👁️ Jump Trading Colluded with Do Kwon: Whistleblower
Plus Cantor Fitzgerald's role in Russian Sanctions Evasions; DJT tanks; and SBF is totally innocent, he swears.
We’re getting right down to it today. Check out my summary of Sam Bankman-Fried’s sentencing hearing if you missed it, and this writeup of all the bad dudes I’ve gone up against over my years as a fraud investigator.
In this issue:
Sam Bankman-Fried Didn’t Do It, He Swears
Jump Trading Colluded With Do Kwon to Prop up UST, Claims Whistleblower
Trump SPAC Tanks as Insiders Farm MAGA Liquidity
Is Cantor Fitzgerald Helping Russia Evade Sanctions?
Watch: The Octopus Murders, on Robert Maxwell and PROMIS
Sam Bankman-Fried Truly Commits to the Bit: “I never thought that what I was doing was illegal.”
Sam Bankman-Fried spoke to ABC News after his conviction last week, and no surprise, he has continued to lie. Most brazenly, he claims that he “never thought that what I was doing was illegal.”
That claim is clearly contradicted by the hard evidence of his own contemporaneous behavior. At trial, we heard testimony that Bankman-Fried directed his lieutenants to spend FTX customer funds – then immediately, literally the same day, taking to social media to assure users that FTX never used customer funds.
Bankman-Fried also repeated the claim that FTX depositors could be repaid in full; he blamed lawyers Sullivan and Cromwell for something or other; and sought to obscure his own role in events.
“I never intended to hurt anyone or take anyone’s money. But I was the CEO of FTX, I was responsible for what happened to the company, and when you’re responsible it doesn’t matter why it goes bad.”
This sounds like taking responsibility, but it’s really the opposite. The reason things went bad was that Sam Bankman-Fried decided to gamble with money that didn’t belong to him, in full knowledge that what he was doing was wrong. Essentially, these new statements are regurgitations of his non-apology final statement in his sentencing hearing (I summarized the sentencing hearing here).
On the one hand, Sam is obviously coldly maneuvering himself for an appeal, including making absurd claims that he wasn’t given a fair trial (obviously he doesn’t mention his own repeated perjury, which might be considered a little unfair itself). At the same time, because this is the way his beautiful mind works, he seems to genuinely believe the fantasies spewing out of his mouth.
This is, as Judge Kaplan spelled out at sentencing, a dangerous, dangerous person.
Jump Trading Colluded with Do Kwon to Prop up UST: Whistleblower
In the ongoing trial of Terraform Labs, former Jump Trading employee James Hunsaker testified on March 29 that he filed an SEC whistleblower complaint against his employer for colluding with Terraform to prop up the value of the supposed “algorithmic stablecoin” TerraUSD (UST).
Specifically, as recounted in detail by the WSJ’s Alexander Osipovich, Hunsaker testified that Jump Crypto head Kanav Kariya collaborated with Do Kwon directly during the May 2021 depeg of UST – nearly a year before the unwind that would bring the entire structure crashing down.
This first depeg and recovery was always suspected to have been manipulated, since UST’s “algorithmic” peg structure could never actually work. The SEC now claims Jump’s intervention restored UST’s peg. We alluded to the possiblity of Jump’s involvement on my documentary podcast Crypto Crooks, so this is not exactly surprising, but it’s good to have confirmation. Hopefully the SEC will file fraud charges against Jump and the team there.
On that note, Hunsaker also testified that Bill DiSomma, not Kanav Kariya, was the “real boss” of Jump Crypto. It always seemed odd that Kariya, who is very young and started at Jump as an intern, would be made head of the new Crypto arm. This suggests Jump itself was engaged in a long game that planned for the possibility of fraud, and need an insignificant fall guy to eat the heat.
Trump Media is a MAGA Liquidity Farm
It was inevitable that Donald Trump’s Truth Social SPAC would get absolutely rekt, and take a lot of his supporters’ money with it. But it’s happening very fast!
The stock lost 21% on April 1, and that’s … no joke, folks! I’ll be here all week. The drop came just five days after the SPAC went through, which pushed the value of $DJT up about 25%.
The immediate, public cause for the hemorrhaging was an earnings report that disclosed … well, that there were no earnings. That there were *negative* earnings, what a bold man might even call losses, on the order of $60 million in 2023. The ticker still has a market cap of around $6 billion, so you can anticipate the bleeding will continue, whether slow or fast.
That’s the thing about SPACs, or reverse mergers – you don’t have to publicly disclose earnings data for the acquired firm, which is also how Chamath Palatakeyourmoneya managed to get rich on utter dogs like Clover Health.
But the drop likely also represents something else - $DJT insiders using his most deplorable, ignoramus hog-whispering supporters as exit liquidity. The report was the perfect opportunity/trigger to cash in gains that anyone with half a brain knows aren’t sustainable.
Part of me feels bad for the rubes getting washed in this one. Another part of me … doesn’t.
Russia using Tether (and Cantor Fitzgerald?) to Evade Sanctions
The Wall Street Journal has a … curious report about Russia’s efforts to evade sanctions. What’s interesting is that it slightly misleadingly says the trade is conducted using “crypto,” which is sort of correct but fundamentally wrong.
In fact, Russia is using Tether, a centrally-controlled stablecoin that moves on crypto rails. The thing about Tether is that its managers have the ability to freeze assets. The dollars backing Tethers live, in part, in U.S. financial institutions. Specifically, Cantor Fitzgerald has said it manages at least part of Tether’s reserves, and maybe a lot of them.
So if Russia is using U.S.-domiciled assets to buy weapons, that seems both bad … and something the U.S. government has the ability to directly intervene to stop? Makes one wonders exactly why they don’t.
Watch: American Conspiracy: The Octopus Murders
I’ll be diving deep into this one sooner than later. This multi-part documentary centers around Iran-Contra and PROMIS, a suite of backdoored intelligence software that the U.S. sold to allies in the 1990s, through agents including Robert Maxwell. That’s right, Ghislaine’s dad, who later mysteriously fell off a boat.