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Founder of failed crypto exchange FTX apologises to ex-employees

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The founder of the failed crypto exchange FTX has written to its former employees apologising for his role in its collapse and continuing to insist its downfall can be solely explained by a misplaced $8bn (£6.7bn).

In the letter, first published by the industry news site CoinDesk, Sam Bankman-Fried wrote: “I deeply regret my oversight failure. In retrospect, I wish that we had done many many things differently … I’m going to do what I can to make it up to you guys – and to the customers – even if that takes the rest of my life.”

Despite the mea culpa, however, Bankman-Fried said that the company was salvageable, and that if he had not been pressed into filing for bankruptcy in mid-November he could have saved it.

“We likely could have raised significant funding,” he wrote. “Potential interest in billions of dollars of funding came in roughly eight minutes after I signed the chapter 11 docs. Between those funds, the billions of dollars of collateral the company still held, and the interest we’d received from other parties, I think that we probably could have returned large value to customers and saved the business.

“An extreme amount of coordinated pressure came, out of desperation, to file for bankruptcy for all of FTX – even entities that were solvent – and despite other jurisdictions’ claims … I reluctantly gave in to that pressure, even though I should have known better; I wish I had listened to those of you who saw and still see value in the platform, which was and is my belief as well.”

In the letter, Bankman-Fried reiterated claims that FTX was a fundamentally healthy business, presenting a narrative of its downfall that showed it with assets of $60bn, against only $2bn of liabilities, as recently as this spring.

Since then, he says, two crashes in crypto markets led to its assets dropping in value, even as more customers fled to the platform. In November, its assets had fallen to $17bn, before “a run on the bank” resulted in $8bn of withdrawals in a few days.

The coup-de-grace, he said, was discovering a further $8bn of liabilities because of old cash deposits from “before FTX had bank accounts”. Bankman-Fried had previously explained in messages to Vox journalist Kelsey Piper that those debts had been forgotten about for years.

They existed because the company used to ask users to wire funds to the bank account of the group’s hedge fund Alameda Research, where deep-rooted mismanagement resulted in billions of dollars of cash being waylaid.

Bankman-Fried didn’t directly address the involvement of Alameda in his note to employees, glossing over the source of the confusion, and also not mentioning the inciting incident of the November bank run: the discovery that Alameda’s solvency rested on billions of dollars worth of a token, FTT, that FTX printed itself, and which had no deeper value beyond the promise of FTX to effectively pay dividends to holders.

“I never intended this to happen,” Bankman-Fried wrote. “I did not realise the full extent of the margin position, nor did I realise the magnitude of the risk posed by a hyper-correlated crash.”

However, the exculpatory tale presented by the former CEO – who was replaced in mid-November by John J Ray III, the bankruptcy specialist who oversaw the winding up of Enron 20 years ago and has said FTX is the worst case he has seen – has been criticised by observers.

Bankman-Fried presents the company’s finances “marking everything to market, regardless of liquidity” – assuming that the huge deposits of crypto assets that FTX holds can be sold at something approaching market prices.

For large markets such as bitcoin or ethereum, that assumption may be true. However, FTX has denominated billions of dollars of its assets in tokens, such as FTT and serum, that it controls. According to a balance sheet prepared by Bankman-Fried shortly before FTX’s bankruptcy, $2.5bn of the company’s assets were in tokens FTX had created, which had a total market cap of a fraction of that sum.

Delaware bankruptcy court heard on Tuesday how the former chief executive had run FTX as his “personal fiefdom”. Lawyers for the company told the court that 8% of the FTX group’s customers were based in the UK, representing about 80,000 unsecured creditors.

Most of those customers are believed to be corporate clients and investment professionals, using the lightly regulated FTX International exchange to make risky leveraged bets on cryptocurrency values.

After the collapse of FTX, the online bank Starling announced a seven-month suspension of all customer deposits to cryptocurrency exchanges, citing the risk to consumers. The suspension would be reviewed in June 2023, the bank said.


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Hollywood writers agree to end five-month strike after new studio deal

Hollywood writers are officially ending their five-month strike, after union leaders approved an agreement made with the Alliance of Motion Picture and Television Producers and sent the full details of the new contract to union members for ratification.

