April 2024 - cypherpunks - lists.cpunks.org

FTX Bombshell: Former FTX Lawyer, Daniel Friedberg, Alleges Fraud by Sullivan & Cromwell in Court Filing Today
by Gunnar Larson 28 Apr '24

28 Apr '24

https://wallstreetonparade.com/2023/01/ftx-bombshell-former-ftx-lawyer-dani… By Pam Martens and Russ Martens: January 19, 2023 ~ Ryne Miller, Former Sullivan & Cromwell Partner; Now General Counsel of FTX.US Ryne Miller, Former Sullivan & Cromwell Partner; Now General Counsel of FTX.US Daniel Friedberg, a former attorney at the collapsed crypto exchange, FTX, has filed a heart-stopping declaration today with the U.S. bankruptcy court in Delaware. He is effectively accusing one of the oldest law firms in America, Sullivan & Cromwell (S&C), of engaging in a fraudulent scheme in the FTX bankruptcy case. Friedberg further alleges that this fraudulent conspiracy was helped from the inside of FTX by S&C’s former law partner, Ryne Miller. According to new management at FTX, at least $8 billion of customer funds are missing, with the bulk of the money illegally diverted for use by Alameda Research, a hedge fund owned by the former co-founder and CEO of FTX, Sam Bankman-Fried, who has pleaded not-guilty to 8 criminal felony counts brought by the U.S. Department of Justice. Two of his top lieutenants, Caroline Ellison and Gary Wang, have pleaded guilty and are cooperating with prosecutors. A hearing is scheduled at the bankruptcy court tomorrow at 10:00 a.m. to take testimony on Sullivan & Cromwell’s petition to become the lead counsel in the case. The U.S. Trustee in the case, which represents the Justice Department in bankruptcy matters, had already filed objections to Sullivan & Cromwell becoming lead counsel. Another objector, a former customer of FTX, Warren Winter, has said it would be like allowing the fox to guard the hen house if Sullivan & Cromwell is put in charge. Four sitting U.S. Senators were so alarmed about Sullivan & Cromwell’s conflicts that they took the unusual step of filing an objection with the Court. But none of the prior objections can hold a candle to the breathtaking charges being made by Friedberg. In one section of Friedberg’s declaration involving former S&C law partner, Ryne Miller, Friedberg writes as follow: “In 2021, the then President of FTX.US made the decision to hire Ryne Miller (‘Mr. Miller’) as general counsel of FTX.US and counsel for Alameda, and FTX International. Mr. Miller’s salary was paid by FTX.US and Alameda, but services were also performed by Mr. Miller for FTX International in addition to FTX.US and Alameda… “After being hired, Mr. Miller came to me and asked if he could engage Sullivan & Cromwell, LLP (‘S&C’) as counsel for the Debtors. I responded that as general counsel, it was his role to generally approve outside counsel for FTX.US. “Mr. Miller informed me that it was very important for him personally to channel a lot of business to S&C as he wanted to return there as a partner after his stint at the Debtors. This bothered me very much and I told him that his job was to only hire the best outside counsel for the job, and that his allegiance was now to the Debtors and not S&C. This continued to be a problem throughout his work at the Debtors as further described below. “Mr. Miller quickly engaged S&C on many matters for FTX.US and S&C acted as primary counsel for FTX.US, FTX Derivatives (formerly Ledger X) which was a subsidiary of FTX.US (‘LedgerX’), and Emergent (an entity owned by Sam that invested in Robinhood shares). S&C also acted as personal counsel to Nishad [Nishad Singh, an FTX executive] and Sam….” Later in the filing, Friedberg makes even bolder allegations, writing: “On November 7, 2023, certain FTX personnel including Sam informed certain executives in the Bahamas of the existence of an $8 billion customer deficit with respect to FTX International. “The FTX International general counsel contacted me by zoom to inform me of this shocking development. “Prior to this disclosure, I had no idea of any customer deficit. It was not my job as regulatory counsel to conduct a customer proof of reserves; indeed, I would have no idea how to do this. I relied on the executives, the finance team, and the auditors, and believed that the customer assets were fully funded on a 1:1 basis as advertised to the customers. “I was in the New York office of FTX.US at the time and went to Ryne Miller to inform him of the development. Mr. Miller was already aware of the development and said that he was busy contacting ‘all the billionaires that he knew’ to provide emergency financing to cover the customer deficit. “I explained to Mr. Miller that he had to review his ethical obligations before continuing to represent FTX.US under such circumstances, and soliciting financing under the circumstances might conflict with his ethical duties. He dismissed my concerns and remained optimistic about helping Sam get future financing. “I reviewed my ethical obligations that evening and felt that there was substantial risk that I would be used to further additional fraud in connection with the additional investment efforts if I stayed on. In addition, I no longer trusted Sam, Gary, or Nishad, and did not think that I could proceed under such circumstances. “I therefore tendered my resignation the following day. “A day or two later, I had a final call with Ryne Miller as I was concerned about the direction of the companies. This was after CZ of Binance [a crypto exchange competitor] had announced that he was abandoning the purchase of the Debtors and it looked like bankruptcy was the only answer for the FTX International Group and the Alameda Group. “On that call, I first informed Mr. Miller that we had been counseled by all our other law firms that the bankruptcy filings of FTX International Group and the Alameda Group should occur outside the United States, and likely in Bahamas or Europe. This was in part because of the unnecessary expense of the US bankruptcy system, the situs of the primary regulator, as well as the fact that creditors of the FTX International Group were outside the United States, amongst other legal issues. “Mr. Miller told me that the bankruptcy filings of FTX International Group, the Alameda Group, and the FTX.US Group had to be in the United States because otherwise S&C couldn’t do the job. “I then told Mr. Miller that FTX.US should not file bankruptcy at all until it was certain that there were insufficient assets at FTX.US. Indeed, the tech team checked the wallets and had told the FTX International general counsel at the time of the disclosure of the customer deficit that FTX.US was not affected. I told Mr. Miller that the FTX.US crypto exchange needed to be retained if at all possible and sold as a going concern to allow the preferred shareholders to be paid back. Mr. Miller stated that he needed to include FTX.US as part of the bankruptcy because FTX.US had the cash to pay S&C its retainer. Without this retainer from FTX.US, S&C wouldn’t file. I told him that it wasn’t proper for FTX.US to pay for the expenses of the bankruptcy of FTX International Group or the Alameda Group. “Mr. Miller informed me that S&C was installing ‘S&C’s guy’ to run all the companies. [That refers to John J. Ray III who has been put in the post of CEO of the FTX group of companies and has appointed a new Board of Directors.] I told Mr. Miller that S&C was not the proper law firm to select because of the claims and conflicts, as well as the exorbitant costs of the firm. Mr. Miller told me that there was over $200 million cash in LedgerX and that he was going to send these funds to S&C, and that bankruptcy legal costs were therefore not a problem. “I was horrified at this response and started to try to remind him of his ethical obligations and that he was stealing further funds from customers, but he hung up the phone on me and terminated the call….” If that is not enough to take one’s breath away, Friedberg goes on to provide a chart of the legal causes of action that could be leveled against the various separate business entities of FTX to demonstrate why it was improper for the new CEO and Sullivan & Cromwell to lump all of these companies together as one pot of money. Friedberg writes: “Based on advice of counsel, each of these groups were intended to be separated. For example, the FTX International exchange was operated from a server housed in Japan, while the FTX.US exchange was operated from a server in Virginia. The wallets and assets of FTX International and FTX.US were separated in these different instances. There are conflicting claims that arise between each of these entities as set forth below, and each of these groups deserve separate independent counsel as described in the chart below. Note that the chart below raises just a few of the myriad of conflicts between the group entities requiring separate counsel.” Equally striking, Friedberg notes the following: “Each of these groups have different creditor classes which each deserve separate legal representation as well as separate creditor committees. “S&C represented all of these groups simultaneously without proper conflict waiver. S&C also represented Sam and Nishad personally. The lawyers in this important bankruptcy proceeding should be independent and not have a history of representing all of the various groups and the principals at one time….” Sullivan & Cromwell did provide a document previously to the court that confirmed that Sam Bankman-Fried and Nishad Singh were former clients of the firm. Next, Friedberg goes on to detail the claims that creditors would likely have against Sullivan & Cromwell, which should disqualify it from serving as lead counsel. Friedberg writes in part: “The first claim involves a breach of ethical obligations and overbilling by S&C during their representation of Alameda in its credit bid in the Voyager bankruptcy. “At the time that this Voyager credit bid matter commenced, S&C sent me their retention letter which I signed with respect to that particular matter. Regretfully, I did not fully read the exhibit to the letter. S&C was our prior counsel and I did not imagine that they would try to slip something in the engagement letter. I was proved to be wrong. “S&C represented Alameda for a few months on this matter without tendering a bill. I saw that there were an unnecessary number of S&C lawyers working on the matter, and assumed that it would be a high bill, and expected a cost of $500,000. This sounds like a shocking fee but this would be normal for S&C. “Andrew Dietrich [Dietderich] sent me a bill for $6.5 million as a flat fee for the entire matter and stated that the engagement letter I had signed provided for ‘value billing’ and this was a $1 billion transaction. I was absolutely shocked and told him that we only pay by the hour. “To be clear, Alameda engaged S&C to place a bid on assets in a bankruptcy that took a few months and they charged $6.5 million for the matter! “I told Ryne Miller to fix the problem and Mr. Miller told me that we should help Andy on this as he needed the bankruptcy work. I angrily told Mr. Miller to get them to bill us by the hour or I would have to involve Sam. Mr. Miller told me not to tell Sam and promised to fix the matter. “I later learned that Ryne Miller authorized payment of $2.5 million to S&C for the matter.” Friedberg also lists what he alleges are numerous false statements made to the court by Sullivan & Cromwell partners. For example, he writes the following about law partner Andrew Dietderich: “In paragraph 5 of the Dietderich Supplemental Declaration, Mr. Dietderich states that Mr. Ray was the one who decided to file the Debtors for Chapter 11 protection. As stated above, S&C and Ryne Miller selected this route and chose ‘their guy’ to run it….” Friedberg closes this bombshell by indicating that he expects to be targeted by S&C for making these allegations and declares under penalty of perjury that his statements are truthful.

