The Supreme Court lands on both sides of the same case, more fraud uncovered by DOGE, the Russo-Ukrainian War continues despite the White House dustup, Mark Steyn catches a break, and strange cell(block) fellows.
It’s the Friday LinkSwarm!
The Supreme Court giveth: “Supreme Court pumps brakes on order forcing Trump to shell out $2B in foreign aid.”
Supreme Court Chief Justice John Roberts pumped the brakes on a lower court order that gave the Trump administration a midnight deadline Wednesday into Thursday to unfreeze $2 billion worth of foreign aid.
Roberts paused the order Wednesday until further notice and gave plaintiffs suing the Trump administration until noon Friday to respond, marking the first time the Supreme Court has dealt with a case involving the president’s push to overhaul the federal government.
The question at hand is the Trump administration’s 90-day freeze on US Agency for International Development spending amid a review to ensure the outlays were aligned with the president’s policies.
District Judge Amir Ali, who was appointed to the bench by former President Joe Biden, temporarily mandated that the funds continue flowing while considering the case.
Plaintiffs argued that the Trump administration did not properly unfreeze all of the money, which led to Ali giving the Trump administration a deadline of 11:59 p.m. Wednesday to fully comply.
And the Supreme Court taketh away. “The Supreme Court has *upheld* a lower court’s order forcing USAID/State to immediately pay ~$2 billion owed to contractors for work they’ve already performed….The court in a 5-4 decision upheld Washington-based U.S. District Judge Amir Ali’s order that had called on the administration to promptly release funding to contractors and recipients of grants from the U.S. Agency for International Development and the State Department for their past work.”
The US Justice Department revealed Thursday evening that Mexico has begun extraditing dozens of high-level cartel leaders to the US, as President Trump reiterated that 25% tariffs on Mexican goods will take effect next Tuesday.
“The defendants taken into US custody today include leaders and managers of drug cartels recently designated as Foreign Terrorist Organizations and Specially Designated Global Terrorists,” the DoJ wrote in a statement, adding these terrorists are facing charges including racketeering, drug-trafficking, murder, illegal use of firearms, money laundering, and other crimes.
Mexico’s Attorney General’s Office and Secretariat of Security and Citizen Protection released this statement: “This morning, 29 people who were deprived of their liberty in different penitentiary centers in the country were transferred to the United States of America, which were required due to their links with criminal organizations for drug trafficking, among other crimes.”
The tariffs are currently on hold. CNN has a list of who was exchanged, including Rafael Caro Quintero, Alder Marin-Sotelo, Andrew Clark, José Ángel Canobbio Inzunza, Norberto Valencia González, José Alberto García Vilano, Evaristo Cruz Sánchez, Miguel and Omar Treviño Morales.
We touched on this in a previous LinkSwarm, but here’s more details on Stacey Abrams EPA-backed multi-billion dollar slush fund.
Three short weeks ago, a newly confirmed Lee Zeldin got to his office at the Environmental Protection Agency (EPA) and hit the broom closet to start sweeping.
Thanks to the previous braggadocious occupants and their already well-documented pre-exit shoveling of cash and grants out the door, he had an inkling there might be plenty of questionable transactions to uncover that hadn’t exactly been notated ‘on the books’ or done ‘by the book’ either.
I mean, what were the odds?
It didn’t take long for Zeldin to find himself a whopper of a honeypot hidden away that made quite a splash when he announced it, particularly as it was tied to an infamous Project Veritas video from December boasting about its very surreptitious creation.
David covered the reveal.
Project Veritas dropped a shocker of a video back in December, in which an EPA manager was bragging that the Biden administration was metaphorically ‘dropping gold bars off the Titanic.’ They were shoving every dime they could out to their NGO buddies so they could harass the Trump administration and continue to suck off the taxpayers’ teat for years to come.
We all know such things happen, but to have it so vividly described was revealing.
Well, Lee Zeldin is retrieving those gold bars, and it turns out to be a lot of them. $20 billion, all sitting in the equivalent of a bank vault.
The massive scale of this scam–which as with so many things is SOP at government agencies–blows your mind. Pushing $20 billion out the door to friends of the administration with little to no financial controls, zero accountability, and lots of malice aforethought is only different in scale and not in kind.
Snip.
…It’s a green slush fund. $20B parked at an outside bank towards the end of the Biden administration, given to just eight NGOs…These NGOs were created for the first time, many of them just to get this money. And their pass-throughs…So the EPA entered into this account control agreement with these entities, Treasury enters into a financial agent agreement with the bank, and they design it to tie the EPA’s hands behind their back -to tie the federal government’s hands behind its back. So when the money goes through the NGOs to subgrantees, many of them also pass-throughs, we don’t know where it’s going. We don’t have the proper amount of oversight. And, as you pointed out, it’s going to people in the Obama and Biden administrations, it’s going to donors. It’s not going directly…to remediate that environmental issue…deliver that clean air…’
This is just some stunning stuff. As Zeldin told the NY Post:
…As Zeldin told The Post: “Of the eight pass-through entities that received funding from the pot of $20 billion in tax dollars, various recipients have shown very little qualification to handle a single dollar, let alone several billions of dollars.”
He’s called for the EPA’s inspector general to investigate; who knows what other rank misuse that might turn up.
Bondi and Patel are already on the case, and I hope someone from Scott Bessent’s Treasury IG thinks they should be as well.
Crawl up their collective butts, the lot of them.
No wonder Democrats continued to treat Abrams like a rock star despite high profile electoral flameouts. She’s evidently a vitally important nexus in their graft distribution schemes. (Hat tip: Stephen Green at Instapundit.)
At some point, some president was going to have to stop the unsustainable spending and borrowing.
To have any country left, some president would eventually have had to restore a nonexistent border and stop the influx of 3 million illegal aliens a year.
Some commander-in-chief finally would have to try to stop the theater wars abroad.
But any president who dared to do any of that would be damned for curbing the madness that his predecessors fueled.
And so none did—until now.
Not since Franklin Roosevelt’s rapid and mass implementation of the New Deal administrative state have Americans seen such radical changes so quickly as now in Trump’s first month of governance.
Americans are watching a long-awaited counter-revolution to bring the country out of its madness by restoring the common sense of the recent past.
It is easy to run up massive debts and hard to pay them back. Politicians profit by handing out grants and hiring thousands with someone else’s money or creating new programs by growing the debt.
Yet it is unpopular and considered “mean” to spend only what you have and to create a lean, competent workforce.
1776, not 1619, is the foundational date of America.
Biological men should not manipulate their greater size and strength to undermine the hard-won accomplishment of women athletes.
Affordable fossil fuels, when used wisely, are still essential to modern prosperity.
American education must remain empirical and inductive, not regress into indoctrination and deduction. If college campuses no longer abide by the Bill of Rights, then perhaps they should pay taxes on income from their endowments and guarantee their own student loans.
If American citizens are arrested and arraigned for violent assaults, destroying property, and resisting arrest, then surely foreign students who break the laws of their hosts should be held to the same account—and if guilty, go home.
Tribalism and racialism, and government spoils allotted by superficial appearances, are the marks of a pre-civilized society. Such racialism leads only to endless factions and discord.
It is easy to destroy a border, and hard to reconstruct it. And it was not Trump who invited in 12 million unaudited illegal aliens, a half million of them criminals.
Who is the real culprit in the Defense Department—the new secretary with the hard task of restoring the idea among depleted ranks that our race, religion, and gender are incidental, not essential, to defeating the enemy and ensuring our national security?
Is it really wise to divert money from needed combat units and weapons to indoctrinate recruits with social and cultural agendas that do not enhance, but likely undermine, our national defenses?
Who is the real callous actor—Elon Musk, who is trying to prevent the country from insolvency by eliminating fraud and waste, or those who bloated the bureaucracy in the first place with jobs and subsidies for their constituents, friends, clients, and fellow ideologues?
No one likes to fire FBI agents.
That certainly is an unpleasant job for the new FBI Director, Kash Patel.
But again, who are the true culprits who so cavalierly turned a hallowed agenda into a weaponized tool to warp elections, harass political enemies, lie under oath, surveil parents at school board meetings, doctor court documents, and protect insider friends?
Massive borrowing is an opiate addiction that needs shock treatment, not more deficits to break the habit. An unchecked administrative state becomes an organic organism that exists only to grow larger, more powerful, and more resistant to any who seek to curb it.
“DOGE reveals most savings at Dept. of Education with nearly $1B cut. DOGE claims to have saved the most money at the U.S. Department of Education out of any government agency through cuts in wasteful spending. DOGE launched an ‘Agency Efficiency Leaderboard’ that ranks government agencies based on how much wasteful funding has been cut, and the Dept. of Education is ranked in first place.”
Campus Reform reported that DOGE has canceled nearly $900 million in contracts and training grants at the Department of Education.
This includes “over $600 million in grants to institutions and nonprofits that were using taxpayer funds to train teachers and education agencies on divisive ideologies” such as critical race theory (CRT) and diversity, equity, and inclusion (DEI), according to a press release from the department.
“Diversity” had already been around for many years, its hustler scratching at the university door. Not actual diversity, mind you, but the skin-deep diversity of noxious racialism tarted-up with fake Enlightenment discourse. This concept of “diversity, equity, inclusion” quickly metastasized until it was everywhere, and this was no accident. It was a bureaucratic initiative designed to anchor a new raft of social justice programs as an inescapable presence on the campus.
It was no accident that it was violence and the threat of violence that opened the door for this effervescence of DEI. It sounded absurd. I knew it was absurd; I knew it was a con. Most people likely knew it was a con but then most people on the campuses also knew to keep their mouths shut in a time of hair-trigger tempers and performative chaos unleashed by well-funded activist groups. No college administration wanted the summer violence of 2020 overflowing onto the campuses. And so they opened the university to barbarian ideas rather than the barbarians themselves.
This was the madness of crowds brought en masse onto the campuses, and it was wildly successful. It achieved this success with a superb combination of psychological factors—relentless hustling, a primitive ideology suffused with mysticism and “indigenous knowledges,” and the barely concealed violent urges of quasi-communist and terroristic revolutionaries. All of this shielded from criticism and even the mildest of questioning.
You knew something was terribly wrong with it.
Anyone on a college campus subjected to the mediocrity of a DEI hustler knew there was something wrong with it.