The Writers Guild of America (WGA) said in a statement on Tuesday evening that writers would be free to work starting after midnight local time, while a ratification vote takes place on a new three-year contract with Hollywood studios that won concessions on writers’ payment, terms with streaming shows, and the use of artificial intelligence.

Negotiators for the Writers Guild of America (WGA) and an alliance of studios, streaming services and production companies reached a tentative agreement on Sunday after five marathon days of talks.

On Sunday, the WGA hailed the three-year agreement as “exceptional – with meaningful gains and protections for writers in every sector of the membership”.

Late-night and daytime television shows are expected to return to the air quickly. But most TV and film productions cannot yet resume as the actors’ strike is still under way, and the strikes have already affected the production and release schedules for the coming months.

The move brings a dramatic chapter in Hollywood to a close after the strike – one of the longest in the industry’s history –brought productions to a halt, sending shockwaves across Los Angeles and beyond.

In May, the WGA voted overwhelmingly to authorize its 11,500 members to strike for the first time in 15 years amid stalled negotiations with major studios. Writers argued they were receiving worse pay and less stable work in the online-streaming era. The union also demanded additional protections around studios’ use of artificial intelligence.

Writers spent months on picket lines outside major studios from Los Angeles to New York, including Amazon, Netflix, Paramount and Warner Bros. A few months after the writers began their strike, the Hollywood actors’ union Sag-Aftra undertook similar action, in what amounted to a historic “double strike”, the first such action in over six decades.

The writers’ strike, which lasted 146 days, was just five days shy of becoming the longest strike in the guild’s history.

A summary of the deal with the studios was made public on Tuesday. Writers won concessions across multiple areas they said were crucial, including residual payments for shows on streaming platforms, more transparency on viewership numbers for streaming platforms such as Netflix, minimum numbers of writers for pre-development “mini rooms”, and guidelines for the use of artificial intelligence.

Members are set to vote on the deal between 2 and 9 October.

The agreement with the WGA came after negotiators renewed talks following a months-long impasse. Four top industry executives – Bob Iger, the Disney CEO; David Zaslav, the Warner Bros Discovery CEO; Ted Sarandos, the Netflix co-CEO; and Donna Langley, the NBCUniversal Studio group chair – took part in this week’s negotiations.

Demonstrators rally outside the Paramount Pictures Studio this week. The writer’s strike was one of the longest in Hollywood history.
Demonstrators rally outside the Paramount Pictures Studio this week. The strike was one of the longest in Hollywood history. Photograph: Jae C Hong/AP

The end of the Hollywood actors’ strike may not be on the horizon yet, but the deal for writers has ignited a new spirit of optimism and animated those who are still picketing. The deal could provide a path forward to resolve the actors’ strike, as the WGA agreement addresses concerns similar.

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“For a hot second, I really thought that this was going to go on until next year,” said Marissa Cuevas, an actor who has appeared on the TV series Kung Fu and The Big Bang Theory. “Knowing that at least one of us has gotten a good deal gives a lot of hope that we will also get a good deal.”

Writers’ picket lines had been suspended, but they were encouraged to walk in solidarity with actors, and many were on the lines on Tuesday, including Mad Men creator Matthew Weiner, who picketed alongside friend and ER actor Noah Wyle, as he has throughout the strikes.

“We would never have had the leverage we had if Sag had not gone out,” Weiner said. “They were very brave to do it.”

Striking actors have also voted to authorize their leadership to potentially expand their walkout to include the lucrative video-game market, a step that could put new pressure on Hollywood studios to make a deal with performers who provide voices and stunts for games.

Sag-Aftra, the Screen Actors Guild-American Federation of Radio and Television Artists, announced the move late Monday, saying that 98% of its members voted to go on strike against video-game companies if negotiations are not successful.

Some of the same issues are at play in the video-game negotiations as in the broader actors’ strike, including wages, safety measures and protections on the use of artificial intelligence.

Lois Beckett and agencies contributed reporting

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Las Vegas hospitality workers vote to authorize strike

Hospitality workers in Las Vegas have voted to authorize a strike if their union does not reach a contract deal with dozens of hotels on the Las Vegas strip.

