March 2024 - cypherpunks - lists.cpunks.org

The Epic Antitrust Cases And Challenges Of Injunctive Relief
by Gunnar Larson 15 Mar '24

15 Mar '24

The Epic Antitrust Cases And Challenges Of Injunctive Relief <https://www.law360.com/competition/articles/1813790?nl_pk=6416fd97-1dc4-4e0…> The Epic cases against Apple and Google offer a window into the courts' considerable challenges in Big Tech litigation and establishing injunctive relief that enhances competition and benefits consumers, say Kelly Lear Nordby and Jon Tomlin at Ankura Consulting. Read full article » <https://www.law360.com/competition/articles/1813790?nl_pk=6416fd97-1dc4-4e0…> | Save to favorites » <https://www.law360.com/competition/articles/1813790?nl_pk=6416fd97-1dc4-4e0…>

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Wright Is Not The Inventor Of Bitcoin, Judge Rules
by Gunnar Larson 15 Mar '24

15 Mar '24

Wright Is Not The Inventor Of Bitcoin, Judge Rules <https://www.law360.co.uk/financial-services-uk/articles/1813645?nl_pk=a94fc…> By Lucia Osborne-Crowley A London judge ruled Thursday that Australian computer scientist Craig Wright is not the pseudonymous inventor of bitcoin, ruling that the evidence against his claim to be Satoshi Nakamoto was "overwhelming." Read full article » <https://www.law360.co.uk/financial-services-uk/articles/1813645?nl_pk=a94fc…> | Save to favorites » <https://www.law360.co.uk/financial-services-uk/articles/1813645?nl_pk=a94fc…>

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Mnuchin Now Wants to Buy TikTok, Days After Leading NYCB Rescue
by Gunnar Larson 14 Mar '24

14 Mar '24

Mnuchin Now Wants to Buy TikTok, Days After Leading NYCB Rescue https://www.bloomberg.com/news/articles/2024-03-14/mnuchin-is-putting-toget… Steven Mnuchin is targeting a purchase of TikTok from its Chinese parent company, a day after House lawmakers passed a bipartisan bill that would ban the wildly popular social media app in the US.

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Wall Street Law Firm Sullivan & Cromwell Gets Sued Over Allegations It Aided and Abetted the FTX Crypto Fraud
by Gunnar Larson 14 Mar '24