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Serially-Charged Robinhood Doubles in Price in Three Days – But Appears to Have Forgotten about Its Second Quarter Earnings Report after Losing $1.4 Billion in First Quarter
by Gunnar Larson 28 Apr '24

28 Apr '24

https://wallstreetonparade.com/2021/08/serially-charged-robinhood-doubles-i… By Pam Martens and Russ Martens: August 5, 2021 ~ NY Stock Exchange Trading Floor-150pixRobinhood is the poster boy for the craziest, most unregulated stock market era since 1929. That one ended in tears. This one will also. Robinhood is the trading app used by millions of young, inexperienced retail investors to trade stocks and options on their mobile phones. The company went public last Thursday on the Nasdaq stock market (the wonderful folks who brought us the dot.com crash in 2000). Robinhood closed the trading week last Friday with a share price of $35.15 – an embarrassing 7.5 percent below its IPO price of $38. Curiously, so far this week, through Wednesday’s closing price of $70.39, the stock has soared 100.256 percent from Friday’s closing price. In an efficient, regulated stock market that is capable of engaging in its core function of price discovery, Robinhood would not have doubled in price in three trading sessions. The company lost $1.4 billion in the first quarter of this year and has yet to report its second quarter earnings or even announce the date that it will report those earnings – or lack thereof. But in this crazy stock market era, earnings are just pesky details. The business media actually reports on how many times a company’s name is mentioned on Reddits’ Wall Street Bets forum. For example, Reuters – an international business wire – reported yesterday that Robinhood “was the most mentioned stock on WallStreetBets, the Reddit platform at the center of this year’s ‘meme stock’ rally, over the past 24 hours, according to sentiment tracker SwaggyStocks.” After its big runup in price, Robinhood reported after the market closed yesterday that another 97.9 million Class A shares will be sold over time – meaning shareholders who bought in the IPO will be diluted. That sent the price of the stock down about 10 percent in pre-market trading this morning. Big losses in the first quarter are far from the only negative about Robinhood. On December 17 of last year, the SEC brought charges against the company “for repeated misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders.” The company paid a fine of $65 million to settle the SEC charges. The day before the SEC’s action, the state of Massachusetts brought an enforcement action against Robinhood for “1) aggressive tactics to attract new, often inexperienced, investors; 2) failure to implement policies and procedures reasonably designed to prevent and respond to outages and disruptions on its trading platform; 3) use of strategies such as gamification to encourage and entice continuous and repetitive use of its trading applications; 4) failure to follow its own written supervisory procedures regarding the approval of options trading; and 5) breach of the fiduciary conduct standard required by the Act and Regulations.” Six months later, Robinhood was back in the crosshairs of regulators. Wall Street’s self-regulator, FINRA, charged the company for causing “widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so.” FINRA fined the company $57 million and ordered it to pay $12.6 million in restitution, plus interest, to customers. FINRA previously fined Robinhood $1.25 million in 2019 for failing to provide “best execution” for its customers’ trades. The negative news about this company does not stop there – by a long shot. On February 18 the House Financial Services Committee hauled Robinhood’s CEO, Vlad Tenev, before a hearing to answer questions about its dodgy business model. The most revealing part of the hearing was this exchange between Congresswoman Cindy Axne of Iowa and Tenev: Axne: “Right now, what I’m seeing is gambling in the stock market and that’s not a real solution to income inequality and I don’t think we should pretend that it is. “Just last June when Hertz declared bankruptcy, after that Robinhood was actively pushing the stock on its site, it was trending on Robinhood, and the promotion of that worthless stock I don’t think is good for investors. That’s a gamble that they shouldn’t have taken. That’s just one example… “Generally, 99 percent of short-term traders underperform the market. So, Mr. Tenev, you say Robinhood’s mission is to democratize finance. Is that correct?” Tenev: “That’s correct Congresswoman, yes.” Axne: “Okay. So I want to ask you then, you’ve invested significantly in behavioral research. And just so you know, I own a digital design firm with my husband so I’m familiar with what behavioral research can do for platforms and websites. That behavioral research has really shaped how your app is designed, is that correct?” Tenev: “Congresswoman, like many technology companies we employ data scientists, user researchers, and designers to provide a better customer experience.” Axne: “So on the specifics, when people sign up they get a scratch-off ticket to see what they get; confetti falls every time they place an order; they get push notifications; they’re encouraged to trade; if a friend signs up they get a free stock. On and on. Why have you added specific gaming design elements to look like gambling to your app that encourages more frequent trading?” Tenev: “Congresswoman, as I mentioned earlier, we want to get people what they want in a responsible, accessible way. We don’t believe in gamification. We know investing is serious and that’s why most of our customers are buy and hold. A very small percentage of our customers utilize margin.” Axne: “I appreciate that but you know, folks like my nephew actually aren’t your customer. They’re your product. Your customer is sitting right next to you, Mr. Griffin with Citadel.” Billionaire Ken Griffin’s Citadel Securities is a so-called internalizer or market-maker. It pays Robinhood to send its retail orders to it to execute the trades, thus allowing Robinhood to offer commission-free trading on its trading app. While Robinhood has payment-for-order-flow agreements with other internalizers, the bulk of its trade orders are going to Citadel Securities. The vast majority of Robinhood’s revenue stream comes from this payment-for-order flow. Thus, its priority would appear to be to please its true customer, Citadel Securities. The rationale behind the idea that the young people placing trades on Robinhood’s mobile phone app are “the product” that Robinhood is selling to Citadel Securities is that Wall Street has long viewed retail orders as the “dumb money” it wants to trade against. That’s because the retail investor is typically unaware that they are trading in the dark market offered by internalizers rather than on a lit market like the New York Stock Exchange, where bids and offers on stocks are publicly displayed. CNBC has this statement appearing under a news article about Robinhood: “Robinhood is a five-time CNBC Disruptor 50 company and topped this year’s list.” We agree that Robinhood is disrupting markets – but it certainly is not in a good way. A frequent commentator on CNBC, Steve Weiss, summed up his feelings about Robinhood on CNBC last Thursday: “They’re not disruptors. They’re going into a business and they’re offering prices which are free, which many, many others are doing. So I don’t think they’re a disruptor. Number two – they haven’t democratized investing. That’s been democratized a long, long time ago. And they’re talking out of two sides of their mouth. Cause they are gonna own – I believe – about 16 percent of the company but control over 60 percent of the vote. So let’s go where their intentions are – which is not one shareholder, one vote. That’s really poor governance.” Update: This article has been updated to add the word “Securities” after the word “Citadel” in the fifth paragraph from the bottom, second sentence.

