Last week, the FTX court saga had elements of a TV drama, with Sam “SBF” Bankman-Fried’s former business associate and girlfriend, Caroline Ellison, sharing some shocking stories about SBF’s rule over the company. Ellison admitted to fraud during her time as CEO at Alameda under Bankman-Fried’s direction. However, she blamed the misuse of FTX user funds directly on SBF, claiming he “set up the systems” that led to Alameda taking roughly $14 billion from the exchange.
Ellison revealed that Alameda’s bad loans created market panic around FTX, causing users to withdraw their funds. FTX then paused withdrawals to contain the situation, and the exchange came crashing down within days. When one of the employees attending the meeting asked Ellison how FTX intended to pay back its customers, she said the crypto exchange was planning to raise further funds to fill the gap.
She also told the court about the SBF’s ambitions to become the president of the United States, his willingness to “flip a coin and destroy the world,” and his plans to attract investment from Saudi Crown Prince Mohammed bin Salman.
Meanwhile, former FTX chief technology officer Gary Wang, who’s also been giving his testimony in court, pleaded guilty to four charges, including conspiracy.
IRS must implement crypto reporting requirements before 2026
Seven members of the United States Senate have called on the Treasury Department and Internal Revenue Service (IRS) to advance a rule imposing certain tax reporting requirements for crypto brokers “as swiftly as possible.” A group of U.S. senators, including Elizabeth Warren and Bernie Sanders, criticized a two-year delay in implementing crypto tax reporting requirements, which are scheduled to go into effect in 2026 for transactions in 2025. The lawmakers claimed delaying implementation of the rules could cause the IRS to lose roughly $50 billion in annual tax revenue and continue policies allowing bad actors to avoid paying taxes.
DeFi doesn’t represent a “significant risk” to financial stability in Europe yet
The European Securities and Markets Authority (ESMA) — the European Union’s financial markets supervisory authority — released an article on decentralized finance (DeFi) and the risks it poses to the EU market. In a 22-page report, the ESMA admits the promised benefits of DeFi, such as greater financial inclusion, the development of innovative financial products, and the enhancement of financial transactions’ speed, security and costs.
Warning about the risks of the technology, the regulator concludes that currently, DeFi and crypto, in general, do not represent “meaningful risks” to financial stability. That is because of their relatively small size and limited interconnectedness between crypto and traditional financial markets.
Malaysia approves its fifth digital exchange
The Malaysia-based Hata has received in-principle approval from the Securities Commission Malaysia to register as a Recognized Market Operator as a digital asset exchange and digital broker. The approval means Hata could launch its services in six to nine months. Hata will become the fifth regulated digital asset exchange in Malaysia and the first legal entity to receive approval as a digital broker, allowing it to display trade orders from other regulated exchanges.