14 Mar '24

https://wallstreetonparade.com/2024/02/wall-street-law-firm-sullivan-cromwe… Wall Street Law Firm Sullivan & Cromwell Gets Sued Over Allegations It Aided and Abetted the FTX Crypto Fraud By Pam Martens and Russ Martens: February 21, 2024 ~ Ryne Miller, Former Sullivan & Cromwell Partner; Now General Counsel of FTX.US Ryne Miller, Former Sullivan & Cromwell Partner, Became General Counsel of FTX.US The 144-year old Wall Street go-to law firm, Sullivan & Cromwell, may be getting rich on the FTX bankruptcy legal fees, but it’s also doing a helluva job destroying its reputation as a prudent law firm. Last Friday, a federal lawsuit was filed against the law firm alleging civil conspiracy, aiding and abetting fraud, aiding and abetting breach of fiduciary duty, and violations of civil federal racketeering law in regard to its work for the collapsed crypto exchange, FTX, which looted customer funds to the tune of billions of dollars. We’ll get to the stunning allegations in the lawsuit in a moment, but first some necessary background. Last year, Wall Street On Parade wrote more than 20 articles documenting the labyrinthine and deeply conflicted ways that Sullivan & Cromwell had enmeshed itself in the FTX crypto exchange before the house of cards collapsed. (See a small sampling of our work in “Related Articles” at the end of this article.) One of Sullivan & Cromwell’s law partners, Ryne Miller, moved to FTX.US and became its General Counsel. Another former Sullivan & Cromwell lawyer, Tim Wilson, became General Counsel for FTX Ventures, the venture capital arm of FTX. Sullivan & Cromwell had previously represented the kingpin of the fraud, Sam Bankman-Fried, who was convicted in November 2023 on seven counts of fraud and conspiracy. The law firm had also previously represented the Head of Engineering at FTX, Nishad Singh, who has pled guilty to fraud charges. According to Sullivan & Cromwell’s own bankruptcy court declaration, it had been involved in more than 20 legal engagements for FTX before it filed for bankruptcy on November 11, 2022. According to the declaration, the law firm’s legal work began 15 months prior to the collapse of the firm. Notwithstanding these conflicts, Sullivan & Cromwell steamrolled its way into becoming lead counsel of the FTX bankruptcy and then argued against allowing the U.S. Department of Justice’s U.S. Trustee to appoint an independent examiner – a legally mandated position for bankruptcy cases exceeding $5 million. Equally troubling, the FTX bankruptcy judge, John Dorsey, of the U.S. Bankruptcy Court for the District of Delaware, bought into Sullivan & Cromwell’s arguments and declined to allow the U.S. Trustee to appoint an independent examiner. The Third Circuit Court of Appeals overruled the Judge last month. Sullivan & Cromwell’s conflicts with FTX and its demand to be appointed lead counsel in the bankruptcy were so over the top that in January of 2023 four sitting U.S. Senators (Elizabeth Warren (D-MA), John Hickenlooper (D-CO), Thom Tillis (R-NC) and Cynthia Lummis (R-WY)) sent a letter to Judge Dorsey. Senator Hickenlooper Tweeted a link to the letter with the comment: “Get this: FTX’s legal advisors *pre-collapse* want to be appointed to oversee investigations INTO the collapse.” The Senators’ letter included this blunt assessment of Sullivan & Cromwell’s conflicted role: “To name just one challenge: will the firm’s lawyers be able to effectively investigate their current and former partners who were central in FTX’s conduct? Additionally, given their longstanding legal work for FTX, they may well bear a measure of responsibility for the damage wrecked on the company’s victims. Put bluntly, the firm is simply not in a position to uncover the information needed to ensure confidence in any investigation or findings.” That assessment was clearly an understatement according to the federal lawsuit filed last Friday against Sullivan & Cromwell by the Moskowitz Law Firm on behalf of 16 customers of the FTX crypto platform. Among the allegations in the lawsuit are the following: “…from November 2022 to mid-January 2024, S&C’s income from matters just related to FTX has surged, exceeding $180 million — or 10% of the total revenue the 900-lawyer firm publicly stated it collected in all of 2022 — with paralegals billing $595/hr. and partners billing up to $2,165/hr.” “S&C attorneys served as the primary legal services providers for the RICO enterprise, assisting in the structuring of the enterprise operations.” “When the FTX fraud was revealed in November 2022, Mr. Miller and S&C moved to consolidate power over the FTX Group without delay, quickly ousting SBF [Sam Bankman-Fried] and his lieutenants and appointing in their stead hand-picked successors to navigate FTX through the bankruptcy process. S&C’s post-collapse maneuvering seems particularly calculated, given that S&C was well positioned to see the collapse coming, via knowledge gleaned from prior engagements.” “Mr. Miller and S&C moved to divert the $250 million FTX Guaranty Fund from LedgerX, one of the few entities S&C specifically chose not to include among the over 100 FTX entities it forced into bankruptcy, in order to secure receipt of a multi-million-dollar retainer to S&C before the FTX Group filed for bankruptcy, presumably to improve the Firm’s revenues throughout the extensive FTX bankruptcy process. With S&C’s assistance, SBF and FTX caused billions in losses to Plaintiffs through at least two separate schemes, both of which contributed to the downfall of the FTX Group.” “S&C was one of FTX US’s principal outside law firms and its conduct mirrors that of the other MDL [Multi-District Litigation] Defendants. This conduct violates numerous laws, including laws related to the sale of unregistered securities, consumer protection, professional malpractice, aiding and abetting fraud, negligence, breach of fiduciary duties, and violations of the Racketeer Influenced and Corrupt Organizations Act (‘RICO’). S&C provided services to the FTX Group entities that went well beyond those a law firm should and ordinarily provides. As the evidence will reveal, S&C lawyers were eager to craft not only creative, but misleading strategies that furthered FTX’s misconduct. As several members of Congress recently remarked, these and other services are ‘often central to major financial scandals, given [legal counsel’s] role in drafting financial agreements, risk management compliance practices, and corporate controls.’ S&C is no different, and the services and strategies it provided to the FTX Group were important to the eventual FTX Group’s fraud.” The case is Edwin Garrison, et al., v. Sullivan & Cromwell LLP. It has been filed in the U.S. District Court for the Southern District of Florida. The case number is 1:24-cv-20630. It is part of Multi-District Litigation (MDL) and was stayed by the Judge in an order yesterday while claims proceed in a related case, In Re: FTX Cryptocurrency Exchange Collapse Litigation. Related Articles: No One Trusts the FTX Bankruptcy Case: News Outlets Intervene; Justice Department Trustee Demands Independent Examiner; SEC Orders Disclosures A Sam Bankman-Fried Company Loaned or Invested More than $1 Billion in Clients of its Law Firm, Sullivan & Cromwell Sullivan & Cromwell, FTX Lead Counsel in Bankruptcy, Says It Has No Adverse Relationships, Despite Representing Four of FTX’s Crypto Exchange Competitors Bombshell Emails Raise Questions about What Sullivan & Cromwell Knew about Fraud at Sam Bankman-Fried’s Crypto Firms

