Tag: DOJ Probe (Page 1 of 3)

DOJ is Investigating Sam Bankman-Fried Connections: FTX Opposes

FTX opposes new bankruptcy investigations at it probes Sam Bankman-Fried connections.
FTX opposes new bankruptcy investigations at it probes Sam Bankman-Fried connections.

(Reuters) FTX has objected to a U.S. Department of Justice request for an independent investigation into the once-prominent crypto exchange’s collapse, saying it is already conducting a wide-ranging probe that includes family members of FTX founder Sam Bankman-Fried.

FTX said in a court filing in Wilmington, Delaware, late on Wednesday that the DOJ’s proposed review would only add cost and delay to its bankruptcy case.

FTX acknowledged “fraud, dishonesty, incompetence, misconduct, mismanagement, and irregularity” in its past conduct, but said that its previous wrongdoing is already being probed by the company’s new management, its creditors and law enforcement agencies.

As part of its own investigation, FTX asked U.S. Bankruptcy Judge John Dorsey, who is overseeing its Chapter 11 proceedings, to help it secure documents from Bankman-Fried, members of his family and other insiders with information about FTX transactions that used “misappropriated and stolen” funds.

These transactions, it said, include a $16.7 million Bahamian real estate purchase under the name of Bankman-Fried’s parents, Joseph Bankman and Barbara Fried.

FTX is also seeking information about political donations connected to Bankman-Fried, asking wide-ranging questions about Mind the Gap, a political action committee founded by Barbara Fried, and Guarding Against Pandemics, an advocacy organization founded by Sam Bankman-Fried and his brother, Gabriel Bankman-Fried.

FTX said Guarding Against Pandemics’ multimillion-dollar Washington, D.C., headquarters was purchased with misappropriated funds.

A spokesperson for Mind the Gap said it did not receive direct contributions from Sam Bankman-Fried, although Bankman-Fried made donations to some political causes it recommended to its donor network.

Related: Citadel to Launch Crypto Exchange After FTX Collapse

FTX Bankruptcy Update Today

DOJ probes Sam Bankman-Fried connections | Latest FTX bankruptcy update 2023.
DOJ probes Sam Bankman-Fried connections | Latest FTX bankruptcy update 2023.

FTX, once among the world’s top crypto exchanges, shook the sector in November by filing for bankruptcy, leaving an estimated 9 million customers and other investors facing total losses in the billions of dollars.

The U.S. Department of Justice’s bankruptcy watchdog has called for an independent investigation into its collapse, a request that received backing from a bipartisan group of U.S. senators.

FTX’s new CEO, John Ray, who worked with court-appointed examiners while leading Enron Corp and Residential Capital through bankruptcy, is prepared to testify that examiners in those two cases cost a combined $150 million and provided “minimal” benefits to creditors, FTX said.

FTX’s official committee of creditors joined the company in opposing the appointment of an examiner.

FTX also on Wednesday night filed a new list of creditors in bankruptcy court, which included financial watchdogs and government agencies from the United States, Japan and Switzerland, as well as companies including Airbnb Inc and crypto giant Binance.

Sam Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto-focused hedge fund, has pleaded not guilty to fraud charges. He is scheduled to face trial in October.

Related: Sam Bankman-Fried on AMC Tokenized Shares Before Arrest

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DOJ Attempts to Weed Out Crime with 75% Reduction in Fines

Market News: DOJ Offers 75% Reduction in Fines to Companies that Admit Crime.
Market News: DOJ Offers 75% Reduction in Fines to Companies that Admit Crime.

[Bloomberg] The Justice Department will recommend as much as a 75% reduction in fines for companies that voluntarily report wrongdoing to the government and fully cooperate with investigations.

Even companies that don’t voluntarily disclose wrongdoing but still fully cooperate with investigations could still get a 50% reduction off the low end of the guidelines for fines, the head of the department’s criminal division said Tuesday.

“The policy is sending an undeniable message: come forward, cooperate, and remediate,” Assistant Attorney General Kenneth Polite said in a speech at Georgetown University Law Center.

Polite made it clear that cooperators seeking declination will be held to a higher standard than your average or even gold-standard cooperator — the cooperation must be “truly extraordinary.” 