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Jamie Dimon Is in a Whale of a Mess on the WeWork IPO
by Gunnar Larson 28 Apr '24

28 Apr '24

https://wallstreetonparade.com/2019/08/jamie-dimon-is-in-a-whale-of-a-mess-… By Pam Martens and Russ Martens: August 23, 2019 ~ Jamie Dimon Is In a Whale of a MessThe WeWork IPO preliminary prospectus was filed last week with the Securities and Exchange Commission (SEC) and the company has been getting savage reviews ever since. WeWork is a commercial real estate company leasing out office space but is attempting to mesmerize the public into believing it is some genius new-age thinker. JPMorgan Securities LLC, a unit of JPMorgan Chase, and Goldman Sachs & Co. are listed as lead underwriters on the IPO. Scott Galloway, a professor at NYU’s Stern School of Business, wrote on his blog that “bankers (JPM and Goldman) stand to register $122 million in fees flinging feces at retail investors….” What has not been crystallized as yet, however, is how Jamie Dimon, Chairman and CEO of the largest bank in the U.S., JPMorgan Chase, sits smack in the middle of this mess. Dimon should definitely have seen this mess coming. Dimon was co-CEO of Salomon Smith Barney when it began its super chummy relationship with Bernie Ebbers of WorldCom, which ended in multi-billion dollar legal settlements by Citigroup, Salomon Smith Barney’s parent, and Ebbers serving a 25-year Federal prison sentence. The WeWork IPO prospectus (the company will officially be called The We Company) uncannily channels the relationship that Salomon Smith Barney (SSB) and Citigroup had with Ebbers. To ostensibly get Worldcom’s investment banking business, Ebbers received lots of favors from SSB and Citigroup. According to a 2003 lawsuit brought by Alan Hevesi, the Comptroller of New York State, SSB and Citigroup had provided $499 million in personal loans to Ebbers, some of it collateralized with Worldcom stock, which meant the bank had a conflicted incentive for the share price to do well and to tout the stock to public investors, even if it meant wearing due diligence blinders. Compare that set of facts to this language in the WeWork IPO prospectus regarding the underwriters relationship with Adam Neumann, the Chairman and CEO of WeWork: “UBS AG, Stamford Branch, JPMorgan Chase Bank, N.A. and Credit Suisse AG, New York Branch, affiliates of the underwriters in this offering, have provided a line of credit of up to $500 million to Adam Neumann, of which approximately $380 million principal amount was outstanding as of July 31, 2019. The line of credit is secured under a security and pledge agreement by a pledge of approximately _____shares of our Class B common stock beneficially owned by Adam and held through WE Holdings LLC, of which Adam serves as a managing member. The line of credit has a scheduled maturity of September 18, 2020 and may be extended from time to time at the discretion of the lenders. The lenders have received and will receive customary fees and expense reimbursements in connection with the loan.” Then there is this paragraph which suggests JPMorgan has gotten especially chummy with Adam Neumann: “In addition, JPMorgan Chase Bank, N.A, an affiliate of J.P. Morgan Securities LLC, has made loans and extended credit to Adam Neumann totaling $97.5 million across a variety of lending products, including mortgages secured by personal property and unsecured credit lines and letters of credit.” Hevesi’s lawsuit against WorldCom assessed its Board of Directors as follows: “Among other things, the underwriters failed to conduct any due diligence to determine whether it had the means, intent, and ability to satisfy the staggering amount of debt it was accumulating…Had the bankers seriously weighed the import of the WorldCom board minutes, they would have seen what the Examiner and Special Committee found immediately apparent: the WorldCom board was nothing more than a ‘rubber stamp’ and was in no way an internal check and balance on WorldCom’s management.” Compare that assessment of WorldCom’s Board with this statement in the WeWork prospectus: “Adam [Neumann] controls a majority of the Company’s voting power, principally as a result of his beneficial ownership of our high-vote stock. Since our high-vote stock carries twenty votes per share, Adam will have the ability to control the outcome of matters submitted to the Company’s stockholders for approval, including the election of the Company’s directors. As a founder-led company, we believe that this voting structure aligns our interests in creating shareholder value.” Fortune magazine turned to Charles Elson, Director of the John L. Weinberg Center for Corporate Governance at the University of Delaware for his thoughts on this governance structure. Elson said: “It’s a mess any way you look at it from a governance standpoint.” Bloomberg News published the assessment of Rett Wallace, CEO of Triton Research, who called the WeWork prospectus “a masterpiece of obfuscation,” citing, for example, the fact that “the company stops counting sales and marketing expenses at a given location once it’s been open for two years — but the spending doesn’t actually stop after that. Instead, it counts as an operating expense.” Professor Galloway at NYU adds an additional point about WeWork’s $47 billion in long-term obligations versus its revenue stream, writing: “WeWTF is an especially risky business going into a recession, when the ability to variabilize costs is limited, but revenue decline is unlimited. WeWTF has $47 billion in long-term obligations (leases) and will do $3 billion in revenue this year. What could go wrong?” Jamie Dimon has somehow remained as Chairman and CEO of JPMorgan Chase despite three felony counts from the Justice Department on his watch, to which the bank pleaded guilty. The bank remains on probation until January 2020 for the last of the felony counts. Dimon also famously called the London Whale fiasco at his bank “a tempest in a teapot” at the time it was first disclosed in the press. The “teapot” turned into $6.2 billion in losses at Dimon’s Federally-insured bank from traders in London using bank deposits to make high-risk gambles in derivatives on subprime debt. That episode resulted in more than $1 billion in fines and settlements by the bank and a 300-page, highly unflattering assessment of incompetence in risk controls at the bank by the U.S. Senate’s Permanent Subcommittee on Investigations. Unlike in the WorldCom matter, the underwriters and their highly-paid lawyers seem to have gone out of their way in the WeWork IPO prospectus to reveal the ugly warts and entrenched conflicts of interest. The theory today is if it’s revealed by the company to investors, it’s not illegal. But JPMorgan Chase, as the largest bank in the U.S., and already a three-count criminal felon, does not need any more reputational damage. At some point, even Dimon’s snoozing Board is going to say “enough.”

