Coin Edition -
- Ripple CTO says crimes are often settled by trading money for silence.
- FTX offered whistleblower $5M million to keep quiet about preferential treatment of Alameda.
- FTX code gave Alameda special privileges, including a $65 billion negative balance.
In response to the recent reports concerning the alleged misconduct of the bankrupt FTX crypto exchange, Ripple Chief Technology Officer David Schwartz has weighed in. Schwartz argued that financial matters that could potentially be prosecuted as crimes are often resolved by exchanging money for silence.
The Ripple CTO’s comment followed a tweet from one X user, Nicholas Kaknes, who questioned the ethical implications of accepting a $5 million payment to remain silent, suggesting that such an action could make one complicit in any wrongdoing.
“Many accusations of things that could be prosecuted as crimes are lawfully settled by trading money for silence,” Schwartz remarked.
Many accusations of things that could be prosecuted as crimes are lawfully settled by trading money for silence.— David "JoelKatz" Schwartz (@JoelKatz) October 7, 2023
Notably, these comments follow a report from a Wall Street Journal scoop, which disclosed that the LedgerX team, acquired by FTX, had identified FTX’s preferential treatment of Alameda through a hidden mechanism.
However, the whistleblower who brought these concerns to light was terminated from their position. Meanwhile, the report noted that FTX subsequently offered the whistleblower $5 million to keep mute.
Nonetheless, further investigation later uncovered allegations that Sam Bankman-Fried, the founder of FTX, may have misappropriated funds from FTX customers by implementing covert “special features.” These features allegedly allowed Alameda, his crypto trading firm, to utilize FTX as a slush fund.
Besides, the WSJ report revealed that within FTX’s code, there was a line of programming that granted Alameda the ability to maintain a negative balance of up to $65 billion on the exchange, a privilege not afforded to regular users who faced automatic liquidation if their balances fell below zero.
These developments have ignited a broader discussion about accountability and the acceptance of financial incentives to remain silent in the face of potential wrongdoing within the crypto industry.
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