Holders of FTX’s FTT will be allocated 0.35% of the new Pudgy Penguins token PENGU, according to the NFT project’s distribution plan. 

Pudgy Penguins announced the launch of PENGU early on Friday. A total of 88 billion tokens will distributed, with 17.8% allocated to the project’s team, 25.9% to NFT holders, and 12.35% to liquidity. 

FTT holders will receive a share of 308 million tokens. Since the announcement, FTT rose by 7.7% to $3.75 before falling back to $3.39. However, roughly 13 hours beforehand, it had climbed 40%. 

X user @DarkCryptoLord claims this pre-pump was a sign that “someone’s committing crime in broad daylight” and accused the Pudgy Penguins team of insider trading. 

Read more: FTX sues Binance and CZ for ‘fraudulent tweets’ and $1.8B clawback

Last November, FTX announced that it expects to start repaying customers and creditors in March with a specific date to be announced this month. A total of $16.5 billion will be distributed to victims of the FTX crash. 

Most holders of FTT will likely have been victims of the FTX crash, however, despite a bankruptcy judge deeming FTT worthless, people are still buying and trading the token. Indeed, it has a 24-hour trading volume of almost $400 million.  

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Today’s news that FTX co-founder Gary Wang has been sentenced to time served and supervised release for his role in the multi-billion dollar FTX fraud scheme means that only three of the five executives involved will serve any time in prison for their part in the theft.

Wang pleaded guilty to four counts — wire fraud, conspiracy to commit wire fraud, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud — and was sentenced on Wednesday to time served and three years of supervised release on each.

The longest sentence was reserved for the mastermind of the theft, FTX founder and majority owner of Alameda Research Sam Bankman-Fried. He was sentenced to 25 years in prison.

The second-longest sentence was handed to FTX Digital Markets Chief Executive Ryan Salame, who was sentenced to seven and a half years for his role in using customer funds for influence-purchasing political donations. 

Read more: FTX sues Binance and CZ for ‘fraudulent tweets’ and $1.8B clawback

Caroline Ellison, the co-chief executive of Alameda Research and on-again-off-again romantic partner to Bankman-Fried, was sentenced to two years for charges of fraud and conspiracy, receiving substantial leniency thanks to her cooperation with prosecutors and law enforcement.

Wang, along with FTX’s Director of Engineering Nishad Singh, avoided prison time in their sentences, reflecting both their cooperation with the prosecution and their somewhat more peripheral role in the massive fraud. 

In total, this inner circle of FTX and Alameda executives have been sentenced to a total of 34.5 years in prison.

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Bankrupt crypto exchange FTX has sued rival Binance and its former chief Changpeng Zhao to recover $1.8 billion worth of shares that it says were wrongfully repurchased by Sam Bankman-Fried back in 2021.

In 2019, Zhao purchased a 20% share in FTX for $80 million. Under the leadership of Bankman-Fried, FTX repurchased the shares in July 2021 for $2.2 billion.

Bankman-Fried claimed at the time that the repurchase “just makes sense.” He told Decrypt that he and Zhao “had been expecting it would go in that direction for a little while, and now seems like a decent time to just go ahead and get it done.

“And obviously they did quite well on the investment as well, so I certainly think it’s been a win for them.”

However, in a complaint filed on Sunday in Delaware bankruptcy court, FTX claimed that because FTX and its trading firm Alameda Research were “balance-sheet insolvent by early 2021,” the deal was fraudulent (via Bloomberg).

FTX claims Binance’s CZ intended to “destroy his rival”

Bankman-Fried also eluded to Binance’s problems with regulatory scrutiny in the Decrypt interview. Indeed, in a much later interview for Michael Lewis’ book, Going Infinite, Bankman-Fried said the repurchase catalyzed a “cold war” between the pair, leading to a back-and-forth of thinly veiled threats via Twitter.

FTX’s complaint filed on Sunday addresses this “cold war” by further alleging that Zhao had a hand to play in FTX’s collapse. In response to CoinDesk’s damning article on November 2, 2022, which claimed that Alameda’s balance sheet is propped up by FTX’s FTT token, Zhao posted on Twitter that Binance intends to liquidate its remaining $550 million worth of FTT.

