Former FTX CEO Sam Bankman-Fried Faces New Charges in Multi-Billion Dollar Fraud Case

February 23, 2023 Bitcoin.com

Report: Former FTX Director of Engineering Nishad Singh Negotiating Plea Deal with Prosecutors

February 18, 2023 Bitcoin.com

SEC and CFTC Lawsuits Against Former FTX CEO Paused Until Criminal Proceedings Conclude

February 14, 2023 Bitcoin.com

FTX Co-Founder Sam Bankman-Fried Seeks Removal of Bail Restrictions on Crypto Asset Transfers

January 28, 2023 Bitcoin.com

NY law firm investigates potential ‘securities fraud’ at Core Scientific

January 10, 2023 Coin Telegraph

Coin Telegraph

The investigation was prompted by a report from Culper Research, which alleged that Core Scientific had "wildly oversold" its mining and hosting businesses.

A New York-based law firm says it has begun an investigation into whether Bitcoin miner Core Scientific and its leadership potentially engaged in “securities fraud and other unlawful business practices" which led to its stock price falling on several occasions.

According to securities class action firm Pomerantz LLP, the investigation was prompted by a report from Culper Research in 2022, which alleged that Core Scientific had "wildly oversold" its mining and hosting businesses in 2021 and also waived a 180-day lockup period of over 282 million shares, making them "free to be dumped" in Mar. 2022.

This report suggested that insiders at Core Scientific had "abandoned any pretense of care for minority shareholders," noting that on this news, Core Scientific's share price fell 9.4% on Mar. 3, 2022.

The law firm also highlighted another incident on Sept. 28, 2022, in which crypto lender Celsius Network filed a motion in the bankruptcy court, accusing Core Scientific of violating the automatic stay provisions, adding improper surcharges, and failing to meet its contractual obligations.

This led to its stock price falling 10.3% the day after on Sep. 29, 2022, it said.

In a final incident, the law firm said on Oct. 27, 2022, Core Scientific announced that "given the uncertainty regarding the Company's financial condition, substantial doubt exists about the Company's ability to continue," revealing it held only 24 Bitcoin (BTC) compared to 1,051 BTC on Sept. 30.

This news caused Core Scientific's stock price to drop sharply, closing at $0.22 per share, a decline of 78.1%, said the firm.

Pomerantz LLP said it was investigating these claims on behalf of investors of Core Scientific and has called for any such investors to join the potential class action.

The same law firm filed a class action lawsuit against Silvergate Capital on Dec. 13 for making "materially false and/or misleading statements" and failing to disclose "material adverse facts about the Company's business, operations, and prospects."

On Jan. 4, Cointelegraph reported that Core Scientific had agreed to shut down 37,000 mining rigs it was hosting for Celsius due to the Bankrupt cryptocurrency lender’s failure to pay its power bills. According to the Bitcoin miner, this played a significant role in liquidity issues that led to its filing for Chapter 11 bankruptcy on Dec. 21.

On Dec 23, Cointelegraph reported that a United States bankruptcy court had granted Core Scientific interim approval to access a $37.5 million loan from existing creditors to fund its liquidity issues.

Media Draws Attention to Sam Bankman-Fried’s 2 Visits While on House Arrest

December 30, 2022 Bitcoin.com

Crypto Twitter explodes over the news of Sam Bankman-Fried’s arrest

December 13, 2022 Coin Telegraph

Alexandria Ocasio-Cortez

US politicians, crypto execs and influencers fired up their Twitter apps upon learning that Sam Bankman-Fried was in custody in the Bahamas.

Crypto Twitter has blown up over the shocking news of Sam Bankman-Fried’s arrest in the Bahamas, with many surprised it had occurred so quickly.

On Dec. 12, the disgraced FTX founder was arrested by the Royal Bahamas Police after they received notification that the United States government had filed criminal charges against him.

Within hours, politicians, crypto executives and influencers had all booted up their Twitter apps to comment on the arrest of the former CEO.

New York Democratic Representative Alexandria Ocasio-Cortez, who’s held a fairly neutral view on the crypto industry to date, told her 13.4 million Twitter followers that Bankman-Fried’s was a step toward “justice being served,” but noted that the arrest would postpone Bankman-Fried’s testimony before the House Financial Services Committee, which was scheduled for Dec. 13.

Bankman-Fried was set to testify before the House tomorrow. Tonight he was arrested.

While I am disappointed we will not have the opportunity to present our line of questioning, we look forward to more information coming to light and justice being served in this case. https://t.co/HS9u1n5Kur
— Alexandria Ocasio-Cortez (@AOC) December 13, 2022

U.S. Senator Cynthia Lummis was also pleased, tweeting that prosecutors made the right decision to hold Bankman-Fried accountable for the “good, old-fashioned fraud” he allegedly committed.

