Unchained - Here’s How Sam Bankman-Fried’s High-Stakes Trial Could Play Out - Ep 549

Starting point is 00:00:00 Even though each of these charges, if you look at the DOJ, press release says, oh, it contains a maximum sentence of 20 years or five years, whatever. It's not going to be consecutive. It'll be concurrent. So the estimate I'm getting from various attorneys that I've spoken to over the past few weeks is it'll probably be somewhere in the, you know, 10 to 20 year range. Hi, everyone. Welcome to Unchained. You're no hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians.

Starting point is 00:00:28 I started covering crypto eight years ago and as a senior editor at Forbes was the first Mainstream meter reporter to cover cryptocurrency full-time. This is the September 29th, 2023 episode of Unchained. Thinking of launching your own stablecoin? Start with the open source stablecoin studio toolkit on Hedara. Start your journey at hadera.com slash unchained. Shape tomorrow today. With the crypto.com app, you can buy, trade, and spend crypto in one place. Download and get $25 with the code, Laura. Link in the description. Arbitrum's leading layer-2 scaling solution offers you ultra-cheap and lightning-fast transactions,

Starting point is 00:01:06 all with security rooted on Ethereum. Visit arbitram.io today. Toku makes implementing global token compensation and incentive awards simple. With Toku, you get unmatched legal and tax tech support to grant and administer your global team's tokens. Make it simple today with Toku. Today's guest is Nick Day. CoinDesk's Managing Editor for Global Policy and Regulation.

Starting point is 00:01:31 Welcome, Nick. Thanks for having me. The trial for former FTC CEO Sam Bankman-Fried starts next Tuesday, October 3rd. There's been a lot happening pre-trial. For instance, Sam has requested release from jail multiple times and repeatedly been denied, including as recently as Thursday morning. My personal thought was that it seemed like all these requests that the defense was putting in at this critical juncture right before the trial was supposed to be.

Starting point is 00:01:57 begin was maybe not the best use of their time, but that's just my personal opinion. I'm not a lawyer. Why do you think they made this such a point of focus in the last few days? Yeah. So I'm actually coming, you know, I was in the courthouse just a few hours ago where this very issue was brought up. And the, you know, defensive arguments were, well, the first time we asked it was for pretrial release. You know, this was right after Bankman Fried was remanded into custody in mid-August. The second time was, you know, they were asking an appeals court to, you know, overrule the judge's decision to remand him, and they lost that as well. In court today, the defense said, well, you know, now we want to ask for during trial, which is why we waited until

Starting point is 00:02:37 this week to make that request. And they say that they want to, you know, the circumstances are different. They're not asking for a banquet free to be released from jail in the weeks leading up to trial. Now they're saying, well, you know, during the trial, we're going to have to talk to him and check with him about defense witness testimony and cross-examination and things like that. So that's why are we making this request? And the judge didn't really find that compelling? And why do you think the judge has stuck to this position of keeping Bankman Fried in jail? So in the judge's words, there's a couple different reasons. One being that Bankman Fried has had ample time to look at the defense materials. One of the arguments was there are something like 1,300 exhibits expected over the course of the trial.

Starting point is 00:03:20 and the judge asked today, you know, were these all prepared and shared with you before, I think he said September 8th, so earlier this month. And the defense, they said, yes, we've seen all of this, we've had access to all of this. Bankman Fried was out on bail for about seven and a half months. And so the judge's argument is, well, he's had time to look at this. You know, there's no surprises here. And he said that the defense has the chance to talk with Bankman Fried in the Metropolitan Detention Center where he's currently being housed weekends, during days that there are no trials. So, you know, the trial is not every weekday.

Starting point is 00:03:54 It's going to be most weekdays. And he said, you know, you have the time, you have the opportunity, you are able to talk to your client. You're not really losing a whole lot. But he added kind of a, you know, made this ruling where Bankman Fried will even be presented to the courthouse early on trial days, where there's certain witness testimony that has be discussed and let the attorneys just talk to him before the trial begins on those days. So he's saying basically, you know, you have opportunities to talk to your client and I'm going to give you, you know, more time to do so.