It was not noble. It was not idealistic. It was not the many wonderful things its proponents said. It was one thing to the public, and it was another altogether when enacted on the campuses. It was weird and alien and hateful at its core, but the public is rarely exposed to any of this. It was the classic Potemkin village offering, with a façade masking a brute, racialist substance.
In other words, it was a con. In fact, it was the biggest Con Story of the 21st century, with America’s universities the biggest suckers imaginable. And the crowning achievement of Western civilization—the modern university—tottered under the assault of mediocrity, racialism, and pseudoscience.
I suppose that folks duped by the big cons will eventually retreat in their embarrassment at having been fooled by one of the shadiest Con Stories ever deployed. Even now, DEI is in retreat. As it plays out in its final act, I assure you that it will dissipate in a flurry of new acronyms and new labels designed to hide its failure.
Its proponents will roll out new slogans to replace the vapid “Diversity is our strength.” Already, “inclusive excellence” is supplanting DEI as this trusty acronym becomes freighted with failure. The Con Story will morph and adapt. Reluctantly. Buzzwords will change, new slogans will be coined, but the underlying ideology will remain the same as it always has. It must serve yeoman’s duty for the Big Con.
A bill came up in the senate to block men from women’s sports and every Democrat voted against it. The social justice hive mind is still controlling the Democrat party.
California Democratic Governor Gavin Newsom, however, has broke ranks on men playing women’s sports. Sort of. Kinda. “Notice that at no point does Newsom add, ‘And thus, I will be pushing to repeal the 2013 law that gave students the right to participate in sex-segregated programs, activities and facilities based on their self-identification and regardless of their birth gender.’ He feels that those born male participating in women’s sports is unfair, but not quite strongly enough to do anything about it.”
Guaranteed Income scheme once again fails to improve lives of recipients. “Receiving guaranteed income had no impact on the labor supply of full-time workers, but part-time workers had a lower labor market participation by 13 percentage points.” And recipients smoked more. (Hat tip: Director Blue.)
The first and most important question is whether Russia has lost the war. Wars are fought with an intent formed by an imperative. A prudent leader has to take steps to avoid the worst possible outcome, and Putin, as a prudent leader, prepared for the possibility that NATO would choose to attack Russia. He expressed this fear publicly so the only question was how to block an attack if it occurred. He needed a buffer zone to significantly impede a possible assault.
That buffer was Ukraine, and he on several occasions expressed regret that Ukraine had separated from Russia. The distance from the Ukraine border to Moscow, on highway M3, is only about 300 miles (480 kilometers). Russia’s nightmare was that Germany could surge its way to Moscow. Three hundred miles by a massive force staging a surprise attack is not a huge distance. He rationally needed Ukraine to widen the gap.
I predicted years before the war that Russia would invade Ukraine to regain its buffers. That Russia wanted to take the whole of Ukraine is confirmed in its first forays into the country. The initial assault was a four-pronged attack, one thrust from the east, two from the north and one from the south via Crimea. The two northern prongs were directed at the center of Ukraine and its capital, Kyiv.
Details of the failure of that plan snipped since I covered that as it was happening.
It is clear that the Russians intended to take all of Ukraine. They made minor gains in the east, but their northern penetration failed, as did any attempts to turn westward. It is true that they have gained territory in Ukraine, but it is far from what their initial war plan was designed for. Now their argument is that they never wanted more territory in other parts of the country.
To call this a Russian success is false, and to call a failed war plan a defeat is reasonable. The war was meant to gain a buffer against NATO, and in that, Moscow failed. But it was also intended to be a demonstration that Russia was still a great power. After three years, a major commitment and, by most reports, close to a million dead Russian soldiers, Russia has little more than 20 percent of Ukraine. It also failed to demonstrate the power of the Russian army. Therefore, except for its nuclear capabilities, it is not a military threat or a great power.
The issue now is whether Russia, assuming it agrees to some kind of negotiated settlement, can launch another war. Here it’s important to note that while Putin is powerful, he is not an absolute ruler. He cannot govern Russia the way, say, Stalin did. Under Stalin, Moscow ruled Russia down to the smallest homes in the smallest villages. He ruled not only through military and law enforcement but also through the rank-and-file members of the Communist Party who drew benefits from their membership in return for vigilance. They reported misdeeds, real and imagined, to the internal police, which was controlled by the party, which was controlled by the Politburo, which was controlled by Stalin. Later iterations would be slightly less deadly, but the instruments of oppression were always there.
The collapse of the Soviet Union meant the collapse of the Communist Party. The structure of terror no longer functioned.
Putin’s goal was to resurrect Russia. But with the Communist Party gone, the state structure was also gone. Putin had to find a new base. He had only one source of power: the oligarchs. Between Mikhail Gorbachev and Putin, the party’s assets were sold off to private citizens on the basis of their relationship with the government. The agreement was simple: Putin and his subordinates distributed vast industries and other things of value to the new oligarchs, who pledged to support the regime with money and deference, as well as a network of political and economic relationships that gave them significant influence.
Putin handled the politics — and apparently was well paid. The oligarchs became fabulously wealthy, and for most Russians life improved, as the new arrangement ended the terror and created employment. Disagreement was no longer a capital offense, and the media was comparatively independent and reliable. It was not long before the new private enterprises started entering the global market.
Putin was in charge at first, but in short order power was transferred to the oligarchs who underwrote the regime. They depended on access to European markets for their revenue, and many lived outside of Russia and expected Putin to facilitate trade. But when Putin’s initial invasion of Ukraine in February 2022 failed, many of the most lucrative markets closed their doors to the oligarchs and Western investment cratered. Putin ordered the oligarchs to return to Russia, which many did. However, some of the oligarchs were not happy with their former patron and left Russia permanently, or until the political and economic environment would shift. That this has gone on for three years has created serious problems for them. They wanted the war over and a settlement reached long ago.
Snip.
Putin must end the war and hope for the best. The best way to end a failed war is to declare victory and go home. Putin is declaring victory by saying he got all he wanted. But only Americans believe that. The Russians know they lost. The question is not how Putin will suppress dissent. It is how he will deal with the devils he created, and how the country responds if he doesn’t. A reign of terror might help, but there is no mechanism to carry it out now, and later is too late.
U.S. President Donald Trump knows the game that is playing out. The one who blinks loses. It won’t be Trump. He will take every bit of power and every cent he can from Putin’s weakness. Like a good hedge fund manager, one moment he says he is Putin’s friend, the next moment he will walk away from the deal. Then, after the borrower really starts sweating, he will come back. Trump holds the cards in this business. And he wants some of Putin’s economic and geopolitical power.
What SpaceX is building is more than just a rocket. Starship is a strategic weapon, not as a one-off but as a fleet. A fully reusable heavy-lift system capable of hauling 200 tons per launch per rocket is not just an engineering marvel: it’s a military revolution.
Why? Because a fleet of Starships could land an entire armored division anywhere on Earth in under an hour and keep it supplied in the field.
Just as the speed of tanks revolutionized warfare between the World Wars, this development changes everything. Forget C-17s and cargo ships: you might as well use horses and wagons. A fleet of Starships is not just an incremental improvement in logistics: it’s a fundamental shift in the nature of warfare. The ability to almost instantaneously create and reinforce a whole combat theater anywhere on Earth will give the United States overwhelming power, unlike anything heretofore seen outside of science fiction.
And let me stress: we’re not just talking about the initial deployment. The bigger deal is the resupply. It took six months in 1990-91 for the United States to get its forces in position to invade Kuwait. Maintaining them in the field required a constant stream of slow-moving cargo ships from U.S. ports halfway around the world. A decade later, and for 20 years thereafter, a similar supply chain ran through Karachi, Pakistan, up a rail line, then on truck convoys over the Khyber Pass. Since that was often impractical (there were these pesky Taliban guys about), the military frequently had to rely on the only available alternative, a grueling 36 hours on a C-17 (including layovers). All of this depended on deals with shady, unfriendly countries, subsidies (bribes), and endless risk of attacks on our personnel.
What if you could ship everything you wanted anywhere in the world straight from Texas? Or Florida? Or anywhere else? In under an hour?
Wars are often won by those who can move the fastest, supply the best, and sustain their forces longest. A conflict in Taiwan or the Baltics could see adversaries complete their objectives before the U.S. military can even begin meaningful counter-operations.
Starship negates all these timelines. Instead of waiting days or weeks for military assets to arrive by conventional means, forces could be on the ground on the same day as an invasion. No need for prepositioned stockpiles, forward operating bases, or painfully slow sealift capabilities. Those days are over.
In a Taiwan crisis, Starship could land American armor and mechanized infantry before the People’s Liberation Army (PLA) finishes crossing the Strait. It would change the strategic calculus entirely. Every U.S. war game predicting Taiwan’s fall under a rapid Chinese assault assumes conventional response times. Starship forces a complete rethink, for both sides. It will allow American forces to arrive in time to fight the decisive battle, not the delayed counter-offensive.
I think the Starship assembly timeline is a bit optimistic, but point-to-point global logistics really is a game-changer. (Hat tip: Mark Tapscott at Instapundit.)
California is getting the energy policy it deserves, good and hard.
Back when I served in the California State Assembly from 2004 to 2010, California ranked 7th or 8th in the nation for electricity costs. At the time, the Democratic majority in Sacramento was pushing bill after bill mandating greater reliance on renewable energy, assuring everyone that these policies would make us look like “geniuses” when the price of fossil fuels inevitably soared.
I warned that these laws, regulations and subsidies would instead drive up electricity costs for Californians, making the grid less reliable and California’s economy less competitive.
Now, two decades later, the results are in. In 2024, the U.S. Energy Information Administration (EIA) reported that California had the second-highest electricity prices in the nation for the second year running, behind only Hawaii. The Golden State’s misguided energy policies have steadily increased the price of electricity as green energy mandates, grid instability and regulatory burdens have taken their toll. Meanwhile, states with more balanced energy policies — natural gas, coal and nuclear power — have fared far better.
What’s worse, California’s natural advantage in AI will be lost to Texas and other low-cost energy states. California’s industrial electricity prices averaged 21.98 cents per kilowatt-hour in 2023 vs. 6.26 in Texas, a whopping 251% price premium that no electricity-hungry AI installation or server farm operator is going to pay.
The core issue is simple: California’s policymakers prioritized renewable energy mandates over affordability and reliability. Over the years, they have forced utilities to integrate ever-growing amounts of wind and solar power while discouraging natural gas, nuclear and large-scale hydroelectric projects. These decisions ignored the reality that intermittent renewables require extensive grid upgrades, costly backup power sources and expensive storage solutions — all of which drive up costs for consumers and industry.
