WIRED reveals the real stories of A Swatting spree in the US and implications for Facebook posts and other social media posts about Russian alleged terrorist attacks
As A Swatting spree spreads across the US, in which false reports of active shooters send police charging into schools, WIRED investigated more than 90 of the incidents and found potential connections between many of them. “In speaking to a number of people who experienced it, I can tell you that the anxiety and fear—it was real to them for 15 minutes,” Amanda Klinger, director of programs and cofounder of the Educator’s School Safety Network, told WIRED. “There’s a period of time in these incidents where people are literally running for their lives, law enforcement is responding with their weapons, and people think it’s the real thing.”
Even after extensive sanctions meant to isolate Russia from the global economy amidst its ongoing war with Ukraine, investigators around the world are working to curb the ongoing influx of capital to Russian military and paramilitary groups. The conviction of Joe Sullivan this week is seen as a major development for the tech industry because it is the first time a corporate executive has faced criminal charges in relation to data breeches. The new executive order that addresses privacy seems more like a Band-Aid than a solution as it attempts to assure Europeans that their data is safe when stored in the US.
More than 400 malicious apps were found to have hacked into users’ Facebook accounts, and the findings were released by Meta. And we took a look at the toll of living your life online, the potential erosion of privacy that comes with consistent social media posting, and the ways it can impact your sense of self.
Plus, there is more. Each week, we highlight the news we didn’t cover in-depth ourselves. Click on the headlines for more information. And stay safe out there.
Source: https://www.wired.com/story/binance-hackers-minted-569-million/
In response to the FTX Future Fund: A security breach perpetrated against CoinCoinance, Binance, and Alameda
In a Friday release, the company said that an exploit had been made to the flaw in its BNB Chain token, which would allow them to mint 2 million of the company’s decentralised token worth $569 million. That money was faked out of thin air in order to make up for a flaw in the security of the Binance coin. But the hack nonetheless seemed poised to flood the market with BNB and thus reduce its value for legitimate owners, while allowing the hackers to walk away with half a billion dollars.
Bankman-Fried was worth about $16 billion at the start of the week. But as his crypto exchange, FTX, collapsed, the value of his assets was reduced to zero in what Bloomberg called “one of history’s greatest-ever destructions of wealth.”
In reality, the complaint alleges, Bankman-Fried secretly diverted FTX customer funds to effectively provide an “unlimited ‘line of credit’” to Alameda. Bankman-Fried concealed the risk associated with FTX’s large exposure to overvalued, illiquid assets such as FTX-related token from investors.
The details of Bankman-Fried’s alleged fraud will likely take months, and potentially even longer, to disentangle. He spent years swindling investors of huge sums of money and then used the money to bankroll his lavish lifestyle and set up millions of dollars in illegal campaign contributions.
On Thursday, the entire staff of the FTX Future Fund, which says it has committed $160 million in grants, publicly quit. The team said that they have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation.
Customer withdrawals had surged last Sunday after Changpeng Zhao, CEO of giant crypto exchange Binance, said Binance would sell its entire stake in FTX’s digital token, worth at least $580 million, “due to recent revelations.” The coinDesk report four days before said that much of Alameda’s $14.6 billion in assets were held in the token.
A large portion of that total has since disappeared, they said. According to one source, the missing amount is about $1.7 billion. The other said the gap was between $1 billion and $2 billion.
The Bankman-Fried Charged with Using Digital Assets to Obtain Financial Credits from the FTX Trading Account in the Presence of An Obstruction by Binance
FTX filed for Chapter 11 on Friday after a lot of customer withdrawals earlier this week. A rescue deal with rival exchange Binance fell through, precipitating crypto’s highest-profile collapse in recent years.
Bankman-Fried told The New York Times that he did not knowingly commingle funds between FTX and Alameda. The government thinks otherwise.
The two people with knowledge of FTX’s finances said that Bankman-Fried met with several executives in Nassau on Sunday to figure out how much outside funding he would need to cover the shortfall.
