(Bloomberg) — FTX said it fired three top executives from former Chief Executive Officer Sam Bankman-Fried, the Wall Street Journal reported.
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Meanwhile, the collapse of the crypto empire is being transformed into a new political battle front as Republicans highlight the ties between Democrats and their one-time benefactor Bankman-Fried.
Missouri Republican Senator Josh Hawley sent out a broad request on Friday for correspondence between federal agencies and Democrats, including the Biden administration and House and Senate campaign committees, regarding the bankrupt crypto exchange FTX and trading house Alameda Research. Hawley said he is trying to determine whether Bankman-Fried’s more than $37 million in political donations to Democrats may have put pressure on regulators to be lenient with the former crypto executive.
The chair of a house panel is asking FTX to turn over documents and information by Dec. 1 as part of its investigation into the crypto platform’s collapse.
Key stories and developments:
FTX bankruptcy bombs squeeze crypto lenders behind Bull Run
Wall Street Beat: FTX lesson for withdrawing funds with debt and tokens
FTX’s Point of No Return was Ellison’s Tweet, Trade Data Show
Bankman-Fried’s Island Haven comes under scrutiny following the demise of FTX
FTX Existential Crisis Solution; TMT’s Mega-Cap Problem (Podcast)
(Time references are New York unless otherwise noted.)
FTX Fire Top Sam Bankman-Fried Deputies, WSJ Reports (10:07pm)
FTX said it fired three top executives from former Chief Executive Officer Sam Bankman-Fried, the Wall Street Journal reported.
FTX co-founder and chief technology officer Gary Wang, technical director Nishad Singh and Caroline Ellison, who headed Alameda Research, were fired from their positions, the paper said, citing an FTX spokeswoman late Friday. The paper did not say whether it was trying to reach executives for comment.
They left those roles after FTX appointed John J. Ray to oversee the bankruptcy, the report said. The newspaper had previously reported that executives were aware of the decision to send client money to trading firm Alameda.
Hawley seeks emails from Democrats as FTX collapse turns political (4:04 p.m.)
The collapse of the crypto empire founded by political mega-donor Sam Bankman-Fried is being transformed into a new political battlefront as Republicans highlight ties between Democrats and their one-time benefactor.
Missouri Republican Sen. Josh Hawley sent out a broad request for correspondence between federal agencies and Democrats on Friday, saying he is trying to determine whether Bankman-Fried’s more than $37 million in political donations to Democrats may have put pressure on regulators to be lenient with the former crypto executive.
Shortsellers Jump on Crypto Stocks Despite High Stake Costs (2:44 PM)
Short sellers have poured into crypto-focused stocks as the digital asset space crumbles in the wake of FTX’s public implosion.
Crypto stocks are shorted nearly three times more than the average stock, even though short sellers pay nearly eleven times as much in funding fees to bet against them, according to data collected by Ihor Dusaniwsky and Matthew Unterman of S3 Partners.
Traders banking on losses in a handful of crypto stocks, including Block Inc., Coinbase Global Inc., MicroStrategy Inc. and five others, added $55 million in new shorts in the week through Friday, according to S3’s analysis. The total crypto short interest for these eight stocks is over $4.5 billion.
Silvergate Shares Fall as FTX Fallout Short Sellers Pick Up (1:16pm)
The shares of Silvergate Capital Corp. slumped, losing a quarter of their value this week as investors penalized the bank for its ties to bankrupt FTX.
Shares of the company, which held deposits for FTX, fell 9.9% to $25.14 at 1:03 p.m. in New York. Thursday’s drop of nearly 11% triggered a short-sale circuit breaker. Data from S3 Partners indicates that short-term interest in Silvergate is about 11% of the shares available for trading.
FTX looks at years of lawsuits to recover billions from customers (1:12 pm)
FTX’s bankruptcy opens the door to likely lawsuits from creditors to recover billions of dollars in assets withdrawn by customers and insiders before the crypto company abruptly filed for Chapter 11.
As the company’s advisers scramble to get to grips with the finances, they’ll have a range of bankruptcy tools at their disposal with which to try and get money back into the FTX empire to try and pay all creditors, though efforts are likely to fail. will last for years.
Crypto Fallout Leaves US Pension Benefits Largely Unscathed (12:35pm)
Most of the largest US state and local government pension funds have dodged the lingering fallout from the collapse of crypto exchange FTX by not investing directly in digital tokens. For the pensioners that have dipped into the risky asset class, investments represent only a small portion of the pension funds’ portfolio, and much of the limited exposure is indirect through crypto-related stocks or other investment products.
According to an informal survey by Bloomberg, nearly all of the top 10 US pension funds by assets said they are not invested in Bitcoin or other cryptocurrencies.
House Panel Seeks Documents In Investigation Of FTX Blowup (11:13 am)
A house panel chair is asking FTX to turn over documents and information by Dec. 1 as part of its investigation into the collapse of the once-prominent crypto platform.
“FTX’s customers, former employees and the public deserve answers,” Representative Raja Krishnamoorthi, chair of the House Oversight Subcommittee on Economic and Consumer Policy, said in a Friday letter to former FTX CEO Sam Bankman-Fried and John J. Ray III. , the new CEO and Chief Restructuring Officer who oversaw the liquidation of Enron Corp.
He asked last week for details about the circumstances surrounding the crypto company’s spiral into bankruptcy, including an explanation of the company’s liquidity problems, how those problems of its Bahamas-based parent company affected the US arm, and details of how money from customers was used. The subcommittee is also seeking internal documents and communications.
FTX auditor defends work as new CEO takes a crack at financials (10:57 am)
The accountants of FTX Trading Ltd. are defending their work even after the new management of the imploded crypto exchange slammed the accountants in a stunning bankruptcy filing.
“We believe that the financial statements of FTX Trading Ltd. as of 12/31/21 have been fairly presented and we stand by our audit opinion,” New York-based accounting firm Prager Metis CPAs LLC said in a statement to Bloomberg Tax. .
FTX CEO Bankman-Fried Dumped by Paul Weiss Over Conflicts (10:47 am)
Paul Weiss said Friday that it no longer represents embattled crypto mogul Sam Bankman-Fried, citing a conflict of interest.
Bankman-Fried, the former CEO of bankrupt FTX, is losing help from the company as US lawyers for the platform claim he is interfering with restructuring efforts through “incessant and disruptive tweeting”.
Fed’s Kashkari says ‘the whole idea of crypto is bullshit’ (9:55 am)
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said Friday that the whole idea of cryptocurrency is “bullshit” after the FTX Group implosion exposed the industry’s shortcomings.
“This is not a case of 1 fraudulent company in a serious industry,” Kashkari said on Twitter, responding to an article about how investors fell for FTX. “The whole idea of crypto is bullshit. Not useful 4 payments. No inflation hedge. No scarcity. No tax office. Just a tool for speculation and bigger fools.
–With help from Stephen Stapczynski.
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