A New York judge has prohibited Sam Bankman-Fried from attempting to contact any former or current employees of Alameda Research or FTX and using private messaging applications like Signal. The decision to amend the FTX founder’s bail conditions, issued by U.S. District Court Judge Lewis Kaplan on Wednesday, comes after federal prosecutors filed a letter with the court on Friday asking for the former FTX CEO’s bail conditions to be amended after Bankman-Fried contacted the current general counsel for FTX US.
Sanctions & Tax
The U.S. Treasury Department’s sanctions watchdog, the Office of Foreign Assets Control (OFAC), has blacklisted a bitcoin and an ether address allegedly linked to sanctions evasion. According to a press release, Igor Zimenkov and his son Jonatan are part of “a broad network of individuals and entities” that tried to sell defense equipment to “third-country governments” and a Russian arms exporting company Rosoboroneksport. Meanwhile, India will keep its restrictive crypto tax rules in place in 2023. Last year, India instituted stiff taxes on crypto transactions: a 30% tax on profits and a 1% TDS on all transactions.
CoinDesk is committed to making sure there is a place for the bright and innovative women of this industry at Consensus, the most important conversation in crypto and Web3. That is why we are offering women 90% off the purchase price when buying two or more passes. Use code C23WOMEN at checkout. Hurry! This offer is limited to the first 500 orders. Learn more and register.
Sound Bites: AI Concerns
“The central thing we have to do as a society is find positive economies, protocols, mechanisms for individuals to own and control their own data.”
– Metaphysics founder Tom Graham, discussing the ethical dilemma of AI generated deepfakes, on CoinDesk TV’s “First Mover.”
A carefully constructed network of vendors and complementors power the blockchain-native role-playing world.
Sometimes it takes more than a village. Sometimes it takes a metaverse.
One case in point: Undeads Metaverse, developed by a dedicated project team in collaboration with developers at Unicsoft and Whimsy Games. The team further partnered with Warner Bros. and Wabi Sabi Sound for its sound design, as well as BrightNode and Machinations.io for in-game economy design and Unreal Engine 5.1 for the VR social hub for Web3 gamers. Continue reading.
*This is sponsored content from Undeads.com
The Takeaway: Venturing Out
Charges have been filed by the U.S. Securities and Exchange Commission (SEC) against three top FTX executives, including Sam Bankman-Fried, but this is certainly not the end of the SEC’s probe. Earlier this month Reuters reported the SEC is also seeking information from financial firms (yet to be named) that made significant investments in FTX regarding their due diligence processes used prior to investing in FTX.
While this particular area of the investigation is not necessarily an indication of any wrongdoing, the abundance of venture capital funds associated with, and deeply invested in, FTX raises some questions. Specifically, the SEC is focusing on details about what policies and procedures venture firms had in place when they chose to invest in FTX, and whether they were followed.
The list of FTX investors who in aggregate invested over $2 billion, and subsequently had to write it all off, spans an impressive “who’s who” of well-known investment firms, including NEA, IVP, Third Point Ventures, Tiger Global, Insight Partners, Sequoia Capital, SoftBank, Lightspeed Venture Partners, Temasek Holdings and BlackRock. It also includes the Ontario Teachers’ pension fund, one of Canada’s largest pension funds, with nearly $250 billion in assets under management. It will write down the entirety of its $95 million investment in FTX.
That’s quite a lot of money flowing into an organization that had an accounting firm in the metaverse, no board of directors, a questionable corporate domicile and was highly leveraged from the very beginning, among a list of other “red flags.” So, what gives? Each of the VC funds that invested in FTX said it conducted an appropriate amount of due diligence. That includes Temasek Holdings, which stated it spent eight months of due diligence without identifying a single red flag.
While I’m not in a position to Monday-morning quarterback the VC/FTX bandwagoning, it’s undeniable that serious questions are being raised by the SEC and others. Were the funds acting responsibly on behalf of their own investors when they poured money into FTX as part of their fiduciary duties? How is it possible that not one of FTX’s investors noticed anything amiss? And is VC groupthink what led to all of this?
When it comes to FTX, (and many others, including Terraform Labs, Celsius Network, BlockFi, CoinDesk sister company Genesis, etc.) the stopgaps and oversight failed. We expect regulators to protect investors from fraud and mismanagement of their investment, while investors expect and rely on investment managers to do proper due diligence on investment and make risk-reward decisions as part of their fiduciary duty. This delicate balance of oversight, trust and accountability failed because, let’s face it, FTX was the cool thing to invest in.