What happened at FTX appears to be good, old-fashioned fraud, and I'm glad prosecutors have been investigating what happened to ensure everyone who committed crimes is held accountable for what they did.
— Senator Cynthia Lummis (@SenLummis) December 13, 2022

Fellow U.S. senator and crypto skeptic Elizabeth Warren agreed, stating in a Dec. 13 tweet to her 7 million followers that the U.S. Department of Justice needs to hold more lawbreaking corporate executives accountable.

Others took the opportunity to make light of it all. Benjamin Cowen, the chief executive and founder of the crypto-analysis channel called Into The Cryptoverse, used ChatGPT to create poetry about Bankman-Fried’s latest predicament.

“Write a poem about SBF, the CEO of FTX, who was arrested in the Bahamas for wire fraud.” pic.twitter.com/OWMXlhcqPt
— Benjamin Cowen (@intocryptoverse) December 13, 2022

Meanwhile, memes are already making the rounds on Twitter:

Sam Bankman-Fried goes to jail finally. pic.twitter.com/i2JqL7JiD6
— DRE THE NOID (@THEGOONEEZ) December 13, 2022

Much is also being said about Bankman-Fried’s Twitter posts and media appearances since FTX’s stunning collapse in November.

The co-host of Not Investment Advice, Trung Phan, told his 538,000 Twitter followers on Dec. 13 that Bankman-Fried’s erratic public behavior will make life harder for his defense attorney, while others believe that Bankman-Fried’s arrest will likely see him pointing the finger at colleagues and people linked to the FTX debacle, including those that received his sizeable political donations.

In what is likely his last Twitter Spaces interview, with Unusual Whales on Dec. 12, Bankman-Fried stated “I don’t think I’ll be arrested” when pressed about the possibility.

The Royal Bahamas Police Force made the arrest following the formal notification from the U.S. that it has filed criminal charges against Bankman-Fried, according to a Dec. 12 announcement by the Bahamas’ Office of the Attorney General.

Michael Saylor Says SEC Should Shut Down XRP, Ethereum, Solana and Other Altcoins for Being Unregistered Securities

December 7, 2022 The Daily Hodl

So-Called ‘Pharma Bro’ Martin Shkreli Turns ‘Crypto Bro’ — ‘I Started Using Uniswap in Prison’

May 22, 2022 Bitcoin.com

Former SEC official predicts regulator ‘will lose on the merits’ of case against Ripple

February 23, 2022 Coin Telegraph

Coin Telegraph

Joseph Hall believes that the SEC is not yet equipped to handle litigation in cases concerning cryptocurrencies as securities yet, making it hard to win the case against Ripple.

A former executive from the Securities and Exchange Commission believes the regulator has a good chance of losing its $1.3 billion lawsuit against Ripple “on the merits” of the case.

Attorney Joseph Hall also voiced concerns over what the SEC’s endgame could be regarding the high-stakes case against Ripple (XRP), which will have ramifications for the entire industry.

The lawsuit alleges that the company and its co-founders, Brad Garlinghouse and Christian Larsen, failed to notify the SEC about its sale of XRP beginning in 2013, and that the tokens are unregistered securities. The SEC is trying to prove that securities fraud took place as a result.

Hall, a former Managing Executive for Policy at the SEC appeared on the Thinking Crypto podcast with host Tony Edward on Feb. 22 where he said:

“I’m not entirely sure what the SEC is planning on proving in the XRP litigation.”

The implications for the SEC and for the crypto industry as a whole are massive. As Hall puts it, “the SEC has a lot riding” on the case, and “their entire regulatory project could be basically shut down if they lose on the merits” of the case.” He continued:

“And I continue to think there is a pretty good chance that (the SEC) will lose on the merits.”

Hall believes that Ripple has a strong defense on the basis that the SEC failed to give fair notice of its investigation. The SEC is required to notify individuals and corporations that they are being scrutinized.

“I'm very sympathetic to that argument. It's a basic due process argument. The Ripple network was operating for years before the last minute filing of a lawsuit against them.”

Another attorney who has been following and commenting on the Ripple case for some time, Jeremy Hogan, also believes that Ripple’s fair notice defense will be strong enough to keep it out of the proverbial fire. In a Feb. 23 tweet, he cited a precedent from the case the SEC brought against Library Credits (LBRY) last March which was stricken because the SEC failed to give fair notice.

Uhhmm... In the LBRY case, LBRY actually asserted a Fair Notice Defense and not only did it not get stricken, the SEC didn't even TRY and strike it.

So, how a trial level court striking a completely different affirmative defense in that case is relevant... I don't understand. https://t.co/g9XuBWr4Ob pic.twitter.com/X0OSRecUdB
— Jeremy Hogan (@attorneyjeremy1) February 22, 2022

The Ripple case could have effects that set the tone for investigations and litigation in cases regarding cryptocurrency for the foreseeable future once a ruling is made. If the SEC wins, it could begin a deluge of new investigations and court cases against crypto projects. If Ripple wins, it could force the SEC to drastically curtail attempts to go after the crypto industry.

Securities Fraud