California’s high electricity prices are not an accident; they are a direct consequence of these policies. The state’s cap-and-trade system, restrictive permitting laws and mandates like the Renewable Portfolio Standard (which requires utilities to generate 60% of their electricity from renewables by 2030) have all contributed to rising rates.
At the same time, bureaucratic obstacles have made it nearly impossible to build new natural gas plants or modernize existing infrastructure. From 2014 to 2024, California approved or built only five natural gas plants, four of which replaced older facilities for a total output of up to 4 gigawatts. By comparison, in the prior 10 years, California commissioned dozens of plants totaling more than 20 gigawatts of nameplate capacity.
Follow-up: Remember the guy who opened fire at a band competition before being tackled by four band parents? He died in the hospital.
“Honors student sues Connecticut school district for not teaching her to read and write. Meet Aleysha Ortiz, a 19-year-old who graduated with honors from Hartford Public High School in Connecticut. It would seem congratulations are in order … except she says she’s functionally illiterate.”
Israel rolls on in Gaza, Democrats get indicted on election fraud, Sam Bankman-Fried found guilty, censorship schemes get busted, and George Soros’ evil fingers are everywhere. It’s the Friday LinkSwarm!
Israel’s ground offensive has surrounded Gaza City, where it seems to think most of Hamas infrastructure is located.
The blue circles indicate Israel military activity, which does rather suggest they’re pounding the snot out of Hamas.
House Republicans on the GOP’s “weaponization” subcommittee said in a Friday report that the IRS has agreed to end its “abusive” policy of surprise visits to taxpayers’ homes following pressure from the panel.
The Committee’s and Select Subcommittee’s oversight revealed, and led to the swift end of, the IRS’s weaponization of unannounced field visits to harass, intimidate, and target taxpayers,” reads the report. “Taxpayers can now rest assured the IRS will not come knocking without providing prior notice—something that should have been the IRS’s practice all along.”
The IRS announced in July that it would end most unannounced agent visits to the homes of Americans, citing security concerns.
But it also came after the agency engaged in what appeared to be witness intimidation, after visiting the New Jersey home of journalist Matt Taibbi on the same day he appeared before Congress to testify on government abuse.
Following the incident, Chairman Jim Jordan (R-OH) demanded answers from the IRS, writing “In light of the hostile reaction to Mr. Taibbi’s reporting among left-wing activists, and the IRS’s history as a tool of government abuse, the IRS’s action could be interpreted as an attempt to intimidate a witness before Congress.”
Taibbi thanked Jordan on Saturday, writing in response to the report:
One of the cases outlined is my own. My home was visited by the IRS while I was testifying before Jordan’s Committee about the Twitter Files on March 9th. Sincere thanks are due to Chairman Jordan, whose staff not only demanded and got answers in my case, but achieved a concrete policy change, as IRS Commissioner Daniel Werfel announced in July new procedures that would “end most” home visits.
Anticipating criticism for expressing public thanks to a Republican congressman, I’d like to ask Democratic Party partisans: to which elected Democrat should I have appealed for help in this matter? The one who called me a “so-called journalist” on the House floor? The one who told me to take off my “tinfoil hat” and put greater trust in intelligence services? The ones in leadership who threatened me with jail time? I gave votes to the party for thirty years. Which elected Democrat would have performed basic constituent services in my case? Feel free to raise a hand.
If silence is the answer, why should I ever vote for a Democrat again?
In the conversation with [Joe] Rogan, Musk then explains George Soros’ massive bet (now overseen by his son, Alexander Soros) on funding city and state district attorney elections nationwide. He said, “The value for money in local races is much higher than in national races – the lowest value for money is a presidential race.”
“Soros realized you don’t actually need to change the laws – you just need to change how they’re enforced – if nobody chooses to enforce the law – or the laws differentially enforced – it’s like changing the laws,” Musk said.
This leaves with a new interview from one Maryland sheriff, just outside of crime-ridden Baltimore City, in Wicomico County, who drops a truth bomb about radical progressive lawmakers in the state, some of whom have likely been funded by Soros, who purposely fail to enforce law and order and only embolden criminal.
“I’m in my 40th year of law enforcement, and I have never ever seen it this bad,” Sheriff Mike Lewis said.
Lewis continued: “I’ve never seen a government so ingrained – and quite frankly complicit – in the criminal activity taking place in our nation.”
Speaking of Soros: “Soros has funneled over $15M to pro-Hamas organizations through Open Society Foundations.” Of course he has.
A jury has found Sam Bankman-Fried, the disgraced founder of FTX, guilty on all seven criminal fraud counts for his role in the crypto exchange’s downfall.
Those counts include wire fraud on customers of FTX, conspiracy to commit wire fraud on customers of FTX, wire fraud on Alameda Research lenders, conspiracy to commit wire fraud on lenders to Alameda Research, conspiracy to commit securities fraud on investors in FTX, conspiracy to commit commodities fraud on customers of FTX, and conspiracy to commit money laundering.
He faces a maximum sentence of 115 years in prison. His sentencing is scheduled for March 28 at 9:30 a.m.
During a month-long trial in a Manhattan federal court, prosecutors claimed Bankman-Fried misled investors and mishandled billions in funds. He was accused of misusing customer funds deposited with FTX to boost his crypto hedge fund, Alameda Research.
Nicolas Roos, an assistant U.S. attorney, said Bankman-Fried committed crimes of “epic proportions.” He alleged during closing arguments that Bankman-Fried built his company on a “foundation of lies and false promises.”
Snip.
Bankman-Fried was a Democrat megadonor, giving nearly $39 million to Democrat-aligned causes during the 2022 election cycle.
Prosecutors said he “misappropriated and embezzled FTX customer deposits, and used billions of dollars in stolen funds for a variety of purposes, including … to help fund over a hundred million dollars in campaign contributions to Democrats and Republicans to seek to influence cryptocurrency regulation,” according to an August indictment.
Both Caroline Ellison, Bankman-Fried’s ex-girlfriend and the former head of Alameda, and FTX co-founder Gary Wang, testified against Bankman-Fried during the trial. Ellison and Wang both pleaded guilty in December to multiple charges.
“The Department of Health and Human Services has sent over $800,000 to a group in Texas where they distribute crack pipes, according to the Dallas Express…The funds were sent to the El Paso Alliance, a non-profit that helps people recover from alcoholism and drug addictions, according to its website.” Knowing what I know about leftwing activists, I’m guessing that $80,000 went to crack pipe distribution, and the rest disappeared into various leftwing pockets.
California is still having trouble managing this newfangled electricity thing. (Hat tip: Instapundit.)
China’s least awful communist official, former Chinese Prime Minister Li Keqiang, just died of a heart attack at age 68, and the CCP is banning memorial wishes for him.
Despite the Texas law against teaching Critical Race Theory, Katy ISD students are being told to reflect on their white privilege.
More than two dozen top U.S. law firms have issued a stern warning that law schools move with “urgency” to address the rising antisemitism on campus, or else it could affect recruitment, National Review has learned.
“Over the last several weeks, we have been alarmed at reports of anti-Semitic harassment, vandalism and assaults on college campuses, including rallies calling for the death of Jews and the elimination of the State of Israel. Such anti-Semitic activities would not be tolerated at any of our firms,” the statement published on Wednesday reads.
“As educators at institutions of higher learning, it is imperative that you provide your students with the tools and guidance to engage in the free exchange of ideas, even on emotionally charged issues, in a manner that affirms the values we all hold dear and rejects unreservedly that which is antithetical to those values,” the letter continued. “There is no room for anti-Semitism, Islamophobia, racism or any other form of violence, hatred or bigotry on your campuses, in our workplaces or our communities.”
Snip.
Signatories included: Akin Gump Strauss Hauer & Feld LLP, Cadwalader, Wickersham & Taft LLP, Cleary Gottlieb Steen & Hamilton LLP, Cravath, Swaine & Moore LLP, Davis Polk & Wardwell LLP, Debevoise & Plimpton LLP, Fried, Frank, Harris, Shriver & Jacobson LLP, Gibson, Dunn & Crutcher LLP, Kirkland & Ellis LLP, Latham & Watkins LLP, McDermott Will & Emery LLP, Milbank LLP, O’Melveny & Myers LLP, Paul Hastings LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Proskauer Rose LLP, Ropes & Gray LLP, Shearman & Sterling, Simpson Thatcher & Bartlett LLP, Skadden, Arps, Slate, Meagher & Flom LLP, Sullivan & Cromwell LLP, Watchtell, Lipton, Rosen, and Katz, Weil, Gotshal & Manges LLP, Norton Rose Fulbright, and Willkie Farr & Gallagher LLP.
Jewish homes in Paris marked with Stars of David. It’s good that sort of thing has never led to any negative outcomes in Europe…
Good: Disney is making it’s live-action Snow White remake a more traditional film, including actual dwarfs rather than random guys. Bad: The CGI dwarfs look absolutely horrible. It’s as though Disney wants to punish movie-goers for rejecting their woke vision…
No job yet, but my dogs and I are all doing fine. Israel’s land incursion into Gaza is still pending, more Democratic Party graft, another House Speaker aspirant drops out, and media flame outs at Disney and Apple. It’s the Friday LinkSwarm!
“Tanks line up at Gaza border as ground invasion appears imminent.” I swear I’ve seen some variation of this headline every day this week, though.
“Israel Evacuates Northern City as Tensions Flare along Lebanon Border.” I keep checking Livemap, and I’m not seeing the sort of activity I would expect if Hezbollah were really getting ready to throw-down with the IDF, but I’m sure they want Israel to think they’re ready to act when the Gaza operation proper gets under way.
“U.S. Navy Destroyer Intercepts Missiles Launched from Yemen, ‘Potentially’ Targeting Israel, Pentagon Says.” I’ve got to wonder how much of Iran’s GDP is spent building crappy missiles to target Israel from its various client states.
“President Joe Biden received a $200,000 personal check from his brother shortly after James Biden received a “shady” loan in the same amount, House Oversight Committee chairman James Comer (R., Ky.) revealed Friday.” If it seems like there’s news of shady Biden influence peddling every week, it’s only because there is…
Speaking of shady Democrat financial shenanigans, alleged multi-billion dollar crypto fraudster Sam Bankman-Fried allegedly gave $1 million in stolen customer money to Beto O’Rourke.
