First Mover Americas: DOJ: SBF’s Crypto Empire Was Built on a Lie

The latest price moves in crypto markets in context for Oct. 5, 2023.

AccessTimeIconOct 5, 2023 at 12:05 p.m. UTC
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This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

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FTX founder Sam Bankman-Fried’s entire crypto empire was a “house of cards,” which was “built on a lie,” the U.S. Department of Justice said in its opening statement at the FTX founder’s trial. Bankman-Fried’s defense team countered that the former FTX head acted in good faith – even as his businesses grew too quickly and collapsed dramatically through no fault of his own, his lawyers said. They assigned some of the blame to his former paramour and employee, Caroline Ellison, and said she failed to install safeguards. Ellison has already pleaded guilty and will testify during the trial.

The crypto winter hit fundraising in Q3, which fell to its lowest lowest level in three years, blockchain intelligence firm Messari found. The amount raised by crypto firms in Q3 totaled just under $2.1 billion across 297 deals, the lowest on both counts since Q4 2020, according to Messari's latest State of Crypto Fundraising report. From a peak of nearly $17.5 billion across over 900 deals in Q1 2022, the returns diminished throughout the year as conditions in the crypto industry worsened, coming to a head with the sudden collapse of exchange FTX in November.

Some of FTX's employees in the U.S. knew about the backdoor in the exchange that allowed Alameda Research to withdraw billions in customer funds, according to a Wall Street Journal report on Thursday. The employees flagged their discovery to FTX's director of engineering Nishad Singh but the problem never got fixed, the WSJ reported, citing people familiar with the matter. The team, who worked for LedgerX, the crypto derivatives exchange bought by FTX in 2021, was examining whether the code for FTX's main exchange could be used in the U.S when they made the discovery. LedgerX's chief risk officer Julie Schoening raised the concerns to her boss Zach Dexter, who then discussed it with Nishad Singh, one of FTX founder Sam Bankman-Fried's closest deputies.

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Edited by Parikshit Mishra.

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Lyllah Ledesma

Lyllah Ledesma is a CoinDesk Markets reporter currently based in Europe. She holds bitcoin, ether and small amounts of other crypto assets.


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