Axios

A cybercriminal appears to have attempted to steal $400 million of customer funds from the crypto exchange FTX as the platform grapples with its bankruptcy, alongside widening questions about its business practices.

Why it matters: Many consumers, companies and crypto projects have their funds trapped on the exchange while bankruptcy proceedings begin. They are anxiously waiting to see how much they will get back, and how soon.

Meanwhile, the exchange has allegedly lost a considerable amount of customer funds in loans to its sister company, Alameda Research.

• A hack suggests there will be even less left over to distribute among customers.
• The Block reported that $400 million worth of cryptocurrency had been stolen.

Context: Cryptocurrency holdings are all viewable on the blockchain to anyone who knows how to look, and FTX's assets are some of the most watched funds in the world right now.

• As the irregular activity began, users began noticing immediately. FTX US general counsel Ryne Miller confirmed on Twitter that the movements of funds were not intentional.
• One Twitter user followed the funds and detailed several ways the attacker lost funds through various trades as they attempted to cover their tracks on chain.

What they're saying: "Following the Chapter 11 bankruptcy filings - FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage. Process was expedited this evening - to mitigate damage upon observing unauthorized transactions," FTX US general counsel Miller tweeted overnight.

Be smart: There are two stories right now that might be confusing: allegedly improperly used funds by FTX and Alameda, and the hack that happened over the last 24 hours. These aren't the same.

What we're watching: Experienced observers are saying the perpetrator has already been identified. If law enforcement is able to access the person (or people), that improves the chances of recovering at least some of the stolen money.

Actor Alec Baldwin filed a lawsuit Friday in California against individuals of the “Rust” film crew, alleging there was wrongdoing on the set that led to the accidental shooting and death of Halyna Hutchins.

The big picture: This is the first time Baldwin has thrown allegations of wrongdoing against someone connected to the film.

There are two stories playing out in the media right now about improper use of funds at FTX, the formerly high-flying crypto platform that stunned markets this week in a spectacular meltdown that unfolded within mere days. A casual reader could easily confuse them.

Why it matters: The bankruptcy of the crypto exchange FTX, led by celebrity CEO Sam Bankman-Fried, is one of the biggest stories in the business world right now, but to understand it readers need to be able to keep its many threads untangled.

Details: Observers are following two separate cases of FTX customer funds improperly leaving the exchange.

• FTX allegedly improperly loaned customer funds to Alameda Research, its sister firm which trades cryptocurrency. Much of this appears to have simply been lost in bad trades, but Reuters reports $1 billion cannot be accounted for.
• Overnight, someone stole $400 million of remaining funds at FTX.

By the numbers: Bitcoin, the cryptocurrency market's bellwether, is now down about 25% from its price before FTX began to unwind following a damning report by CoinDesk.

• Encouraging macroeconomic news Friday appears to be propping it up, at least for now.

What we're watching: The most important question for consumers and companies that had funds on the exchange is how much will ultimately be recovered through the bankruptcy process.

• Everyone who had funds on FTX when it halted withdrawals is likely to come up short when the process is finalized.

Elon Musk is using the same leadership playbook at Twitter that he has at his other companies. It's proving to be a costly mistake.

What to know: Musk has a well-earned reputation for being among the most demanding and capricious bosses in the history of corporate America. Past and present employees tell of being assigned tasks with cost or timeline objectives that seem impossible, often with their jobs hanging in the balance.

U.S. prosecutors said Friday that Theranos founder Elizabeth Holmes should receive 15 years in prison and pay $800 million in restitution to the investors defrauded through her blood-testing company, per Reuters.

Why it matters: Holmes, who was found guilty of conspiracy and fraud against certain investors earlier this year, is set to be sentenced next week.

The use of racial slurs on Twitter has soared since Elon Musk's takeover, a new report has found.

Why it matters: Twitter has made it clear on multiple occasions that there would be a decline in the hateful and racist language since Musk took over. But these claims don't "stand up to scrutiny," according to the report from the Center for Countering Digital Hate.

The world’s wealthiest economy — with the deepest and most liquid market — is a riskier place than it used to be for investors. And politics is a big reason.

Why it matters: “Political risk” is an investment thesis used to evaluate developing economies with histories of weak governance and social instability.

Some unlucky Powerball players can cash in on their losing lottery tickets from the record $2.04 billion jackpot with a limited JCPenney offer.

Driving the news: While lottery fever has waned after a single winning ticket won the world-record jackpot, the department store chain announced on Instagram Thursday that it is giving away 20,000 coupons worth $400,000 combined.

Axios' star political reporter Jonathan Swan is joining the New York Times as a political reporter, where he will continue to cover politics and the 2024 election.