Read more: Binance founder CZ made $12B overnight when Donald Trump won

Customers withdrew a whopping $2 billion in funds that day. By the following day, November 5, over $5 billion had been withdrawn. FTT dropped in value from $22 to $7.

The FTX complaint says that Zhao’s series of “false, misleading, and fraudulent tweets” were “maliciously calculated to destroy his rival.”

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An alleged SIM-swap hacker accused of stealing $400 million in crypto from collapsed exchange FTX has reportedly requested a temporary release from home detention on the grounds that he would like to attend his girlfriend’s sister’s birthday party at an Illinois branch of Chuck E. Cheese.

Robert Powell, aka ‘ElSwapo1’ was arrested alongside two alleged accomplices back in February and subsequently granted home release on a $10,000 bond.

Other conditions of his release included that he avoid non-essential internet use and any online gambling and that he must remain at home other than to go to court or medical appointments. 

However, in a request to the court, Powell’s lawyers have requested that it “modify his conditions of release” and allow him to attend his girlfriend’s sister’s birthday party on Sunday, November 10 between the hours of 2 pm and 6 pm at an Arlington Heights Chuck E. Cheese.

According to the request, “Mr. Powell has been in full compliance with all his release conditions,” and, “All other release conditions shall remain in effect.”

It also states that “Pretrial and the government are not objecting to this request.”

Read more: OKX SIM-swap leads to discovery of 2FA security flaw

Dates of $400M heist matched FTX loss

Powell, along with Carter Rohn and Emily Hernandez, were charged with conspiracy to commit wire fraud and conspiracy to commit aggravated identity theft and access device fraud after they allegedly traveled to cellphone stores in more than 15 states.

The trio, known as the ‘Powell SIM Swapping Crew’ were arrested after $400 million worth of crypto was siphoned from the (then) world’s biggest crypto exchange on the day that it declared bankruptcy in November 2022.

There was initially some debate about who exactly the gang’s victim was and the initial indictment referred to ‘Victim Company-1.’ However, blockchain analytics firm Elliptic subsequently clarified in a blog post that, “We’re not aware of any other thefts of this magnitude on these dates.”

“It therefore seems likely that ‘Victim Company 1’ is FTX,” it added.

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In New York today at 3pm, Nishad Singh entered a federal courtroom to hear a judge read his final sentencing for the crimes he committed at FTX.

After considering statutory minimums, sentencing guidelines, and other documents filed relevant to the decision, Judge Lewis Kaplan decided to administer a sentence of time served with three years of supervised release, according to reporting from InnerCityPress.

For context, FTX’s former CEO Sam Bankman-Fried received a 300-month prison sentence. Former co-CEO of FTX Digital Markets Ryan Salame received a 90-month sentence. Caroline Ellison, CEO of Alameda Research which stole funds from FTX customers, received a 24-month sentence.

Singh, FTX’s ex-Director of Engineering, pleaded guilty to six crimes last year. He also filed a sentencing submission — and received written support from bankruptcy cleanup lead John J. Ray III — that stressed his post-collapse cooperation with US authorities.

Both asked judge Kaplan to please avoid administering a prison sentence.

However, a filing today from representatives for the former Chief Operating Officer of FTX Japan challenges Singh’s claim that he took steps to preserve funds at FTX Japan, specifically describing Singh’s claims as “completely false.”

Singh’s hearing was scheduled for 3 pm Eastern Time. The judge handed down the sentence shortly after opening comments, recitations, and other formalities.

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Former FTX executive Nishad Singh has received a letter of support from FTX bankruptcy CEO John J. Ray III ahead of his sentencing for his part in the collapsed exchange’s theft of $8 billion in customer funds.

That’s according to Inner City Press and Matthew Russell Lee who shared the letter last night. The letter, addressed to Judge Lewis Kaplan, highlights Singh’s cooperation with debtors, from returning Bahamian real estate that was purchased with debtors’ funds to providing documents and answering questions while under investigation. 