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BREAKING: Wright Is Not The Inventor of Bitcoin, Judge Rules
by Gunnar Larson 14 Mar '24

14 Mar '24

BREAKING: Wright Is Not The Inventor of Bitcoin, Judge Rules <https://www.law360.co.uk/financial-services-uk/articles/1813645?nl_pk=a94fc…> By Lucia Osborne-Crowley A London judge ruled Thursday that Australian computer scientist Craig Wright is not the pseudonymous inventor of bitcoin, ruling that the evidence against his claim to be Satoshi Nakamoto was "overwhelming." Read full article » <https://www.law360.co.uk/financial-services-uk/articles/1813645?nl_pk=a94fc…> | Save to favorites » <https://www.law360.co.uk/financial-services-uk/articles/1813645?nl_pk=a94fc…>

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Hedge Fund Titan John Paulson Made $1 Billion in an Illegal Goldman Sachs Deal; Trump Is Now Floating Him for Treasury Secretary
by Gunnar Larson 14 Mar '24

14 Mar '24

https://wallstreetonparade.com/2024/03/hedge-fund-titan-john-paulson-made-1… By Pam Martens and Russ Martens: March 14, 2024 ~ Hedge Fund Titan, John Paulson According to headlines at Bloomberg News and Reuters this morning, Donald Trump is floating the notorious hedge fund billionaire, John Paulson, to be his next Treasury Secretary. Paulson has, apparently, earned consideration for the post the same way Steve Mnuchin, Trump’s former Treasury Secretary, got the job: by raising a lot of money for the Trump political campaign. Paulson has hosted multiple fundraising events for Trump in the current election cycle and in Trump’s failed run for reelection in 2020. Paulson is the founder and President of the hedge fund Paulson & Co. On April 16, 2010, the Securities and Exchange Commission had this to say about Paulson’s business morals when it announced formal charges against Goldman Sachs pertaining to the infamous 2007 ABACUS deal: “The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.” Translation, Paulson helped Goldman select dogs that would default or receive credit downgrades and then made easy bets that they would. The SEC complaint goes on: “…after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS [Residential Mortgage Backed Securities] portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.’s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors.” According to the SEC’s complaint, Paulson & Co. paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By October 2007, 83 percent of the bonds in the portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded. The SEC estimated that investors lost more than $1 billion in the ABACUS deal while Paulson profited by approximately the same amount. On July 15, 2010, the SEC announced that Goldman Sachs would pay $550 million to settle its ABACUS charges. Fabrice Tourre, a young Goldman investment banker involved in the deal, was the only person to face a civil trial. No one was criminally prosecuted. Paulson walked free – ostensibly because he didn’t actually sell the product or misrepresent it to investors – he just stacked the deck against investors and, apparently, that’s not a big deal in the eyes of the SEC. While Paulson’s involvement in the ABACUS deal was the subject of news reporting, NYU’s Stern School of Business announced that it had received a $20 million donation from Paulson and would name “the first floor lobby of Tisch Hall and the School’s auditorium in his honor,” noting further that those areas “are prominent locations for hosting business and policy conferences as well as serve as central community hubs for students and returning alumni.” If, as Senator Bernie Sanders has correctly surmised, the business model of Wall Street is fraud, and that is now an open secret in America, then it makes eminently good sense to let students aspiring for jobs on Wall Street come and go in a university hub honoring John Paulson. It also meshes with Donald Trump’s view of American capitalism, where the skill and cunning to commit crimes and avoid prosecution renders you fit for the highest political offices. (What should deeply concern every American, however, is why the national security agencies in the U.S. are tolerating this view.) Trump’s first Treasury Secretary, Steve Mnuchin, had such a challenged history as a foreclosure kingpin that in January 2017 every Democratic Senator on the Senate Finance Committee boycotted the vote on Mnuchin for Treasury Secretary. Democrats were repulsed by the prospect of Mnuchin as U.S. Treasury Secretary. In a press release, Democratic Senator Jeff Merkley said: “Donald Trump’s choice of Mnuchin is not only a fundamental betrayal of his promise to stand up to Wall Street — it is a punch in the gut to the thousands of American families who were thrown out of their homes by Mnuchin’s bank. The voices of these Americans should be heard loud and clear as the Senate examines his record and considers his nomination.” Senator Bernie Sanders weighed in with this: “During the campaign, President-elect Donald Trump told the American people that he was going to change Washington by taking on Wall Street. But now that the election is over, Donald Trump’s choice for Treasury Secretary is the same old, same old Wall Street insider who made a fortune during the financial crisis as millions lost their homes. If confirmed, Steve Mnuchin would be the third Treasury Secretary to come from Goldman Sachs in the last 17 years. That is not the type of change that Donald Trump promised to bring to Washington — that is hypocrisy at its worst. The last thing we need is another Treasury Secretary from Goldman Sachs and another broken promise from Donald Trump.” It emerged during Mnuchin’s confirmation hearing that the bank he headed, OneWest, had illegally foreclosed on activie duty military and engaged in other illegal foreclosure practices. Mnuchin was confirmed by a slim margin of votes in the Senate, 53-47, along party lines, with all Republicans voting for him and all Democrats voting against him, except for Senator Joe Manchin of West Virginia, who voted yes. The power and influence of the U.S. Treasury Secretary is sweeping. Its bureaus include the IRS; the Office of the Comptroller of the Currency which oversees national banks; the Bureau of Engraving and Printing and the U.S. Mint that issues the currency and coin of the U.S.; the Financial Crimes Enforcement Network (FinCEN) which is supposed to combat money laundering; and numerous other units. The Treasury Secretary not only sits at the helm of the U.S. Treasury but as a result of the 2010 Dodd-Frank financial “reform” legislation, the Treasury Secretary now chairs the Financial Stability Oversight Council (F-SOC), which is responsible for preventing another financial implosion like that of 2008 – where hedge fund guys and Wall Street bankers got bailed out while millions of innocent Americans lost their jobs and their homes to foreclosure.