Starting point is 00:04:25 But I'm not going to let banquet free out of jail. So the main focus next week as the trial begins will be jury selection. Tell us what you think that process will be like. It definitely will be interesting. I think it's probably going to be very boring from just kind of observer perspective because it's a long process. And we're going to be just sitting there watching this judge ask each individual, have you heard of FTX? have you heard of San Bank of Freed? What do you think about cryptocurrencies? But it's going to be very interesting because this is the part where we're really going to get a sense of, okay, you know,

Starting point is 00:04:55 these are the 12 or so people who are going to determine whether or not Bankman Fried spends the next, you know, 10 to 20 years of his life behind bars. And so I'm expecting to see maybe as mixed selection. I think if you pluck a random group of New Yorkers off the streets, some of them may have heard of cryptocurrency. Most of them probably will not hope. And they're going to be tasked with deciding whether or not one of the biggest figures in crypto committed fraud on the way up and on the way down. Something that was interesting to me was the prosecution said that they expected jury selection to take, quote, the better part of a day. I've seen some legal opinions that it will take longer than that. What do you think could potentially happen there?

Starting point is 00:05:38 And why do you think some analysts are saying that it would take longer? Yeah, no, I've spoken to a number of lawyers as well ahead of the trial, you know, where. at coin us we're trying to do a lot of kind of review coverage basically saying here's how it might go down. Everyone I spoke to said it will probably take a couple days. Part of that is because this is a fairly notorious case. A lot of people will have heard about Bankman Freed and presumably formed some kind of opinion that would disqualify them from being a juror on the trial. I'm not sure where the DOJ is getting their estimate from. It's very possible that, you know, through the questionnaires that the jury bull is sent through the, you know,

Starting point is 00:06:17 the kind of the mass selection process or deselection process that the judge engages in, maybe that streamlines a big part of it by kind of, you know, reducing or like immediately filtering out to people who are most blatantly, you know, either knowledgeable or biased or otherwise have their own preformed viewpoints about the case. And so the jury selection might just be focused on, you know, those individuals who have made it through those initial filtering processes. But that's speculation on my part. I honestly, I'm not sure. If it is a better part of a day that we could see opening statements as soon as, you know, next Wednesday, October 4th, which would be pretty rapid start to the trial. And at CoinDisc did some work to try to suss out what it is

Starting point is 00:06:57 that Lower Manhattan New Yorkers might say if they were randomly picked for a jury. What did you discover there? Yeah, no. So CoinDusk's, Dylan and Victor, went to Manhattan, downtown Manhattan to the financial district and literally just went up to people and said, hey, we're going to CoinDusk. Have you heard of FTCs? Have you heard of San Big. Fried. And a fairly large part of this group just hadn't heard about it. They weren't familiar with it. They weren't comfortable to talk about crypto. They weren't familiar with crypto. And of those who were, you know, I think they found a fairly even mixed. There were some individuals who had heard about Banking Fried, some individuals who had only heard about crypto. Some individuals who were very knowledgeable. They actually found a, you know, a Yahoo anchor who was the most knowledgeable about it, naturally, as, you know, ordered covering the financial space. But they also found people who were looking for. for jobs in crypto, people who were investors in the space. By and large, it seems to, you know, a lot of the people they spoke to just weren't interested in talking about crypto or in, you know, being part of this, being part of crypto. So if that is a representative sample of who we'll see

Starting point is 00:08:02 next week at the jury pool, it'll be interesting because we'll see a large, potentially large jury pool of people who aren't familiar with crypto, again, on one of the biggest, you know, being in on one of the biggest figures in this space. Recently, the defense proposed certain questions that it would ask the jurors and the government said that they felt these were, quote unquote, intrusive. What were some of the questions that were proposed and what was the government's response? Yeah, so, yeah, the background here is both the DOJ and the defense team filed their proposed jury questions to help filter potential jurors. The defense team in particular had a number of questions about, you know, how these potential