According to the letter, a final settlement between Singh and debtors is in the works. Singh will be required to turn over “all of his remaining assets after satisfying his forfeiture obligations,” testify as needed, and “voluntarily provide documents and information, reviewing and clarifying documents, locating and retrieving assets, and answering questions from the Debtors’ advisors.”

Read more: Nishad Singh hopes to avoid prison in FTX case

Singh, who was FTX’s Director of Engineering, pleaded guilty to six charges last year. He also filed a sentencing submission earlier this month that stressed his cooperation while claiming he should avoid a prison sentence.

Singh’s hearing is scheduled for 3 pm, Eastern Time.

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Nishad Singh, the former Director of Engineering at FTX, has filed a sentencing submission in his criminal case arguing that he should avoid prison in light of his extensive cooperation and smaller role than many of the conspirators in the fraud.

The documents detail Singh’s roles at Alameda Research and FTX, from almost the beginning of Alameda up until the firms plunged into a chaotic bankruptcy. They detail Singh’s narrative about how he was unaware of the misappropriation of customer funds at FTX until just months before the collapse, though this underplays his role in creating the infamous ‘allow negative’ years before. 

Singh, like other executives, also emphasized that it was recommended to him that he take large, poorly documented loans from Alameda instead of liquidating his tokens to fund his activities. Among his activities described as “regrettable” was the purchase of a multi-million dollar vacation home after he was aware of the theft occurring at FTX. 

Additionally, the document emphasizes how Singh was responsible for providing much of the documentary evidence that prosecutors relied on, including “taking screenshots of Signal messages” that provided context to the prosecution and at trial of the final days of FTX and Alameda.

Read more: CHART: Everyone sentenced from FTX and Alameda

This level of cooperation was recognized by other executives of FTX. Indeed, Ryan Salame once tweeted that Singh “absolutely wrecked him” but that he still had to acknowledge that Singh was “one of the most genuinely nice human beings I’ve ever met.”

This cooperation extended beyond FTX and Alameda Research to “virtual interviews with the Securities and Exchange Commission (SEC) regarding separate inquiries (nor directly related to FTX’s downfall) on three separate occasions, and produced documents in his possession relevant to those inquiries.

Also, just this month, Singh sat for a virtual interview with the Commodity Futures Trading Commission (CFTC) to assist them with a separate, nonpublic investigation.”

This document, meant to gain Singh whatever leniency it can, repeatedly emphasized the purity of his intentions and his many good works. There are letters included from friends, family, and former FTX colleagues, many with stories of Singh’s generosity. 

The document also detailed how Singh tried to dissuade Sam Bankman-Fried from some of his more exceptional spending activities, including reportedly balking at the K5 investment deal and encouraging FTX to end the irresponsible FTX Earn lending program.

Singh’s sentencing is currently scheduled for October 30. 

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One of yesterday’s trending news stories on X was a supposed reminder that today, September 30, would be the day that FTX bankruptcy creditors would receive approximately $16 billion. Like many breaking headlines on X, however, that is entirely untrue.

Posts about the supposed payouts and the ostensible distribution of FTT liquidity earned hundreds of thousands of impressions and thousands of likes. Undeterred by fact checks, traders bid up the price of FTX’s proprietary token, FTT, from less than $1.40 on Saturday to a high of $2.71 on Sunday.

Although FTX’s bankruptcy estate has announced plans to make distributions during the fourth quarter, there are no distributions happening this week. The next earliest date that distributions could occur would be after the bankruptcy plan confirmation hearing on October 7 in the US Bankruptcy Court for the District of Delaware.

Read more: CHART: Everyone sentenced from FTX and Alameda

FTX to repay ‘in full with interest’… with a catch

As Protos noted in a previous fact check, if that court confirms FTX’s Chapter 11 bankruptcy plan next week, that confirmation might allow FTX to repay approximately 98% of customers and unsecured creditors “in full with interest” using a USD calculation for all crypto asset prices as of November 11, 2022. 

That means, sadly, a price of just $16,871 per bitcoin and similarly dismal rates for altcoins.

Although creditors have blamed the estate for “breathlessly touting what they claim to be a full recovery with interest” that is “nothing of the sort,” calculations based on November 11, 2022 prices abide by the court’s rules.

