FTX, one of the world’s largest exchanges, filed for U.S. bankruptcy protection, putting billions in investments at risk.
Sam Bankman-$16 Fried’s billion net worth was wiped out in days after an asset scandal that may leave one million creditors unable to reclaim cash.
The cryptocurrency market has fallen from $3 trillion a year ago to $827 billion at the time of publication. While others, including politicians, face inquiry for their financial ties to Bankman-Fried, one conspiracy theory links U.S. funding for Ukraine to the exchange’s failure. Multiple tweets from November 12-15, 2022 indicate Ukraine supplied foreign aid to FTX, which was then sent to the Democratic party. Madison Cawthorn, James Woods, Calvin Robinson, Seth Dillon, and Jack Posobiec have disseminated the claim.
Conspiracy theory subreddits, 4Chan, and other online fringes spread the story. The collapse of FTX has shaken the cryptocurrency market, causing a domino-like collapse of popular cryptos like Bitcoin, whose value plunged to a two-year low. A reporting agency has analyzed FTX’s issues and the online allegation to determine if and how they are related to U.S. political parties and Ukraine. The situation arose after Coindesk reported on November 2, 2022, that Bankman-hedge Fried’s firm possessed a large quantity of FTT tokens. Coindesk stated the fund had tight financial ties to FTX.
Binance, FTX’s biggest competitor, stated it would sell FTT tokens. FTX tried to process $6 billion in FTT withdrawals in three days as panic spread.
This created liquidity fears—that FTX wouldn’t be able to pay clients—and spurred Binance to release a non-binding letter of intent to buy the platform (which it later walked away from). Bankman-Fried indicated he would close Alameda Research, while FTX filed for bankruptcy.
At least $1 billion in consumer funds are gone, according to Reuters. Many watchers have pointed out FTX’s ties to U.S. political parties, especially the Democrats.
Bankman-contributions Fried’s to Democrats are well-known, and he was called the “newest megadonor” by Politico in 2022, but he has also given to Republicans. On November 5, 2022, he tweeted that he was “a substantial donor in both D and R primaries. Supporting constructive candidates across the aisle to prevent pandemics and bring a bipartisan climate to DC. And working with them to encourage permissionless financing.”
FTX Executive Ryan Salame and I signed up campaigns to accept bitcoin and provided millions to Senate and House Republicans.
Open Secrets says FTX spent over $70 million on lobbying in 2022. These include payments to Democratic and liberal PACs like Protect Our Future and House Majority.
The Intercept reported earlier this year that FTX executive Ryan Salame created his own super PAC focused entirely on electing Republicans. Salame also donated to the GOP Senate and Congressional Leadership Funds. The Intercept reported these gifts before FTX’s collapse.
The argument that FTX money only benefited the Democratic Party is untrue.
Bankman-Fried is interested in U.S. digital currency laws that may benefit the bitcoin business.
Before FTX’s collapse, he told the Washington Post he was “very enthused” by pending legislation that would give the CFTC primary supervision over crypto markets, which are presently overseen by the SEC (SEC). The SEC has been at the core of cryptocurrency regulation talks and actions in recent years, especially in its legal struggle with Ripple, developer of XRP, another cryptocurrency.
Since Russia’s invasion, FTX has helped Ukraine accept cryptocurrency donations.
Aid for Ukraine, backed by FTX, debuted in March 2022 to send crypto donations to the National Bank of Ukraine. Aid for Ukraine has received 611 Bitcoin, 10,723 Ethereum, and 15,048,821 USDT, according to its website (which is at least on paper supposed to be pegged to the U.S. dollar, though that may be no longer tenable).
Everstake, a crypto firm involved in setting up the donations, responded on Twitter to claims these funds were illegally transferred to the Democrats, stating Aid for Ukraine had used FTX “only a few times in March 2022 exclusively to convert crypto donations into fiat” which The National Bank of Ukraine had confirmed receipt of. It claimed that of the $60 million received through Aid For Ukraine, $54 million was spent on “Ukraine’s humanitarian and military requirements.” Ukraine’s Vice Prime Minister Fedorov Mykhailo made the same claim on Twitter and provided a breakdown.
Everstake emphasized that funds were not held on FTX and may be “converted into fiat elsewhere”
Its CEO Sergey Vasylchuk accused Russia of disinformation on Twitter.
“Every time Russia loses on the battlefield, it spreads bogus news based on made-up assumptions,” Vasylchuk added. “This time, they used the FTX bankruptcy to create yet another money laundering story. It’s apparent that Western support of UA affects Russia’s battlefield losses.
We know every donation benefited Ukraine.
As well as the official crypto wallets of Ukraine, several large exchanges (like Binance) have set up relief funds, as have NGOs and philanthropic groups.