Starting point is 00:08:41 jurors felt about things like effective altruism, about political donations. about ADHD and people who have ADHD. And the DOJ response was really, you know, they felt that some of these questions, for example, about effective altruism and about political donations, seems kind of primed to, or designed to prime the potential jurors to think,

Starting point is 00:09:02 oh, well, Bankman Fried was trying to do all of this in service of this effective altruism philosophy. Therefore, he was trying to raise money to donate to better the world or designed to try and prime the jury to think, okay, well, you know, political donations is fine. So these allegations about breaking the law in the way he tried to donate funds maybe is a, you know, overreach or whatever. And in the intrusive part, you know, treating just kind of this question of ADHD and whether or not people were, you know, involved with individuals who had it or the DOJ just felt that these questions were really designed to try and shape how the jury would see Bankman Freed as opposed to just kind of gauge their existing biases. And so the DOJ, oppose these questions and I think we're still waiting to see for sure if there's any public response on the judge prior to jury selection on Tuesday. All right. So in a moment, we're going to talk about different legal strategies that the defense might pursue. But first, a quick word from the

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Starting point is 00:11:47 Recently, the defense did propose a number of witnesses, but the judge denied most of them. Who were these proposed witnesses and why were they denied? Yeah, so the DOJ and defense both had a number of proposed expert witnesses. The defense in particular had a number of individuals that they said could speak to everything from the terms of service that FDX operated under to the FTCX software. to just rebutting certain DOJ witnesses. The judge basically said he agreed with the DOJ in rejecting all of these proposed witnesses. There were seven.

Starting point is 00:12:21 He did allow defense to call forth four of them later on, but they have to meet certain requirements and fill out certain disclosure forms first. A big part of the judge's reasoning was the witnesses had just not adequately explained what they wanted to testify about or what they would say. And so he didn't have enough information to allow them to testifying. which was functionally the DOJ's argument as well. That being said, some of these proposed witnesses are intended to act as rebuttal witnesses to DOJ's witnesses. I know we're saying the word witnesses a lot, but that's what it comes down to is four of these witnesses or could come back and respond to, you know,

Starting point is 00:13:00 either FTX inner circle members who are testifying on behalf of the DOJ. One of the potential witnesses that the defense can call forward is someone who can speak to the actual technical software underlying, the, you know, FDX program, again, in response to DOJ witnesses, the judge did completely ban, for example, a British barrister who was supposed to explain the FDX term of service, as well as someone who was supposed to speak to kind of the crypto industry at large, saying that, you know, those witnesses and that proposed testimony seemed a bit too far afield from what the case would be about and could probably do more to confuse the jury than to clarify anything. And SPF's team also wanted to block a proposed government witness that was also denied.

Starting point is 00:13:43 Who was that? And why did the judge deny that motion? The DOJ proposed a University of Notre Dame professor to testify about some forensic analysis he did on FTX financials. The defense objected, they said that this witness would basically just reiterate the DOJ's claims, the allegations. But the DOJ argued that he was doing his own analysis of the data. that he had access to. And so he wouldn't just be stated in the DOJ's claim. He would be providing his own expert insight based on his own work, you know, examining the databases that he had access to.