Alameda isn’t just accused of using money sent to its own bank accounts. According to the SEC, it had the ability to make unlimited withdrawals from its FTX trading account and could tap digital assets there, too.
When Bankman-Fried launched FTX, customers who wanted to send fiat currency to their FTX accounts were told to wire their money to Alameda Research. Those funds weren’t kept separate from Alameda’s money, or placed into accounts labeled “for the benefit of” FTX customers, the complaint says. The Alameda accounts that held FTX money were labeled “fiat@ftx” on FTX’s internal ledger system.
FTX’s terms state that no of the digital assets in a user’s account can be lent to FTX Trading. According to the CFTC complaint, that was a lie. The use of customer funds wasn’t authorized by FTX customers, and they didn’t know their funds were being used by Alameda Research, the complaint says.
The new CEO of FTX, John J. Ray, made a comment in the Chapter 11 filing about the company being worse than other companies.
Is Bitcoin Really Necessarily Useful? Not a Solution to the Coin Coin Coin Problem (Nonlinear Voices Are My Comrades Are)
Emily has worked at the US State Department as a policy advisor and was a writer for The Wall Street Journal. She is the author of “Now I Know Who? My Comrades Are: Voices From the Internet Underground.” Her opinions are in this commentary. CNN has more opinion.
The answer is no one, because crypto shouldn’t need a savior. The whole point of crypto is that it is supposed to be decentralized and transparent. The industry has gone far astray from the ideal. Today’s crypto world is one of opaque entities run by larger-than-life personalities. FTX and its leader are a great example.
It wasn’t supposed to be this way. Bitcoin, the world’s first major cryptocurrency, came into the world on the heels of the 2008 financial crisis, which led to a deep disappointment in bankers and politicians. The idea was that it was not a requirement of the new system to trust anyone at all. Bitcoin transactions are recorded on a decentralized ledger known as a blockchain, which everyone can see and no bad actor should be able to fraudulently alter.
Binance CEO Changpeng Zhao and the Clumpy Bits of Cryptocurrency: A Reappraisal by Ben Bankman-Fried
One of those critics was Binance founder and CEO Changpeng Zhao. The rivalry between the two billionaires came out in a big way on social media, where they commanded millions of followers. He helped pave the way for the withdrawals that doomed FTX.
Bankman-Fried said he takes full responsibility for his mistakes. He said that he was responsible for making sure things went well when he was the CEO. I, ultimately, should have been on top of everything. I failed in that. I’m sorry.”
Brian Armstrong, the CEO of rival exchange, said in a phone interview on Friday that people feel deceived. “On the surface, FTX was able to garner a lot of attention. The basics weren’t there as people looked into it.
The cult of personality problem is not limited to crypto. We see that in social media as well. Twitter is now subject to the whims of owner Elon Musk, the richest man in the world.
Bankman-Fried may be as close to his predecessors as possible. Bankman- Fried is not only a new version of an old story, but also hopes to start the long term change in the industry by introducing the kinds of regulations and transparency that are needed to protect consumers from fraudulent and criminal activity.
CoinDesk isn’t going away: The CZ crisis is a “reasonable analogy,” says Changpeng Zhao
Prices of digital currencies fell again as the crisis engulfing the market deepened over the weekend. Bitcoin, the world’s biggest cryptocurrency, has plummeted about 65% so far this year. On Monday it was trading at about $16,500. Analysts believe that it could fall below $10,000.
It isn’t getting much better for the world’s second most valuable coin, ether. It was trading at about $1,230 on Monday, having sunk over 20% over the last week, CoinDesk data showed.
Some industry insiders have said the company’s downfall had triggered a “Lehman moment,” referring to the 2008 collapse of the investment bank that sent shockwaves around the world.
The episode has not just destroyed confidence in the crypto industry, but will also embolden global regulators to tighten the screws. Some of the biggest names in the business said they will welcome the scrutiny, if it helps restore faith in the industry.
There is a “lot of risk,” said Changpeng Zhao, who runs Binance, the biggest crypto exchange. “We have seen in the past week things go crazy in the industry, so we do need some regulations, we do need to do this properly,” he added.
