The Real Story of Online Bullying and Spaming: A WIRED Investigative Look at Two Latest Cases of Facebook Mapping and Facebook Abusal

In the wake of false reports of active shooters sending police to schools, WIRED investigated more than 90 of them and found potential connections between many of them. “In speaking to a number of people who experienced it, I can tell you that the anxiety and fear—it was real to them for 15 minutes,” Amanda Klinger, director of programs and cofounder of the Educator’s School Safety Network, told WIRED. “There’s a period of time in these incidents where people are literally running for their lives, law enforcement is responding with their weapons, and people think it’s the real thing.”

Even after extensive sanctions meant to isolate Russia from the global economy amidst its ongoing war with Ukraine, investigators around the world are working to curb the ongoing influx of capital to Russian military and paramilitary groups. The development is being watched closely by tech industry as it is likely the first criminal case involving a data breech by a corporate executive. The Biden administration’s new executive order addressing privacy seems like more of a Band-Aid than a panacea, as it attempts to reassure Europeans that their data is safe when stored in the US, despite government surveillance.

Meanwhile, Meta released findings on more than 400 malicious Android and iOS apps that it says were harvesting Facebook credentials to take over users’ accounts. We discussed the toll that living online has on your life, as well as the potential erosion of privacy that comes with consistent social media posting, and how it can affect your sense of self.

Plus, there’s more. Each week, we highlight the news we didn’t cover in-depth ourselves. Click on the headlines below to read the full stories. And stay safe out there.

Source: https://www.wired.com/story/binance-hackers-minted-569-million/

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, is charged with a hacking and laundering scheme out of thin air

Binance revealed Friday that unidentified hackers managed to exploit a flaw in the company’s BNB Chain crypto token, allowing them to mint 2 million of the company’s decentralized tokens worth a total of $569 million. That money wasn’t actually stolen from Binance, in other words, but rather fabricated out of thin air thanks to a flaw in the security of Binance’s cryptocurrency. The hack seemed poised to flood the market with Bnb and thus reduce its value for legitimate owners while allowing the hackers to walk away with half a billion dollars.

The spectacular rise and fall of Sam Bankman-Fried, the founder of the failed crypto exchange FTX, came full circle on Monday, with his arrest in the Bahamas at the request of U.S. authorities, followed by the S.E.C. filing its own charges on Tuesday.

The complaint alleges that, in reality, Bankman-Fried orchestrated a years-long fraud to conceal from FTX’s investors (1) the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund; (2) the undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited “line of credit” funded by the platform’s customers and exempting Alameda from certain key FTX risk mitigation measures; and (3) undisclosed risk stemming from FTX’s exposure to Alameda’s significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens.

It will likely be months before the details of Bankman- Fried’s alleged fraud are untangled. But the broader story is relatively straightforward, and familiar: He allegedly spent years defrauding unsuspecting investors of gargantuan sums of money, and then allegedly used that money to not only bankroll his lavish lifestyle, but to set up tens of millions of dollars in illegal campaign contributions.

FTX, a $32 billion company that pioneered virtual currencies, filed for bankruptcy a month ago after it was discovered it was moving money around illegally.

A large portion of that total has since disappeared, they said. One source put the missing amount at about $1.7 billion. The other said it was between $500,000 and $2 billion.

FTX’s Jack-of-the-Plane: Analyzing Alameda Research with Money Before Its Own Benefit

The FTX has been hacked. The admin on FTX’s official Telegram channel wrote about the fact that all funds seem to have disappeared, and warned users against going onto the platform’s websites due to the presence of malicious software. The website for the FTX.com and FTX.us are currently down at this time of writing.

In a tweet on Friday, Bankman-Fried said he was “piecing together” what had happened at FTX. “I was shocked to see things unravel the way they did earlier this week,” he wrote. I’ll write a more complete post soon about the play by play.