Starting point is 00:14:17 And the judge agreed with that and said that based on what he saw and based on what the witness disclosure had provided, the witness was likely just speaking to his own expertise and looking at actual data as a third party expert witness might do. And so that, you know, those witnesses are allowed right now. We're still waiting on the full and final witness list, but we now know that there are probably at least a dozen witnesses that we're going to hear from over the next six weeks. And who are the ones that stick out to you on that list? I think the cooperating witnesses, so the FTX inner circle, that's former Alameda Research CEO,

Starting point is 00:14:49 Carolyn Ellison, former FTX, Director of Engineering, Neshad Singh and Gary Wang. I forgot which one of them was the Director of Engineering. The other one was a fellow executive, but, you know, these are the three individuals. I think we're going to hear from probably first, maybe. I might hear from them as soon as next week. not certainly the week after. They're the ones who were in it, right? They were involved in this. They were part of FTCX. They were part of the highs. I think we're going to probably hear from them, you know, how FTCs might have fallen apart. I know from court filings, we know that DOJ wants

Starting point is 00:15:24 to ask Carolyn Ellison about the FTT token and allegations that Sam Beacon Fried was directly involved in trying to, you know, argue for Alameda to take a large sum of it and to potentially allegedly manipulate the price. So I think that testimony is going to be really interesting just because, again, it's the firsthand account of what happened. We're also probably going to see the defense try and discredit these witnesses to the extent possible, right? Straight out of the gate saying, well, you know, you weren't threatened with jail if you didn't testify and turn against your, you know, former boss. So I imagine we're just going to hear arguments like that from the defense during cross-examination. But either way, I think this is going to, you know, those are three

Starting point is 00:16:03 witnesses, I think we're looking forward to most right now. And then once we're past that kind of initial surge of FTX insiders, that's when we'll get to kind of more, I don't want to say the more mundane, because I don't think that is the right word for it. But, you know, people who are looking at it from kind of the, you know, again, forensic analysis perspective, people who are going to be able to kind of dig through and say, all right, well, you know, we look through the smoking remains and here's what we found. And I think that will also be interesting because it'll be really a third-party perspective on, you know, here's how this thing was set up, and here's where things may have gone wrong, or here's where things may have fallen apart.

Starting point is 00:16:39 And getting a third-party perspective on that, I think is going to be really fascinating because there'll be, I assume, a bit more objective about it than, you know, people who built it and worked on it maybe could be. One other kind of motion that happened this week that was pretty interesting, or development, I should say, is that the judge did allow SPF's team to ask some of the witnesses about, their drug use, what do you think will be the significance of that line of questioning? I think that goes back to the earlier point about potentially trying to discredit witnesses. If you have a cooperating witness, FTX inner circle members saying, while we were at FTX, Sam directed us to manipulate FTT, whatever, you know, just speculating what someone could say.

Starting point is 00:17:23 And the defense comes back and says, well, you know, are you sure that's what he said? Were you high at the time of these conversations or were you engaged in recruitment? drug use during the time you were running this company, you know, if I'm a member of the jury and I hear, okay, well, everyone was partying and on drugs and doing weird stuff or, you know, potentially, you know, in an altered state of mind, that might shape how I view the, you know, the defendant, the verdict, the whole case. So the judge did say that prior to making those, you know, kind of questions, the defense has to notify the prosecution and the judge about it. So it's It's not going to be a case of like the blindside witnesses about this, but I imagine it's going to kind of come back to this effort to try and say like, okay, you know, Banking Fried wasn't doing something wrong on his own or intentionally. It's just that things fell apart, but they were well-intentioned.

Starting point is 00:18:15 The defense is going to attempt to, I think, pin some of the blame on legal advice that Bankingfine freed received. How effective do you think that argument will be at trial? That's a really hard question to answer. I think the problem that the defense has is there's really no denying that FTCS fell apart. And it fell apart in like a very dramatic fashion, right? The day it filed for bankruptcy, that evening, what, a couple hundred million dollars or tens of millions of dollars worth of crypto was stolen, I think? I forget the exact amount, but, you know, it was a pretty dramatic way to cap off what was already a chaotic week. So the problem the defense has is, they can't say, well, FTCS is fine. And so they're leaning on this advice of counsel defense. Their argument is going to be, you know, Bankman Fried was well-intentioned. He told