CZ, as he’s known, was speaking at a conference in Indonesia on Monday. He said last week that comparing the current crypto turmoil to the 2008 global financial crisis is “probably an accurate analogy.”
Timing the FTX Era: Why Don’t Cryptos Get Their Own Investments? A Comment on Tim Bankman-Fried and Sequoia
FTX moved its headquarters from Hong Kong to The Bahamas last year, with former CEO Sam Bankman-Fried hailing it as “one of the few places to set up a comprehensive framework for crypto” at the time.
FTX was looking into the topic of whether the assets were stolen. Crypto risk management firm Elliptic said $473 million in crypto assets appear to have been nabbed from FTX.
The scrutiny of big players in the dark world of cryptocurrencies has led to an error where $400 million in ether was sent to the wrong account.
Kris Marszalek, the CEO of the exchange, said that the company made a transfer of 320,000 ETH to its corporate account at Gate.io three weeks ago.
“We have since strengthened our process and systems to better manage these internal transfers,” Marszalek tweeted Sunday. The platform’s native token has fallen over 20% in the last 24 hours, according to CoinDesk.
The firm has acted as a responsible, regulated player since its inception, and will soon prove the critics wrong, according to Marszalek.
“Crypto firms may have closer ties to the banking system than previously understood,” Warren and Smith wrote. “Banks’ relationships with crypto firms raise questions about the safety and soundness of our banking system and highlight potential loopholes that crypto firms may try to exploit to gain further access.”
Bankman- Fried denied the accusations of misusing customer deposits. “I didn’t knowingly commingle funds,” he told The New York Times last week. I was surprised at how big Alameda’s position was.
“I care because it’s retail investors who suffer the most, and because too many people still wrongly associate bitcoin with the scammy ‘crypto’ space,” said Cory Klippsten, CEO of Swan Bitcoin, who for months raised concerns about FTX’s business model. He has a deep skepticism about the other parts of the universe.
Sequoia Capital, which invested in Apple, Cisco, Google, Airbnb and YouTube, described their meeting with Bankman-Fried as likely “talking to the world’s first trillionaire.” Several of Sequoia’s partners became enthusiastic about Bankman-Fried following a Zoom meeting in 2021. Sequoia decided to invest in the company.
“I don’t know how I know, I just do. “SBF is a winner,” Adam Fisher wrote in a profile he wrote of Bankman-Fried for the firm. In late September the article was taken down from the website.
What When Did Bankman-Fried Purchase Voyager Digital? A Brief History of his Influence on Wall Street, Wall Street Wall Street and Wall Street Ponzi Schemes
In a terse statement, the Ontario Teachers’ Pension Fund said, ” not all of the investments in this early-stage asset class perform to expectations.”
When Bankman-Fried bought up the assets of bankrupt crypto firm Voyager Digital for $1.4 billion this summer, it brought a sense of relief to Voyager account holders, whose assets has been frozen since its own failure. That rescue is now in question.
His influence was going to start pouring into popular culture as he was king of the crypt. FTX bought prominent sports sponsorships with Formula Racing and bought the naming rights to an arena in Miami. He pledged to donate $1 billion toward Democrats this election cycle — his actual donations were in the tens of millions — and prominent politicians like Bill Clinton were invited to speak at FTX conferences. Football star Tom Brady invested in FTX.
Bair stated that there were eerie similarities between the rise and fall of Bankman-Fried and that of notorious Ponzi scheme mastermind.
Bair notes that 30-year-old Bankman-Fried, like Madoff, proved adept at using his pedigree and connections to seduce sophisticated investors and regulators into missing “red flags” hiding in plain sight.
Long before his Ponzi scheme collapsed, Madoff was known as a wizard on Wall Street. He was the former chairman of the Stock Market, and served as an advisory panel member for the SEC.