On Monday, former FTX engineering chief Nishad Singh testified that FTX had used stolen customer money from Alameda Research to make political donations, even after learning it owed $13 billion to customers. In short, Sam Bankman-Fried was using customer funds to make political donations to Democrats, according to Singh’s testimony.
One of those Democrats was failed Texas gubernatorial candidate Beto O’Rourke, who in November of last year reported returning a $1 million donation from SBF just four days before the November election because he was ‘uncomfortable receiving such a large, unsolicited donation.’
In truth, the adderall-addicted SBF (or one of his employees) fat-fingered what was supposed to be a $100,000 donation, and instead ended up being $1 million.
In January, the Washington Free Beacon reported that O’Rourke kept the $100,000.
House lawmakers are warning that the Biden administration’s $27 billion green energy “slush fund” at the Environmental Protection Agency could be used to finance Democratic political allies and Chinese solar companies, according to a letter obtained by the Washington Free Beacon.
The EPA’s Greenhouse Gas Reduction Fund will be responsible for distributing $27 billion to nonprofit groups and the green energy technology sector by next September.
Republicans on the House Energy and Commerce Committee said the short deadline for doling out the money will make it difficult for the agency to conduct proper vetting of grantees. They also noted that some EPA officials previously worked for nonprofit groups that stand to benefit from the funding and questioned how the EPA will prevent money from going to Chinese companies that dominate the solar industry.
“Hardworking Americans are facing record high energy costs as a result of the administration’s massive tax-and-spend agenda, which has driven inflation across the board,” House Energy and Commerce Committee chair Cathy McMorris Rodgers (R., Wash.) told the Free Beacon. “Energy and Commerce Republicans won’t stand by and let President Biden use this $27 billion slush fund to line the pocket of his political friends or use it on technology that is produced in China.”
The only questions is which parts of the federal government aren’t being used as a slush fund for Democratic Party cronies. (Hat tip: Stephen Green at Instapundit.)
The mother of Soros-backed Orleans Parish DA Jason Williams was carjacked.
“State Audit Finds Harris County Violated Texas Election Law in 2022. In a preliminary report, the Texas Secretary of State’s Office found that Harris County did not provide statutorily mandated supplies of ballot paper.”
Southern Poverty Law Center is “deeply saddened by the tragic loss of Leonard Cure.” Cure was pulled over by a cop for driving 100 MPH, failed to comply, and was shot only after two different taser jolts failed to stop him and he started choking the police officer while yelling ‘Yeah, Bitch!” Leonard Cure was a classic case of “Play stupid games, win stupid prizes” and richly deserved his dirt-napping.
Apple TV has problems with The Problem and cancels John Stewart’s interview show. “When Stewart broke the news to the staff, he informed them that potential show topics discussing China, artificial intelligence, and the 2024 presidential campaign were points of contention for the Apple executives.”
Are cheap Chinese knockoff tool batteries just as good as Milwaukee-brand batteries? Not so much.
I saw Peter Gabriel perform in Austin on Wednesday, on pricey tickets bought well before my most recent job ended. This is pretty close to the end of his tour, but he’ll be in Houston Saturday.
“Those terrorists may want to die, but they apparently don’t want to die badly enough to come to Texas.”
It’s surprisingly dusty for October.
Pakita, a dog in Argentina, spent nearly three years in an animal shelter after being mistaken for a stray. The shelter owners eventually found her true owner and arranged a reunion. Initially hesitant, Pakita's excitement grew as she recognized her owner's scent. Credit: Jukin pic.twitter.com/qdgXBiWogE
Below is the tip jar, if you’re so inclined. Thanks to everyone who donated to the Non-Homeless Blogger Fund. I’m bad at thanking people individually the way I should, but let me know if you want public recognition in this space or not.
The Hunter Biden scandals refuse to go away, California continues to hemorrhage taxpayers, Texas teachers behaving very badly, more Flu Manchu heart attacks, and a golden new parking aid. It’s the Friday LinkSwarm!
Hunter Biden’s sweetheart plea deal collapsed. Here’s former federal prosecutor Will Scharf discussing how the DoJ’s trickery backfired:
Typically, if the Government is offering to a defendant that it will either drop charges or decline to bring new charges in return for the defendant’s guilty plea, the plea is structured under Federal Rule of Criminal Procedure 11(c)(1)(A). An agreement not to prosecute Hunter for FARA violations or other crimes in return for his pleading guilty to the tax misdemeanors, for example, would usually be a (c)(1)(A) plea. This is open, transparent, subject to judicial approval, etc.
In Hunter’s case, according to what folks in the courtroom have told me, Hunter’s plea was structured under Federal Rule of Criminal Procedure 11(c)(1)(B), which is usually just a plea in return for a joint sentencing recommendation only, and contained no information on its face about other potential charges, and contained no clear agreement by DOJ to forego prosecution of other charges.
Instead, DOJ and Hunter’s lawyers effectively hid that part of the agreement in what was publicly described as a pretrial diversion agreement relating to a § 922(g)(3) gun charge against Hunter for being a drug user in possession of a firearm.
That pretrial diversion agreement as written was actually MUCH broader than just the gun charge. If Hunter were to complete probation, the pretrial diversion agreement prevented DOJ from ever bringing charges against Hunter for any crimes relating to the offense conduct discussed in the plea agreement, which was purposely written to include his foreign influence peddling operations in China and elsewhere.
So they put the facts in the plea agreement, but put their non-prosecution agreement in the pretrial diversion agreement, effectively hiding the full scope of what DOJ was offering and Hunter was obtaining through these proceedings. Hunter’s upside from this deal was vast immunity from further prosecution if he finished a couple years of probation, and the public wouldn’t be any the wiser because none of this was clearly stated on the face of the plea agreement, as would normally be the case.
Judge Noreika smelled a rat. She understood that the lawyers were trying to paint her into a corner and hide the ball. Instead, she backed DOJ and Hunter’s lawyers into a corner by pulling all the details out into the open and then indicating that she wasn’t going to approve a deal as broad as what she had discovered.
DOJ, attempting to save face and save its case, then stated on the record that the investigation into Hunter was ongoing and that Hunter remained susceptible to prosecution under FARA. Hunter’s lawyers exploded. They clearly believed that FARA was covered under the deal, because as written, the pretrial diversion agreement language was broad enough to cover it. They blew up the deal, Hunter pled not guilty, and that’s the current state of play.
And so here we are. Hunter’s lawyers and DOJ are going to go off and try to pull together a new set of agreements, likely narrower, to satisfy Judge Noreika. Fortunately, I doubt if FARA or any charges related to Hunter’s foreign influence peddling will be included, which leaves open the possibility of further investigations leading to further prosecutions.
More on how Hunter Biden’s sweetheart deal blew up.
The Hunter Biden defense and the Biden Justice Department hid the sweeping immunity term, shielding Hunter from all future prosecution, in a “diversion agreement” related to the gun offense on which Hunter was not pleading guilty and is anticipated not to be prosecuted. (See here, p. 7, para. 15.) The “diversion agreement” is separate from the plea agreement to the misdemeanor tax charges (see here) — i.e., the only charges to which Hunter actually planned to plead guilty. The plea agreement is where one would ordinarily find the all-important immunity term (since the immunity is given by the government in exchange for the guilty plea). Both the diversion agreement and the plea agreement incorporate an outrageous statement of facts (which is appended to the tax plea agreement, linked above). This fictitious presentation, which appears to have been drafted by Hunter’s lawyers, is nevertheless endorsed by the Biden Justice Department, even though it is utterly inconsistent with the prosecutors’ face-saving protestations, under pointed questioning Wednesday by Judge Maryellen Noreika, that they are conducting a continuing investigation in which Hunter is a subject and could be charged.
It could not be more obvious that, if the government were truly conducting a continuing investigation, prosecutors would never in a million years give one of the main subjects of that investigation a plea to minor tax charges — with the promise of a recommendation of no imprisonment — in the middle of that investigation.
This corrupt episode happened because this case is not a legitimate case — it’s a sham. In legitimate prosecutions, the defendant and the Justice Department are adversaries, with defense lawyers looking out for the defendant’s interest and the prosecutors vindicating the public interest in seeing that lawbreakers are held to account. The Hunter Biden case, to the contrary, is a travesty, in which the defense and the prosecution are on the same side.
That is why the prosecutors have never filed an indictment that lays out the case against Hunter in exacting, painful detail — the way the Justice Department typically does. To do that would be politically devastating for the president, who is implicated in his son’s conduct. Plus, if prosecutors fully describe the serious charges that appear to be supported by evidence already known, it would become politically impossible to settle the case on two trivial tax misdemeanors with no jail time, in addition to disappearing a gun felony carrying a potential ten-year prison sentence.
That is why the plea agreement could not be a normal plea agreement. The point of an agreement is to outline in detail the full extent of the immunity the defendant is getting in exchange for his plea. Because the Hunter Biden defense and the Biden Justice Department are on the same side, the collective objective was to give Hunter as much immunity as possible, with as little said as possible about why he needs it.
Biden family business associate and President Joe Biden’s son Hunter’s “best friend in business” has canceled his scheduled appearance on Monday to give testimony before the House Oversight Committee for a third time. Well, something seems to really have this guy spooked, wouldn’t you say? Why in the world would this guy cancel not once, not twice, but thrice, er, I mean three times? It doesn’t take someone with an IQ north of 180 to see this.
Rep. James Comer (R-Ky.), the chairman of the House Oversight Committee, spoke with Fox News and stated that Devon Archer canceled the deposition he was scheduled to participate in before the committee. Archer is currently under a subpoena from the committee but has now backed out three times, according to Breitbart News.
The Department of Justice (DOJ) has dropped campaign finance charges against alleged ‘crypto scammer’ Sam Bankman-Fried, who was accused of misusing customer deposits and who made $90 million in campaign contributions to around 300 predominantly left-wing political candidates or action committees (PACs).
Prosecutors argued the United States “mishandled” the process of extraditing Bankman-Fried from the Bahamas, writing a letter stating, “In keeping with its treaty obligations to the Bahamas, the government does not intend to proceed to trial on the campaign contributions count.”
Bankman-Fried, who had a net worth of around $26.5 billion at his peak, ranked behind only George Soros in donations to the Democrats last year.
Two Texas teachers accused in separate sex crimes against children were arrested on the same day and each charged with sexually assaulting a child and trafficking a child for sex.