Starting point is 00:19:00 his lawyers everything he wanted to do, and he did everything they told him to do. And so because it all fell apart, you can't really pin that on Bank McFeed. You have to look at the advice he was given and the information he was acting on. And so I guess part of the problem that the defense might have here is did they share, or did Bankrupt Fried share everything he wanted to do with his attorneys? Did the attorneys have all the information? And did he do everything exactly the way his attorney sold them to. And I don't know, you know, I'm sure we'll see answers to those questions over the next, you know, six weeks or so. But that seems to be kind of how that might play out. And it's going to be an interesting argument for sure. But again, I think that comes down to a central problem of FTCS for sure

Starting point is 00:19:42 collapsed and how you respond to that. One other issue is that the judge did rule that the prosecution could mention SPF's political donations. And there are charges specifically related to that that will be tried in a separate trial next year. So why were those allowed in this case? So this is where we get into what has become one of the new fun parts of being a court reporter in this case is Bahamas' exudition treaties. So the original indictment that Banking Fried was charged with back in December of 2022 did include campaign finance violations as one of the charges. But because it did not appear in the charging document that the Bahamas police department had, there was a lot of the state, the of Bahamas National Police, something like that. Bankman Free's defense team successfully argued that

Starting point is 00:20:28 they could not bring that charge right now because he had agreed to be expedited on the first seven charges, which were wire fraud and conspiracy to commit wire fraud and conspiracy to commit securities and bodies fraud, et cetera. So what it seems like is going to happen is the prosecution is going to try and fold all of that into all the political donation stuff into the other charges into the wire fraud charges and say, well, you know, we have the evidence, we have the allegations, and here's what you have to look at. What that means for the next trial, and you're absolutely correct,

Starting point is 00:20:58 there is another trial currently tentatively scheduled for it's either March or April, 2024, next spring, I don't way, where we will be going through all of this again. But a lot of that is dependent on the Bahamas, and, you know, we could probably talk about that for another hour if you wanted to.

Starting point is 00:21:14 All right. Well, we'll leave that for another episode, but one thing I did want to ask about is earlier in this interview, you said that his sentence was likely to be in the range of ten, at 20 years. And obviously, you know, there's many charges and we don't know which ones he'll be found guilty of and which ones he won't. But how are you coming up with that estimate?

Starting point is 00:21:33 So, yeah, I should definitely be more precise there. So I personally am not a lawyer or an expert in this. I have spoken to a number of lawyers about this. And what they said is if you have a defendant who has found guilty, so this assumption here is that he is convicted on at least one of these charges. But if he's found guilty on even several of the charges, because all of the conduct is similar, because it's all kind of identical conduct at the core, a judge when making a sentencing determination will basically fold all the charges into each other, right, all the conduct. And so even though each of these charges, if you look at the DOJ, press release says, oh, it contains a maximum sentence of 20 years or five years or whatever, it's not going to be consecutive, it'll be concurrent. So the estimate I'm getting from very attorneys that I've spoken to over the past few weeks is probably be somewhere in the, you know, 10 to 20 year range. Some estimates came down as low as five years, some as many as 36 years, but they also seem to base that on just kind of the allegations. The charges themselves, combined with the amount of money allegedly lost, which is more than 50 million,

Starting point is 00:22:40 combined with the severity and all of that. Yeah. And so 50 million is sort of like some threshold because I think it goes in levels of severity. Yeah. And the higher the number goes, the longer the sentence. However, that's the largest threshold. It looks like, yeah. So I literally looked up the federal sentencing guidelines, which by the way is a very confusing document.

Starting point is 00:23:04 I did not understand it. So I asked someone else to explain it to me. But yeah, there's the different thresholds that you mentioned. And it starts with, I think the thousands range and then just kind of escalates up. And 50 million seems to have been the uppermost that they had. So it's 50 million plus. I think the allegation is something like 10 billion lost from FTX. So 10 billion is a hair more than 50 million.