In an attempt to stave off a collapse of the FTT token price, Ellison and Bankman-Fried began to liquidate Alameda Research’s investments — freeing up cash for buybacks, according to the CFTC complaint. It wasn’t enough. During that period, Bankman-Fried, Ellison, and a third, unnamed FTX executive expressed surprise that the price of Bitcoin hadn’t fallen more.

Bankman-Fried held a meeting with executives in Nassau, Bahamas to figure out how much funding would be needed to cover the FTX shortfall, according to two people with knowledge of FTX’s finances.

Some people associated with FTX and Bankman- Fried’s Alameda Research have been accused by prosecutors of using money from the start of their operations to their own benefit.

And as if all that weren’t enough, Bankman-Fried’s successor, Ray, spent the day calling out the colossal mismanagement that took place before FTX and Alameda collapsed. In addition to calling the previous leaders “a very small group of grossly inexperienced and unsophisticated individuals” — under oath, mind you — Ray also illustrated that mismanagement by revealing that FTX used QuickBooks to run its business, which was valued at more than $30 billion at its peak. (Ray clarified: “Nothing against QuickBooks. It’s a very nice tool. Just not for a multibillion-dollar company.”)

Two senior executives associated with collapsed FTX have pleaded guilty and are cooperating with the federal prosecutors. Additionally, the pair face civil fraud charges from the Securities and Exchange Commission that were announced Wednesday night.

What Is the Wild West of Financial Markets? An Opposition to the Revival of Wall Street and Wall Street Journal Reports on FTX

It is the Wild West of the financial world due to the lack of regulation in the market. When something breaks, investors are vulnerable.

On Friday, FTX said it had turned over control of the company to John J. Ray III, the restructuring specialist who handled the liquidation of Enron Corp – one of the largest bankruptcies in history.

Emily is a former policy advisor to the US State Department and wrote for The Wall Street Journal. She is the author of a book. Who They are voices from the internet underground. Her opinions are her own in this commentary. CNN has more opinion.

The case of Bankman-Fried a decade after the financial crisis: Is it really worth investing in a decentralized financial system?

The answer is no one, because crypto shouldn’t need a savior. The whole point of crypto is that it is supposed to be decentralized and transparent. The industry has deviated from the ideal, as seen by Bankman-Fried’s rise and fall. One of the most opaque entities in thecryptocurrencies is run by some large-than-life personality. FTX and its leader are perhaps the best example there is.

It wasn’t supposed to be this way. The 2008 financial crisis was a time of great disappointment in bankers and politicians because of the emergence of the world’s first major cryptocurrencies. The new system wouldn’t require you to trust anyone, in light of the distrust in financial institutions. Bitcoin transactions are recorded on a decentralized ledger known as a blockchain, which everyone can see and no bad actor should be able to fraudulently alter.

The entire fiasco is completely unsurprising, and in many ways could have been foreseen — as indeed some did. After all, this is hardly the first case of alleged fraud we’ve seen from a figure like Bankman-Fried. SBF, as opposed to what any lawyer would advise, did not remain silent. He talked to reporters and even virtually participated in the DealBook Summit in New York last month where he said he had never tried to commit fraud on anyone.

The Cult of Personality Problem in Social Media and Twitter: Comments on the Bankman-Fried Proposal of a Cosmic Fraud Investigation

The cult of personality problem is not limited to crypto. We see it in social media as well, another supposedly leaderless and decentralized technology. Twitter is now subject to the whims of owner Elon Musk, the richest man in the world.

In the case of crypto, many have long pointed out the risk of powerful centralized exchanges like FTX, with some people preferring to hold their own coins instead of storing them in an exchange. Another option is to actually use blockchain technology to provide greater visibility, something that Bankman-Fried is now promising to do. He said his priority would be to give as close to transparency as possible, so people know what’s going on. In the case of FTX, of course, it’s probably too late.