Red Oak ISD teacher and coach Gershon Caston, 38, was arrested Thursday and charged with three first-degree felonies:
Aggravated sexual assault of a child
Trafficking a child to engage in sexual conduct
Compelling prostitution by a minor
Snip.
Former Nacogdoches ISD teacher Annaleigh Andrews, 24, was also arrested Thursday and charged with a dozen felonies:
Three counts of trafficking a child to engage in sexual
Three counts of sexual assault of a child
Three counts of improper relationship between student and educator
Three counts of enticing a child with intent to commit a felony
Senate Democrats on Thursday blocked a measure that would have stopped the Biden administration from discriminating against Jewish-made Israeli products.
The Democratic members of the Senate Commerce Committee rejected a measure from Sen. Ted Cruz (R., Texas) that would have blocked the Federal Trade Commission from penalizing products produced by Israelis living in contested territories, including the West Bank, Gaza Strip, and Golan Heights.
Speaking of unexpected heart attacks, LeBron James’ 18-year old son Bronny James suffered cardiac arrest during a basketball workout. He survived. You know, I never remember hearing about young athletes having heart attacks pre-Flu Manchu vaccines…
I suspect this Peter Zeihan video might count as trolling my readers: “Why Fiat Currencies Will Always Beat Gold.” I think it’s broadly true in the cases he articulates, but doesn’t take into account the possibility of hyperinflation and/or widespread social unrest.
Here’s hedge fudge manager/university professor Patrick Boyle goes into detail of just how it went down.
“Silvergate’s importance in the recent crypto boom is possibly best described by a now-deleted testimonial from the bank’s website: ‘Life as a crypto firm can be divided up into before Silvergate and after Silvergate.It’s hard to overstate how much it revolutionized banking for blockchain companies.’ The testimonial was written by a millennial who still lives in his parents’ basement playing video games and has had some recent run-ins with the law. His name is Sam Bankman Fried.”
“If we go back ten years, Silvergate was a small San Diego based real estate lender that transformed itself into the go-to bank for the crypto industry.”
“Silvergate invited in crypto entrepreneurs and asked them what problems they were trying to solve and how the bank could be helpful. After this, the bank transformed itself and grew rapidly. It went public in late 2019 at a share price of $13, and a year later the stock price had risen by 1,580% as it became a key interchange point between dollars and cryptocurrencies.”
“Major Silverlake clients included Paxos, bitFlyer, Kraken and also innovators in atonal rock music – Mars Junction…” [This is an inside joke. Mars Junction is the band of Cameron & Tyler Winklevoss, AKA the WInklevoss Twins of Facebook investing controversy] “…who also had some involvement in the Crypto industry. FTX and Alameda were also big customers.”
“The bank’s growth mirrored the growth of the crypto industry, and it declined alongside that industry too, announcing in a regulatory disclosure earlier this week that it plans to wind down operations in the face of ‘turmoil in digital currency markets.'”
Last week Silvergate had announced that they would be unable to file an annual report with the SEC on time due to a weakening in their capital position. They announced that they might be forced to close at that time, blaming growing problems, in part on pending investigations into their operations. The filing confirmed that Silvergate is being investigated by the US Department of Justice.”
“Customers rushed over the last few months to pull money out of Silvergate. In January they reported that customers had withdrawn more than $8 billion, forcing them to sell held-to-maturity assets to fund the run, accruing losses on the sale of those securities of $718 million dollars.”
Why was Silvergate so important in the world of crypto? Well, people who trade cryptocurrencies often want to use dollars to buy crypto, or they want to sell crypto and receive dollars and the dollar side of those transactions is where things get bogged down. If you are transferring large sums of money to buy crypto, you need to deal with the US banking system, who might ask you a lot of questions relating to anti money laundering regulations. Crypto people hate questions like this. Similarly, if you just sold some crypto and want to deposit the dollars you received, most banks will have a long list of questions about the source of your funds, and there is a really good chance that they will simply refuse to do the transaction. It is going to be a struggle for a US regulated financial institution to show their regulator that they have done enough due diligence to be sure that your funds are not the proceeds of crime. And the last thing a bank needs is to be accused of money laundering; they would rather just simply not deal with suspicious transactions.
“For this reason, stablecoins like Tether and Terra exist – or existed.” If you weren’t paying attention, the value of theoretically stable Terra crashed hard last year.
“If you can convert your dollars into crypto once, you can then buy stablecoins that are supposed to always be worth a dollar, and then instead of buying and selling crypto, with actual dollars you buy and sell crypto with dollar-denominated stablecoins, your money can stay ‘on chain.’ The problem with that, is that you have to trust the stablecoin issuers, and they, for some reason, don’t always seem trustworthy. They won’t really tell you where the money is.”
“They’ll sometimes announce that they are going to be audited by a top 12 auditor (I’m not really sure what a top 12 auditor is – but when you hear that – you know you are getting number 12 on the list), and you start to wonder if Friehling & Horowitz made that list.” Friehling & Horowitz were Bernie Madoff’s auditors.
“If you have deposited your dollars with a crypto exchange or a stablecoin provider, they still need to deposit them somewhere. They need a bank too. Now (of course), another way of dealing with this banking issue, might be to lie to your bank about what your account is being used for (SBF and the team at FTX did that), but the technical term for ‘lying to your bank’ is Bank Fraud (as Sam Bankman-Fried just found out) – and you can get in trouble for that.”
“There was significant demand for a “crypto friendly bank” and Silvergate was willing to fill that role, when no other bank was willing to take that risk. Silvergate weren’t just crypto friendly either, they built their own payments network called the Silvergate Exchange Network to (according to their marketing documents) enable the efficient movement of U.S. dollars between participants 24 hours a day, 7 days a week, 365 days a year.”
“As you might imagine, Silvergate (being the only bank that would deal with them) attracted a lot of big crypto customers, as these customers were able to open up accounts without lying too much.”
“Silvergate dealt with most of the big players in the industry and they were an actual US regulated bank with excruciatingly detailed audited financial statements and capital regulation. This meant that your money was safe at Silvergate, unlike at the other venues we just went over.”
“The beauty of dealing with these crypto customers, crypto exchanges, [was] that because you don’t have any real competition in this space, you don’t really have to pay them any interest on their deposits. You could take the billions of dollars they deposit with you, put it all in treasuries, and you get to keep all of the interest. You’ll probably have to spend some of the profits on lawyers to keep the regulators at bay, but overall you might have a profitable business. But that’s boring right? And no one gets involved in crypto for a boring life…”
“They had a product called SEN Leverage direct lending, where they would lend people money collateralized with bitcoin. Exchanges could also borrow dollars collateralized with bitcoin for corporate treasury and other business purposes. In January, they announced that total SEN Leverage commitments were $1.1 billion dollars and that all of their SEN Leverage loans ‘continued to perform as expected, with no losses or forced liquidations.’ So, as crazy as that business might sound, it was not really the source of their problems.”
“As of September, 2022 their balance sheet showed about $11.4 billion of ‘securities,’ meaning bonds: Treasury securities, mortgage-backed securities, agency bonds and so on and $1.4 billion of ‘loans,’ meaning the Bitcoin loans and some other real-estate lending. They had $13.2 billion worth of deposits at the end of September, most of them being from crypto companies – so non-interest paying deposits, the best kind.”
“The problem for Silvergate was that when FTX was exposed as being insolvent, crypto investors were considerably less willing to leave their cash on exchanges.”
“They asked for their money back from the exchanges, meaning that the crypto companies had to ask for their money back from Silvergate, so Silvergate was faced with a good old fashioned bank run – driven not by a loss of faith in Silvergate, but by a loss of faith in crypto exchanges. By the end of December, noninterest bearing deposits at Silvergate fell from $13.2 billion dollars to just $3.9 billion dollars.” Yowzers! It’s hard to expect any bank to survive an outflow of 2/3rds of their deposits in such a short period of time.”
“There is a good chance that if you had an account at a crypto exchange, that exchange banked with Silvergate, and if you closed your account and cashed out, the cash came from a deposit at Silvergate.”
“There were other FTX related problems too. When prosecutors started looking into the collapse of FTX, their attention was drawn to their banker – Silvergate, for hosting accounts connected to Sam Bankman-Fried. Now, a big problem for Silvergate, was that – with their money all tied up in bonds or lent out, Silvergate had to come up with around 9 billion dollars to pay out these withdrawals.”
“Their accounts show that by the end of December they had sold half of their bonds and had controversially borrowed $4.3 billion from the Federal Home Loan Bank of San Francisco, a government institution that is in place to give short-term secured loans to banks that have a short-term liquidity problem.” That, and the FTX connection, attracted the attention of Washington D.C.
In September Silvergate had shown 3.1 billion dollars’ worth of bonds as being “held to maturity” and 8.3 billion dollars’ worth of bonds as being available for sale. The difference between these two classifications (from an accounting perspective) is that the available for sale bonds have to be marked to market – or held on the books at their fair market value, while the “held to maturity” bonds could be marked at their cost price. By the end of December there were no “held to maturity” bonds left on the balance sheet, meaning that they had either been sold, or reclassified as available for sale. One way or another, interest rates had gone up a lot in 2022, and these bonds were worth a lot less than they were being carried on the balance sheet at.
So they might have skated by if rising interest rates hadn’t wrecked their mark-to market.
The sale resulted in a loss of $751.4 million during the fourth quarter of 2022 and in addition, the company recorded a $134.5 million dollar impairment charge related to an estimated $1.7 billion dollars of securities it “expects to sell in the first quarter of 2023 to reduce borrowings.” This is because reclassifying some of the bonds to “available for sale” meant that they now had to be marked to market and that the loss had to be recognized under GAAP accounting rules. Silvergate also had to write down a $196 million dollar investment in “certain developed technology assets related to running a block-chain-based payment network” that it had bought in January 2022. So, all in, there was a net loss of over a billion dollars in the fourth quarter of 2022.
“Bank capital requirements are ‘risk-based’ and need to be kept above 4% to be ‘adequately capitalized’ and above 5% to be considered ‘well capitalized.’ Different types of assets have different risk weights, and this is done to keep deposits safe.”
“A bank that makes a lot of mortgage and business loans might have a capital requirement of around 8%, and assets like bitcoin have a 100% capital requirement, meaning that a bank would need to have $100 of capital for every $100 of bitcoin on its books.”