Starting point is 00:23:28 So that will probably be kind of the way they calculate it, probably. And again, this is dependent on if he's convicted on one or more charges and all sorts of stuff. Yeah. Okay. Well, we will have to see how all that plays out. Thank you so much for explaining all of this on Unchained. Thanks for having me again. Always great to talk to you.

Starting point is 00:23:50 Yes, same here. Don't forget, next of is the weekly news recap. Today, presented by veteran crypto reporter and Columbia University Night Batchett Fellow Michael Del Castillo. Stick around for this week in crypto after this short break. Join over 80 million people using crypto.com, one of the easiest places to buy, trade, and spend over 250 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card.

Starting point is 00:24:15 Get up to 5% cash back instantly, plus 100% rebates for your Netflix and Spotify subscriptions, and zero annual fees. Download the crypto.com app now and get $25 with the code Laura. Link in the description. In a week where regulatory scrutiny takes center stage from SEC chair Gary Gensler facing congressional heat to Binance exiting Russia, there were plenty of interesting developments that you need to hear to stay up to date with the crypto industry this week. I'm Michael Del Castillo, a Knight Badget Fellow at Columbia University, and this is your weekly crypto recap. This week, SEC Chair Gary Gensler found himself under scrutiny from U.S. lawmakers. A bipartisan group of congressmen sent Gensler a public letter urging him to approve spot Bitcoin ETFs

Starting point is 00:25:04 that would let institutions invest in securities directly tied to the price of Bitcoin, calling the SACTS. calling the SEC's current stance, quote, inconsistent and discriminatory. In their letter, the representatives cited a recent court victory by Grayscale, in which a U.S. Court of Appeals judge ruled that the SEC's decision to reject the Grayscale Bitcoin ETF application was, quote, arbitrary and capricious, and quote, stating that the SEC's posture is, quote, untenable moving forward, end quote. On Wednesday, Gensler Field did a hotbed of questions from the House-Feing. Financial Services Committee, as reported by the Block. Lawmakers grilled the SEC chair on various

Starting point is 00:25:45 aspects of crypto regulation, including the status of Bitcoin as a security and the potential for spot Bitcoin ETFs. As has come to be expected in crypto hearings, the conversation touched on such unusual topics as whether or not Pokemon cards could be securities. More to the point, though, Gensler faced accusations of lacking transparency and in a taunting play on the practice of so-called regulation by enforcement, where regulator prioritizes persecution over clarity, was accused by Representative Emmer of adopting a, quote, regulation by harassment, end quote, approach. Adding to the regulatory uncertainty, also on Wednesday, the SEC announced delays in decisions on ARC21 shares, Ethereum and Bitcoin ETFs, and Goldbug VanX Ethereum

Starting point is 00:26:34 ETO. The new deadlines are set for late December at the earliest. In signs of a possible power struggle over the right to regulate Bitcoin, Gensler, the top U.S. securities regulator, repeated his past assertion that Bitcoin isn't a security. However, Gensler stopped short of identifying the asset as a commodity, which could be seen as admitting another regulator, the U.S. Commodities and Futures Trading Commission, might actually have more authority here than he'd like to admit. The SEC Chair's comments and the agency's delays have heightened tensions at the crypto industry seeks clearer regulatory guideline.

Starting point is 00:27:14 Showcasing the stark difference in approach taken by other jurisdictions, a representative of Hong Kong's securities and future commission, said in a speech Tuesday that they're preparing to release near-term guidance, authorizing the use of blockchain to create tokenized versions of good old-fashioned traditional investment products. In a complex legal tangle, Doe Kwan, the former CEO of defunct Terraform Labs, is evading the SEC's legal pursuit. In February, the SEC sued Kwan for allegedly misleading investors in TerraForM Labs, TerraUSD stablecoin scheme, that resulted in a $60 billion collapse when its underlying Luna asset lost nearly all its value. But before the SEC could arrest Do Kwan, Montenegro authorities snatched him for using Kro.

