FTX Used Random Numbers ToGenerate The Size Of Its Insurance Fund
According to a testimony from FTX co-founder Gary Wang, the crypto exchange used a formula based on random numbers and daily trading volume to misrepresent the balance of its insurance fund.
Specifically, FTX used a random number (approximately 7,500) multiplied by the platform’s daily volume and then divided by one billion to arrive at the fake balance.
The displayed balance was reportedly manipulated using hidden Python code.
During his testimony, Wang confirmed that the displayed number did not match the real number in the database, and the real insurance fund balance was, in fact, lower than what was showcased to the public.
“Does that number have anything to do with the actual number in the insurance fund?” prosecutor Nicolas Roos asked.
Wang responded, “No.”
Insurance funds are a safeguard to pay out profits and cover losses, preventing the automatic closure of profitable positions caused by widespread counterparty liquidations.
DOJ Wants To Block Sam Bankman-Fried FromBringing Up Anthropic AI Raise In Court
Assistant US Attorney Thane Rehn has reportedly filed a motion seeking to forbid FTX founder Sam Bankman-Fried from bringing up AI company Anthropic in his trial. Notably, the filing comes as a result of prosecutors being worried about SBF’s legal team using Anthropic’s recent billion-dollar fundraising valuation as a defence strategy that intends to deflect the real impact of the FTX fraud.
Rehn cited an earlier circumstance in which Judge Kaplan ruled,
“It is immaterial as a matter of law whether [Bankman-Fried] intended to repay the misappropriated funds. Such evidence would therefore be wholly irrelevant, and present a substantial danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, and waste of time.”
The DOJ has previously tried to bar Bankman-Fried’s defense team from arguing that FTX creditors will receive most or all of their funds back.
“The Indictment alleged that the defendant committed wire fraud by misappropriating FTX customer deposits to make investments and other expenditures. It is immaterial whether some of those investments might ultimately have been profitable,” the DOJ filing said. “… Nor would it be a defense to the charges in this case if the defendant invested stolen FTX money believing that the investments would ultimately be so lucrative that he could pay back the stolen money.”
Anthropic has an agreement with Amazon worth potentially up to $4 billion and is in talks to raise another $2 billion, Bloomberg reported last week.
FTX took a stake in Anthropic that was worth $500 million when it filed for bankruptcy nearly a year ago. The company’s bankruptcy trustee has yet to sell the stake.
Thomas Braziel, the founder and CEO of advisory firm 117 Partners, told CoinDesk that the news about the fundraise was a “fantastic turn of events for FTX creditors.”
Huobi, KuCoin Among Crypto Firms AddedTo UK Watchdog’s Warning List
The United Kingdom’s Financial Conduct Authority (FCA) has reportedly added several crypto exchanges, including Huobi and Kucoin, to its warning list of unauthorized firms that customers “should avoid.”
Notably, the updated list comes as a result of the FCA enacting the country’s new Financial Promotions (FinProm) Regime for cryptocurrency firms yesterday. The new regime seeks to ensure fair, clean and transparent crypto promotions.
In response to the updated list, both Huobi and Kucoin have stated that they do not “operate or market” their services or products in the UK and that they will adjust their “products and services accordingly to ensure compliance with relevant laws and regulations in each country to the extent possible.”
In a generic warning for Huobi and KuCoin among the 147 companies it added to the list, the FCA wrote:
“This firm may be promoting financial services or products without our permission. You should avoid dealing with this firm.”
Penalties for non-compliance can include takedown requests for websites and apps, unlimited fines and even prison time.
Justin Sun, the crypto mogul who runs Huobi, has run into regulatory rough waters before. The US Securities and Exchange Commission in March accused Sun of fraud and market manipulation using TRX, the native cryptocurrency of his Tron blockchain.
Huobi says it holds licenses to operate in Lithuania, Gibraltar, Dubai, Australia, British Virgin Islands, and South America, according to its website, but doesn’t list the UK as a prohibited venue.
Seychelles-based KuCoin says its platform is restricted in countries including the US, Singapore, Hong Kong, the mainland of China, Thailand, Malaysia and Ontario, Canada. It doesn’t name the UK in its restricted locations list.
Hi, I’m Luke Baldwin and I have been investing in crypto for the past two years. Despite knowing so much about the system and the different ways you can use it to your benefit, I still found the transition rather difficult.
That is why I made my site - Stock Maven. Now that I feel settled and confident about trading, I want to be a source of help to anyone else who might be struggling to break into the crypto market successfully.
My website is full of my tips and tricks, as well as information that I have always found interesting about crypto. My friends and family are sick of hearing me talk about it, so now it’s your turn!
I hope that you stick around and find something useful on my site. Remember, to make it big in crypto, you’ve got to be confident! Go for it and don’t look back.