Better Markets and Sens. Sherrod Brown and Timing Sen. Elizabeth Warren and Tina Smith to Charge Bankman-Fried with a Charge of Misappropriation in the Ponzi Scheme
Better Markets CEO Dennis Kelleher said in a statement on Monday that FTX had a strategy of “revolving door hires” from the Commodities Futures Trading Commission (CFTC) and elsewhere “to use their knowledge, influence and access at the agency and in Washington to move FTX’s agenda.”
If all your peers and marquee names are investing in venture capital, you have got to do the same. That adds credibility to Washington policymakers. It all feeds on itself,” said Bair, who sits on the board of directors at Paxos, a blockchain infrastructure company (Bair said she was speaking for herself, not Paxos).
The track record of the Ponzi scheme is an unlikely one, but its success was made possible by an elaborate scheme which involved repaying existing clients with new client deposits.
Former FTX CEO Sam Bankman-Fried is expected to appear in a Bahamas court on Monday to reverse his decision to contest extradition to the US, a person familiar with the matter told CNN.
The misuse of client funds and the wiping out of billions of dollars owed to over a million people caused the failure of the entities, according to the senators.
The FTX debacle would have been the first time that Bankman-Fried had spoken under oath. In a statement, Waters said she was “surprised” to learn of the arrest. The public has been waiting to hear these answers under oath, and the timing of this arrest denies them that opportunity.
“There are still significant unanswered questions about how client funds were misappropriated, how clients were blocked from withdrawing their own money, and how you orchestrated a cover up,” Brown said in a public letter to Bankman-Fried on Wednesday.
Separately, Sens. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, both Democrats, sent letters to three regulators – the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – asking them to assess the traditional banking system’s exposure to turmoil in the crypto space, a largely unregulated, parallel financial system.
Waters tells the BBC “It wasn’t a joke” that Bankman-Fried was arrested monday night in the Bahamas
“Based on your role as CEO and your media interviews over the past few weeks, it’s clear to us that the information you have thus far is sufficient for testimony,” Waters replied to Bankman-Fried earlier this week.
Bankman-Fried remains in the Bahamas, where FTX was based, and was arrested last Monday night. He was arraigned Tuesday, and a Bahamian judge denied his request for bail, saying that he posed a flight risk. His extradition to the United States could take weeks.
Bankman-Fried, was arrested without incident at his apartment complex shortly after 6 pm ET Monday in Nassau, and is set to appear in court Tuesday, the Royal Bahamas Police Force said in a statement.
The United States’ extradition treaty with the Bahamas allows US prosecutors to return defendants to American soil if the charges would be considered punishable by imprisonment of at least a year in both jurisdictions.
“I didn’t knowingly commit fraud,” he told the BBC over the weekend. “I didn’t want any of this to happen. I wasn’t quite as competent as I thought.
Waters said they were still committed to getting to the bottom of what happened, even though they would not be able to hear from Bankman-Fried tomorrow.
Sam Bankman-Fried is not a Customer Asset Manager on FTT, but a Counterexample to the Alameda Misuse
These uses weren’t authorized by customers, as the CFTC suit makes clear. It echoes allegations made in the SEC suit about Alameda misuse of customer funds. Indeed, FTX’s terms of service explicitly forbid this kind of thing, the CFTC suit says. So that means the executives were aware that it was important to keep customer assets safe and segregated from other funds — important for establishing intent, which is crucial for proving fraud charges.
“There was no person who was chiefly in charge of positional risk of customers on FTX,” Bankman-Fried told DealBook. That feels embarrassing in retrospect.
Bankman-Fried has denied knowledge of any such backdoor. “I don’t even know how to code,” he told cryptocurrency vlogger Tiffany Fong in an interview last month.
Damian Williams said that the arrest was based on a sealed indictment filed by the Southern District of New York.
The prime minister of the Bahamas said that his country is cooperating with law enforcement and regulators in the United States, but it has its own regulatory and criminal investigations going on.
Bankman-Fried, who resigned hours before the Bankruptcy filing, spent the last month on a charm campaign in which he showed that he was a guy who let things slide and did not commit fraud.
