FTX petitioned a federal court for permission to sell several subsidiaries on Thursday, including U.S.-licensed derivatives platform LedgerX, as part of a plan to pay back creditors. The exchange, which has upwards of $10 billion in liabilities, is “moving quickly” to offload assets and has reportedly received “dozens of unsolicited” bids for various subsidiaries (many acquired in a 2022 buying spree), according to a filing. Meanwhile, trading firm Wintermute’s Asia-based subsidiary has gained a seat on the FTX creditors’ committee steering decisions about the bankrupt estate. Changing gears: Bankrupt crypto “hedge fund” Three Arrows Capital reportedly estimated its assets to be worth around $1 billion and liabilities at $3 billion in July, new info shows.
Exchange Change
Crypto exchange Gemini has come back online after seven hours of scheduled (and presumably unscheduled) maintenance. “Gemini is investigating reports of potential service disruptions. All customer accounts and funds remain completely secure,” the exchange said. Separately, Binance’s “auditor” Mazars, author of a criticized proof-of-reserves report which was seemingly taken offline, announced it will no longer work with crypto clients. Finally, Crypto.com received a payments license in Brazil while the Dutch central bank reprimanded KuCoin for operating without a registration in the Netherlands.
Trump Cards
A collection of 45,000 fantasy NFTs created by the former U.S. President Donald Trump sold out within hours – garnering some 1224 ETH (~$1.4 million) in trading volume from at least 13,000 buyers, data shows. The NFTs cost $99 at mint and entered buyers into a “sweepstakes” to receive experiences with Trump, including a Zoom call, a dinner in Miami or a cocktail hour at Mar-a-Lago. Over 100 people purchased 45 NFTs, costing $4,455, for a guaranteed invite to a gala dinner with the 45th president. A year ago, former First Lady Melania Trump launched her debut NFT collection “Cobalt Blue Eyes.”
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“Investments are going to continue to decline into 2023.”
– Pitchbook senior emerging technology research analyst Robert Le, on CoinDesk TV’s “First Mover”
The Takeaway: SBF’s Mom’s Immorality
(Midjourney/CoinDesk)
Perhaps the most important twist in the downfall of Sam Bankman-Fried is that his parents were, until their son’s crimes were exposed, respected scholars of corporate tax law and ethics at Stanford University. On an interpersonal level, the situation is Shakespearean: the legal scholar parents are likely to have both their livelihoods and their legacies destroyed by the sins of their child.
They had direct ethical exposure to the con: FTX purchased the parents a $16 million house in the Bahamas and paid them salaries, FTX CEO John Jay Ray III testified this week. Bankman-Fried’s father, Joseph Bankman, has been removed from the Stanford teaching schedule for next year and said he foresees total financial ruin from the costs of their son’s legal defense.
But the specifics of the parents’ ideas, and how they might have influenced SBF’s actions, are at least as fascinating as the interpersonal drama. Joseph Bankman and Barbara Fried’s scholarly work on corporate ethics in some cases advocated for unorthodox attitudes towards right and wrong. Similar to the “effective altruism” their son espoused, the parent’s writings covered rationalism (the idea that decisions can be made entirely on the basis of known facts and predictable outcomes) and utilitarianism (the idea that outcomes are more important than principles or intentions).
Barbara Fried’s 2013 paper titled “Beyond Blame” argues the idea of personal responsibility has ruined criminal justice and economic policy. “It’s time to move past blame,” she wrote. There’s some nuance to Fried’s argument, but the core idea is that individuals should not face moral criticism for their mistakes because individual free will is an illusion.
Barbara Fried’s disdain for the very basic principle of individual moral responsibility seemed to manifest in at least two recent moments of FTX fallout. First, there was the staggeringly evasive testimony SBF planned to give before the House Financial Services Committee – testimony forestalled by his arrest in the Bahamas – where he would likely have blamed his company’s failure on everyone from Binance CEO Changpeng Zhao to, hilariously, the bankruptcy law firm and interim CEO who are currently cleaning up his massive mess. He seems to believe all actions are merely the product of circumstance, and we can’t ever be blamed for anything.
The second episode that seems to connect to Barbara Fried’s determinist anti-humanism is far sadder. She and Joseph Bankman were present for their son’s arraignment in the Bahamas on Tuesday. Barbara reportedly laughed with audible disdain as the allegations against her son were read aloud – seemingly in disbelief but also in disrespect of the court.
After downplaying personal moral responsibility and the enforcement of ethical behavior as mere petty “retributivism,” she was getting a harsh reminder that most humans believe there is a difference between right and wrong, and that violators of that norm deserve both punishment and condemnation. She was also realizing – perhaps at the exact moment her son was denied bail – that she and her family were about to pay a huge price for disregarding thousands of years of human morality.
In the face of that staggering realization, maybe all you can really do is laugh.
When discussing the optimization of blockchains, many will look to improve on the three pillars of blockchain technology: security, scalability and decentralization. While improvements to these blockchain fundamentals may improve the capabilities of the network, it falls short of making improvements for its users.
While Ethereum recently moved to proof-of-stake (PoS) to work on its fundamentals, NEAR protocol has already set itself on a strong foundation, 10 years ahead of Ethereum’s roadmap. Continue here.
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Off-Chain Signals
Futureverse merges 8 Web3 companies to create an open metaverse ecosystem (Venture Beat)
FTX influencers shift blame back onto the crypto exchange (Protos)
FTX US Accounting Firm Armanino Ends Crypto Audit Practice (Forbes – paywalled)