Why it matters: Swan is one of the most well-sourced reporters in Washington. His ability to consistently break big stories and his sharp interview skills helped Axios expand its brand globally.

Sam Bankman-Fried resigned as chief of FTX.com, capping the insolvent crypto exchange's 11th hour hunt for capital to stay afloat, which ended Friday morning.

• FTX Group companies, which includes FTX Trading Ltd as well as FTX US, started Chapter 11 proceedings in the U.S., according to a statement.
• John Ray III has been appointed CEO of FTX Group. Bankman-Fried, known as SBF, will remain to assist in an orderly transition.

Why it matters: FTX.com and associated units have officially declared bankruptcy.

• The collapse is consequential for the industry, and the likely contagion effects in the days and weeks to come.

Sam Bankman-Fried knew exactly what risks he was taking; he explained them in some detail in a podcast last year. From his point of view, they were risks worth taking. From the point of view of other crypto-market participants now surveying the rubble, however, they most certainly were not.

Why it matters: FTX and Alameda Research were both fully controlled by a single man with a highly idiosyncratic risk appetite. The final result: Ingnominious bankruptcy.

You might have heard that art is a fantastic alternative asset class that has outperformed the S&P 500. Microsoft co-founder Paul Allen, from beyond the grave, is here to say: Not so much.

Driving the news: In the biggest and most blockbuster art sale of all time, a selection of paintings and sculptures from Allen's collection was auctioned at Christie's in New York this week. In total, the art sold for more than $1.6 billion.

One of the main ways that Sam Bankman-Fried (also known as SBF) gained credibility was by finding a way to take the famous "greed is good" line from "Wall Street" and try to make it true.

Why it matters: SBF wasn't just the face of the crypto industry; he was also the standard-bearer of the effective altruism (EA) movement. That, too, has been damaged by his downfall.

Veterans Day is a time when the country honors those who served and are serving in the U.S. military.

The big picture: Many confuse Veterans Day with Memorial Day, the federal holiday held in late May that honors those who have died in military service.

Restaurants salute veterans and active-duty military personnel this Veterans Day with free meals, drinks and discounts Friday.

The big picture: The federal holiday honors those who have served in the military — past and present — by showing appreciation for those who have sacrificed for the country.

China's government eased some pandemic measures Friday — including reducing quarantine periods for travelers and close contacts of people infected with COVID-19 and ending penalties on airlines for bringing virus cases into the country.

Why it matters: The new rules are a notable adjustment to President Xi Jinping's zero-COVID policy. China is the last major economy to have retained the strategy of trying to keep out the virus with measures such as lockdowns and quarantines.

This article originally appeared in Axios Finish Line, our nightly newsletter on life, leadership and wellness. Sign up here.

Liz Jarvis-Shean lives, by choice, in pressure cookers — first at the White House, then Tesla, then Airbnb and now DoorDash, a high-growth, high-intensity startup.

• Why it matters: Marinating in stress, chaos and wild unpredictability, Liz developed her own blueprint for leading through turbulence.

Call it the Liz Doctrine.

• Here's my crack at distilling it, based on an interview we did this week for Axios HQ:

1. The 1% Rule: Push yourself to get 1% better each day, in good times and bad. No one changes radically overnight, but everyone can get a tiny bit better at something daily.

• "Hold yourself accountable," Liz says. "Don't just throw up your hands and say it's not worth it." This rule is a core value at DoorDash, she tells us.

2. Find yourself: You can't guide others if you're lost yourself. Use tough moments to sharpen your core beliefs — the things that matter most — and then share them confidently.

3. Be real: "Nobody trusts a phony," Liz says. "People can smell insincerity a mile away."

• In tough times, people crave clarity and directness. Deliver it.
• "Don't try to be something you're not."

4. Don't hide: People too often let fear guide them to silence. Fear of screwing up. Fear of saying the wrong thing.

• "A lot of people's natural instinct … is to be very, very guarded," Liz said. "I think there's enormous power in transparency."

5. Exploit crisis: When COVID hit, DoorDash could have collapsed. The company needed restaurants making meals — and drivers delivering them safely.

• So everyone from the CEO on down had to phone relatives and friends to find enough masks and supplies to stay afloat. "Crisis focuses people if you handle it correctly."

Crypto lender BlockFi announced on Twitter that it would halt withdrawals per its terms and conditions, blaming "lack of clarity" into FTX — which has extended it a line of credit — and its affiliated companies.

What they're saying: "We are shocked and dismayed by the news regarding FTX and Alameda," a letter attached to the company's tweet said. "We are not able to operate business as usual."