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Treasury Says Crypto Mixer Is 'Corporation In All But Name'
by Gunnar Larson 14 Mar '24

14 Mar '24

Treasury Says Crypto Mixer Is 'Corporation In All But Name' <https://www.law360.com/fintech/articles/1813503?nl_pk=d2b3e7ef-ab62-4a62-80…> By Aislinn Keely The U.S. Department of the Treasury told the Fifth Circuit on Wednesday that it was justified in sanctioning crypto mixer Tornado Cash because the crypto project "is a corporation in all but name" rather than ownerless computer code, as its users contend. Brief attached | Read full article » <https://www.law360.com/fintech/articles/1813503?nl_pk=d2b3e7ef-ab62-4a62-80…> | Save to favorites » <https://www.law360.com/fintech/articles/1813503?nl_pk=d2b3e7ef-ab62-4a62-80…>

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Jewish Group Sues UN Relief Agency Over Hamas Massacre
by Gunnar Larson 14 Mar '24

14 Mar '24

Jewish Group Sues UN Relief Agency Over Hamas Massacre <https://www.law360.com/delaware/articles/1812977?nl_pk=8f2e5a76-bb66-462b-a…> By Joyce Hanson An advocacy group that defends Jewish rights has sued in Delaware federal court an American charity that aids a United Nations relief agency for Palestinian refugees, saying it purportedly bears accountability for the Hamas attack in Israel in October. Complaint attached | Read full article » <https://www.law360.com/delaware/articles/1812977?nl_pk=8f2e5a76-bb66-462b-a…> | Save to favorites » <https://www.law360.com/delaware/articles/1812977?nl_pk=8f2e5a76-bb66-462b-a…>

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BigLaw Paper Poacher Gets 15 Mos. In Merck Insider Case
by Gunnar Larson 14 Mar '24

14 Mar '24

BigLaw Paper Poacher Gets 15 Mos. In Merck Insider Case <https://www.law360.com/capitalmarkets/articles/1813430?nl_pk=abe82add-2a33-…> By Pete Brush A Manhattan federal judge hit a former FBI trainee from Pennsylvania with a 15-month prison sentence Wednesday for illegally trading on a Merck & Co. deal using secrets gleaned from legal papers in the possession of his BigLaw ex-girlfriend. Read full article » <https://www.law360.com/capitalmarkets/articles/1813430?nl_pk=abe82add-2a33-…> | Save to favorites » <https://www.law360.com/capitalmarkets/articles/1813430?nl_pk=abe82add-2a33-…>

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Genesis, Gemini Can't Ax SEC Suit Over Crypto Loan Program
by Gunnar Larson 14 Mar '24

14 Mar '24

Genesis, Gemini Can't Ax SEC Suit Over Crypto Loan Program <https://www.law360.com/capitalmarkets/articles/1813371?nl_pk=abe82add-2a33-…> By Dorothy Atkins A New York federal judge refused Wednesday to toss the U.S. Securities and Exchange Commission's allegations that crypto exchange Gemini Trust Co. and bankrupt crypto lender Genesis Global Capital LLC violated securities laws by running the now-defunct investment program Gemini Earn that sold alleged unregistered securities. Order attached | Read full article » <https://www.law360.com/capitalmarkets/articles/1813371?nl_pk=abe82add-2a33-…> | Save to favorites » <https://www.law360.com/capitalmarkets/articles/1813371?nl_pk=abe82add-2a33-…>

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