The notice of the hearing that was posted as of late Monday night stated that Bankman-Fried was a witness and that the written testimony of FTX’s CEO was also included.
“As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards,” said SEC Chair Gary Gensler in a statement.
Amenable allegations against Bankman-Fried and the new CFTC CEO John J. Ray III in the wake of his FBI investigation of Alameda Research
Bankman- Fried apologized for his error during a virtual appearance at the New York Times DealBook Summit. I would do anything to do those things.
Damian Williams, US attorney, said in a Tuesday press conference that the SBF contributions were funded by the stolen customer money, and they were disguised to look like they came from wealthy co-conspirators.
The allegations against SBF focused on his statements to investors that FTX was a safe place to invest due to the automated risk engine that would sell off customers assets to make sure their values were within the allowed levels.
Other charges may follow, but these are the ones he’s facing so far, and that’s just from the SEC — its announcement notes other charges are being filed today by the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC).
Prior to his arrest, SBF was scheduled to testify via teleconference for the subcommittee of the House Financial Services Committee. That hearing will go forward and is scheduled to begin at 10AM ET, with testimony from FTX’s new CEO, John J. Ray III.
The arrest has sparked jubilation in crypto circles, after some nail-biting over his ostensibly generous treatment by “mainstream media” and speculation (by Twitter CEO Elon Musk, no less) that his political donations may earn him a free pass of sorts with US law enforcement.
Bankman-Fried was likely to get a rough ride from a written preview of Ray’s testimony. Ray wrote that the failures of corporate controls had never been seen in his career, before describing Bankman- Fry and his inner circle as grossly inexperienced and unsophisticated.
In an attempt to stave off a collapse of the FTT token price, Ellison and Bankman-Fried began to liquidate Alameda Research’s investments — freeing up cash for buybacks, according to the CFTC complaint. It wasn’t enough. Three executives from FTX expressed surprise that the price of Bitcoin hadn’t fallen more.
In a press conference today, US attorney Damian Williams characterized Alameda Research and FTX as “one of the biggest financial frauds in American history.”
The CFTC made a strong argument that this could be false, as Ellison has previously stated that she and Bankman- Fried keep the two companies separate in terms of day-to-day operations.
The teams shared the same office spaces and other resources, according to the complaint.
“The crimes that were committed [at Enron] were highly orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets,” Ray told lawmakers. FTX, on the other hand, was “not sophisticated at all.”
The Case for the Indictment of Michael Bankman-Fried: Investigation of a Ponzi Scheme in the Early SEC Era
Bankman-Fried could face up to 115 years in prison if convicted on all eight counts against him in a federal indictment unsealed Tuesday morning, according to congressional statutory maximum sentencing guidelines.
There is still a lot of information that we don’t know. But the fact that prosecutors put together an eight-count, 14-page indictment just four weeks after FTX filed for bankruptcy suggests prosecutors may have an ace in the hole, and/or a preponderance of evidence against the company. (The SDNY are an aggressive people, but they are not sloppy, and they don’t indict without a solid case.)
Several lawyers who aren’t involved in the case say that the speed with which Bankman-Fried was arrested shows that FTX employees may be cooperating with the prosecutors.
According to a former SEC lawyer, the smart move by former employees would be to try and become a cooperator in exchange for a softer treatment. He added: “The fact that only one person has been charged so far would seem to indicate this as well.”
An investigative journalist and writer namedCaseyMichel is covering dark money networks across the globe. He is the author of “American Kleptocracy: How the US Created the World’s Greatest Money Laundering Scheme in History,” and is at work on a book investigating foreign lobbying in Washington, DC. The opinions expressed in this article are his own. CNN has more opinion.
These types of cases are not new and many of them resemble traditional Ponzi schemes. They almost always pair a lack of regulation and oversight with promises of easy wealth schemes, all predicated on some kind of proprietary technology that seems to generate returns out of thin air.
The crash of the stock market in the late 1920s caused a series of bank runs that caused the Great Depression. The Great Recession began because of faulty loans that were packaged as unique financial products and regulators were asleep at the wheel.