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WeSuck: First Came the Hype; then Came Adam Neumann’s Self-Dealing; then Came the IPO Scandal; Now Comes the Bankruptcy
by Gunnar Larson 28 Apr '24

28 Apr '24

https://wallstreetonparade.com/2023/11/wesuck-first-came-the-hype-then-came… By Pam Martens and Russ Martens: November 3, 2023 ~ Adam Neumann, Co-Founder of WeWork Adam Neumann, Former Chairman and CEO of WeWork WeWork, the flexible-office-space company, is the quintessential proof that you can’t put lipstick on a pig forever. On Tuesday, the Wall Street Journal reported that WeWork “ is planning to file for bankruptcy as early as next week….” On October 5, the credit ratings agency Fitch downgraded WeWork’s long-term debt deeper into junk bond territory after WeWork elected to withhold interest payments on its debt that were due Oct. 2. Year-to-date, the publicly-traded stock of WeWork has lost 98 percent of its value. Its shares were trading for pennies in August on the New York Stock Exchange when the financial wizards at the company came up with the idea to do a 1-for-40 reverse stock split in early September to put a little lip gloss on the pig. Yesterday, the stock closed at $1.11, which would mean that it actually closed at just under 3 cents were it not for the 1-for-40 reverse stock split. The collapse in the share price in August came as a result of an 8-K filing with the Securities and Exchange Commission on August 8 which had included these fatal words: “…as a result of the Company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the Company’s ability to continue as a going concern.” Back in 2019, venture capitalists had valued this company at $47 billion and were hoping to cash out in a hot IPO. Yesterday, the company closed with a market value of $59 million. JPMorgan Securities LLC, a unit of five-felony-count JPMorgan Chase, which is currently making headlines with its own scandal of being the financier to Jeffrey Epstein’s sex trafficking ring for 15 years, was going to be the lead underwriter of the 2019 IPO of WeWork, along with Goldman Sachs. But then Scott Galloway, a professor at NYU’s Stern School of Business began to write viral posts on his blog. One of those posts stated that “bankers (JPM and Goldman) stand to register $122 million in fees flinging feces at retail investors visiting the unicorn zoo.” After reading the 2019 IPO prospectus, Wall Street On Parade called WeWork’s planned IPO “hype wrapped in subterfuge.” We said “It’s a money-losing commercial real estate company attempting to pass itself off as the Dalai Lama of office space rentals. The company has never made a dime of profits and its losses spiraled to $900 million in the first half of this year.” To enhance its valuation, WeWork attempted to portray itself as interconnected to technological breakthroughs. We explained in 2019: “We’re also going to have to excise ‘the extensive technology infrastructure’ because what they’re really talking about is not Silicon Valley breakthrough technology but jazzing up drab offices with beer taps, microbrewed coffee, fruit-infused water and WiFi – the latter of which you can get for free in any Panera’s, along with a table and chair, for the price of a cup of herbal tea.” In 2019, WeWork was represented by a very sophisticated law firm, Skadden Arps, Slate, Meagher & Flom. The Wall Street bank underwriters were represented by another sophisticated law firm, Simpson, Thacher & Bartlett. Somehow, all of the Big Law masterminds paid big fees to scrutinize what they were helping to bring to the public markets, failed to see the self-dealing by WeWork’s then Chairman and CEO, Adam Neumann, as fatal to a public listing of its stock. Neumann owed his loyalty to the company under the past century of corporate law. But, instead, he was buying up commercial real estate on his own behalf and then leasing it back to WeWork. According to the IPO prospectus, WeWork was leasing four properties from Neumann on which it owed “future undiscounted minimum lease payments” of “approximately $236.6 million….” Neumann also owned another six properties which WeWork might decide to buy from him according to the prospectus. Neumann also had the right to overrule the Board of Directors. According to the prospectus: “Adam [Neumann] controls a majority of the Company’s voting power, principally as a result of his beneficial ownership of our high-vote stock. Since our high-vote stock carries twenty votes per share, Adam will have the ability to control the outcome of matters submitted to the Company’s stockholders for approval, including the election of the Company’s directors. As a founder-led company, we believe that this voting structure aligns our interests in creating shareholder value.” That didn’t turn out to be true. As of this morning, Forbes puts Neumann’s net worth at $2.2 billion. WeWork’s shareholders are sitting with an effective 3-cent stock that is likely to be wiped out in bankruptcy. How did Neumann get so rich bringing a dog to market? In October 2019, CNBC reported this: “Former WeWork CEO Adam Neumann will get up to $1.7 billion to walk away from the company and give up his voting rights, according to people familiar with the matter. SoftBank will pay Neumann up to $970 million for his shares, a $185 million consulting fee and will offer him $500 million in credit to help repay his loans to J.P. Morgan Chase, UBS and Credit Suisse, said the people, who asked not to be named because details of the agreement are private.” What is Neumann up to lately? Last week he was cavorting in Riyadh, along with speakers Jamie Dimon, Chairman and CEO of JPMorgan Chase, and David Solomon, Chairman and CEO of Goldman Sachs, at the Saudi Arabia investment summit. The IPO in 2019 was so heavily panned by Professor Galloway, ourselves, and numerous others that it was cancelled — delivering egg to the faces of its underwriters and their well-paid lawyers. Neumann resigned as CEO shortly after the IPO was pulled. Two years later, WeWork did an end run by going public by merging with a special-purpose acquisition company (SPAC). The key functions of Wall Street are to efficiently allocate capital to deserving businesses and act as an effective pricing mechanism. When a company goes from a valuation of $47 billion in 2019 to $9 billion in 2021 to $59 million in 2023, Wall Street’s pricing mechanism is broken. And when a CEO pockets $2.2 billion after nefarious self-dealings and the company files bankruptcy four years later, Wall Street’s key function as an efficient allocator of capital is also broken. (See House Lawmakers Will Hear Today How the Integrity of U.S. Markets Is Being Dirtied by SPACs and Direct Listings: Coinbase Should Be a Case Study.) Yesterday, another once highly celebrated young entrepreneur, Sam Bankman-Fried, whose FTX crypto exchange had been gearing up to go public but is now in bankruptcy, was convicted of pulling off a massive fraud. For why WeWork’s Adam Neumann was never prosecuted, see this blog post from former U.S. Labor Secretary Robert Reich, titled: “The 6 secrets to becoming a fabulously rich con artist.” Something is fundamentally wrong with the structure of Wall Street, the watchdogs that are supposed to be policing it, the Senate Banking Committee that is supposed to be attending to timely reforms, and the Big Law firms that seem more interested in raking in billions than insuring the integrity of markets. The failure of all of these checks and balances have their roots in the corruption of campaign financing laws with unlimited money from corporations, hedge funds and Wall Street’s billionaires now grossly disfiguring every aspect of government by the people. This simply can’t end well. As we saw in 2008, markets eventually collapse under the weight of their own corruption, cratering the U.S. economy in the process.