These uses are clear in the suit, as they were not authorized by customers. (It echoes the SEC suit’s allegations about how customer funds were improperly used by Alameda.) Indeed, FTX’s terms of service explicitly forbid this kind of thing, the CFTC suit says. The executives were aware of the importance of segregating customer assets from other funds, which is crucial for proving fraud charges.

The federal prosecutors in Manhattan are trying to have Mr. Bankman- Fried extradited to them. A trial is possible late next year.

The Rise of Bankman-Fried as the World’s First Tsallaire: After Sequoia, Bill Clinton, and Bill Clinton

“Retail investors suffer the most because they are wrongly associated with fake money, and because too many people still wrongly associate the world of virtual currency with a real thing,” said his boss, who for months raised concerns about FTX’s business model. Klippsten has long been skeptical about other parts of the universe and is publicly enthusiastic about bitcoins.

Sequoia Capital, which invested in Apple, Cisco, Google, Airbnb and YouTube, described their meeting with Bankman-Fried as likely “talking to the world’s first trillionaire.” Several of the partners became enthusiastic about Bankman-Fried after a meeting. After a few more meetings, the company was decided to be invested in by Sequoia.

I do not know how I know. Adam Fisher, a business journalist, wrote about Bankman-Fried for SBF, and said that the firm is a winner. The article, published in late September, was removed from Sequoia’s website.

“Not all of the investment in this early-stage asset class perform to expectations,” the Ontario Teachers’ Pension Fund said in a terse statement.

Bankman-Fried purchased the assets of the bankruptcryptocurrencies firm, sparking a sense of relief to account holders whose assets have been frozen since the company’s failure. That rescue is now in question.

His influence was starting to spread into political and popular culture. FTX bought prominent sports sponsorships with Formula Racing and bought the naming rights to an arena in Miami. Bill Clinton was invited to speak at FTX conferences because he was invited to speak at the $1 billion donation to Democrats promised by him. Tom Brady is a football player.

Bair said that there were similarities between the rise of Bankman- Fried and that of the notorious Ponzi scheme mastermind.

Bair notes that 30-year-old Bankman-Fried, like Madoff, proved adept at using his pedigree and connections to seduce sophisticated investors and regulators into missing “red flags” hiding in plain sight.

Before he started his Ponzi scheme, he was known as a wizard on Wall Street. He served as chairman of the stock market and was also on advisory panels for the SEC.

Sam Bankman-Fried, a failed crypto exchange founder in the Bahamas, was arrested on charges of tax evasion in the United States

Better Markets CEO Dennis Kelleher said in a statement on Monday that FTX had a strategy of “revolving door hires” from the Commodities Futures Trading Commission (CFTC) and elsewhere “to use their knowledge, influence and access at the agency and in Washington to move FTX’s agenda.”

You get a herd mentality if all your peers and marquee names in venture capital are investing. And that adds credibility with Washington policymakers. Bair said she was speaking for herself, not Paxos, but she did say it all feeds on itself.

Madoff offered investors marvelous returns that were remarkably consistent and an improbable track record that later proved to be made possible by an elaborate scheme that involved repaying existing clients with new client deposits.

The former FDIC chair is not worried about the collapse of FTX similar to the collapse of Lehman Brothers in 2008. Crypto is still a relatively small part of the broader economy and financial market.

Sam Bankman-Fried, the founder of failed crypto exchange FTX, was arrested in the Bahamas on Monday after US prosecutors filed criminal charges against him, according to a statement from the government of the Bahamas.

“You must answer for the failure of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors,” the senators wrote.

Sam Bankman-Fried in the Bahamas: “I can’t do anything wrong,” he wrote in an e-mail to regulators

I don’t have much access to my data, which is either personal or professional. Bankman-Fried said on Friday that he will not be as helpful as he would like, because he can’t say what he wants. The committee still thinks it would be useful, so I’m willing to testify on the 13th.

There are still unresolved questions about how client funds were misappropriated, how clients were blocked from withdrawing their own money and how you orchestrated a cover up, Brown said in a letter to Bankman-Fried.