The Bankman-Fried is a Computer Hacker in a Dirty and Overcrowded Prison: Why is the MDC so Inhumane?
The time Bankman-Fried will appear in court is unknown. He could return to the US quickly if he waives the extradiction. He is going to appear before a judge in the US for his bail hearing.
Ellison is pleading guilty to seven counts, including wire fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud, conspiracy to commit commodities fraud and conspiracy to commit wire fraud. She is accused of the same crimes, except for the campaign finance charges.
The 30-year-old appeared to be holding a plastic bag of personal belongings during the hearing. Bankman-Fried gave his occupation as “entrepreneur and executive” and told the magistrate that his address was “a little unclear right now.”
US officials claim that the Bankman-Fried is being held in a dirty and overcrowded prison, despite his being in the country less than a week. Its crowded cells often lack mattresses and are “infested with rats, maggots, and insects.”
Attorneys and prosecutors are looking into a plan that would allow the failed computer hacker to be released with conditions that would keep him out of jail. The overcrowded and powerless MDC is one of the reasons for the inhumane state it is in, according to former inmates and rights advocates.
The Last FTX Insider Report of Jayson B. Ellison (Rainbow) and the slambda-bank collider
The charges were announced in a video message by the US attorney for the Southern District of New York. He pointed out that these new charges are not the last and that the investigation is still ongoing in a brief statement.
Ilan Graff, an attorney for Wang, said: “Gary has accepted responsibility for his actions and takes seriously his obligations as a cooperating witness.” Wang appeared in court for his guilty plea.
Wang and Bankman-Fried worked together at the hedge fund Alameda Research. The filings show that Ellison became the CEO of Alameda.
The investigation is moving quickly, as I said last week. Last week was our last announcement and I made it clear that neither is today’s.
The SEC chairman claimed that Mr. Bankman- Fried, Ms. Ellison, and Mr. Wang left investors holding the bag when the house of cards collapsed.
Williams didn’t specify the charges the two pled to but said the guilty pleas were related to their roles as insiders at FTX and its sister company Alameda Research. Wang was a co-founder of the FTX cryptocurrency exchange and owned 10 percent of Alameda Research. The other 90 percent was owned by Bankman-Fried. Ellison was the CEO of Bankman-Fried’s trading company.
The Washington Post said Ellison pleaded guilty. She could face up to 100 years in prison, WaPo says. Wang faces up to 50 years in prison for pleading guilty to four counts.
The Bankman-Fried Piggy Bank: Litigation and Prosecutors in Instances of Crypto-Cryptanalysis
In May, when the price of crypto began to crater, the lenders wanted their money back. Bankman-Fried told them to send customer deposits to the lender. Ellison used that money to pay Alameda’s debts.
Ellison admitted in response to a staff question that her November 6th message to the Binance CEO was misleading and she expressed remorse, according to the complaint. Most of the staff resigned after that.
That made Alameda Bankman-Fried’s ”personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses.“
Ms. Ellison and Mr. Wang both disagreed with Mr. Bankman-Fried. The authorities contend that MrBankman-Fried was aware of what was happening at Alameda, the exchange’s trading affiliate.
The judge said Bankman- Fried would be charged with stealing billions of dollars from customers of his platform at a future date.
Bankman-Fried was escorted into the courtroom by a US Marshal, wearing a navy suit jacket and white button-down shirt. He could hear the clang of his ankle chains as he walked to his seat at the defense table.
Bankman-Fried spoke once during the hearing when Magistrate Judge Gabriel Gorenstein asked him if he understood the consequences he would face if he skipped out on bail, saying, “Yes, I do.”
Also included in bail are prohibitions against opening any new lines of credit, businesses, or transactions over $1,000 without government approval, surrender of any firearms, and mental health treatment.
Roos questioned Bankman-Fried’s decision to hold a class action against the corporate chairman of the Bankman company. He added: ‘Test of an employee in the company’
Roos said evidence against Bankman-Fried includes multiple cooperating witnesses, the testimony of other employees of the companies and encrypted messages.