For historical context, Sam Bankman-Fried’s giant crypto exchange FTX collapsed in November 2022 due to multiple executives’ fraud and theft of customer deposits. Five senior leaders have pleaded guilty to US criminal charges and two have already received multi-year prison sentences.

Within hours of its demise, a clean-up crew of executives led by Enron’s post-bankruptcy expert, John J. Ray III, overtook control and began assessing the wreckage. Fast forward to today, and a bull market in crypto plus untold hours of negotiations and legal proceedings have allowed FTX to recover most of its USD cost basis as of its November 11, 2022 bankruptcy.

Payouts to most FTX customers who filed relatively small claims could occur sometime this month, pending the outcome of court proceedings on October 7. Claimants should refer to the official bankruptcy website and carefully fact-check social media claims, such as yesterday’s inaccurate claim that FTX would be paying $16 billion today.

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The latest FTX-related sentencing saw Caroline Ellison, the former co-CEO of Alameda Research, handed two years behind bars for her role in the exchange’s spectacular collapse. Ellison is expected to be in prison by November 7.

Ellison’s sentence was so lenient thanks to her lending the investigation her full cooperation. Indeed, the judge presiding over the case noted that he hadn’t seen a cooperator “quite like Ms. Ellison.”

However, he also made it clear that due to the severity of the case, remorse and cooperation aren’t a complete “get out of jail free card.” 

She had pleaded guilty to seven counts of fraud and conspiracy and became the third individual involved in FTX’s crimes to be jailed. 

Here’s a chart of every indicted FTX and Alameda official sentenced, or waiting to be sentenced. 

Read more: Which FTX and Alameda executives are going to prison and when?

Collectively, Sam Bankman-Fried, Ryan Salame, and Ellison are serving 34.5 years or 414 months. Gary Wang and Nishad Singh are due to be sentenced in the coming months having both testified against Bankman-Fried.

Wang, a former CTO at FTX and close friend of Bankman-Fried, cooperated with prosecutors and pleaded guilty to four charges including wire fraud and conspiracy to commit securities fraud.

Singh was FTX’s director of engineering and also cooperated with prosecutors. He pleaded guilty to six charges, including conspiracy to commit money laundering and make unlawful political contributions.

Both have stated that they hope to avoid jail time for their crimes. A whole raft of other individuals, including Bankman-Fried’s parents, lawyers believed to have known about criminal activity, and other execs, have also not been indicted.

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Caroline Ellison, the former co-Chief Executive (CEO) of Alameda Research, has been sentenced to two years in prison for her role in the approximately $8 billion stolen from FTX customers.

The 29-year-old pleaded guilty to seven counts of fraud and conspiracy in the lead-up to former FTX chief Sam Bankman-Fried’s criminal trial. Despite facing a maximum 110 years, her lawyers have argued that Ellison’s key testimony for the prosecution should have resulted in no prison time at all.

Ellison’s prison sentence is far less than her ex-flame Bankman-Fried, who received 25 years behind bars. US District Judge Lewis Kaplan explained that Ellison has been particularly cooperative, stating, “I’ve seen a lot of cooperators in 30 years. I’ve never seen one quite like Ms. Ellison,” though he made sure to acknowledge her role in the fraud.

Read more: Executive texts claim Deltec moved customer funds from FTX to Alameda

This level of cooperation was acknowledged by the prosecutors, who wrote in their sentencing submission that “the Government cannot think of another cooperating witness in recent history who has received a greater level of attention and harassment” and that despite this fact, she “steadfastly remained candid and dedicated to telling the truth—as embarrassing as it often was for her—and in assisting with bringing the most culpable party to justice.” 

The former Alameda chief has also been cooperating with the ongoing bankruptcy, providing significant support to its recovery efforts.

Two FTX executives, Gary Wang and Nishad Singh, are also scheduled to be sentenced later this year after pleading guilty to related crimes. Additionally, Ryan Salame, another FTX and Alameda Research executive, will be reporting to prison next month for his over seven-year long sentence.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel. Quotes in bold are our emphasis.

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