“In September Silvergate was fine, as despite the Bitcoin loans, most of their money was in high quality bonds that had zero risk weights. But when their deposits went out the door and they had to sell assets and realize a billion-dollar net loss, they were left in a situation where an additional $19 million-dollar loss would but their capital below 5% and they would no longer be considered well capitalized.”
“Last week Silvergate announced that they had sold additional debt securities in January and February to repay the company’s outstanding advances from the Federal Home Loan Bank of San Francisco and that they ‘expect to record further losses related to the other-than-temporary impairment on the securities portfolio.’ These additional losses they said would ‘negatively impact the regulatory capital ratios of the company and could result in the bank being less than well-capitalized.” And that’s when Brunhilda strode on stage to give her farewell.
“This announcement caused the stock price to half that day and according to Bloomberg caused Coinbase, Galaxy, Paxos and other crypto firms to announce that they would stop accepting or initiating payments through Silvergate. These customers leaving were the final nail in the coffin, as they reduced deposits even further.”
“A bank run, on a real bank, caused by crypto related losses and crypto volatility.”
“Matt Levine at Bloomberg argues that one way to think about the rise and fall of Silvergate is that the crypto boom was at its heart a low-interest-rate phenomenon. People started speculating in crypto because interest rates were below the rate of inflation, and so Silvergate was hugely exposed to interest-rate risk simply because of its exposure to its crypto customers.”
“Rising interest rates caused the deposits to evaporate at the same time as the assets backing those deposits fell in value. Levine argues that (with hindsight), Silvergate’s risk management – a year ago – should have been laser-focused on the risk of rising interest rates crushing both its assets and its customers, and it should have hedged that risk one way or another.”
I know all this is long and a bit detailed and technical, but I wanted to point it out as an example of how a cascading chain of events (much like the Piper Alpha disaster) caused a failure, mainly how massive fraud on the basis of one crypto space player and rising interest rates ended up bankrupting a real bank in the real world.
Mutiny! Bank runs! Twitter files! It’s a ginormous LinkSwarm full of interesting (and alarming) links!
And I finally get a chance to talk more about the FTX scandal.
The Twitter files revelations continue to roll out. And Democrats aren’t happy that the workings of their thought police apparatus are being unmasked.
As one might expect, the Judiciary hearing on the “weaponization” of federal agencies, featuring Matt Taibbi and Michael Shellenberger as witnesses was full of fireworks, facts, and ad hominem friction.
Out of the gate, Ranking Member Democratic Del. Stacey E. Plaskett labeled the two “so-called journalists” as dangerous and a “threat” to former Twitter employees.
She claimed that Republicans brought “two of Elon Musk’s ‘public scribes'” in “to release cherry-picked out-of-context emails and screenshots designed to promote his chosen narrative – Elon Musk’s chosen narrative – that is now being parroted by the Republicans” for political gain.
“I’m not exaggerating when I say you have called two witnesses who pose a direct threat to people who oppose them,” Plaskett said after the video.
Chairman of the House Judiciary Committee, Republican Rep. Jim Jordan of Ohio, had a simple response to her accusations:
“It’s crazy what you were just saying.”
“You don’t want people to see what happened,” Jordan continued.
“The full video, transparency. You don’t want that, and you don’t want two journalists who have been named personally by the Biden administration, the FTC in a letter. They say they’re here to help and tell their story, and frankly, I think they’re brave individuals for being willing to come after being named in a letter from the Biden FTC.”
Taibbi was having none of it.
Matt Taibbi epic comeback:
"Ranking Member Plaskett, I'm not a 'so-called journalist'. I've won the National Magazine Award, the I.F. Stone Award for Independent Journalism, and I've written 10 books including 4 NYT Best Sellers." pic.twitter.com/crXlWjScEr
— Citizen Free Press (@CitizenFreePres) March 9, 2023
As Glenn Greenwald chimed in from Twitter: “To Democrats, “journalist” means: one who mindlessly and loyally endorses DNC talking points. ”
Unshaken, Matt Taibbi continued, when he was allowed to respond, laid out what he and Shellenberger had found in their research of The Twitter Files:
“The original promise of the Internet was that it might democratize the exchange of information globally. A free internet would overwhelm all attempts to control information flow, its very existence a threat to anti-democratic forms of government everywhere,” Taibbi said.
“What we found in the Files was a sweeping effort to reverse that promise, and use machine learning and other tools to turn the internet into an instrument of censorship and social control. Unfortunately, our own government appears to be playing a lead role.”
Taibbi pointedly added that “effectively, news media became an arm of a state-sponsored thought-policing system.”
“It’s not possible to instantly arrive at truth. It is however becoming technologically possible to instantly define and enforce a political consensus online, which I believe is what we’re looking at.”
Democrats only response to Taibbi and Shellenberger’s facts was to get personal…
Snip.
As we detailed earlier, journalists Matt Taibbi and Michael Shellenberger are testifying before the House Judiciary Committee’s Select Subcommittee on the Weaponization of the Federal Government today. Both journalists were involved in the ‘Twitter Files’ disclosures, in which we learned that the government was directly involved in censoring disfavorable speech.
“Our findings are shocking,” writes Shellenberger at his blog. “A highly-organized network of U.S. government agencies and government contractors has been creating blacklists and pressuring social media companies to censor Americans, often without them knowing it.”
Ahead of the appearance, Taibbi released his prepared remarks. He also dropped a new and related Twitter Files mega-thread on ‘THE CENSORSHIP-INDUSTRIAL COMPLEX’ which will be submitted to the Congressional record which, according to Taibbi, ‘contains some surprises.’
But Twitter was more like a partner to government. With other tech firms it held a regular “industry meeting” with FBI and DHS, and developed a formal system for receiving thousands of content reports from every corner of government: HHS, Treasury, NSA, even local police…
But equally concerning was how those driving The Narrative used NGOs that agreed with them as Arbiters of Truth.
We came to think of this grouping – state agencies like DHS, FBI, or the Global Engagement Center (GEC), along with “NGOs that aren’t academic” and an unexpectedly aggressive partner, commercial news media – as the Censorship-Industrial Complex.
Who’s in the Censorship-Industrial Complex? Twitter in 2020 helpfully compiled a list for a working group set up in 2020. The National Endowment for Democracy, the Atlantic Council’s DFRLab, and Hamilton 68’s creator, the Alliance for Securing Democracy, are key…
Twitter execs weren’t sure about Clemson’s Media Forensics Lab (“too chummy with HPSCI”), and weren’t keen on the Rand Corporation (“too close to USDOD”), but others were deemed just right.
NGOs ideally serve as a check on corporations and the government. Not long ago, most of these institutions viewed themselves that way. Now, intel officials, “researchers,” and executives at firms like Twitter are effectively one team – or Signal group, as it were:
The Woodstock of the Censorship-Industrial Complex came when the Aspen Institute – which receives millions a year from both the State Department and USAID – held a star-studded confab in Aspen in August 2021 to release its final report on “Information Disorder.”
The report was co-authored by Katie Couric and Chris Krebs, the founder of the DHS’s Cybersecurity and Infrastructure Security Agency (CISA). Yoel Roth of Twitter and Nathaniel Gleicher of Facebook were technical advisors. Prince Harry joined Couric as a Commissioner.
Why the fuck is Prince Harry on a committee deciding how free American citizens should be censored?
Their taxpayer-backed conclusions: the state should have total access to data to make searching speech easier, speech offenders should be put in a “holding area,” and government should probably restrict disinformation, “even if it means losing some freedom.”
Snip.
The same agencies (FBI, DHS/CISA, GEC) invite the same “experts” (Thomas Rid, Alex Stamos), funded by the same foundations (Newmark, Omidyar, Knight) trailed by the same reporters (Margaret Sullivan, Molly McKew, Brandy Zadrozny) seemingly to every conference, every panel.
The #TwitterFiles show the principals of this incestuous self-appointed truth squad moving from law enforcement/intelligence to the private sector and back, claiming a special right to do what they say is bad practice for everyone else: be fact-checked only by themselves. While Twitter sometimes pushed back on technical analyses from NGOs about who is and isn’t a “bot,” on subject matter questions like vaccines or elections they instantly defer to sites like Politifact, funded by the same names that fund the NGOs: Koch, Newmark, Knight.
#TwitterFiles repeatedly show media acting as proxy for NGOs, with Twitter bracing for bad headlines if they don’t nix accounts. Here, the Financial Times gives Twitter until end of day to provide a “steer” on whether RFK, Jr. and other vax offenders will be zapped.
Well, you say, so what? Why shouldn’t civil society organizations and reporters work together to boycott “misinformation”? Isn’t that not just an exercise of free speech, but a particularly enlightened form of it?
The difference is, these campaigns are taxpayer-funded. Though the state is supposed to stay out domestic propaganda, the Aspen Institute, Graphika, the Atlantic Council’s DFRLab, New America, and other “anti-disinformation” labs are receiving huge public awards.
Meant to cover this back in February, but FTX founder Sam Bankman-Fried, in additional to all those federal fraud charges, was charged with “12 new counts, including illegally making over 300 political contributions to the tune of tens of millions of dollars through straw donors and using corporate funds.” The overwhelming majority went to Democrats and left-leaning causes. “Bankman-Fried was the second largest individual donor during the 2022 US midterm elections, contributing $39 million to various Democrat causes.” Also: “FTX’s former CEO wanted to give at least $1 million to a pro-LGBTQ political action group, but couldn’t find anyone bisexual or gay at the company whom he trusted, the document said.”
Speaking of Bankman-Fried: “The previously sealed names of two people who co-signed Sam Bankman-Fried’s $250 million bail package have been publicly released. The guarantors were identified in the unredacted bonds as Andreas Paepcke, a Stanford research scientist, and Larry Kramer, former dean of Stanford law school…How the fuck did these Stanford faculty members get so rich as to guarantee that size of a bail?”
Speaking of crypto, Silvergate, a California bank that was a heavy player in the crypto space, is shutting down and liquidating after huge bank runs in the crypto-winter. Want to guess who was a big booster of Silvergate? Would you believe Sam Bankman-Fried?
When China began to require Western corporations to establish Chinese Communist Party (CCP) cells, businesses brushed off the move as benign. For example, when HSBC HBA 0.0% became the first international financial institution at which workers established a Chinese Communist Party cell in its investment banking venture in China in July, the bank stated that the CCP committee does not influence the direction of the firm and has no formal role in its day-to-day activities. But the CCP may have begun to flex its muscle in other ways. This week, the CCP cell inside the Beijing office of Big Four accounting firm EY demanded that party members wear CCP badges at work in the run-up to China’s annual parliamentary meetings.
Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.
All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.
Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours. Banking activities will resume no later than Monday, March 13, including on-line banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.
As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.
SVB was a bank that primarily counted venture capital firms and technology startups as clients. It achieved financial stardom during the COVID-19 pandemic because major cash deposits from the booming firms increased its deposits from $60 billion in the first quarter of 2020 to over $200 billion in December 2022, the Wall Street Journal reported. Its securities portfolio rose from roughly $27 billion in 2020’s first quarter to approximately $127 billion at the end of 2021.
The fact that most of SVB’s assets were seemingly secure — they were mainly longer-term government bonds — led many investors to feel the bank was secure. Those feelings would be dashed in just two days. The bank suddenly announced Wednesday that it needed to raise over $2.2 billion, sending its stock plunging by more than 60% in a matter of days.
The government securities bought by SVB pay a fixed rate, so when market interest rates were raised, a gap began to grow between how much the securities were worth on the open market and what they were valued on the bank’s books. The unrealized losses in SVB’s securities portfolio in December had grown to more than $17 billion, a number expected to grow, as the securities could only be sold at a loss.
Crack the whip: unacceptable because of origins in slavery
Waiter or waitress: server should be used instead
Biological gender, biological sex, biological woman, biological female, biological man, or biological male
Illegal immigrant or illegal alien
Cake walk: “originated during slavery” and thus perpetuates “racist motifs”
In reference to illegal migration: onslaught, tidal wave, flood, inundation, surge, invasion, army, march, sneak and stealth
Anchor baby
Chain migration: this is a term used by “immigration hard-liners”
Peanut gallery: “the cheapest seats often occupied by Black people and people with low incomes”
Third-world countries: too “derogatory”
Oh, it does not end there. Politico reporters are also not allowed to say that a transgender person “identifies as” a certain gender, or describe the current situation at the border as a “crisis.” The guide also warned reporters to make sure not to portray migrants as a “negative, harmful influence.”
Want some more? “Pro-choice” is frowned upon in favor of “abortion rights supporter,” and (of course) “pro-life” is outlawed, with “anti-abortion” taking its place. “Late-term abortion” is also a no-no; reporters are told to use “abortion later in pregnancy.”
College student accused of stealing more than half a million dollars via credit card fraud working part-time at a mall jewelry store where most of the items are under $50. She marked up items, then returned them at the original price and somehow pocketed the difference. She made eight fake transactions totally more than $540,000. As though somehow the store wasn’t going to notice something funny going on.
I’m pro-life but this is stupid. “Texas Lawmaker Looks to Restrict Online Access to Materials Assisting or Facilitating Abortion.” You can’t ban access to information you don’t like, that’s prior restraint and illegal under the U.S. Constitution.
Speaking of violating rights, a judge was suspended for not allowing a defendant access to legal council. Again. The dumbass in question was Kenton County District Judge Ann Ruttle in Kentucky.
Democrats being soft on criminals, pedophiles and common sense highlights this week’s LinkSwarm.
Man, there sure seems to be a lot of funny number counting going on in Philadelphia.
Regular readers are well aware that back in July, Zero Hedge first (long before it became a running theme among so-called “macro experts”) pointed out that a gaping 1+ million job differential had opened up between the closely-watched and market-impacting, if easily gamed and manipulated, Establishment Survey and the far more accurate if volatile, Household Survey – the two core components of the monthly non-farm payrolls report.
We first described this divergence in early July, when looking at the June payrolls data, we found that the gap between the Housing and Establishment Surveys had blown out to 1.5 million starting in March when “something snapped.” We described this in “Something Snaps In The US Labor Market: Full, Part-Time Workers Plunge As Multiple Jobholders Soar.”
Since then the difference only got worse, and culminated earlier this month when the gap between the Establishment and Household surveys for the November dataset nearly doubled to a whopping 2.7 million jobs, a bifurcation which we described in “Something Is Rigged: Unexplained, Record 2.7 Million Jobs Gap Emerges In Broken Payrolls Report.”
Snip.
We bring all this up again because late on Dec 13, the Philadelphia Fed published something shocking: as part of the regional Fed’s quarterly reassessment of payrolls in the form of an “early benchmark revision of state payroll employment”, the Philly Fed confirmed what we have been saying since July, namely that US payrolls are overstated by at least 1.1 million, and likely much more!
And the correction came after the midterms! What are the odds?
The Royal Bahamas Police Force took the failed financial tech entrepreneur into custody after the U.S. filed criminal charges against him, according to a press statement. FTX, which Bankman-Fried founded, imploded in November, costing investors millions of dollars in losses. The fallen businessman has been accused of misusing customer funds deposited with FTX to artificially prop up another one of his enterprises: a crypto hedge fund, Alameda Research, which he operated simultaneously while seemingly evading financial ethics scrutiny.
Speaking of abusing children: “Former CNN Producer Pleads Guilty In Pedo Scandal. Former CNN producer John Griffin, who worked ‘shoulder to shoulder’ with Chris Cuomo, pleaded guilty on Monday in federal court to using interstate commerce to entice and coerce a 9-year-old girl to engage in sexual activity as his Vermont ski house. This is a different CNN pedophile than Jake Tapper’s former producer, Rick Saleeby, who resigned after it emerged that he solicited sexually explicit photos of an underage girl.”
The mother of an 11-year-old rape victim is suing a George-Soros backed prosecutor in Virginia who let the boy’s rapist walk free, alleging the prosecutor’s actions violated the minor’s civil rights and made him fear for his physical safety.
Amber Reel in November filed the federal lawsuit on behalf of her son after Fairfax County commonwealth’s attorney Steve Descano (D.) let the rapist walk. Court filings show Descano was months late in sharing necessary evidence before a September trial, dooming the case and forcing his office to enter into a lesser plea deal with the rapist the same month. Ronnie Reel, who was released on time served, had faced life in prison for forcibly sodomizing the minor. Reel is the victim’s uncle.
This is the second high-profile case in the last month where the Soros prosecutor freed a dangerous offender. In December, Descano struck a plea deal that would clear the record of a man who fired his gun into a crowded Virginia bar. Soros donated more than half a million dollars to Descano’s 2019 campaign.
A grand jury had already indicted Reel in February for sodomy and aggravated sexual battery, and the case was set for trial in September. But Descano’s office didn’t share evidence with the public defender before trial, bungling Reel’s prosecution with its “woefully, woefully missed” deadlines. The case’s presiding judge said Descano’s office did a “disservice to the victim” and was “very concerning to the court.”
Because he dodged a felony sex crime conviction, Reel won’t have to register as a sex offender and won’t be barred from holding jobs in schools or other places that would put him near children. The victim and his mother in their suit say Descano’s “deliberate indifference represents egregious conduct that is shocking to the conscience.”
Speaking of pedophile friendly Democrats: “During the hearing before the House Oversight and Reform Committee, California [Democratic] Rep. Katie Porter asserted that the phrase “groomer” is a “lie” used to maliciously discriminate against LGBTQ+ people and make them appear to be a “threat.” “You know, this allegation of ‘groomer’ and ‘pedophile,’ it is alleging that a person is criminal somehow and engaged in criminal acts merely because of their gender identity, their sexual orientation, their gender identity.” Yes, if your “gender identity” is “I like to have sex with children,” then yes, you’re a pedophile, and if you tell elementary school children what sort of sex you have, then yes, you’re a groomer.
Former state Sen. Kirk Watson (D-Austin) will be the next mayor of Austin about two decades after he left that same office in the early aughts.
He defeated state Rep. Celia Israel (D-Austin) by a slim margin after finishing second in the general election. He’ll serve as mayor for the next two years before having to seek re-election in 2024 due to redistricting.
Watson lost Travis County, the city’s largest portion, by 17 votes while winning Williamson county by 881 and Hays County by 22. During the general and runoff races, he outspent Israel by a wide margin.
The two candidates sparred over housing and homeless policy during the general election and the runoff. About one-third of the voting population turned out to vote in the runoff versus the November 8 general.
Watson will take over for Mayor Steve Adler after his self-described “disruptive” tenure marked by a lingering homelessness problem, public fallout and a declining relationship with the police department, and a cumbersome and increasingly costly light rail transit project.
The United States has always had kind of a friends and family plan that it sells military gear to, but it has always reserved the very top top top stuff for itself and the Brits. Well, in this calendar year we have already seen the first two exceptions to that policy being made. The United States is sending air-launch cruise missiles and nuclear-powered submarines to the Australians. And now we’re giving Tomahawks to the Japanese, giving both of these countries the ability to independently destroy China’s economic links to the wider world without any additional help from the United States. And this sudden proliferation of countries that can now bring China to their knees independently, this is arguably the biggest strategic development of the Year, even more so than the Ukraine war, because it takes what has become the world’s second largest economy and puts it completely at the mercy of the domestic politics of a third party, and now a fourth party.
Oberlin College finally pays their judgment to Gibson’s Bakery. “The $25 million verdict plus interest and attorney’s fees resulted in an almost $32 million judgment, with interest running at about $4000 per day since June 2019. In all, over $36 million was owed.” Cudos to William A. Jacobson at Legal Insurrection for his thorough, ongoing coverage of this story from beginning to end.
F-35B fighter crashes in the Metroplex. Fortunately the pilot safely ejected, and it appears that the airplane (which was undergoing testing for Lockheed) looks recoverable. To my untrained eye it looks like a stuck throttle.
Governor Ron DeSantis said in his victory speech that, not only did he win the Florida gubernatorial race, but he has also “rewritten the political map.” It is difficult to argue with that assessment. He beat Democrat Charlie Crist by 20 percentage points and flipped Democratic strongholds such as Miami-Dade County.
A particularly potent force in his campaign has been culture-war issues — battles DeSantis won by going on the offensive. “We fight the woke in the legislature,” he said in his speech. “We fight the woke in the schools. We fight the woke in the corporations. We will never, ever surrender to the woke mob. Florida is where woke goes to die.”
As with Trump, DeSantis’s political aggressiveness wins him admirers. The tactics that some conservatives consider morally or philosophically dubious appear only to intensify his popularity.