FTX’s collapse has revealed its business and government connections, but there has been no recent investigation into whether other donation wallets sent crypto or fiat back to the U.S. Contrary to conspiracy claims, we have seen no evidence that Ukraine invested billions of dollars in FTX to begin with. No such statements or announcements have been made by the Ukrainian government, its Central Bank, or FTX.
The idea that cash were “laundered” from Ukraine via FTX back into the U.S., less so to the Democratic party coffers or Biden, is unproven.
A recent analysis found no transaction IDs, statements, or other physical evidence that U.S. funding or crypto donations were washed back to the Democratic Party through a Ukrainian investment in FTX or otherwise.
The assertion ignores the auditing and vetting of U.S. foreign aid to guarantee it’s spent properly on Ukrainian aid.
In the package that provided $40 billion in emergency aid to Ukraine, $5 million was spent on oversight alone, including by the Department of State Inspector General and the USAID Inspector General.
DOD OIG and USAID OIG evaluate the use of funding in Ukraine and investigate complaints and suspicions of misuse or attempted misuse.
The USAID OIG examines fraud and corruption in U.S.-funded foreign aid programs and provides preventive measures, such as verifying financial assistance, employing regulated money transfer agents, and security-locking beneficiary lists before distribution.
The DOD OIG recently published a congressional report on the use of this funding, broken down by recipient such as the army, air force, and navy, with details on the amount of money due to be spent and what was actually spent. This report is informed by third-party reporting by analytics firm Advana and includes recommendations regarding any accountability concerns noted by the DOD OIG.
For the Ukrainian government to invest in a cryptocurrency exchange using U.S. government funding—under the nose of a multi-million dollar oversight process—would require a major lapse in oversight from those auditing Ukraine and a breakdown of protections in place to ensure funds could not be re-appropriated.
In response to these claims, Alex Bornyakov, Deputy Minister of Digital Transformation of Ukraine on IT industry development, tweeted: “A fundraising crypto foundation used @FTX Official to convert crypto donations into fiat in March. Ukraine’s government never backed FTX. Newsweek spoke with Dr. Anna Bradshaw, a partner at U.K. law firm Peters & Peters and expert on financial crime and anti-money laundering, about the claim.
Bradshaw said the claim resembled fraud more than money laundering (which Interpol defines as “concealing or obscuring the origins of illegally obtained proceeds”).
“You’re trying to make the money look like it’s coming into the political party, if that’s where it ends up, as a valid, unrelated donation,” Bradshaw said.
Sending it back to its own nation is an interesting twist. It wouldn’t be the first time, but it wouldn’t happen without US and Ukrainian help, she claimed.
Money laundering is the easiest accusation to make. It’s telling that the accusation was made without solid evidence.
This erroneous tale has a murky origin: “Money laundering may include such a wide range of things.” The first instance occurred on the Hal Turner Radio Show website on November 11, 2022. It was presented without evidence alongside what appeared to be antisemitic stereotypes involving Bankman-Fried (who is Jewish).
Hal Turner, a right-wing conspiracy theorist condemned to 33 months in jail for threatening three federal appeals court judges, spreads bogus allegations on his website.
Hal Turner Radio Show received one of NewsGuard’s lowest scores for publishing fake content and not carefully gathering and presenting information. The FBI and Cybersecurity Infrastructure Security Agency said in October 2022 that “foreign actors” will likely utilize “information manipulation strategies for 2022 Midterm Elections.”
Foreign actors may try to influence the 2022 midterm elections by disseminating or exaggerating reports of hostile cyber activity on election infrastructure, the research said.
“These foreign actors may also manufacture and spread false claims and narratives about voter suppression, voter or ballot fraud, and other misleading information to erode faith in election procedures and alter public view of the elections’ legitimacy.
Foreign actors continue to distribute false narratives about electoral infrastructure to foment societal unrest and suspicion in U.S. democratic processes and institutions, and may try to inspire violence.
Absence of evidence does not mean we can yet rate the social media narrative as false, but its verifiably false and misleading elements, dubious origin, lack of internal cohesion, and lack of reliable sources and accounts involved in its initial proliferation dent its credibility. As such, it should be viewed with heavy skepticism.
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More Than 400 Industry Organizations Ask Congress To Stop Rail Strike
The leaders of Congress are being urged by more than four hundred different business organizations to be ready to avoid a freight train strike that could begin wreaking havoc on the economy as early as the following week.
In a statement sent on Monday, industry groups sponsored by the Chamber of Commerce wrote to House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer, House Minority Leader Kevin McCarthy, and Senate Minority Leader Mitch McConnell that “No one wins when the railroads stop operating.” In accordance with the Railway Labor Act of 1926, the Congress has the authority to impose a contract on both parties or to extend a “cooling-off period” for discussion in order to keep the railroads operating and prevent interruptions to interstate commerce. The laws governing employees’ time off are at the center of the disagreement between the railroad companies and their workforce.