The Justice Department will distinguish extraordinary cooperation by assessing the immediacy, consistency, degree, and impact of the cooperation.

Prosecutors will expect companies to cooperate immediately, consistently tell the truth, and hand over evidence that the DOJ otherwise would not be likely to obtain, such as quick access to electronic device images, audio/video recordings, trial testimony, and other kinds of cooperation that “produces results.”

The policy also covers corporations conducting business internationally, as the changes will apply to all corporate matters handled by the Criminal Division, including all Foreign Corrupt Practices Act (FCPA) cases nationwide.

Notably, the new policy is the third in a trilogy of Department of Justice memoranda addressing the prosecution of corporate misconduct and setting forth revised policies concerning the effect of cooperation by companies that have engaged in wrongdoing.

Years of Ongoing Investigations

The new policy was announced to further Deputy Attorney General Lisa Monaco’s October 2021 memorandum directing the creation of a Corporate Crime Advisory Group within the Department to recommend guidance concerning, in part, the nature of a company’s dealings with the government required to receive cooperation credit in resolving company misconduct, and to consider revisions and reforms to the Department’s approach to corporate crime prosecution.

The new policy also follows less than five months after the issuance of a memorandum further clarifying the Department of Justice’s policy against seeking a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely and properly remediated the conduct at issue in the absence of aggravating factors and directing all department components, including the 93 U.S. Attorney’s Offices across the country, to review its policies on corporate voluntary self-disclosure and ensure it has a publicly available written policy.

At the same time, the September 2022 memorandum emphasized DOJ’s commitment to “strong corporate criminal enforcement.”

Polite likely had these pronouncements in mind as he concluded his speech. He entreated corporations to “come forward, cooperate, and remediate,” and to join the Department of Justice as allies in the fight against crime.12 But he also warned: “Failing to take these steps, a company runs the risk of increasing its criminal exposure and monetary penalties.”

Related Article: Citadel Under Investigation by DOJ

Source(s): Bloomberg.

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Tiger Global Hedge Fund Sinks a Massive 34% This Year

Tiger Global Hedge Fund Sings 34%
From left, Chase Coleman III, Scott Shleifer, and John Curtius. Photos by Bloomberg. Art by Mike Sullivan, Edited by Frank Nez

Tiger Global has an AUM of $95 billion, that’s $57 billion more than Citadel’s AUM of approximately $38 billion.

The monster hedge fund is managed by Chase Coleman, 46, who was up until now considered to be a hedge fund legend.

Tiger Global Management had a rough 2021 according to sources and losses are piling up in 2022.

Hedge funds seem to be in a lot of distress recently.

Let’s break it down together.

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Hedge funds face turbulence in 2022

Tiger Global

This year we’ve seen many hedge funds face massive adversity.

Hedge funds have been dealing with significant losses this year, probes from the DOJ, and scrutiny from retail investors.

Hedge fund managers once deemed leaders in their industry now have their reputation on the line.

Gabe Plotkin was named a great trader by Citadel’s Ken Griffin although the hedge fund had to bail Melvin Capital out due to the ‘meme stock’ frenzy.

Citadel pulled $2 billion from Melvin Capital in recent months.

Chase Coleman is in a sticky situation too.

Tiger Global Management is down 34% this year through March.

The speed of the reversal has shocked just about everyone, considering that Coleman is celebrated as one of his generation’s brightest stars, a standout among the elite money managers mentored by the famed Julian Robertson, Bloomberg.

Tiger Global Management treads rocky waters

The bad run has been fueled by massive bets on stocks that have been hammered, such as fast-growing tech companies in the U.S and China.

Tiger Global hedge fund lost 7% last year, its first annual drop since 2016 and its third total, according to Bloomberg.

Tiger Global told clients in a letter that it’s opening up both its hedge and long funds to a limited amount of capital from existing investors to bolster positions in stocks that underperformed

However, we see the results in the first quarter of 2022 has not been what the hedge fund anticipated.

Built by Coleman and his partner Scott Shleifer, Tiger Global has long been seen as a throwback to the industry’s glory years, when double-digit returns were the norm and ‘hotshot managers’ unerringly backed winning companies and shorted the losers.