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In the WeWork IPO, the Money Trails End Up at JPMorgan’s Doorstep
by Gunnar Larson 28 Apr '24

28 Apr '24

https://wallstreetonparade.com/2019/09/in-the-wework-ipo-the-money-trails-e… By Pam Martens and Russ Martens: September 16, 2019 ~ According to the amended prospectus filed with the Securities and Exchange Commission to alert the public to the thousands of warts with malignant possibilities sprouting out of the office rental company, WeWork, which plans to offer its shares to the public for the first time, JPMorgan Chase will receive something no other underwriter is getting in this deal: a cool $50 million extra as a “structuring fee.” On top of that, of course, the bank will also get the fat underwriting fees that the other banks involved in the IPO get. That’s just one of the many curious ways that JPMorgan Chase stands out in its relationship with WeWork. (The parent of WeWork, The We Company, is actually offering the shares to the public.) As it turns out, quite a few of JPMorgan Chase’s commercial real estate clients who have obtained massive loans from the bank are benefitting from WeWork taking out big leases in their buildings, helping JPMorgan Chase’s clients thus have a lower vacancy rate and thus a smaller chance of defaulting on their loans to the bank. Those corporate clients include Rudin Management; L&L Holding Company; and Midwood Investment and Development, to name just a few. JPMorgan Chase is also one of three banks that has given an eye-popping $500 million line of credit to WeWork’s CEO, Adam Neumann, a 40-year old who previously lived in a kibbutz in Israel. According to the prospectus, Neumann has drawn down $380 million of the line of credit thus far. In addition, JPMorgan Chase “has made loans and extended credit” to Neumann “totaling $97.5 million across a variety of lending products, including mortgages secured by personal property and unsecured credit lines and letters of credit,” according to the prospectus. And then there is JPMorgan Chase’s central role in a very, very strange deal that was spun to the public as WeWork having the financial clout to buy the Lord & Taylor flagship store in Manhattan for $850 million in 2017. On October 24, 2017 two very savvy business writers for the New York Times, Michael J. de la Merced and Michael Corkery, wrote this: The company that owns the department store chain, Hudson’s Bay, said Tuesday that it was selling off the flagship store to WeWork, a seven-year-old start-up whose office-sharing model is helping to reinvent the concept of work space.” Three days later Ginia Bellafante said it again in the New York Times – that WeWork was buying the Lord & Taylor building, noting that “WeWork’s purchase of the Lord & Taylor building has a resonance beyond the obvious. WeWork leases office space to small but growing companies, giving them shared access to communal rooms that look like lounges with bars, air-hockey tables, lemon-infused water and so on.” Again on December 30, 2018 and as recently as August 28, 2019 someone was giving the New York Times the script which it dutifully spit out that WeWork had purchased the Lord & Taylor building. But according to the prospectus, JPMorgan Chase put up $607 million in a loan toward the purchase of the Lord & Taylor building at 424 Fifth Avenue, which is listed as long-term debt owed by The We Company in the prospectus. The We Company only shelled out $50 million according to the prospectus and received a 17.4 percent interest. The We Company is also on the hook for $1.7 billion in lease payments for the 20-year lease it signed on the building. Here’s the actual wording from the prospectus: “In February 2019, the Company invested $50 million for a 17.4% interest in a joint venture that simultaneously closed on the acquisition of a $850 million real estate investment located in New York City (the ‘424 Fifth Venture’). The WPI Fund is also a 39.1% owner in the 424 Fifth Venture. The 424 Fifth Venture was initially capitalized with a total of $287 million of equity and a debt facility of up to $900 million, of which, approximately $600 million was drawn down at closing.” According to the prospectus, “the entities that currently advise and manage the WPI Fund [which owns the 39.1 percent of the Lord & Taylor building] were each indirectly owned 50% by us [The We Company] and 50% by affiliates of the Rhône Group. This year the WPI Fund was merged into something called ARK with various consideration contributed by both The We Company and Rhone Group resulting in a structure that is as clear as mud in the prospectus. At the time that WeWork was being reported as buying the Lord & Taylor building, the New York Post reported this: “WeWork will convert the 11-story building at Fifth Avenue and 38th Street into its headquarters while making a $500 million investment in Toronto-based HBC [Hudson’s Bay Company] along with Rhone Capital, which formed a joint venture with WeWork to create WeWork Property Advisors.” Hudson’s Bay (HBC) announced in June of this year that a consortium of shareholders wants to take it private. That consortium includes Richard A. Baker, Governor and Executive Chairman of HBC; Rhone Capital L.L.C.; and WeWork Property Advisors. Advising on the deal will be…wait for it…J.P. Morgan Securities, a unit of JPMorgan Chase – thus opening the door to potentially more fees for the bank. According to more recent reporting, HBC going private may be scuttled by other investors who see the deal as a low ball bid. To understand what’s really going on here, it helps to have some historical perspective on JPMorgan Chase. It is the only mega U.S. bank in U.S. history to survive admitting to three criminal felony counts and the only mega U.S. bank in history to leave the same Chairman and CEO, Jamie Dimon, in place after having its reputation dragged through the mud over those felony counts and $36 billion in fines for other outrageous allegations by its regulators. Two of the criminal felony counts came in 2014 in conjunction with JPMorgan Chase looking the other way while Bernie Madoff ran his Ponzi scheme out of a business checking account at its bank over two decades. According to Irving Picard, the trustee of the Madoff victims’ fund, this was not just incompetent risk controls at JPMorgan Chase (which it is also famous for). This was an operation structured like those Russian nesting dolls with lots of moving parts and hidden agendas. After reading the details in the criminal charges released by the Justice Department in the matter, the Los Angeles Times asked in a photo caption of Madoff standing outside the Federal Court: “Bernie Madoff: Was he part of the JPMorgan ring, or was JPMorgan part of his ring?” One might now be forgiven for suspecting a quid pro quo embedded in the WeWork IPO: Is Adam Neumann part of the JPMorgan ring or is JPMorgan part of the Adam Neumann ring? Our money is on the former since all of the labyrinthine money trails uncannily end up at the doorstep of JPMorgan Chase. Neumann, of course, has been making hay while the sun shines and the SEC is asleep at the switch. Despite owing his loyalties to WeWork as its Chairman and CEO, he has bought four buildings on his own and leased them back to WeWork on which the company owes “future undiscounted minimum lease payments” of “approximately $236.6 million….” In addition to those four properties, Neumann owns another six properties which WeWork may decide to buy from him according to the prospectus. Neumann and his wife, Rebekah (who has been serving as the brand manager for the company) aren’t putting all their eggs in the WeWork basket. They have put those extremely generous loans from JPMorgan Chase to good use, diversifying their assets away from a highly speculative IPO and into residential real estate in some of the toniest, upscale communities in America. The Neumanns now own five opulent homes for which they paid a total of $80 million: two in Manhattan; one in the Hamptons at the East End of Long Island; a country estate in Westchester, New York; and a $22 million estate in the Bay Area of San Francisco that was newly added to their residential asset base just last year.