The 449 different business associations, which range from the Aluminum Association and the Beer Institute to the US Apple Association and the Window & Door Manufacturers Association, have all stated that this is a matter of “grave urgency” due to the fact that even a temporary stoppage of work would result in a significant amount of issues. They stated that a consensual agreement between the freight train unions and the freight railroads would be the greatest possible outcome, but they emphasized that Congress needed to prepare for the worst possible outcome. “Absent a voluntary agreement, we call on you to take immediate steps to prevent a national rail strike and the certain economic destruction that would follow,” the groups wrote, pointing out that Congress has intervened 18 times in labor negotiations since 1926 when interstate commerce was threatened. “Absent a voluntary agreement, we call on you to take immediate steps to prevent a national rail strike and the certain economic destruction that would follow,” the groups wrote.
It is possible that a rail strike will take place as early as December 9, which will result in a lack of goods, an increase in costs, and a stop in the production of goods in factories. According to the estimates provided by the business organizations, this might also result in a disruption of commuter rail services, which could affect up to seven million passengers per day, as well as the transportation of 6,300 carloads of food and farm products every day.
However, the trade groups warn in the letter that the effects of a nationwide well strike will be felt by many firms as early as December 5 in the form of service outages and other impacts. They mentioned that earlier this year, there was a prospective rail strike that caused “severe disruptions” for essential goods and products, such as fertilizer, chlorine, and other things, but the strike was averted with an 11th-hour preliminary arrangement.
According to the letter, “Congress must be prepared to intervene before the end of the current’status quo’ term on December 9 to ensure continuing rail service” in the event that an agreement cannot be reached. “The unpredictability of rail service in the midst of this year’s drawn-out contract negotiation has produced an immense amount of concern.”
Outside China, Protests Are Grabbing Headlines
In China, the censors are working nonstop. Thousands of protestors have gathered in the streets of more than a dozen Chinese cities in recent days, demanding an end to strict Covid lockdown restrictions and political freedoms in a rare display of rage against the Chinese Communist Party.
For major news outlets around the world, it is one of the top stories, if not the top story. However, the unprecedented challenge to Chairman Xi Jinping has received almost little publicity for the hundreds of millions of Chinese who rely on state-run media for their news.
This is due to the fact that Chinese media have mostly ignored the rebellion, which is thought to be one of the greatest to occur in recent memory, as Xi deploys a variety of iron-fist techniques to stifle coverage and suppress the totalitarian nation’s growing acts of dissent. For instance, the state-run Xinhua News Agency’s webpage lacked any coverage of the demonstrations on Monday. In reality, a scan of its website revealed that the propaganda organization had not used the word “protest” in any digital pieces since the protests started.
Xinhua is a common news source. Attempts are being made by additional state-run media sources to completely ignore the widespread protests, which have started in at least 16 locations. The websites of the People’s Daily and China Daily, two more well-known state-controlled media outlets, did not mention the protests on Monday.
According to Jonathan Yerushalmy of The Guardian, CCTV “spending most of the morning covering the announcement of the planned launch of the Shenzhou-15 spacecraft to China’s space station on Tuesday.”
According to Philip Hsu, director of the Center for China Studies at National Taiwan University and a visiting fellow at Brookings, “the lack of media coverage, due to Xi’s control, restricts the spread of information and helps, to some extent, prevent the protests from proliferating in an unbridled fashion.”
Hsu would not rule out the idea that some coverage choices were made out of self-censorship. But this situation, according to Hsu, “reflects an even more fundamental control by the Party than if there are the directives, because the media has been extensively conditioned on what they can and cannot do without being instructed individually.”
Young protesters across China held up sheets of white paper as a metaphor for the numerous critical posts, news stories, and vocal social media accounts that were removed from the internet in a symbolic protest against the ever-tightening censorship.
The deliberate attempt by the state-run media to put an end to the demonstrations and spread official messages exposed the depths to which Xi’s mouthpieces will go to quell dissension. Given that the absence of coverage has not been able to quell the escalating protests or conceal the reality from the world that is eluding the authoritarian hold via social media, it also raises concerns about the efficacy of his propaganda machine.
It’s possible that this is the reason why state-run media is currently adopting a slightly different strategy. In some cases, these pieces appear to be intended to quiet the uproar by implying that the government will strive to “refine” its harsh Covid measures. For instance, The People’s Daily’s site included a headline that said, “Precision” is required “as cities roll out optimal COVID response.” In other words, some wiggle room is needed for the rigid Covid limits.