Across the firm’s $35 billion in funds focused on public companies, this year’s losses have triggered a more than $10 billion hit to investors that include foundations, endowments and pension funds, as well as Tiger Global insiders.

Coleman’s personal wealth has dropped by $1.3 billion, according to calculations by the Bloomberg Billionaires Index. 

Coleman’s hedge fund headed towards worst year

Tiger Global hedge fund may be on track for one of its worst years yet.

Tiger Global Hedge Fund

The blue in this chart indicates the hedge fund’s losses in 2008, 2016, 2021, and 2022.

The firm’s first serious bump was during the 2008 financial crisis, when it lost 26%, followed by a 1% gain the next year.

While markets were already jittery this year due to high inflation and expectations of rate hikes, Russia’s war against Ukraine triggered a flight from risk. 

The Russia-Ukraine conflict has affected every corner of the financial sector.

Earlier we saw Citadel and other hedge funds faced default on Russian bonds from tech company Yandex.

But Tiger Global Management isn’t the only hedge fund struggling.

Investors are pulling out $250 million from Coatue Management and the hedge fund cannot meet its investors demands.

We’re beginning to see this domino effect of losses begin to catch up to even the biggest hedge funds in the world.

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BREAKING: Citadel Under Investigation by Department of Justice

DOJ is investigating Citadel
The DOJ is investigating Citadel for market manipulation

Bloomberg just confirmed Citadel is one of the hedge funds under investigation by the Department of Justice.

Regulators are taking Morgan Stanely and several other hedge funds to court after several subpoenas were sent out earlier this year.

Bloomberg’s report confirms Citadel is one of the hedge funds on the list who the DOJ is seeking information from.

Keep reading to watch the Bloomberg clip below.

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Welcome to Franknez.com – this clip came about on Twitter where a community member shared the Bloomberg news. Citadel is under investigation by the DOJ and the community is spreading this like wildfire.

Let’s dive right into it.

Bloomberg: Citadel under investigation by DOJ

Citadel under investigation by DOJ Bloomberg

Citadel has been one of the hedge funds/market makers who has been attacking AMC Entertainment stock.

Predatorial short selling strategies were exposed by the AMC and GME stock communities after the ‘meme stock’ frenzy fiasco early last year.

Both these stocks’ share prices have been suppressed by dark pool trading, naked short selling, spoofing, and through OTC trading.

The hedge fund is now being investigated after subpoenas were sent to numerous hedge funds and banks who might be connected.

Morgan Stanley and Goldman Sachs are two of the banks that are being ordered to court.

Among Citadel is a hedge fund by the name of Element according to the Bloomberg report.

Related: Chicago Tribune Says Citadel Securities Dark Pool Targets Small Investors

Other Citadel news

Citadel News

Citadel received a $1.2 billion lifeline from partners Sequoia and Paradigm early this year, the first time the company receives private funding.

The hedge fund is estimated to have lost several billions of dollars shorting AMC and GameStop.

Deputy Global Treasurer Michael Kurlander has also resigned after 4 years with Citadel.

He left in June of 2021 during the time when ‘meme stocks’ were at their peak.

The hedge fund announced late last year to its customers they would be imposed heavy fees if they withdrew their investments.

The company also said getting back in would be nearly impossible.

After a year of shorting so called ‘meme stocks’, the community discovered Ken Griffin owns company shares of News Corp., a corporation that owns Wall Street Journal, Market Watch, and a number of other platforms that have been attacking AMC and GameStop.

These mainstream platforms have lost a lot of trust from retail investors due to major conflict of interest.

Other recent probes by the Justice Department

Muddy Waters Hedge Fund Probe
Muddy Waters Hedge Fund Probe – DOJ Investigates Citadel

Muddy Waters was recently probed for flooding the market with fake orders.

Many retail investors doubted the SEC or DOJ would take action, but it seems actions spoke louder than words this time.

Still, only time will tell where these investigations go.

What do you want to see come out of this investigation?

Leave a comment below with your thoughts on the matter.

This is a developing story.

Related: Global Head of Operations at Citadel Has a Seat at DTCC

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Franknez.com is the media blog that keeps retail investors informed.

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Also Read: How Bloomberg’s Beloved Citadel Manipulates the Market


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