seems like exactly what we would have predicted has happened. She has gone from being a happy three-year-old with a profoundly difficult disease to being this shell of herself.”

“I feel like I am losing her,” Maha says with Julia in her arms. “She is dying right next to me and I cannot even do anything. The thing I fear the most is losing my daughter.”

There is some chance of an extraction to safety soon. It is not guaranteed but it is some hope for one little girl in a place where uncertainty is all around.

This is a story about two families worlds apart but bound by a disease.

I don’t yet know how it will end. This may feel sometimes like a world of hopelessness, but I have some hope.

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‘Part of the American spirit’: Arrested student denies protests are violent

Published

1 day ago

May 4, 2024

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'Part of the American spirit': Arrested student denies protests are violent

Much has been said about the students whose protests have gripped America this past week.

Their cause has been framed in polarising ways. A violent Hamas-sympathising mob? Or peace activists striving for equality?

Within a frenzied spectrum of views and noise, one young student sat down with me for a conversation.

Aidan Doyle, 21, is a philosophy and jazz double major at the University of California in Los Angeles (UCLA).

He was arrested early on Thursday morning for being part of an encampment at the university.

He told Sky News he was shocked that the police arrested so many student protesters, despite not intervening in an attack on the protesters by a pro-Israeli group the day before.

He said his arrest had not deterred him from continuing his protest, which he likened to the Vietnam War demonstrations of the 1960s.

Mr Doyle rejected the notion, from President Biden, that the protests are not peaceful.

“Graffiti, putting posters up, that’s all peaceful,” he said, commenting on the president’s statement from the White House.

“I also think that President Biden needs to actually take some introspection and realise that maybe the reason so many of these protests are happening is partially due to him.”

Mr Doyle added: “Protests in general are part of the American spirit. They’re part of being an American. And if we were to just stand around in circles and sing and dance, and pretend everything was fine, then nothing would change and nobody would care at all.

“Part of a protest is causing disruption and causing at least a minor level of chaos that is, again, not violent but that actually disrupts things.”

He denied any accusations of antisemitism, but conceded there is a spectrum of opinion within the movement.

“If you’re going to criticise a movement, I think you have to look at the movement’s goals and their mission, not what fringe members of the group say or do.

“You have to actually look at what we say, what the organisers say, and what is in the mainstream, and what our mission and our goal is: the peace and prosperity of the Palestinian people.”

Asked if he believed in Israel’s right to exist as a country, he said: “I think Jewish sovereignty is incredible. I think it’s an amazing thing.”

He added: “I think that if there is a country for Jewish people that protects the Jewish people, that is of utmost importance, especially with the vile and rampant antisemitism that exists across the world that I see every day and that I try and combat as much as possible.

“But doing that and then simultaneously repressing another group of people, dehumanising them and brutalising them, then the question of whether your state has the right to exist becomes secondary.”