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Crypto mogul Sam Bankman-Fried’s ‘epic’ legal battle

    Sam Bankman-Fried, the fallen crypto tycoon who told The Times last month that his personal fortune had dwindled to $100,000, will not be spending the holidays behind bars. He and his defense team negotiated a $250 million bond deal on Thursday that secured his release from federal custody.

    The conditions are very restrictive. Mr. Bankman-Fried, 30, had his passport surrendered and will remain under house arrest at the California home of his parents, Stanford Law School professors Joe Bankman and Barbara Fried. He is equipped with a bracelet that monitors his movements, must undergo a mental health evaluation and will have to receive government or court approval for expenses over $1,000.

    The bail deal was negotiated before Mr. Bankman-Fried boarded the plane back to the US on Wednesday night. If he misses a court date or flees, his parents will be liable for that quarter-billion dollar bond.

    The lawsuit against him is moving fast. Mr. Bankman-Fried’s next trial is scheduled for Jan. 3 in Manhattan before U.S. District Judge Ronnie Abrams.

    Prosecutors allege Mr Bankman-Fried was the mastermind behind “fraud of epic proportions”, said he stole money from clients to support Alameda Research, the company’s trading arm. FTX lost billions in the fallout of the crypto market, leaving a global list of creditors. Bankman-Fried also faces federal charges for violating campaign finance rules.

    Top employees have already turned against him. His former roommates — Caroline Ellison, who ran Alameda Research, and Gary Wang, FTX’s former chief technology officer — pleaded guilty this week and are cooperating with authorities. Prosecutors are urging more insiders to freak out.

    The SEC resisted calls for new laws to protect crypto investors. In an interview with The Times on Thursday, SEC Chairman Gary Gensler said the rules in place were adequate and it was up to industry players to comply. “The road is getting shorter,” he said, warning that crypto companies would have to register with his agency or face enforcement action.

    In other FTX news:

    Donald Trump was the “central cause” of the riots in the Capitol. The former chairman executed “a multi-part plan to overturn the 2020 presidential election,” the House committee said in its Jan. 6 final report. The panel also made a number of recommendations to ensure that something similar could not happen again.

    Winter storm rages across the center of the US Airlines canceled flights as deserted conditions and freezing temperatures hit large parts of the country, disrupting holiday travel plans, causing power outages and forcing some governors to declare a state of emergency. Airlines shares fell sharply on Thursday.

    The US is urging China to share information about the Covid outbreak. Secretary of State Antony Blinken called for “transparency to the international community” in a conversation with his Chinese counterpart, citing concerns that Beijing would downplay the number of deaths. China’s top health authority reportedly estimated that 37 million people were infected in a single day this week, making the outbreak by far the largest in the world.

    TikTok’s owner admits to improperly obtaining data on US users. The parent company of the popular video app, ByteDance, said an internal investigation found that employees had gained access to the IP addresses and other information of users, including two journalists. The revelation comes as more than two dozen states have banned TikTok from government-issued devices.

    Microsoft is hitting back at the FTC’s bid to block Activision Blizzard’s $69 billion bid. The tech giant said the deal, the largest in video game history, would not harm competition. It pointed to concessions it had made, including keeping games accessible to rivals. Britain’s and the European Union’s antitrust regulators are also looking into the deal.

    Tesla bulls, consider this a kind of Christmas present and New Year’s resolution all rolled into one: Elon Musk has vowed not to sell Tesla stock (again), this time for at least two years.

    Tesla shares plunged nearly 9 percent on Thursday, one of the worst-performing stocks on the S&P 500. Shares of the electric car maker are heading for their worst month on record, according to Reuters, as the company faces a whirlwind of challenges — from increasing competition to production problems — that go far beyond Musk’s preoccupation with Twitter.

    Investors are restless at Mr. Musk. Shares are down 60 percent in the past year, wiping about $600 billion from Tesla’s market cap. Adding to their grumbles, Mr. Musk has sold nearly $40 billion worth of Tesla stock, mostly to pay for his takeover of Twitter.

    Ross Gerber, the head of Gerber Kawasaki Wealth and Investment Management, and a major Tesla shareholder, has publicly advocated for Mr. Musk to quit Twitter and return to Tesla full-time. Mr. Musk himself blames the economy and the Fed’s policy of raising interest rates for Tesla’s share price decline. Mr Musk too said Thursday that his personal Twitter account is “critical” to Tesla’s stock price performance and was adamant that he was not neglecting his responsibilities at the car company.

    Investors appear to be applauding his statement this morning. At 6:30 a.m. Eastern, Tesla was up nearly 1.4 percent in premarket trading. Musk also said the company could buy back shares once the economy stabilizes.

    Elsewhere in Mr. Musk News:

    Business at Wall Street banks is down and things are looking worse for next year. Companies are pulling back from closing deals, lending and IPOs due to rising interest rates and recession fears. Investment banking revenues in the United States are expected to have fallen by more than half to nearly $35 billion by mid-December. And that will take its toll on bankers’ bonuses, reports The Times.

    The bonus pool at top banks has shrunk considerably. Goldman Sachs, JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Barclays are expected to be 30 to 50 percent lower than last year. “This is going to be a tougher compensation season at Jefferies, just as it will be for any company in our industry,” the bank’s CEO Richard Handler and president Brian Friedman wrote in a memo to employees.

    Top performers may only see a small dip in their bonuses, while a majority of workers see cuts of 80 percent or more. Some bankers will not receive a bonus. Banks expect some workers who get the Wall Street equivalent of coal in their stockpile to quit their jobs, which could ease the downsizing next year.

    — An attorney for Neal Schonthe founding guitarist of the rock band Journey, wrote in a cease-and-desist letter to the band’s keyboardist, Jonathan Kane, urging him to stop performing at events for former President Donald Trump “like Journey” , and performing Journey numbers on those functions.

    Scott Minerd, the chief investment officer at Guggenheim Partners and a widely followed commentator on markets and the economy, died Wednesday of a heart attack during his regular workout, the asset manager announced. He was 63.

    Mr. Minerd was a towering presence in Guggenheim, both literally – he was a former competitive bodybuilder who attended Gold’s Gym in Venice, California – and intellectually, as the architect of the company’s investment strategy. He joined what became Guggenheim in 1998 as a managing partner shortly after its inception, having previously worked at Credit Suisse First Boston, Merrill Lynch and Morgan Stanley.

    Mr. Minerd helped build Guggenheim into a major asset manager. Largely due to its unconventional investment approach, the firm’s assets under management have grown to approximately $285 billion. He also became a regular on CNBC and Bloomberg TV, commenting on bonds, markets, Bitcoin and more. Many of his responsibilities will be taken over on an interim basis by Anne Walsh, the chief investment officer of Guggenheim Partners Investment Management.

    Mr. Minerd is survived by his husband, Eloy Mendez.

    This is how he is remembered on Wall Street:

    • “Scott was a key innovator and thought leader instrumental in helping Guggenheim Investments grow into the global company it is today,” said Mark Walter, CEO of Guggenheim

    • “He was a brilliant man whom I got to know over the past five years. He was an old-fashioned handshake businessman whose word was his bond,’ tweeted Bill Ackmanthe hedge fund magnate.

    • “Scott was a master of fixed income – brilliant at deciphering medium and long term interest rate movements. He was a dear friend and supporter. I will miss him,” tweeted Bill Grossa co-founder of Pimco and Wall Street’s old “Bond King.”

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