In March, the Republican Florida legislature passed the Parental Rights in Education Act, preventing teachers from instructing kindergarten through third-grade students in gender identity and sexuality. “I would say when you oppose a parent’s rights and education bill, which prevents six-, seven-, eight-year-olds from having sexuality, gender ideology injected in their curriculum, you are the one that’s waging the culture war,” DeSantis said in defense of the bill. DeSantis also signed the Stop W.O.K.E. (Wrongs to Our Kids and Employees) Act, preventing critical race theory from being promoted or advanced in schools and corporations.
When Walt Disney executives criticized the education law as a “Don’t Say Gay” bill, DeSantis retaliated by questioning whether the corporation’s 50-year-old “independent special district” status should go under “review” to ensure that it is “appropriately serving the public interest.” Charles C. W. Cooke warned about the dangers of this move. Yet, however short-sighted, it was undoubtedly effective culture-war politics. DeSantis’s enemies fell into the trap: Democrats revealed their hypocrisy by rushing to the defense of big business.
DeSantis has also won the PR fight on immigration. His morally dubious decision to fly asylum seekers to Martha’s Vineyard revealed Democrats’ hypocrisy. His hard line on immigration does not dampen support among Hispanics. According to a Telemundo/LX News poll, DeSantis had a 51 percent to 44 percent lead over Crist among Hispanic voters. A bilingual pollster who conducted the survey explained: “There are lots of Hispanic voters in this state who really like the governor’s style, this strongman who won’t back down.”
On transgenderism, DeSantis has been utterly fearless. He stated that, in children, most “dysphoria resolves itself by the time they become adults” and “it’s inappropriate to be doing basically what’s genital mutilation.” While other Republican states have tried to use legislation to stop gender experiments, DeSantis appointed a state medical board that banned doctors from prescribing puberty blockers, hormones, and gender-transition surgeries. This way, his enemies can’t claim that politicians are interfering in the medical profession. Rather, it’s medical professionals keeping politics out of health care.
FTX’s new CEO and liquidator, John Ray III, who also oversaw the unwinding and liquidation of Enron, admits that “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
And just in case his shock at FTX’s fraud of epic proportions was not quite clear enough, he adds that “from compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
Snip.
Below we excerpt some of the most notable highlights from the affidavit, which we embed at the bottom of the post and which everyone should read to get a sense of just how massive Sam Bankman-Fried’s fraud was.
I have over 40 years of legal and restructuring experience. I have been the Chief Restructuring Officer or Chief Executive Officer in several of the largest corporate failures in history. I have supervised situations involving allegations of criminal activity and malfeasance (Enron). I have supervised situations involving novel financial structures (Enron and Residential Capital) and cross-border asset recovery and maximization (Nortel and Overseas Shipholding). Nearly every situation in which I have been involved has been characterized by defects of some sort in internal controls, regulatory compliance, human resources and systems integrity.
Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.
For purposes of managing the Debtors’ affairs, I have identified four groups of businesses, which I refer to as “Silos.” These Silos include:
(a) a group composed of Debtor West Realm Shires Inc. and its Debtor and non-Debtor subsidiaries (the “WRS Silo”), which includes the businesses known as “FTX US,” “LedgerX,” “FTX US Derivatives,” “FTX US Capital Markets,” and “Embed Clearing,” among other businesses;
(b) a group composed of Debtor Alameda Research LLC and its Debtor subsidiaries (the “Alameda Silo”);
(c) a group composed of Debtor Clifton Bay Investments LLC, Debtor Clifton Bay Investments Ltd., Debtor Island Bay Ventures Inc. and Debtor FTX Ventures Ltd. (the “Ventures Silo”);
(d) a group composed of Debtor FTX Trading Ltd. and its Debtor and non-Debtor subsidiaries (the “Dotcom Silo”), including the exchanges doing business as “FTX.com” and similar exchanges in non-U.S. jurisdictions. These Silos together are referred to by me as the “FTX Group.
Each of the Silos was controlled by Mr. Bankman-Fried. Minority equity interests in the Silos were held by Zixiao “Gary” Wang and Nishad Singh, the co-founders of the business along with Mr. Bankman-Fried. The WRS Silo and Dotcom Silo also have third party equity investors, including investment funds, endowments, sovereign wealth funds and families. To my knowledge, no single investor other than the co-founders owns more than 2% of the equity of any Silo.
Much, much more at the link, including an eye-dropping, deeply incriminating Twitter thread by founder Sam Bankman-Fried about the step-by-step decisions they made that weren’t really illegal because they had such good intentions.
BlackRock’s energetic focus on ESG investing is affecting its bottom line. The index fund’s performance is deteriorating, and risks are accumulating. In the face of this situation, UBS Wealth Management recently downgraded ratings for BlackRock (NYSE: BLK) by now listing it as a “Neutral” recommendation rather than a “Buy.” The bank also cut the target stock price to $585 from $700.
The new recommendations were made based entirely on BlackRock’s reckless ESG positioning. UBS says that stubborn insistence on this course could also trigger increased regulatory inspections and investor withdrawals.
Thus, the company pressuring countless firms to adopt more “woke” positions has suddenly found a boomerang coming in its direction. Investors and analysts are now telling BlackRock that ESG shenanigans are bad business and want it stopped.
Another one of those things that makes you go “Hmmmm“: “The Funeral Business Is Booming (And Not Because Of COVID)…We’re having to do at one point of time 20 percent more funerals which is unheard of…the third quarter of this year, we did 15% more calls than we did in the third quarter of 2019.”
Jay Leno is expected to make a full recovery after getting seriously burned in a gasoline fire from one of his many cars. Conan O’Brien should call him up and go “Jay, when I said ‘die in a fire,’ I meant it figuratively, not literally!”
“This was a close call,” said one Republican leader in Washington. “We were worried that we would achieve massive victories tonight, but we thankfully snatched defeat from the jaws of victory to achieve a much more proper and sensible red trickle, like the proper gentlemen we are.”
Let me start out by explaining how cryptocurrency works: You exchange your money for digital strings of numbers based on math you don’t understand, for one of the following reasons:
A. You believe those digital strings of numbers will be worth more money at some point in the future.
B. You want to buy drugs online in a theoretically untraceable manner (said theoretical untraceability being a key property of the math you don’t understand).
C. You want to place your money beyond the reach of your national government.
There are exceptions to the above (say, you’re mining your own cryptocurrency, or you know enough math to understand exactly the mathematical properties of how blockchain-based cryptocurrency works), but I’m going to guess that one of the three above use cases apply to 95% people using cryptocurrency.
I’m somewhat sympathetic to C, and even understand how A might be tempting (hey, crypto has dropped so much I might buy a couple thousand worth of Dogecoin, just for the hell of it, as a pure speculation play), but cryptocurrencies as a whole are not a proven store of worth on par with, say, a bar of gold, a share Apple stock, or a
Is cryptocurrency money? Sort of.
Cryptocurrency offers something that sometimes acts like money, offers anonymity like money, and offers an alternative to government-backed fiat currencies. Instead of being backed by the full faith and credit of the federal government, cryptocurrency is backed by the full faith of millions of technologically savvy individuals who believe the math is sound.
The math may indeed be sound, but that didn’t save it from the loss of investor confidence of the Crypto Winter we’re now experiencing. And that winter is absolutely slamming the business models of people who sought to make crypto more like other forms of money.
Enter Sam Bankman-Fried and FTX, whose crypto empire just collapsed.
Amid all the jubilation and gloating by Joe Biden, Chuck Schumer and pals over the Democrats’ better-than-expected showing in the midterms comes a disturbing story that may explain something about how they won such a curious election.
Biden’s second-biggest donor, cryptocurrency billionaire wunderkind Sam Bankman-Fried, a k a SBF, saw his business file for bankruptcy days after the election, but not before pumping $40 million into the Democratic Party to spend on “get-out-the-vote” and other shadowy ballot-harvesting mechanics for the midterms.
The shambolic 30-year-old whiz kid, once said to have been worth $16 billion, had spent $10 million helping get Biden elected in 2020.
SBF’s mother, Stanford law professor Barbara Fried, also is co-founder of left-wing political action committee Mind The Gap, which has raised a reported $140 million to help Democrats win elections through the same “get-out-the-vote” grift.
Tree. Acorn. Distances.
A more unlikely billionaire you could not find — and of course his money was built on thin air. A math genius with poor social skills, SBF reportedly lived in a “polycule” — a polyamorous relationship with multiple people — in a luxury penthouse with about 10 co-workers in the tax haven of the Bahamas, where his collapsed crypto exchange FTX was headquartered.
Otherwise, he was sleeping on beanbags in his office, eating vegan fries and, according to his own Twitter feed, popping amphetamines and sleeping pills to regulate his chaotic sleeping habits.
Just the sort of person you want to entrust billions in currency to!
Now Reuters is reporting that between $1 billion and $2 billion of customer funds have vanished from FTX, conveniently after the Democrats safely spent his money.
At last report, SBF and his mysterious co-founder, Gary Wang, were being held “under supervision” by Bahamian authorities after reportedly planning to flee to Dubai, according to fintech publication Cointelegraph.
It is a stunning fall to earth. The financial media and big investors have feted the young billionaire as a saint who shunned earthly pleasures like Lamborghinis and Rolexes, but lived only to give away all his money and make the world a better place.
He was the most famous millennial adherent of a cult known as “Effective Altruism,” which originated at Oxford University, found fertile ground in Silicon Valley — and now has gone down in flames along with him.
“Indulgences! Buy your Social Justice Indulgences here!”
EA is a disguised form of socialism, because all the “good” that is done just happens to match up perfectly with the left’s obsessions, whether climate change, social justice, equity, banning meat or his favorite, “pandemic preparedness.”
In a Nas Daily online video, an awkward Bankman-Fried was featured this year as a role model of altruism for young people: “Sam is not a traditional billionaire because he believes in the concept of ‘earn to give’ … Next decade he will probably give away more than $10 million … He wants to get rich in order to impact the world and change it.”
Some detail snipped.
The sinister neo-socialists at the World Economic Forum (WEF) loved SBF so much, they made FTX a “corporate partner” — but that page on the WEF website has vanished in the last 48 hours, leaving an error message.
Venture capital firm Sequoia was a big backer, investing over $200 million in SBF, a lot of which he then invested back in Sequoia, whose chairman and managing partner Michael Moritz is a big donor to the Dems as well as to anti-Trump hate group the Lincoln Project, and reportedly is a neighbor of Nancy Pelosi in San Francisco.