Starting point is 00:28:03 forged passports and sentenced him to a four-month prison term. While Kwan serves his sentence, the SEC hopes to have the former CEO questions on their behalf, while reserving the right to extradite him and dispose him themselves. As his lawyers put it in the statement, the SEC, quote, seeks to have its cake and eat it too. After Binance briefly halted support for deposits from Visa and MasterCard issues in Russia, the world's largest crypto exchange says it is exiting the Russian market altogether. The firm's chief compliance officer Noah Perlman raised eyebrows, though, when he said in a statement that Binance would sell its entire Russia-based operations to a little-known firm named

Starting point is 00:28:46 ComX. Though the statement described ComX as, quote, venture-backed, its backers remain as of yet unknown. Fueling speculation, this could be another case similar to Binance U.S., which was purportedly also separate from Binance. Chang Peng Zhao, or CZ, Binance's CEO, denied ownership ties to Comex, writing on social media, quote,

Starting point is 00:29:10 I'm not their UBO or ultimate beneficial owner, nor do I own stock shares, end quote. He added that some former finance staff may work for Comex in the future. The lack of transparency around the deal continues to fuel skepticism and questions on social media. The new leadership in charge of beleaguered crypto exchange FTX has filed yet another lawsuit, this time against former employees of the exchange's Hong Kong affiliate Salamata, seeking to recover an estimated $157.3 million. And yes, that's Salamata, if that rings a bell. The suit alleges that in the days leading up to FTX's filing of Chapter 11 bankruptcy protection

Starting point is 00:29:51 in November 2022, the employees, including two brothers and their mom, quote, leverage their connections at FTX group personnel to ensure that they would be authorized over other customers. End quote. FTC's lawyers claim in the suit that more than $123 million was withdrawn on or after November 7 just before the exchange suspended withdrawal. This week, creditors of the embattled crypto lending platform Celsius Network overwhelmingly approved a $2 billion restructuring plan. That's despite reservations from U.S. trustee, Will, William Harrington. Over 98% of creditors back the plan, which promises to return at least 67% of assets to investors and offers stakes in a new entity provisionally named NewCo.

Starting point is 00:30:41 This entity aims to broaden Celsius's existing Bitcoin mining ventures and explore new business avenues. The plan's final approval hinges on a bankruptcy court hearing set for October 2. In a parallel development, BlockFi, another of the crypto companies, and similarly to Celsius that collapsed last year, received court approval for its liquidation plan. New York-based BlockFi's unsecured creditors could receive between 35% and 63% of what they are owned. Gemini, the cryptocurrency exchange founded by Tyler and Cameron Linklewast, has publicly refuted a New York Post article alleging that last August, the twins withdrew $282 million from crypto lender Genesis for personal or corporate use.

Starting point is 00:31:30 In a social media response, Gemini labeled the story as, quote, misleading and pure fantasy, end quote, claiming that the funds were actually withdrawn to increase liquidity reserves for their earn user. The public claim comes amid an ongoing legal dispute between Gemini and Genesis, with the former accusing the latter of, quote, fraud against credit. end quote. While the $282 million may seem like a lot, the lawsuit aims to recover around $1.1 billion of assets allegedly stuck on Genesis. J.P. Morgan Chase's British subsidiary on Tuesday sent an email to its clients prohibiting them from all crypto transactions starting October 16. That's according to an Associated Press report this week. Citing an increase in crypto-related scams,

Starting point is 00:32:18 the email said the bank would decline transactions related to crypto assets. made by debit card, credit card, or bank transfer. In a statement, the bank spokesperson said, quote, we've seen an increase in the number of crypto scams targeting UK consumers, so we have taken the decision to prevent the purchase of crypto assets, end quote. The move is drawn widespread criticism from much of the crypto community. Coinbase CEO Brian Armstrong called Chase UK's decision, quote, totally inappropriate, end quote, in a social media post.