Separately, Sens. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, both Democrats, sent letters to three regulators – the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – asking them to assess the traditional banking system’s exposure to turmoil in the crypto space, a largely unregulated, parallel financial system.

“Crypto firms may have closer ties to the banking system than previously understood,” Warren and Smith wrote. The relationship between banks and crypto firms raises questions about the safety and soundness of our banking system, and highlights potential loopholes that could be exploited to gain further access.

“Based on your role as CEO and your media interviews over the past few weeks, it’s clear to us that the information you have thus far is sufficient for testimony,” Waters replied to Bankman-Fried earlier this week.

Bankman- Fried was arrested last Monday night in the Bahamas, but he is still in the country. He was arraigned Tuesday, and a Bahamian judge denied his request for bail, saying that he posed a flight risk. His extradition to the United States could take weeks.

The Bahamas extradited Sam Bankman-Fried and he was on his way back to the US. Williams said that Bankman-Fried would be going to New York to appear before a judge as soon as possible.

The United States’ extradition treaty with the Bahamas allows US prosecutors to return defendants to American soil if the charges would be considered punishable by imprisonment of at least a year in both jurisdictions.

Indications on a Back Door to the Financial Conduct Act (FTX): Mr. Bankman-Fried at the SEC hearing

“I didn’t knowingly commit fraud,” he told the BBC over the weekend. “I didn’t want any of this to happen. I was certainly not nearly as competent as I thought I was.”

“While I am disappointed that we will not be able to hear from Mr. Bankman-Fried tomorrow, we remain committed to getting to the bottom of what happened,” Waters said in a statement Monday night.

“There was no person who was chiefly in charge of positional risk of customers on FTX,” Bankman-Fried told DealBook. “And that feels pretty embarrassing in retrospect.”

Bankman-Fried has denied knowing anything about a back door. “I don’t even know how to code,” he told cryptocurrency vlogger Tiffany Fong in an interview last month.

The arrest was made at the request of the U.S. government, based on a sealed indictment filed by the Southern District of New York, U.S. Attorney Damian Williams said in a tweet also on Monday night.

In a statement, the prime minister of the Bahamas stressed the country is cooperating with law enforcement and regulators in the United States, but its own “regulatory and criminal investigations into the collapse of FTX continue.”

Against the advice of his lawyers, Bankman-Fried has given a series of interviews since the collapse, but none have been particularly illuminating (with the exception of a Vox report that caught him off-guard). He has largely evaded straightforward questions, given tangential responses, and been generally inattentive—he played video games during at least one interview.

As of late Monday night, the committee still had a notice of the hearing posted that listed Bankman-Fried as a witness and also included the written testimony of the hearing’s other witness, FTX’s CEO John Ray.

Gary Gensler, chair of the SEC said that the price of FTX was manipulated to prop up the value of their house of cards.

Sam Bankman-Fried: A fraud or a fool? The US attorney’s complaint against Alameda Research and the Commodity Futures Trading Commission

“Look, I screwed up,” Bankman-Fried said during a virtual appearance at the New York Times’ DealBook Summit. I’d do anything to do things over.

The US attorney said in a Tuesday press conference that the SBF contributions were funded by the Alameda Research and were not from wealthy co-conspirators.

SBF was accused of saying to investors that FTX was safe because of an automated risk engine that would liquidate assets in order to make sure they didn’t fall under the required levels.

Other charges may follow, but these are the ones he’s facing so far, and that’s just from the SEC — its announcement notes other charges are being filed today by the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC).

Prior to his arrest, SBF had continued an ongoing post-bankruptcy-filing media tour of Twitter Spaces chats and Zoom calls, with at least two live appearances on Monday, and he was expected to appear remotely today to testify before the House Financial Services Committee. The hearing is scheduled to begin at 10AM and will include testimony from FTX’s new CEO, John Ray III.

