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As Sam Bankman-Fried awaits prison sentence, FTX customers await a surprise: Full repayment

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As Sam Bankman-Fried prepares to face sentencing next month for his criminal fraud conviction tied to the epic collapse of FTX in 2022, former customers of the crypto exchange have reasons to believe they could actually recoup their money.

Bankman-Fried, who could spend the rest of his life behind bars, was found guilty in November on seven criminal counts after roughly $10 billion in customer funds from his company went missing. Some of that money went to pay for Bankman-Fried’s lavish lifestyle, but much of it went towards other investments that have, of late, appreciated dramatically in value.

Lawyers representing the bankruptcy estate of FTX told a judge in Delaware last week that they expect to fully repay customers and creditors with legitimate claims. Bankruptcy attorney Andrew Dietderich, who works with FTX’s new leadership team, said “there is still a great amount of work and risk” ahead in getting all the money back to clients, but that the team has a “strategy to achieve it.”

It’s a welcome development for the many thousands of customers (reportedly up to a million) who collectively lost billions of dollars in FTX’s collapse 15 months ago, when the crypto exchange spiraled into bankruptcy in a matter of days. Given the lightly regulated and unsecured nature of FTX — and the crypto industry at large — those clients faced the real possibility that the vast majority of their money had evaporated. Plenty of failed hedge funds and lenders lost virtually everything during the 2022 crypto winter.

Bankman-Fried never believed his company’s situation was that dire.

Even as regulators and federal prosecutors unearthed evidence showing that the 31-year-old entrepreneur and his top lieutenants had been pilfering billions of dollars from customer wallets for years, Bankman-Fried insisted that all the money was still somehow accessible.

“FTX US remains fully solvent,” Bankman-Fried wrote in a Substack post on Jan. 12, 2023, while he was under house arrest at his parents’ home in Palo Alto, California. He said the exchange “should be able to return all customers’ funds.”

In some ways, his narrative appears to be proving true.

For months, FTX’s new CEO, John Ray III, and his team of restructuring advisors have been clawing back cash, luxury property, and crypto, as well as tracking down missing assets. They’ve already collected more than $7 billion, and that doesn’t include valuables like $26 million in gifts and property to Bankman-Fried’s parents, or the $700 million handed over to K5 Global and founder Michael Kives, who invested FTX cash in companies like SpaceX. Some of those investments have seen a precipitous rise in value.

FTX had been negotiating with bidders about a potential reboot of the company, but those efforts were scrapped last month.

Braden Perry, who was once a senior trial lawyer for the Commodity Futures Trading Commission, FTX’s only official U.S. regulator, told CNBC that the decision to repay users in full came afterthe abandonment of efforts to restart the FTX crypto exchange,” in favor of “a focus on liquidating assets to make customers whol​e.”

Getting actual money back in the hands of customers still remains a challenge. While a lot of the value has been recouped and more is to come, divvying up large amounts of cash is a complex process in bankruptcies, particularly when so much of the money is in non-traditional and illiquid assets.

Even Ray was doubtful at the beginning of the process, noting in late 2022 that, “At the end of the day, we’re not going to be able to recover all the losses here.”

‘Sam coins’ soar

What Ray wasn’t banking on was a huge market rebound. When he made those remarks, crypto was mired in a bear market, with bitcoin trading at around $16,000. It’s now above $47,000.

In September, the bankruptcy team released a status report showing that FTX had $3.4 billion worth of digital assets, with over $1.1 billion coming from its Solana investment.

Solana fits into a category of so-called “Sam coins,” a group that also includes Serum, a token created and promoted by FTX and sister hedge fund Alameda Research. After the dust settled from FTX’s bankruptcy, Solana saw a huge run-up in its price, and it continued to rally after the September report. Since the end of that month, it’s spiked fivefold.

Meanwhile, FTX’s bitcoin stash, which was worth $560 million at the time of the September report, is today valued north of $1 billion.

Bankman-Fried’s investments weren’t limited to crypto. He also used client money to back startups like Anthropic, the artificial intelligence company founded by ex-OpenAI employees. FTX invested $500 million in Anthropic in 2021, before the generative AI boom. Anthropic’s valuation hit $18 billion in December 2023, which would value FTX’s roughly 8% stake at about $1.4 billion.

