Caroline Ellison’s Explosive Revelations: Law Decoded
Last week, the FTX court saga had TV drama elements, with Sam “SBF” Bankman-Fried's former business partner and girlfriend Caroline Ellison sharing some shocking stories about SBF's reign over the company. Ellison admitted to committing fraud while she was CEO at Alameda under Bankman-Fried. However, Alameda directly blamed the SBF for misappropriating FTX user funds, saying it “set up systems” that led to the embezzlement of nearly $14 billion.
Ellison said Alameda's bad credit created market panic in the FTX area, prompting consumers to withdraw their funds. FTX then paused withdrawals to contain the situation, and the exchange crashed within days. When asked by one of the employees at the meeting how FTX planned to pay its customers, Ellison said that the crypto exchange planned to raise more funds to fill the gap.
She also told the court about SBF's desire to become president of the United States, his desire to “flip a coin and destroy the world” and plans to attract investment from Saudi Crown Prince Mohammed bin Salman.
Meanwhile, former FTX chief technology officer Gary Wang, who is testifying in court, has pleaded guilty to four charges, including conspiracy.
The IRS must implement crypto reporting requirements before 2026.
Seven members of the United States Senate have called on the Treasury Department and the Internal Revenue Service (IRS) to advance legislation “as soon as possible” to impose certain tax reporting requirements on crypto brokers. A group of US senators, including Elizabeth Warren and Bernie Sanders, criticized the two-year delay in implementing crypto tax reporting requirements, which were planned to apply to transactions in 2026 and 2025. The lawmakers said it could lead to a delay in the implementation of the law. The IRS will continue to lose about $50 billion in annual tax revenue and continue a policy that allows bad actors to avoid paying taxes.
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DeFi does not yet represent a “significant risk” to European financial stability.
The European Securities and Markets Authority (ESMA) – the European Union's financial markets regulatory authority – has published an article on decentralized finance (DeFi) and its potential risks to the EU market. In a 22-page report, ESMA acknowledged DeFi's promised benefits of financial inclusion, the development of innovative financial products and the speed, security and costs of financial transactions.
Warning about the risks of the technology, the regulator concludes that currently, DeFi and crypto, in general, do not represent “meaningful risks” for financial stability. This is due to their relatively small size and limited correlation between crypto and traditional financial markets.
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Malaysia has approved the fifth digital exchange
Malaysia-based Hata has received in-principle approval from the Securities Commission Malaysia to register as a digital asset exchange and digital broker as a recognized market operator. The approval means Hata can start its services in six to nine months. Hata will be the fifth regulated digital asset exchange in Malaysia and the first legal entity to be licensed as a digital broker, allowing it to mirror trade orders from other regulated exchanges.
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