The arrest has sparked jubilation in crypto circles, after some nail-biting over his ostensibly generous treatment by “mainstream media” and speculation (by Twitter CEO Elon Musk, no less) that his political donations may earn him a free pass of sorts with US law enforcement.

A written preview of Ray’s testimony, published in advance of the hearing, gave the first indication that Bankman-Fried was in for a rough ride. Ray described Bankman-Fried and his inner circle as being woefully inexperienced and unsophisticated and said that he had never seen such a failure of corporate controls at every level of an organization.

The US government believes it was a fraud. The complaint made public today by the Commodity futures Trading Commission has some hair raising details and Sam Bankman-Fried hasn’t been telling the truth for a long time. According to the complaint, Bankman-Fried operated Alameda Research and FTX as a common enterprise, for instance. This complaint is civil.

Regulators say the manipulation inflated the holdings of Alameda and overstated the balance sheet of the hedge fund.

The CFTC made a pretty strong argument that this could be false and that the two companies are quite different in terms of day-to-day operations.

Both teams shared office spaces, as well as “key personnel, technology and hardware, intellectual property, and other resources,” according to the complaint.

“The crimes that were committed [at Enron] were highly orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets,” Ray told lawmakers. FTX, on the other hand, was “not sophisticated at all.”

Federal prosecutors in New York charged Bankman- Fried with eight counts of fraud and conspiracy. If Bankman-Fried is convicted of all eight counts, he could face up to 115 years in prison, though he probably won’t get the maximum sentence.

We don’t know a lot about the case. Four weeks after FTX filed for bankruptcy, prosecutors had an eight-count, 14-page indictment against the company. TheSDNY is not sloppy, but they don’t indict without a solid case.

Several lawyers not involved in the case have told me that Bankman-Fried’s arrest is a sign that former FTX employees may be aiding prosecutors.

“The smart move by former employees would be to rush to become a cooperator in exchange for more lenient treatment, and it would not be surprising to learn that one or more of them had done so,” said Howard A. Fischer, a former SEC lawyer. The fact that one person has been charged so far seems to indicate this, as well.

Editor’s Note: Casey Michel is a writer and investigative journalist covering kleptocracy and dark money networks across the globe. The author is working on a book, which is about foreign lobbying in Washington, DC. The opinions are of his own and have nothing to with this article. Read more opinion at CNN.

In some ways, these kinds of cases, many of which resemble traditional Ponzi schemes, are as old as American capitalism itself. They almost always have a lack of regulation and oversight combined with promises of easy wealth schemes, all dependent on proprietary technology that seems to generate returns in thin air.

A half-century later in the late 1920s, the crash of the stock market — which more Americans had poured funds into, without any kind of oversight — propelled a series of bank runs that led to the actual Great Depression. It wasn’t just the faulty loans that caused the Great Recession, but also the lack of attention by regulators that led to the foreclosure crisis that continues to this day.

On the FTX/Alameda Investigation into Bankman-Fried and a former co-founder of a cryptocurrency exchange company

Bankman-Fried is expected to appear before a judge in Manhattan on Thursday. People familiar with the matter told CNN that prosecutors and his attorneys are trying to come up with a bail package that will allow him to avoid being locked up.

Ellison has been charged with seven criminal counts, including conspiracy to commit wire fraud and money laundering. She and Bankman-Fried were close business associates who briefly dated.

Williams didn’t specify the charges the two pled to but said the guilty pleas were related to their roles as insiders at FTX and its sister company Alameda Research. Wang owned 10 percent of Alameda Research and was also a co-founder of the FTXcryptocurrencies exchange. (Bankman-Fried owned the other 90 percent.) Ellison was CEO of Bankman-Fried’s trading company.

The charges were announced in a video message by the US attorney for New York, Damian Williams. He pointed out in the statement that these new charges in the case were not the last and that the investigation is still ongoing.

The lawyer for Wang said that Gary had accepted responsibility for his actions and was a cooperating witness. Wang has already appeared in court for his guilty plea.