Thousands of workers attended the strike vote on Tuesday at the Thomas & Mack Center on the University of Nevada – Las Vegas (UNLV) campus. The union slogan headlining the event was: “One job should be enough.”

Of the 53,000 members, 95% voted in favor of authorizing the strike.

“Companies are generating record profits, and we demand that workers aren’t left behind and have a fair share of that success,” said Ted Pappageorge, secretary-treasurer for the Culinary Union, in a statement.

“As companies reduce labor, there are less workers who have even more responsibilities and are doing more work instead of spending quality time with their families, and that has to change. Workers have built this industry and made it successful and that’s why we are demanding that workers share in that prosperity,” he said.

Pappageorge said the two sides were still “far apart” after months of negotiations with the largest three gaming companies in Las Vegas.

Among the asks from the union include “winning the largest wage increases ever negotiated in the history of the Culinary Union” amid high inflation rates in recent years, the high cost of living in Las Vegas, and furloughs during the beginning of the Covid pandemic that greatly affected hospitality workers.

The union is also pushing for reducing housekeeping workloads, mandating daily room cleaning, which was eliminated throughout much of the hotel industry during the pandemic, expanding safety protections for workers on the job, and adding clarifying language to a no-strike clause that gives casino workers the right to respect picket lines and does not prevent the union from taking action against non-union restaurants on casino properties.

“My job got so much harder since the pandemic and I’m in constant pain at work. When I get home I feel guilty that I don’t have energy to spend time with my son, help him with his homework, or even cook dinner some nights,” said Evangelina Alaniz, a guest room attendant at the Bellagio and a Culinary Union member for 18 years. “Often, I have to go to bed so I have enough strength to go to work the next day and serve the guests.”

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The union has not yet set a strike deadline, but workers are currently working under expired contracts at 22 locations among MGM Resorts, Caesars Entertainment, and Wynn/Encore Resorts. Negotiations began in April, with contract extension agreed upon in June that expired in early September as the union noted a lack of substantial progress.

In 2018, 25,000 hospitality workers voted to authorize a strike, with contracts settled with employers soon after the vote.

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Bankman-Fried asks judge for three suit jackets and slacks to wear at fraud trial

Sam Bankman-Fried, the jailed former cryptocurrency billionaire known for his casual appearance, has asked a US judge for permission to dress up for his forthcoming fraud trial.

In a Tuesday night court filing, Bankman-Fried’s lawyers asked a judge to order US marshals and Brooklyn jail officials to provide their client with three suit jackets and pairs of slacks to wear in the courtroom.

They also asked that Bankman-Fried be given four dress shirts, three ties, one belt, four pairs of socks, two pairs of shoes and “appropriate undergarments”.

The request will be reviewed by the federal judge Lewis Kaplan in Manhattan. Bankman-Fried’s trial is due to begin on 3 October and could last six weeks.

Jailed inmates do not have access to their own clothing. Judges often let them wear business attire in court, to avoid possible juror bias if they wore prison garb.

Bankman-Fried, 31, has pleaded not guilty to stealing billions of dollars in customer deposits from FTX, the now-bankrupt cryptocurrency exchange he founded in 2019.

As he rode a boom in bitcoin and other digital assets to an estimated $26bn fortune, Bankman-Fried was known for his unkempt mop of curly hair and wearing rumpled shorts, T-shirts and sneakers even when entertaining the likes of former US president Bill Clinton and ex-British prime minister Tony Blair.

Kaplan revoked Bankman-Fried’s $250m bail on 11 August and remanded him to the Metropolitan detention center in Brooklyn after ruling he likely tampered with witnesses.

At most court appearances since his December 2022 arrest, Bankman-Fried has worn suits. He wore a beige-colored prison uniform at an August hearing following his jailing.

In July, federal prosecutors asked the court to jail the defendant, saying he “crossed a line” by sharing his former romantic partner Caroline Ellison’s personal writings with the New York Times. They argued that such press was intended to discredit Ellison, who is expected to testify against him at his scheduled 2 October trial.

Bankman-Fried had previously been largely confined to his parents’ home in Palo Alto, California, on $250m bond after being extradited from the Bahamas, where FTX was headquartered.

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