Starting point is 00:32:51 Armstrong questioned how the bank's stance aligns with the UK government's claim last April that it wanted to become a global crypto asset technology hub. Not one to mince words, Armstrong wrote that, quote, UK crypto holders should close their chase accounts if this is how they're going to be treated, end quote. To be clear, nothing we're reporting here or anywhere should be construed as financial advice. In a shocking turn of events, decentralized wallet service provider mix-in network claim more than than $200 million in crypto assets have been stolen. The alleged theft targeted Mixon's cloud service database last Saturday, according to a social media post.

Starting point is 00:33:31 In a live stream on Twitch on Monday, the platform's founder Fang Zao Dong said that only half the assets in question could be accounted for at the time. In a bid to recover the stolen funds, Mixin Network offered that the alleged thief could keep $20 million of the funds as a quote, bug bunty reward. so long, that is, as the alleged thieves returned the other assets owned by users.

Starting point is 00:33:57 Seemingly a generous effort, though it might not be the most intellectually honest strategy to call funds someone has already stolen a form of bounty. Presumably, the implication is the mixing execs won't try to recover the stolen $20 million if the backers return everything else. The platform later updated that the losses were, quote, not as significant as Estes. and quote, but did not provide specific figures. Nixon's native token, X-I-N, saw an 8.6% drop in value following the news, but has already seen signs of recovery at the time of this recording. This latest incident of poorly secured decentralized exchange being robbed or tricked into giving away its funds has once again raised more general questions about the security of

Starting point is 00:34:45 decentralized platforms, though not just decentralized platforms. In related news, Tron Creator and advisor to the Seychelles-based Crypto Exchange H-TX, formerly known as Quibi Global, wrote in a social media post that the exchange was hacked, resulting in a loss of $5,000, or roughly $7.9 million at today's price. Marathon Digital Holdings, a publicly traded Bitcoin miner valued at $1.5 billion, dollars confirmed the mining of an invalid block, a very rare case for the Bitcoin blockchain. On Wednesday, the company wrote, quote, the error was the result of an unanticipated bug that came from one of our experiments, and quote. The experiment aimed to explore transaction ordering, but it backfired, they say, causing the invalid block.

Starting point is 00:35:36 Since shares in the company dropped nearly 10% on Wednesday, they've nearly fully recovered, trading at $8.68 per share, at the time of recording. It's certainly been a tough month for crypto news and this week was no different. Though to wrap things up on a more positive note, Crypto Exchange Cracken is reportedly planning to diversify its offerings by adding traditional U.S. listed stocks to its trading platform. According to anonymous sources, the service managed by a new division called Cracken Securities aims to launch next year

Starting point is 00:36:09 in both the U.S. and the UK. While Cracken seems to have secured the necessary authorization in the U.S. UK, it says it is still awaiting approval from the financial industry regulatory authority or FINRA in the U.S. This move could position Cracken as a direct competitor to license broker-dealer Robin Hood, which also offers both crypto and stock trading. And that's all. Thanks so much for joining us today. Looking forward to chatting next week. Unchained knows it's very hard to keep up with the latest news in the crypto ecosystem. That's why they have a daily and weekly newsletter to keep you covered. Sign up for free and receive the latest updates right in your inbox Monday through Friday.

Starting point is 00:36:49 Check out the show notes and subscribe to their substack today. Unchained is produced by Laura Shin with the help from Kevin Fuchs, Matt Pilcher, Juan Aronovich, Megan Gavis, Ginny Hogan, Shawshank, and Margaret Curio. This weekly recap was written by Juan Aronovich and edited by myself, Michael Delcestue. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily seven days a week with new host, Noel Acheson. Follow the Coindesk podcast network for some of the best shows in crypto.

Unchained - Here’s How Sam Bankman-Fried’s High-Stakes Trial Could Play Out - Ep 549

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