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WeWork’s Stock Imploded to 13 Cents Yesterday; Its Cult-Master, Adam Neumann, Cashed Out Years Ago and Is a Billionaire
by Gunnar Larson 28 Apr '24

28 Apr '24

https://wallstreetonparade.com/2023/08/weworks-stock-imploded-to-13-cents-y… By Pam Martens and Russ Martens: August 10, 2023 ~ Adam Neumann Adam Neumann, Chairman and CEO of The We Company in 2019 That office space company we warned our readers about so extensively in 2019, WeWork, collapsed to 13 cents a share yesterday. Its bonds were trading at about 13 cents on the dollar. WeWork’s stock has been on a steady decline since the company began to trade publicly on October 21, 2021. The chart above shows how investors would have fared in WeWork stock versus a 10-year U.S. Treasury note since WeWork started trading in 2021. The collapse in the share price this week came as a result of an 8-K filing with the Securities and Exchange Commission on Tuesday in which the company uttered these discomforting words: “…as a result of the Company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the Company’s ability to continue as a going concern.” The reason we invested so much digital ink on WeWork back in 2019 was because some very shrewd Wall Street lawyers and investment bankers were planning to dump this dog on the American people as an IPO with an insane valuation. JPMorgan Securities LLC, a unit of five-felony-count JPMorgan Chase, and Goldman Sachs & Co. were to be the lead underwriters on the IPO. Scott Galloway, a professor at NYU’s Stern School of Business, wrote on his blog at the time that “bankers (JPM and Goldman) stand to register $122 million in fees flinging feces at retail investors….” The deal was so dodgy that Galloway took to calling it WeWTF. Wall Street On Parade called WeWork’s planned IPO “hype wrapped in subterfuge.” We said “It’s a money-losing commercial real estate company attempting to pass itself off as the Dalai Lama of office space rentals. The company has never made a dime of profits and its losses spiraled to $900 million in the first half of this year.” To enhance its valuation, WeWork lamely attempted to suggest it was tied to technological breakthroughs. We explained in 2019: “We’re also going to have to excise ‘the extensive technology infrastructure’ because what they’re really talking about is not Silicon Valley breakthrough technology but jazzing up drab offices with beer taps, microbrewed coffee, fruit-infused water and WiFi – the latter of which you can get for free in any Panera’s, along with a table and chair, for the price of a cup of herbal tea.” In an attempt to give this lipstick-on-a-pig of an IPO added luster, WeWork was represented by a very sophisticated law firm, Skadden Arps, Slate, Meagher & Flom. The Wall Street bank underwriters were represented by another sophisticated law firm, Simpson, Thacher & Bartlett. How all of these legal eagles yawned at the conflicts of the then Chairman and CEO of WeWork, Adam Neumann, was a question worthy of the napping SEC. As then Chairman and CEO of WeWork, Neumann owed his loyalty to the company under the past century of corporate law. But, instead, he was allowed to buy up commercial real estate on his own behalf and then lease it back to WeWork. According to the IPO prospectus, WeWork was leasing four properties from Neumann on which it owed “future undiscounted minimum lease payments” of “approximately $236.6 million….” Neumann owned another six properties which WeWork might decide to buy from him according to the prospectus. Unfortunately, Neumann had the right to overrule the Board of Directors according to the prospectus: “Adam [Neumann] controls a majority of the Company’s voting power, principally as a result of his beneficial ownership of our high-vote stock. Since our high-vote stock carries twenty votes per share, Adam will have the ability to control the outcome of matters submitted to the Company’s stockholders for approval, including the election of the Company’s directors. As a founder-led company, we believe that this voting structure aligns our interests in creating shareholder value.” In 2019, Neumann was 40 years old, a former member of the Israeli military, and had previously lived in a Kibbutz. Where did he get those huge sums of money to buy up all that real estate? According to the prospectus, JPMorgan Chase Bank, UBS, and Credit Suisse gave Neumann a $500 million credit line, of which he had already tapped $380 million. In addition, JPMorgan Chase had “made loans and extended credit” to Neumann “totaling $97.5 million across a variety of lending products, including mortgages secured by personal property and unsecured credit lines and letters of credit.” The IPO in 2019 was so heavily panned by Professor Galloway, ourselves, and numerous others that it had to be cancelled — a big embarrassment to JPMorgan, Goldman and those big name law firms. Neumann resigned as CEO shortly after the IPO was pulled. Two years later, WeWork did an end run by going public by merging with a special-purpose acquisition company (SPAC). As of this morning, Forbes puts Neumann’s wealth at $2.2 billion. He made his wealth by selling shares in WeWork when it was still private. Professor Galloway predicted four years ago how the end would come to WeWork. He nailed it, writing: “WeWTF is an especially risky business going into a recession, when the ability to variabilize costs is limited, but revenue decline is unlimited. WeWTF has $47 billion in long-term obligations (leases) and will do $3 billion in revenue this year. What could go wrong?” Galloway was also ahead of his time calling WeWork a “cult.” Last year, Apple TV released a series called WeCrashed, depicting the cultish nature of the company. It starred Jared Leto as Neumann and Anne Hathaway as his wife, Rebekah. (See trailer below.) The purpose of Wall Street is to be an efficient allocator of capital so that businesses with real prospects for innovation, job creation, and growth come to market to make America more prosperous and to keep it competitive on the global stage. Unfortunately, we find ourselves writing more and more about cults that are trading on the New York Stock Exchange. (In addition to WeWork, see here, here and here.) And, of course, there is the cult at the FTX crypto exchange which was gearing up to go public but imploded under the weight of its massive frauds instead and is now in bankruptcy proceedings. In that company, the key executives lived together in a penthouse and took billions of dollars in personal loans for themselves — money which belonged to its customers. Something is deeply, deeply wrong with the structure of Wall Street and the watchdogs that are supposed to be policing it.