During Bankman-Fried’s criminal trial in New York, Judge Lewis Kaplan denied the defense’s request that it be permitted to say that FTX’s investment in Anthropic was a smart bet. The bankruptcy estate of FTX has been looking to sell its Anthropic stake, according to a court filing this month.

In his biography on Bankman-Fried titled “Going Infinite,” Michael Lewis said he was told by an investor interested in bidding for the venture portfolio that “if it was sold intelligently, it should go for at least $2 billion.” Lewis, who published his book late last year, wrote that, based on his back-of-the-envelope math, the $7.3 billion that Ray’s team had come up with didn’t include Serum, some large clawbacks and other venture investments that had appreciated in value.

For FTX customers, being made whole, according to a judge’s ruling, means getting the cash equivalent of what their crypto was worth in November 2022. In other words, they’re not seeing any of the upside of FTX’s investments or being given virtual coins that would allow them to cash out at higher valuations.

Still, some investors have found a way to participate in the FTX’s ongoing odyssey. The market for FTX IOUs lit up last year as it became clear that the bankruptcy estate was cobbling together a lucrative portfolio. One financial firm that had lost around $100 million initially sold its FTX debt for 6 cents on the dollar in a new secondary market out of concern that he may never get a better deal. As of December, those claims were going for more than 70 cents on the dollar.

If customers are eventually made whole, that could play a big role in Bankman-Fried’s appeal, likely following his sentencing, which is set to take place in Brooklyn on March 28. Perry said it could also affect how the judge handles sentencing in the first place.

“Under the federal sentencing guidelines, and even assuming no monetary loss, SBF still faces at least 70 months in prison based on his base level offense, number of victims, sophisticated means, and leadership role,” Perry said.

The massive losses that were originally expected would suggest 30 to years to life, Perry added.

Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities and Commodities Fraud Section, told CNBC that judges typically consider the amount of restitution paid to victims at sentencing.

“If the victim is made whole, that is a big plus for the defendant,” said Mariotti. He noted, however, that the extent of the fraud coupled with Bankman-Fried’s false testimony and violation of bond conditions could limit the reduction.

“I usually advise clients to pay restitution before sentencing if at all possible,” Mariotti said.

Source: cnbc.com

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Fintech

Klarna says its AI assistant does the work of 700 people after it laid off 700 people

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The Swedish fintech, which was criticized for its handling of a dramatic staff reduction in 2022, is touting new efficiencies powered by OpenAI.

Klarna is bullish on bots.

One month after taking its OpenAI-powered virtual assistant global, the Swedish buy-now, pay-later company has released new data touting its ability to handle customer communications, make shoppers happier, and even drive better financial results.

The app-based AI chatbot already handles two-thirds of all customer service chats, the company said Tuesday—some 2.3 million conversations so far—with the virtual assistant earning customer satisfaction ratings at the same level as human agents. Klarna, which is expected to go public this year and will need all the hype it can get at a time when investors have been generally frosty toward IPOs, estimates that the chatbot could help improve its profits by $40 million in 2024.

Announcing a partnership with OpenAI early last year, Klarna said it was one of the first companies to integrate the firm’s groundbreaking ChatGPT technology into a plug-in for shopping. The natural-language interface initially helped customers choose items and make other shopping-related decisions based on personalized queries, a feature Klarna described as “smooth shopping.”

The company has continued to build out its AI offerings since then. Its app-based assistants are now available to customers worldwide and handle a variety of tasks including refunds, cancellations, and even disputes.

Klarna boasted in its announcement on Tuesday that the AI assistant “is doing the equivalent work of 700 full-time agents.”

That statement may raise eyebrows for anyone who remembers the middle of 2022, when the company laid off roughly the same number of employees, then about 10% of its staff. At the time, CEO Sebastian Siemiatkowski cited economic uncertainty, inflation, and the likelihood of a recession as reasons for the cuts. He was criticized for his handling of the staff reduction after he shared a public spreadsheet on LinkedIn that contained the names of many of the laid-off workers.

Fast Company asked Klarna how the company arrived at its calculation for its AI assistant’s human-equivalent productivity. The company said the number of equivalent jobs the AI could perform wasn’t related to the layoffs. In a statement, a spokesperson said the company’s customer service is supported by four to five large third-parties that collectively have over 650,000 employees, and that it offers customers the option to speak with human agents if that’s what they prefer.

