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FirstFT: One of the ‘biggest financial frauds’ in US history

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Sam Bankman-Fried has been accused of engineering “one of the biggest financial frauds in American history” as US prosecutors filed criminal charges against the founder of failed cryptocurrency exchange FTX.

In its indictment (read it in full here), the US Department of Justice charged Bankman-Fried with eight counts including conspiracy to commit wire fraud on customers and lenders, money laundering and violations of campaign finance laws.

Bankman-Fried, who was arrested in the Bahamas on Monday night local time, faces years in prison if convicted. Bahamian attorney-general Ryan Pinder said the country’s police force had taken Bankman-Fried into custody after receiving “formal notification” from the US government that it had filed criminal charges and was “likely to request his extradition”.

The charges pointed to a long-running scheme to misappropriate the deposits of exchange customers to pay debts and expenses of Bankman-Fried’s private trading firm Alameda Research and to make investments.

The conspiracy ran from 2019 — the year he founded FTX — until its collapse last month, according to the indictment. The failure of Bahamas-based FTX, once valued at $32bn, has resulted in billions of dollars of potential losses for millions of creditors, including retail investors, and sent shockwaves through the crypto industry.

  • The case against Bankman-Fried: A series of overlapping events in the Bahamas, Washington and Manhattan led to the FTX founder’s arrest and offers new insights into how his empire collapsed.

  • Crypto market: Investors have pulled more than $1bn from Binance as the world’s largest cryptocurrency exchange fights against a crisis of confidence and fears it will also be drawn into US investigations.

  • Lex: Bankman-Fried’s fraud charges tarnish the whole crypto sector.

1. UK strikes intensify with walkouts by postal and rail workers A wave of industrial action gripping the UK intensifies today as Royal Mail workers go on strike alongside rail industry staff over pay and employment terms. The first nationwide strike by NHS nurses organised by the Royal College of Nursing is due to go ahead tomorrow over pay.

  • Explainer: Can the UK government afford to increase public sector pay? Prime Minister Rishi Sunak claims the offers made to workers are “fair”, but economists say that squeezing them is a political choice, not a necessity.

2. China denied access to Arm chip designs Chinese tech giant Alibaba is unable buy some of Arm’s cutting-edge designs after the British chipmaker determined the US and UK would not approve export licences to China because the technology’s performance was too high. It is the first known time that Arm has decided it cannot export its leading designs to China.

3. Kemi Badenoch refuses to set deadline for India trade deal The UK’s trade secretary has refused to commit to a date for finalising a much-hyped trade agreement with India, telling the Financial Times, “My view is that timelines are not helpful.” She added, however, that 2024 elections in both countries would make talks “difficult” if a deal were not finalised before then.

Kemi Badenoch: ‘We know that having an election coming up does not help in terms of trying to conclude free trade agreements’ © Tayfun Salci/ZUMA/Alamy

4. ECB retreat to put €300bn burden on debt market Investors will have to buy about €300bn more eurozone government debt next year to prevent market turmoil as the European Central Bank starts to cut its vast bond holdings, analysts have warned. The ECB is due to outline plans tomorrow to shrink its €5tn bond portfolio, as it steps up efforts to tame inflation by tightening credit conditions.

5. Moderna’s mRNA cancer vaccine shows promise in early trial Moderna and Merck are preparing to launch the first phase 3 trial of a messenger RNA cancer vaccine after a study suggested it could be used to treat an aggressive type of skin cancer.

The day ahead

Economic data The EU publishes October industrial production figures, while the UK has inflation data for November. Economists polled by Reuters expect inflation to have declined to 10.9 per cent last month.

Earnings Spanish clothing giant Inditex, home to the Zara brand, releases third-quarter results. Tui, one of the world’s largest travel groups, has full-year earnings.

US central bank meeting Policymakers are set to raise benchmark policy rates by half a percentage point, breaking successive 0.75 point interest rate increases.

World Cup Morocco kicks off against France in today’s World Cup semi-final, a match that casts a spotlight on the two countries’ particular historical relationship. The winner will face Argentina in the final on Sunday.

Milestones Today marks the 50th anniversary of the Apollo 17 mission and the last moon landing.

What else we’re reading and listening to

Russia’s wartime economy: learning to live without imports When the heaviest sanctions against Russia were introduced in March, some analysts predicted the economy’s rapid collapse, perhaps by as much as 30 per cent. What is actually emerging is not a dramatic decline but a steady degradation of the country’s productive capacity as imports of components, raw materials and technologies have been constrained.

Fusion power, explained After US scientists announced the first energy gain from a fusion reaction, the question is how much closer this breakthrough takes the energy sector to the dream of fusion power. Energy correspondent Tom Wilson breaks it down.

  • New hope for green hydrogen: Researchers in China claim to have produced hydrogen by splitting seawater without the need to desalinate or purify it first, according to a report in Chemistry World.

France struggles to keep older workers in the labour market The issue has come to a head as President Emmanuel Macron prepares a draft law to raise the minimum retirement age to 65 from 62, an unpopular proposal that unions have vowed to fight. Macron has argued that only by people working “a bit longer” can France ensure the viability of its pension system.

Crypto winter: will my investments ever recover? More than a million crypto investors around the world stand to be wiped out by FTX’s collapse. On this episode of the Money Clinic podcast, Claer Barrett is joined by the FT’s digital assets correspondent and the US financial commentator to discuss what the collapse means for the future of crypto.

The reinvention of Antoine Griezmann With France heading into today’s World Cup semi-final against Morocco, Antoine Griezmann has achieved footballing reincarnation. The man of the match playing up front in the 2018 final is now possibly even better as a playmaker in midfield, writes Simon Kuper.

Globetrotter

For relaxing and restorative experiences that are really worth treating someone special to, check out these five splurgeworthy London spa treatments to gift this season.

A curved glass roof covers the 20m pool in the Peak Fitness Club and Spa at The Carlton Tower Jumeirah
A curved glass roof covers the 20m pool in the Peak Fitness Club and Spa at The Carlton Tower Jumeirah

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