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WeWork?s Unraveling Is Another Indictment of Wall Street?s Universal Bank Model
by Gunnar Larson 28 Apr '24

28 Apr '24

https://wallstreetonparade.com/2019/10/weworks-unraveling-is-another-indict… By Pam Martens and Russ Martens: October 22, 2019 ~ Adam Neumann Adam Neumann, Founder of WeWork WeWork is just one more in a long series of Wall Street scandals that prove that the universal banking model is little more than a thinly-disguised wealth transfer system from the pockets of average Americans to the 1 percent. Just two months ago WeWork’s two lead Wall Street underwriters, JPMorgan Chase and Goldman Sachs, were planning to offer WeWork’s shares to the public investor at a valuation in excess of $47 billion. Now we are learning that the company may run out of money next month and has an actual valuation of $8 billion or less. WeWork’s founder, Adam Neumann, who was attempting to cash out of his company that had never made a dime of profits in its nine years of existence and had run up losses of $900 million in just the first six months of this year, will walk away as a billionaire according to a report in the Wall Street Journal this morning. According to the Journal, the Japanese SoftBank is planning to take over the mess and plow in more billions in a private buyout. SoftBank already has $10.5 billion invested in WeWork so it is effectively doubling down on a bad trade – something that even rookie stockbrokers know better than to do. The obvious questions are why did two seasoned underwriters agree to bring this dog of a company public; why did JPMorgan, pre-IPO, shower Neumann with more than $100 million in personal loans despite his egregious conflicts of interest with WeWork, a company it was planning to bring public; what does it say about the capital allocation process in the United States that this charade came so close to going public and when the ethically-challenged Neumann can walk away as a billionaire? Neumann was buying up real estate and then leasing it to WeWork. He also trademarked the name “The We Company” and sold it back to the company for $5.9 million. (The money was returned after the deal was reported in the media.) Goldman Sachs and JPMorgan Chase are known as “universal” banks. Each is the owner of a commercial bank which takes in federally-insured deposits from moms and pops across America while also owning an investment bank that underwrites and trades in high risk stock and bond offerings. That is a combustible mix that is completely incompatible with U.S. statutory mandates for the “safety and soundness” of commercial banks whose deposits are backstopped by the U.S. taxpayer. >From 1933 until 1999, universal banks were illegal in the United States. Then one day Sandy Weill whispered to John Reed that “we could be so rich,” and got the Clinton administration to go along with repealing the 66-year old Glass-Steagall Act which prevented these kinds of mergers. The universal bank that Weill and Reed created, Citigroup, did indeed make both men obscenely rich. It also collapsed in 2009 to a 99 cent stock while receiving the largest taxpayer bailout in U.S. history. In order to maintain safety and soundness, federal regulators require that commercial banks stay clear of dangerous reputational risks that might prompt a run on the bank by depositors. The poster child for this dangerous cocktail of mixing depository banks with Wall Street’s risky trading is the London Whale scandal that occurred at JPMorgan Chase in 2012. JPMorgan Chase had the not-so-brilliant idea to create a unit known as the Chief Investment Office (CIO) inside its federally-insured commercial bank where it would gamble in high risk derivatives in London and call it hedging for the commercial bank in hopes of slipping under the radar of regulators. The derivative bets became so large that they rocked the derivatives market, which resulted in media coverage and exposure of what was really going on. What was really going on was $6.2 billion in depositor losses from derivative bets gone awry inside JPMorgan’s federally-insured bank. The federal regulator of national banks, the Office of the Comptroller of the Currency, stated in its consent order against JPMorgan Chase that its findings “establish that the Bank has deficiencies in its internal controls and has engaged in unsafe or unsound banking practices and violations of 12 C.F.R. Part 3, Appendix B (Market Risk Management Amendment) with respect to the credit derivatives trading strategies, activities and positions employed by the CIO on behalf of the Bank.” What does WeWork have to do with the safety and soundness of JPMorgan Chase? It sounds an awful lot like JPMorgan may have been “tying” its offer of personal loans from its commercial bank to Adam Neumann in exchange for its investment bank landing the role of lead underwriter in the Initial Public Offering (IPO) of WeWork shares. Tying is illegal and could, once again, subject the bank to charges of engaging in unsafe or unsound banking practices. If tying was not involved here, how does one explain the size of the money that was lavished on Neumann, the CEO of a failed business model of taking out long-term leases on office real estate (to the tune of $47 billion) and then subleasing it to startups and freelancers on a short-term basis – folks who are known to flee to a home office in a downturn. The failure of this model was further evidenced by the fact that in 2018 the company had lost $1.6 billion with an escalating $900 million in losses in the first two quarters of 2019. According to the prospectus filed with the Securities and Exchange Commission for the now-aborted IPO, JPMorgan Chase “has made loans and extended credit to Adam Neumann totaling $97.5 million across a variety of lending products, including mortgages secured by personal property and unsecured credit lines and letters of credit.” The prospectus also revealed that JPMorgan Chase was one of three banks that had given Neumann a $500 million line of credit, of which he had already drawn down $380 million as of July 31, 2019. The line of credit was secured by shares of stock in The We Company, the parent name of WeWork. In addition, according to multiple media reports, JPMorgan Chase was the third largest investor in the pre-IPO shares of WeWork. Clearly, it will have to take a major haircut on those investments. Related Articles: The Dickensian Tale of the WeWork IPO In the WeWork IPO, the Money Trails End Up at JPMorgan’s Doorstep JPMorgan Chase Has Billions in CRE Loans Riding on WeWork Surviving Will Jamie Dimon Finally Lose His Job Over Racketeering Charges?

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Death blow to the patriarchy time!
by pro2rat＠yahoo.com.au 28 Apr '24

28 Apr '24

Death to Michael Bloomberg ( my 2k sats ) “NO GODS, NO MASTERS, NO HUSBANDS ' https://www.anarchistnews.org/content/%E2%80%9Cno-gods-no-masters-no-husban… Gunnar Larson type suits go fuck yourselves.

