Crypto Twitter has seemingly taken issue with Sam Bankman-Fried’s $250 million bail bond, allowing him to spend Christmas in his parent’s Palo Alto home without paying a single dime upfront.
The former FTX CEO arrived in New York from the Bahamas on Dec. 21 and appeared in court on Dec. 22 where he was released on bail via a “personal recognizance bond” — essentially a written promise from the defendant that they will show up for future court appearances and not engage in any illegal activity while out on bail.
According to the release agreement filed on Dec. 22, no cash was required to be deposited with the court, but the bond conditions see to it that Bankman-Fried’s parent’s five-bedroom home in Palo Alto will be used as collateral for the $250 million bond.
Some of the crypto community on Twitter were initially confused by the $250 million no-upfront-cost bail conditions, questioning how Sam Bankman-Fried was able to post the $250 million bail figure after he previously claimed he had less than $100,000 in his bank account.
Under the bail agreement, the bond is only paid up if Sam Bankman-Fried doesn’t appear for future court appearances or violates other conditions of his bail, such as appearing for court proceedings and surrendering to serve a court sentence.
Meanwhile, those who reviewed the court documents instead shared concerns over Bankman-Fried’s guarantors — including his father, Allan Joseph Bankman, and mother, Barbara Fried, who would be on the hook should SBF violate the conditions of his bail.
Host of the Wall of All Streets Podcast Scott Melker tweeted on Dec. 23 saying that while SBF didn’t have to pay $250 million to stay out of jail, if he “skips bail,” his parents will have to work “17 extra jobs” to come up with the money.
Vocal crypto Twitter user Autism Capital elaborated on the matter explaining that while he has not had to pay any money upfront, he has put his parents, relatives, and non-relatives in a difficult situation.
While the host of the Regulatory Jason Podcast, Jason Brett, tweeted on Dec. 23 that while it might not be fair that SBF is staying in a luxurious home while on trial, he reminded his followers that everyone in the United States is entitled to a fair trial and the presumption of innocence.
Steven McClurg tweeted a statement implying that SBF’s parents shouldn’t be allowed to put up their home as collateral on the $250 million bail as the home was bought with “stolen FTX funds.”
The world’s largest crypto exchange, Binance, has been dealing with a torrent of FUD (fear, uncertainty, and doubt) since the downfall of FTX. The firm is now fighting back with its latest blog post.
The first of which was the temporary suspension of USDC withdrawals earlier this month. It explained that this was done during a “token swap” conversion period, with the exchange consolidating its stablecoin reserves into BUSD.
The next thing it addressed was the availability of sufficient reserves for withdrawals. It confirmed that “all users’ assets in Binance are supported 1:1,” and that its financial status was very healthy since it makes ample profit on transaction fees. On Dec. 16, CryptoQuant verified Binance's reserves, reporting that there was no “FTX-like” behavior.
“Binance will not embezzle users’ funds for any transactions or investments, nor does it have any debts, nor is it on the list of creditors of any company that has recently gone bankrupt.”
Regarding Mazars and the “Big Four” auditing firms refusing to work with crypto companies, it said that encrypted on-chain verification was a new field that these companies may not have the capacity to carry out.
It noted that these audits are typically aimed at the financial situation of the listed company, not verifying reserve assets.
Mazars has since removed Binance's audit reports from its website. Binance also stated that it did not need to disclose financial information because it was a private company, not a listed one.
“In many jurisdictions where we operate, we have shared or are sharing operational and financial information as required by local regulators.”
Regarding a Reuters report claiming that the U.S. Department of Justice was investigating the company, Binance stated that mainstream media has been targeting the company with salacious reporting for quite a while now. It added that it had the most compliance licenses in the world and spent the most fighting crypto crime.
Finally, the blog post reiterated CEO Changpeng Zhao’s comments that Binance did not destroy FTX; FTX did that itself. Binance does not regard other exchanges as competitors, it said, adding tha“we are more focused on continuously promoting and expanding industry adoption.”
So there you have it. The FUD has been refuted but that hasn’t prevented an exodus from the exchange in recent weeks as investors moved to self-custody their crypto assets.
While self-custody is considered the ultimate way to secure one’s funds, many fail to acknowledge the risks associated with physically storing seed phrases. A search conducted by the State Police agency for Nevada ended up making a suspect’s seed phrase public after being picked up by the body cam.
A viral video making rounds on Twitter showed two police officers searching a suspect’s car and coming across pieces of paper. It turns out that the suspect was a strong believer in self-custody as unfolding the pieces of paper revealed the suspect’s seed phrase, which was hand-written — a popular method to prevent online compromises.
As the incident got recorded by one of the officer’s body cameras, the suspect’s seed phrase has now become public information.
“I am a proponent of free choice. Feel free to hold your crypto anyway you wish. But learn the risks of each method.”
The video sparked conversations around the best way to store seed phrases, with the most popular suggestion being memorizing the seed phrase. While the idea of learning the seed phrase — a unique combination of 12 or 24 words — by heart sounds safe, CZ pointed out that lack of inheritance and the forgetfulness of the human mind are two of the biggest flaws when it comes to storing important information on the “brain wallet.”
The arrest of former FTX CEO Sam Bankman-Fried for alleged misappropriation of funds was perceived as a cue to rethink long-term storage strategies of cryptocurrencies.
While an immediate reaction was to pull out the funds from crypto exchanges, the CEOs came forward to reassure the investors’ fund's safety regardless of where they intend to store their cryptocurrencies.
On the other side of the spectrum, Ray Youssef, the CEO of the crypto exchange Paxful, sided with the idea of Bitcoin self-custody. He promised to send weekly reminders to all investors to move their funds away from the exchange.
“My sole responsibility is to help and serve you. That’s why today I’m messaging all of our [Paxful] users to move your Bitcoin to self-custody. You should not keep your saving on Paxful, or any exchange, and only keep what you trade here,” he stated.
This Daily Dose was brought to you by Cointelegraph.