Sam Bankman-Fried’s Arrest Offers Cold Comfort to FTX Customers​​​

For many customers burned by the whirlwind collapse of FTX, the arrest of founder Sam Bankman-Fried offered them the chance to take a brief sigh of relief — but not much more, the Wall Street Journal reported. Prosecutors and regulators alleged this week that Mr. Bankman-Fried stole billions of dollars from FTX customers in one of the biggest financial frauds in American history. Much of the money, they said, propped up trading firm Alameda Research, also largely owned by Bankman-Fried. He appeared in court Tuesday in the Bahamas, where he ran the now-bankrupt crypto exchange. Bankman-Fried was denied bail and has been remanded to jail until Feb. 8. The Securities and Exchange Commission and the Commodity Futures Trading Commission also filed lawsuits against Mr. Bankman-Fried this week. FTX halted withdrawals from its international unit in early November, when its financial problems started spilling into the open. U.S. customers said they still can’t get their money out, either. The company’s bankruptcy proceeding is ongoing, and repayment will likely be complicated. Even determining how much money FTX has on hand has been difficult, since the company didn’t keep an accurate list of its bank accounts, according to its new management. Camps of individual investors are likely to battle with each other and possibly other parties, such as FTX’s financial backers, for whatever assets are left. Read more. (Subscription required.)

Bankman-Fried Charges Showcase U.S. Prosecutor's Growing Role in Crypto Enforcement​​​

When he took office as the top federal prosecutor in Manhattan in late 2021, Damian Williams pledged to prioritize "rooting out corruption in our financial markets," Reuters reported. Now, with the fraud charges filed earlier this week against Sam Bankman-Fried, the founder of the bankrupt FTX exchange, Williams has further solidified his office's growing role in prosecuting financial crimes involving cryptocurrency, according to interviews with a half-dozen former prosecutors. "Every U.S. attorney is defined in the public eye by some of the biggest cases that they bring," said Harry Sandick, a partner at law firm Patterson Belknap and former Manhattan federal prosecutor. "This will forever be connected to the current U.S. attorney." The indictment against Bankman-Fried — who was charged with using billions in stolen customer funds to buy real estate, pay debts for his hedge fund, Alameda Research, and donate to political campaigns — situates Williams as a primary adversary for the high-profile entrepreneur whose downfall has captured public attention and led to calls for greater regulation of cryptocurrency platforms. Bankman-Fried, 30, has acknowledged risk-management failures at FTX but said he does not believe he has criminal liability. His lawyer said he is evaluating his legal options. On Tuesday, a judge in The Bahamas ordered him detained there while he contests a U.S. extradition request. Williams led the Southern District of New York's (SDNY) securities and commodities task force before being nominated as the district's top prosecutor by President Joe Biden. Williams, SDNY's first Black U.S. attorney, earned his law degree from Yale and clerked for former Supreme Court Justice John Paul Stevens as well as current Attorney General Merrick Garland when Garland was an appellate judge. Earlier this year, Williams brought the first-ever insider trading cases involving digital assets with charges against a former employee of nonfungible token trading platform OpenSea, as well as a former product manager at Coinbase Global Inc., an FTX rival. Both those defendants have pleaded not guilty. Read more. 

Fewer Americans Apply for Jobless Benefits Last Week​​​

The number of Americans applying for unemployment benefits fell significantly last week, a sign that the labor market remains strong even as the Federal Reserve continues to raise interest rates in an effort to cool the economy and slow inflation, the Associated Press reported. Applications for jobless claims fell to 211,000 for the week ending Dec. 10, down by 20,000 from the previous week’s 231,000, the Labor Department reported today. The four-week moving average of claims, which evens out some of the week-to-week volatility, fell by 3,000 to 227,250. About 1.67 million people were receiving jobless aid the week that ended Dec. 3, up 1,000 from the week before. Read more.

Retail Sales Drop at Start of Key Holiday Shopping Season​​​

Americans cut back sharply on retail spending last month as the holiday shopping season began, with high prices and rising interest rates forcing families, particularly lower-income households, to make harder decisions about what they buy, the Associated Press reported. Retail sales fell 0.6% from October to November after a sharp 1.3% rise the previous month, the government said Thursday. Sales fell at furniture, electronics, and home and garden stores. Inflation has retreated from the four-decade high it reached this summer but remains elevated, enough to erode the spending power of Americans. Prices rose 7.1% in November from a year ago. Sales plunged 2.3% at auto dealers, and slipped 0.6% at sporting goods stores and 0.1% at general merchandise stores, a category that includes large chains such as Walmart and Target. Sales at online and catalog stores fell 0.9%. The steep 2.5% decline in sales at home and garden stores likely reflects the sharp decline in home sales due to rapid interest rate hikes in the U.S., which have put homes increasingly out of reach for more Americans. Read more.

Rents Drove Inflation Higher in November, but Private Data Suggests Prices Easing in 2023​​​

The latest inflation data showed that rents remained stubbornly high in November, but real-time data suggests that national rental prices could ease heading into 2023, Yahoo Finance reported. The shelter component of the November Consumer Price Index (CPI) — which makes up about a third of the overall inflation index — rose 0.6% month-over-month and 7.1% year-over-year. The shelter component includes rent prices and what it would cost the owner to rent an equivalent apartment, known as owners' equivalent rent. But at the same time, real-time data shows that rents across the country have softened for the third consecutive month. And given CPI’s lagged nature, inflation data will likely take time to reflect this reality. Housing costs were “by far the largest contributor” to the overall CPI gain, the Bureau of Labor Statistics said Tuesday. Overall, consumer prices increased at an annual 7.1% pace, while core CPI, which excludes volatile food and energy sectors, rose 6% compared to a year ago. But data from Zillow's Observed Rent Index showed asking rents for new leases nationwide dropped 0.4% from October to November, the largest one-month dip in the seven-year history of the survey. The national average asking rent price now stands at $2,008, according to the survey, 8.4% higher than this time last year. Read more.

ABI Lifetime Achievement Award Renamed to Honor Bill Brandt, Founder of Development Specialists, Inc.​​​

The American Bankruptcy Institute (ABI) announces that its highest award, ABI’s Lifetime Achievement Award, which recognizes the recipient’s sustained and deep commitment to the leadership and governance of the organization, has been renamed after William A. Brandt, founder of Development Specialists, Inc. (Chicago). ABI proclaimed on Dec. 9 during its Winter Leadership Conference in Palm Springs, Calif., that the award will now be called the Bill Brandt Lifetime Achievement Award. An ABI member since 1987, Brandt served on ABI’s Board of Directors, was a commissioner on ABI’s Commission to Study the Reform of Chapter 11, and served on the Advisory Boards of ABI’s New York City Bankruptcy Conference and Bankruptcy Battleground West program. He is currently living and working with Amyotrophic Lateral Sclerosis (ALS), a nervous system disease that weakens muscles and impacts physical function. Read more.

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