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Fwd: FOIL Request No. 2021-085728 (Larson) - DFS Tech Sprint
by Gunnar Larson 27 Apr '24

27 Apr '24

Dear Carmen and Pascale: xNY.io - Bank.org today elects to re-visit FOIL Request No. 2021-085728. Specific to NY-DFS asking xNY.io - Bank.org for certification, "With respect to your request for a list of names of Techsprint registrants, pursuant to Public Officers Law § 89(2)(b)(iii), an unwarranted invasion of personal privacy includes, but is not limited to the “sale or release of lists of names and addresses..." xNY.io - Bank.org can confirm we will not release the information publicly. Would NY-DFS kindly be able to fulfill this request? Have a great day. Thank you, Gunnar -- Gunnar Larson xNY.io | Bank.org MSc - Digital Currency MBA - Entrepreneurship and Innovation (ip) G(a)xNY.io +1-917-580-8053 New York, New York 10001 ---------- Forwarded message --------- From: JeanBaptiste, Pascale (DFS) <Pascale.JeanBaptiste(a)dfs.ny.gov> Date: Fri, Jun 4, 2021, 1:31 PM Subject: FOIL Request No. 2021-085728 (Larson) To: G(a)xNY.io <G(a)xny.io> Cc: Garrett, Carmen (DFS) <Carmen.Garrett(a)dfs.ny.gov> Dear Mr. Larson: Please see the attached determination in response to your FOIL request. Thank you. ANDREW M. CUOMO Governor LINDA A. LACEWELL Superintendent One State Street New York, NY 10004 │ www.dfs.ny.gov VIA EMAIL (G(a)xNY.io) June 4, 2021 Mr. Gunnar Larson xNY.io - CryptoBank New York, New York 10001 Re: Your Freedom of Information Law (“FOIL”) Tracking No. 2021-085728 Dear Mr. Larson: I write in response to a FOIL request that you submitted to the New York State Department of Financial Services (“Department”) on March 3, 2021, which has been assigned the above-referenced tracking number and seeks the “DFS' approval roster (complete approved registration list) with corresponding business affiliation” for registrants of the DFS Techsprint. Specifically, your FOIL request reads as follows: “Good day: Per the e-mail correspondence below concerning the DFS Tech Sprint Innovational, this request is to define and keep the public informed of DFS' approval roster (complete approved registration list) with corresponding business affiliation on the basis of New York's Freedom of Information Law (FOIL) One of the tools available to the public to attain this type of information is access to records concerning any participants role in computer crimes actively engaged at the will of xNY.io's Tech Sprint denial. As the Sprint is now ongoing with DFS' approved participants. the member roster report and affiliation statistics stand already available. Can you kindly advise if this FOIL records request can be complete this week? Thank you. -- Gunnar Larson - www.xNY.io MSc - Digital Currency MBA - Entrepreneurship and Innovation (ip) G(a)xNY.io+1-646-454-9107New York, New York 10001 ---------- Forwarded message --------- From: dfs.sm.DfsNext Date: Mon, Feb 22, 2021 at 3:56 PM Subject: Update on DFS Techsprint To: dfs.sm.DfsNext Hello, Thank you for your interest in the Techsprint. Unfortunately, at this time, we are not able to extend you an invitation to participate. Thank you again for applying. Best,DFS Next DFSNext New York State I. Business Affiliations of Techsprint Registrants The Department is withholding the business affiliations of Techsprint registrants pursuant to Public Officers Law § 87(2)(b), which provides an exemption from disclosure for records or portions thereof that, “if disclosed, would constitute an unwarranted invasion of personal privacy under the provisions of subdivision two of section eighty-nine of this article.” Public Officers Law § 89(2) provides a non-exhaustive list of the types of information that, if disclosed, would constitute an unwarranted invasion of personal privacy, which includes employment history. See Public Officers Law § 89(2)(b)(i). In our view, because employment history is specifically protected, the release of business affiliations of Techsprint registrants would constitute an unwarranted invasion of personal privacy under Public Officers Law § 87(2)(b). Accordingly, the portion of your request that seeks the business affiliations of Techsprint registrants is denied. Pursuant to N.Y. Public Officers Law § 89(4), you may appeal the Department’s determination to withhold records within 30 days by sending an email to D. Monica Marsh, Principal Attorney, New York State Department of Financial Services at FOIL.Appeals(a)dfs.ny.gov. II. List of Names of Techsprint Registrants With respect to your request for a list of names of Techsprint registrants, pursuant to Public Officers Law § 89(2)(b)(iii), an unwarranted invasion of personal privacy includes, but is not limited to the “sale or release of lists of names and addresses if such lists would be used for solicitation or fund-raising purposes.” Please provide your certification that you will not use the requested information for solicitation or fundraising purposes by June 11, 2021. If the Department does not receive your certification by that date, we will deem this portion of your FOIL request withdrawn. Very truly yours, Pascale Jean-Baptiste Acting FOIL Officer Office of General Counsel

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Crypto lender Nexo seeks $3 bln in damages from Bulgaria over aborted investigation | Reuters
by Gunnar Larson 27 Apr '24

27 Apr '24

My God! --- https://www.reuters.com/technology/crypto-lender-nexo-seeks-3-bln-damages-b… LONDON, Jan 24 (Reuters) - Cryptocurrency lender Nexo is seeking $3 billion in damages from Bulgaria over an aborted criminal investigation that the company alleges scuppered its plans for a U.S. stock market listing and a soccer sponsorship deal, legal filings seen by Reuters show. Nexo AG, a Swiss unit of Cayman Islands-based Nexo Capital, alleges the investigation tarnished its reputation and destroyed shareholder value, according to a document filed with the World Bank's International Centre for Settlement of Investment Disputes (ICSID). The Washington-based ICSID, an international arbitration institution that handles disputes between international investors and states, registered the case on Jan. 18, its website showed. An ICSID spokesperson could not confirm the level of damages sought or other details. Bulgaria's finance ministry said it had received a request for arbitration from the ICSID, which would be reviewed by a specialised inter-departmental committee that would then propose next steps. "This or any other communications... shall not be considered in any way an admission as to the substance of any claims or as an acceptance of any arbitral jurisdiction," it added. The prosecutor's office, also a respondent in the case, did not respond to requests for comment. Bulgarian prosecutors in Jan. 2023 launched an investigation into Nexo AG, raiding offices in Sofia and charging its founders with offences that included participating in an organised crime group to launder money and commit tax and computer fraud. But they dropped the case last month, saying there was no evidence of criminal activity. Prosecutors said there was no legal framework for crypto asset services in Bulgaria. Nexo, co-founded by former Bulgarian lawmaker Antoni Trenchev, had denied wrongdoing and alleges the investigation was politically motivated - an allegation previously denied by prosecutors, local news agency BTA has reported. U.S. regulators in particular have been cracking down on alleged illicit activity at top crypto firms, but it is unusual for a crypto firm to take on a country over compensation for a investigation that was dropped. ICSID has previously ordered various countries, including Pakistan, Ecuador and Venezuela, to pay out billions in damages to companies. Reuters was unable to verify Nexo's alleged damages. In an interview with Reuters earlier this month, Trenchev declined to publicly name the banks he said had been instructed for any listing or which European soccer club ended sponsorship talks. Crypto lenders act like banks for the crypto world, offering customers interest on cryptocurrencies they deposit with the platform. Nexo, founded in 2018, phased out its U.S. products and services last year and agreed to pay $45 million to settle charges from the U.S. Securities and Exchange Commission and state regulators that it failed to register its crypto asset lending product.

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