The Securities and Exchange Commission (SEC) has charged SafeMoon, a cryptocurrency company, and its executives with fraud following an investigation.
That wasn’t the only legal news hitting the tech space last week. New revelations have come to light regarding an antitrust lawsuit recently filed by the United States Trade Commission against Amazon, just as the trial of Sam Bankman-Fried, the perpetrator of one of the most sensationalized cases of fraud in American history, draws to a close.
Plus, US President Joe Biden started the week by signing the first executive order of its kind.
Keep reading to learn more about the latest news this week in tech.
1. Bankman-Fried, once the ‘King of Crypto,’ found guilty on all charges
Sam Bankman-Fried, the man behind the failed digital currency exchange FTX and trading firm Alameda Research, was found guilty on Thursday (November 2) of seven criminal charges including wire fraud, securities fraud and conspiracy to commit money laundering.
His trial began on October 3 and was followed closely by the media. Many of Bankman-Fried’s former associates, including his ex-girlfriend and former head of Alameda Research Caroline Ellison and childhood friend and cofounder of FTX Gary Wang, pled guilty to fraud charges and agreed to cooperate with prosecutors, testifying that their former employer knowingly used FTX money to fund his other company, Alameda Research. The fallout resulted in losses totaling US$10 billion of customer funds. Bankman-Fried has maintained his innocence and has excused his actions as those of a young, inexperienced businessman.
Nevertheless, the jury found him guilty after four hours of deliberation. After the verdict was read, US District Attorney Damian Williams said that Bankman-Fried’s case should “serve as a warning to every single fraudster out there.”
Bankman-Fried could potentially get 115 years in prison. His sentencing date is set for March 28, 2024. A second trial has also been set for sometime in March 2024, during which time Bankman-Fried will face five additional charges including conspiracy to bribe Chinese officials.
2. Apple releases Q4 results
Apple (NASDAQ:AAPL) reported its fiscal fourth-quarter results on Thursday, and investors were less than impressed. Sales and earnings per share exceeded expectations, but overall sales have decreased consistently throughout the year. Except for the iPhone 15, sales were down for every hardware business under Apple’s umbrella.
The company’s largest decline in business came from Mac and iPad, with Mac sales falling almost 34 percent compared to last year. However, Apple CEO Tim Cook said in an interview with CNBC that “the comparison point here is very difficult” given that Mac sales last year were at an all-time high due to a disruption limiting supply in previous quarters. He also expects the December quarter to be “significantly better” for Mac sales thanks in part to its new M3 chip, which promises improved graphics and faster rendering and CPU speeds.
The company stated in a conference call that overall revenue for the company’s fiscal Q1 2024 period will be similar to last year, missing Wall Street expectations of 5 percent year-over-year growth. The news sent share prices down by 3.4 percent overnight.
3. Biden issues first AI executive order in history
US President Joe Biden issued an executive order on AI on Monday (October 30), the first of its kind in history. The order comes as law enforcement officials and members of Congress wrestle to understand rapidly evolving AI technology and apply existing laws to its research and application, particularly when it comes to its use in the labor market.
In a statement, the Biden administration broke the order’s objectives into eight parts, including but not limited to protecting consumer privacy, supporting workers, promoting innovation and competition, and advancing civil rights. It requires tech companies to disclose safety test results to the US government prior to the release of any new software.
Officials also stated that, as of November 6, the federal government will be conducting a “government-wide AI talent surge” in an attempt to “ensure the responsible government deployment of AI and modernize federal AI infrastructure.” Citizens with AI expertise are encouraged to seek openings in the federal office by visiting AI.gov.
4. New information surfaces in Amazon antitrust lawsuit
Amazon (NASDAQ:AMZN) was hit with an antitrust lawsuit filed by the US Trade Commission and the Attorneys General from 17 states on September 26, accusing the company of running an illegal monopoly. Newly released information shows how founder Jeff Bezos used an algorithmic pricing tool to juice revenue, and, according to the FTC, it cost US consumers more than US$1 billion between 2016 and 2018.
An unsealed version of a highly redacted portion of the original lawsuit shows that Amazon created a pricing tool, dubbed “Project Nessie,” which was built to find products in Amazon’s catalog that other retailers would price match. The retail giant then increased their prices, with the expectation that rival retailers would follow suit. According to the lawsuit, in 2018 “Project Nessie increased Amazon’s yearly profits by US$334 million.” Approximately US$57 million came from books and US$10 million came from “each of twelve other product categories.”
The complaint goes on to say that “the sole purpose of Project Nessie was to further hike consumer prices by manipulating other online stores into raising their prices.”
5. SafeMoon executives arrested, charged with multiple counts of fraud
Approximately US$200 million in investor funds were used to fund a luxurious lifestyle for three SafeMoon executives, according to charges filed by the US SEC on Wednesday (November 1).
Claims against SafeMoon creator Kyle Nagy, CEO John Karony and Chief Technical Officer Thomas Smith allege that the men misappropriated investor funds that the company promised would remain locked in a liquidity pool. US Attorney Breon Peace claims that “the defendants … diverted millions of dollars to … enrich themselves by purchasing a custom Porsche sports car, other luxury vehicles and real estate.”
They also stand accused of making large purchases of SafeMoon tokens to manipulate the market and drive the price up.
Karony and Smith were placed under arrest on Wednesday but maintain their innocence. Nagy, meanwhile, remains at large. If convicted, each executive faces a maximum prison sentence of 25 years.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.