Here are some of the most important things to watch out for in the upcoming week:
1. Prosecutors Ask SBF to Stop Witness Tampering
Federal prosecutors want to stop former FTX CEO Sam Bankman-Fried from contacting witnesses through the encrypted messaging app Signal. In a filing on Friday, prosecutors said they had learned that Bankman-Fried had been in direct contact with FTX US’s General Counsel who may be a witness at the trial.
Ryne Miller is the General Counsel at FTX US, referred to in the filing as “Witness-1.” The prosecutors said that Bankman-Fried had reached out to Miller on Jan. 15 on Signal as well as by email, sending him the following message:
“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other.”
According to the prosecutors, Bankman-Fried’s request to vet things with Miller suggests an effort to influence his testimony.
Miller reportedly has first-hand knowledge of Bankman-Fried’s actions in the days leading up to FTX’s collapse, having participated in several Signal and Slack communications with the FTX founder and other insiders.
It was in these messages, which Miller can attest to, that Bankman-Fried instructed executives to liquidate $45 million worth of Alameda’s investments to “fill an apparent hole in FTX US’s balance sheet.”
Testimony in this regard could seriously damage Bankman-Fried’s case – he has claimed on several occasions that FTX US has always been solvent and called it “ridiculous” that users have not been made whole as of yet. In his most recent attempt to convince everyone this is the case, Bankman-Fried showed his calculations in an excel spreadsheet which appears to show that FTX US had $400 million in excess cash to meet customer balances.
2. Secret Network Drama
Privacy-focused Layer-1 blockchain Secret Network is at the center of controversy within the crypto community.
Tor Bair, founder of Secret Foundation, the entity backing the blockchain, and Guy Zyskind, CEO of Secret Labs, a community of the network’s developers, presented conflicting statements about the nature of affairs on the community’s governance forum.
Zyskind claims that the Secret Foundation sold $4 million worth of the project’s native SCRT token in 2021 – previously unreported in quarterly transparency reports.
Bair refuted these claims in his own statement, describing the sale as an OTC trade that he carried out with his vested tokens instead of taking a payout from the Secret Foundation. In doing so, he was able to claim a $2.625 million dividend, which he said is verifiable from his tax filings.
Zyskind, however, claims that there were several other unreported financial irregularities – one of which may even include an open loan made to Alameda Research and its affiliates. Zyskind opined that these actions had undermined the community’s trust in Bair, and proposed structuring a new Secret Foundation with higher transparency and compliance.
Following these allegations, major Secret Network validator Smart Stake announced on Sunday that it would be shutting down its nodes for the blockchain on Feb. 21. Smart Stake cited complex and costly validator operations, along with recent events for the reasons behind its decision.
Best wishes to the $SCRT community
— Smart Stake (@SmartStake) January 29, 2023