“This is in no way connected to the workforce reductions in May 2022, and making that conclusion would be incorrect,” the statement read. “We chose to share the figure of 700 to indicate the more long-term consequences of AI technology, where we believe it is important to be transparent in order to create an understanding in society. We think [it’s] important to proactively address these issues and encourage a thoughtful discussion around how society can meet and navigate this transformation.”

Companies have used chatbots for years to handle low-level customer queries and other interactions, although these tools are expected to become more versatile in the wake of advancements in artificial intellegence.

Source: Fast Company

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Mintos officially debuts in Italy and Spain, offering a new investment platform that makes investing easy and free of charge

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Following its official debut in the German market, Mintos, the multi-asset platform offering a unique mix of alternative and traditional investment options, continues its European rollout by making its official debut in the Italian and Spanish investment markets, with plans to expand to more countries in the near future. Since its founding in 2015, the platform has attracted over 500,000 users across Europe. Authorised by MiFID, the company currently manages over 600 million euros in assets under administration.

Revealing insights into financial habits in Italy and Spain

Mintos, in partnership with London-based research company Censuswide, unveils interesting insights into how Italians and Spaniards manage their finances. The survey, carried out on a sample of 4,000 investors based in different cities and regions of Italy and Spain, exposes a noteworthy trend – half of respondents from both countries are currently not actively investing in financial instruments.
“In analysing the results, the sizable segment of non-active investors indicates significant growth potential in Italy and Spain. The nearly equal split between active and non-active investors underscores a strong interest in investment opportunities,” comments Martins Sulte, CEO and co-founder of Mintos.

In addition to that, according to the study, 40% of respondents in Italy and 33% in Spain would like to start investing in the future, and they would be motivated to do so by the possibility to invest small amounts and the chance to learn more about the world of investing. “Mintos was developed for investors looking for simplicity and enables investments from as little as €50. We also acknowledge that there is a broad segment of people who could benefit from educational initiatives and programs aimed at promoting financial literacy and encouraging informed investment decisions,” comments Martins Sulte. “In response, Mintos is committed to bridging this knowledge gap by providing accessible learning content and a user-friendly platform on our blog, ensuring a hassle-free and inclusive financial experience.”

Mintos offering: loans, Fractional Bonds and ETFs

Mintos already holds a prominent position as the leading European platform for investing in loans, offering investors the opportunity to invest in consumer and small business credit for potentially attractive long-term returns.

Another recent addition to Mintos’ offerings are Fractional Bonds that allow customers to invest in high-yield bonds from as little as €50 and zero commissions and enjoy regular, fixed returns. Historically, high-yield bonds were primarily accessible to institutional investors or affluent individuals. However, Mintos has democratized access to these fixed-income securities for retail investors in Europe.

Moreover, in line with classic portfolio theory, equities are essential components. Notably, Mintos distinguishes itself by offering managed ETF portfolios completely free of charge, a significant advantage compared to other players in the market. These include bond and equity ETFs from renowned providers such as Amundi, iShares, JP Morgan, Vanguard and others. The minimum investment is €50 with zero fees.

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Fintech

Woojin Plaimm, Woojin Plaimm Introduces World’s First Online Sales System via Turkish Branch

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In a groundbreaking move, the global injection molding machine provider, Woojin Plaimm has unveiled the world’s first online sales system through its Turkish branch. This innovative system aims to enhance customer convenience by offering a range of user-friendly features, allowing users to easily access machine prices.

Key Features of the System:- Quick Quoting System: Customers can now obtain machine price estimates without the need for separate logins. This feature enables users to swiftly and conveniently grasp the prices of various machinery.- Detailed Quoting System: Requiring user registration, this system enables users to explore package options. It empowers customers to select options tailored to their requirements and receive detailed quotations accordingly.- Comparative Quoting: Users can compare detailed specifications and prices of various models of the same machinery. This feature enables customers to consider diverse options and make optimal selections.- Real-time Inquiries and Support: Users can receive real-time detailed quotations for any additional inquiries they may have. This facilitates prompt access to necessary information for customers.By implementing this online sales system, Woojin Plaimm aims to provide enhanced services
to its customers and furnish them with information to facilitate informed purchasing decisions. This initiative signifies a significant step forward in the realm of online sales systems within the machinery industry.

The post Woojin Plaimm, Woojin Plaimm Introduces World’s First Online Sales System via Turkish Branch appeared first on HIPTHER Alerts.

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