“As I said last week this investigation is very much ongoing and it’s moving very quickly,” Williams said. “I also said last week’s announcement would not be our last and let me be clear, once again, neither is today’s.”

Bankman-Fried, Ms. Ellison, and Mr. Wang: When FTT and the Rest of the House of Cards Collapsed

“When FTT and the rest of the house of cards collapsed, Mr. Bankman-Fried, Ms. Ellison, and Mr. Wang left investors holding the bag,” SEC Chairman Gary Gensler said in a statement.

Ellison pleaded guilty to seven counts, according to The Washington Post. She could face up to 115 years in prison, the WaPo says. Wang pleaded guilty to four counts and faces up to 50 years in prison.

Ellison, acting on Bankman-Fried’s orders, borrowed billions of dollars from lenders, according to the SEC suit. Those loans were backed “in significant part” by the FTT token, which was issued by FTX and given to Alameda for free, the SEC wrote. Ellison’s job was to buy FTT tokens on various platforms in order to increase the price, thus making the FTT that was collateral against Alameda’s loans more valuable. That, in turn, made it possible for Alameda to borrow even more.

Ellison acknowledged that her November 6th offering to buy the CEO’s own FTT holdings for $22 per token was kind of a misleading thing to say.

That made Bankman-Fried’s personal money to be used for many things, including buying luxury condominiums, supporting political campaigns, and making private investments.

Ms. Ellison and Mr. Wang said different things about Mr Bankman-Fried. The documents filed yesterday by the authorities claim that Mr. Bankman-Fried knew about what was happening at Alameda, contrary to what he has said.

The judge said Bankman-Fried would be charged with stealing billions of dollars from customers of his platform at a future date.

US marshals escorted Bankman- Fried into the courtroom wearing a navy suit jacket and white shirt. The sound of clanking from the shackles around his ankles could be heard as he walked to his seat at the defense table.

When the judge asked the man if he knew the consequences of skipping out on bail, he said yes.

Other bail conditions include mental health treatment, surrender of any firearms, and prohibitions against opening any new lines of credit or engaging in transactions over $1,000 without government approval.

The Case of CAROLINE ELLISON, 28, for Using the Zoom and Twitter Spaces-powered Media Tour to Indict Bankman-Fried

Roos said evidence against Bankman-Fried includes multiple cooperating witnesses, the testimony of other employees of the companies and encrypted messages.

For now, the 30-year-old, whose net worth had been calculated to be in the billions until recently, will live in San Francisco with his parents, well-known law professors at Stanford, while wearing an electronic monitoring device. SBF is scheduled to appear in person at his next hearing on the afternoon of January 3rd in New York City.

We didn’t see any mention of any restriction from using computers or the internet, but now that charges have been filed, it would be even more shocking if SBF’s Zoom and Twitter Spaces-powered media tour continues.

CAROLINE ELLISON, 28, is charged with and has pled guilty to two counts of conspiracy to commit wire fraud, each of which carry a maximum sentence of 20 years in prison; two counts of wire fraud, each of which carry a maximum sentence of 20 years in prison; one count of conspiracy to commit commodities fraud, which carries a maximum sentence of five years in prison; one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.

“I agreed with others to borrow several billion dollars from FTX to repay those loans,” Ms. Ellison told Judge Ronnie Abrams of the U.S. District Court for the Southern District of New York.

From July through October, Ellison gave false financial statements to Alameda’s lenders and hid the extent of the loans, according to transcripts from plea hearings held on December 19 and recently.

Ellison and Wang are both cooperating with federal prosecutors who are looking to indict Bankman-Fried.

After his court appearance Bankman-Fried was seen in a lounge at the John F. Kennedy International Airport. Crypto reporter Tiffany Fong also tweeted a photo showing Bankman-Fried on an American Airlines flight.

Bankman-Fried’s legal team confirmed to CNN Business that he had arrived in Palo Alto and was home with his parents. His lawyer declined to comment on the guilty pleas by Ellison and Wang.