It remains to be seen whether that strategy will be successful. But Hsu asserted that one “important” shift brought about by the protests will be “impossible to roll back,” “no matter what happens.”
Individual citizens now understand that there is a good probability that others may join their resistance, according to Hsu.
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Buy Now Pay Later Revenue Up 78% Despite Unparalleled Inflation
Inflation reached a 40-year high this year, yet it didn’t stop the famous Black Friday. Last Friday’s discount frenzy broke the previous record by selling $9.12 billion in merchandise, outperforming the previous year by 2.3%. However, compared to other years, that sales record’s structure is somewhat different. The growth of credit and buy-now-pay-later (BNPL) services seems to have offset the inflationary pressure.
Beyond All Expectations, Black Friday Week
The data from Adobe Analytics collected on Saturday shows that customers used eCommerce more than ever before. One example is the $3.36 billion in sales that Shopify Merchants achieved on Black Friday, shattering previous records. Buy-now-pay-later (BNPL) programs like Zip, Afterpay, Affirm, and PayPal’s Pay-in-4 have been enthusiastically adopted by consumers.
In the week of Nov. 19–25, point-of-sale loans climbed by 78%, and BNPL income increased by 81% from the previous week. Contrary to October, online sales increased by almost 200% in the following categories: toys accounted for the highest increase at 285%, followed by audio equipment (230%), electronics (221%), smart homes (271%), and fitness equipment (218%).
Gaming consoles, drones, Dyson vacuums, MacBooks, and gaming-related devices are among the most popular products. Overall, the yearly study from the National Retail Federation was accurate in predicting stronger consumer spending than it did before 2020. In addition to record BNPL orders, the Black Friday week saw a boom in mobile shopping, which, according to Salesforce, accounted for a record 48% of total online sales, up from 44% last year. With $5.29 billion and $9.12 billion respectively, Thanksgiving and Black Friday both exceeded forecasts and set records. Online buyers don’t often spend more than $3 billion every day. On Cyber Monday, which Adobe projects will generate $11.2 billion, a YoY rise of 5.1%, this trend is anticipated to continue.
Original Black Friday Created in an Inflationary Environment
After the Thanksgiving holiday and only in the US, Black Friday ushers in the start of the holiday shopping season. Beginning in the early 1950s, the term “Black Friday” referred to employees who called in sick after Thanksgiving, generally to extend the holiday into a 4-day weekend.
Since then, as consumer power increased, employees have expanded it to include escapades at the mall and clogged roads, particularly in the late 1970s and early 1980s. Black Friday was first acknowledged by The New York Times in 1975, a year after inflation reached 11.05%. Inflation peaked in 1980 at a record 13.55%.
One year later, on November 28, 1981, The Philadelphia Inquirer published the first description of Black Friday as the day when retailers collect their annual profits and turn their accounting books from red (negative) to black (positive). Where Can Customers Find Relief from Prices?
The NRF predicted that consumers will spend 6%–8% more than they did last year in the present macro environment, which is in line with the 7.7% inflation rate. The only significant product category that provided consumer comfort was clothes, with a 0.7% decrease in costs from September to October, except from used vehicle prices, which fell by 2.4%.
Nevertheless, there was a need for inventory clearance due to supply chain disruptions over the previous two years and an excessive number of orders that were carried over. This gave retail establishments plenty of room to get rid of inventory that was no longer in high demand. Clothing, TVs, appliances, and computers were included in that broad category by Adobe Analytics.
NRF estimates that households making under $75k should cut their holiday expenditures by $606 on average. Despite being fewer in number, households making over $150k should make up the difference in spending by increasing their average annual income by $1,304.
Is High Inflation Being Exit by the Economy?
The Consumer Price Index (CPI) for October decreased from 8.2% to 7.7%, yet the percentage still indicates an increase in prices. Having said that, it seems like inflation is gradually slowing down. Crude Oil (WTI) is currently down 3% year over year, which is the biggest drop since the beginning of 2021. Additionally, the Freightos Baltic Index (FBX), which measures global container freight prices, has fallen by roughly -300% from its top of $11,109 in late September to its lowest level since December 2020. Similarly, prices on the home market are dropping at their quickest rate since the Great Recession of 2008. The highest increase in more than 20 years, however, was a 15% YoY increase in credit card debt balances.
The third quarter of 2022 saw a continuation of the rise in credit card, mortgage, and auto loan balances due to both strong consumer demand and increased pricing. Donghoon Lee, a research advisor for economics at the New York Fed, says
It’s interesting to note that as of September, 2.7% of the total amount of outstanding debt still had a very low debt default rate for Q3 2022. This might alter, though, if the jobless rate keeps rising. It is currently 3.7% compared to 3.5% last month.
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