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US sues to block Microsoft’s blockbuster buyout of gaming giant Activision

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The US Federal Trade Commission wants to block Microsoft's $69 billion buyout of gaming giant Activision Blizzard, maker of the blockbuster "Call of Duty" title
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The US Federal Trade Commission on Thursday sued to block Microsoft’s $69 billion buyout of gaming giant Activision Blizzard, maker of the blockbuster “Call of Duty” title, over concerns that it would stifle competition.

The lawsuit marks one of the biggest ever interventions by the US government to stop consolidation in the tech industry and raises significant doubts on the future of the transaction.

“Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets,” said Holly Vedova, director of the FTC’s Bureau of Competition.

The move by Washington follows an intervention by the European Union, which opened an in-depth probe into the transaction over its concerns that the deal would see Activision Blizzard’s popular games become exclusive to Microsoft, the maker of the Xbox console.

Britain has also announced an “in-depth investigation” into Microsoft’s planned takeover of Activision, which also produces mobile game “Candy Crush.”

In January, Microsoft — which also makes its own games to be played on PCs and mobile devices — announced the takeover that would create the world’s third-biggest gaming company by revenue.

The FTC said Microsoft had a proven history of buying up smaller gaming companies only to make the games exclusive to Microsoft — and thus inaccessible to rivals such as Nintendo or Sony.

This would be a significant change for Activision that currently has a strategy of offering their games on a variety of platforms.

Microsoft had earlier this week made moves to satisfy concerns by announcing that it would bring the “Call of Duty” franchise to Nintendo Switch, a rival of Xbox. This followed an earlier decision to make “Call of Duty” available on Sony’s PlayStation.

– ‘Deal will close’ –

“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” said Microsoft President Brad Smith in a statement.

“While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.”

Bobby Kotick, the head of Activision Blizzard, told company staff that though the lawsuit “sounds alarming…I want to reinforce my confidence that this deal will close.”

The allegations “don’t align with the facts, and we believe we’ll win this challenge,” he said.

The FTC is led by Lina Khan, who had been an advocate of breaking up the biggest tech firms before she was nominated by President Joe Biden to the job.

Last year, the FTC refiled a lawsuit accusing Facebook of maintaining an illegal monopoly in social networking, reviving the case two months after it was dismissed by a federal judge.

That lawsuit, which could take years to go through the courts without a settlement, called for the court to order “divestiture of assets,” including WhatsApp and Instagram, to restore competition.

A separate US antitrust action has been filed against Google, and Apple and Amazon are also in the crosshairs of antitrust enforcers.

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Sam Bankman-Fried, the fallen wunderkind of cryptocurrency

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Samuel Bankman-Fried, founder and former CEO of FTX, faces a potential de facto life sentence after being found guilty of a massive fraud scheme
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He was the face of cryptocurrency, and a young one at that — a media darling seemingly destined to unite the sector.

But the stunning rise of Sam Bankman-Fried and his FTX platform would be matched by an equally spectacular fall when it was revealed that billions of dollars of clients’ funds had been moved and spent without their consent.

After a jury in 2023 found him guilty of seven counts, a federal judge in New York sentenced Bankman-Fried on Thursday to 25 years for leading the fraudulent scheme.

Before it all came crashing down, the native Californian had amassed a fortune at one point estimated to be worth $26 billion. “Save for Mark Zuckerberg, no one in history has ever gotten so rich so young,” read a headline in Forbes, which put Bankman-Fried on its cover in October 2021.

In the span of a few months, the Massachusetts Institute of Technology graduate with a degree in physics had taken the startup he co-founded in 2019 and built it up into the world’s second largest crypto exchange platform.

He quickly became more than just a young entrepreneur, fashioning himself as an ambassador of crypto and making his first appearance in Congress in December 2021, testifying before lawmakers on the then-novel form of currency.

The public would come to know a seemingly oddball whiz kid with a mop of curly dark hair who, when not suited up for appearances on Capitol Hill, wore shorts and a T-shirt.

– Center of crypto world –

The son of two Stanford University professors, Bankman-Fried ventured outside the world of cryptocurrencies, making donations to US politicians and persuading celebrities like American football star Tom Brady or basketball player Stephen Curry to pitch FTX — endorsements for which they were richly rewarded. 

The young man known as SBF would charm US lawmakers with his straight talk and vision of crypto’s future, including recommendations for an extensive regulatory regime — a position at odds with many in the sector.

He devised project after project, from a platform for people to make donations in cryptocurrency to Ukraine to a market for financial derivative products that stepped on the toes of Wall Street.

A vegan, Bankman-Fried said he believed in the concept of effective altruism — finding the best way to help other people, in particular by donating all or part of one’s wealth to charity rather than, say, volunteering at a soup kitchen.

When the cryptocurrency world lurched into crisis in the spring of 2022, Bankman-Fried billed himself as a savior, buying the troubled platform BlockFi, and shares in another company that was in trouble, Voyager.

“We take our duty seriously to protect the digital asset ecosystem and its customers,” he tweeted at the time, as some people were comparing him — barely 30 years old then — to the legendary investing guru Warren Buffett.

– Financial high wire –

But behind his reassurances, Bankman-Fried was walking a financial high wire, as revealed later in court documents and testimony.

Without their knowledge, Bankman-Fried’s team used the money of FTX customers to cover risky operations by an affiliated trading company called Alameda Research, as well as to buy posh real estate and to make political donations.

In November 2022, the crypto news outlet CoinDesk revealed that Alameda had converted a large part of its assets into FTT, a crypto token created by FTX. The news caused that currency to plummet.

Hours later Changpeng Zhao, the head of Binance, the world’s largest crypto exchange platform, announced it was selling all the FTT tokens it held, causing it to lose 90 percent of its value in a matter of days and taking the Bankman-Fried empire with it.

His fortune having vanished overnight, Bankman-Fried was extradited from the Bahamas, where FTX had its headquarters. In December 2022 he was indicted on charges of fraud and racketeering.

After five weeks of trial, the jury quickly reached a guilty verdict on all seven counts, which carry a potential maximum sentence of 110 years behind bars.

In closing arguments, the defense said their client had acted in “good faith” and was overtaken by circumstances and the financial ineptitude of close associates who testified against him to gain leniency from prosecutors.

Prosecutors portrayed the defendant as an extremely smart man consumed by greed who knew what he was doing when FTX funds were secretly funneled to his personal hedge fund.

According to prosecutors, at the time of the bankruptcy of FTX, just over $8 billion belonging to customers had vanished into bad investments at Alameda.

“Who had control? That’s the question. It was one person: the defendant,” the lead prosecutor concluded.

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Crypto fraudster Bankman-Fried faces sentencing

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Former FTX chief Sam Bankman-Fried is set to be sentenced after being convicted in November of fraud by a New York jury
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Disgraced cryptocurrency wunderkind Sam Bankman-Fried is set to be sentenced Thursday following his conviction in one of the biggest financial fraud cases in history.

US prosecutors are seeking a prison term of 40-50 years after a New York jury found Bankman-Fried, known by his initials SBF, guilty in November following a five-week trial that probed the one-time high roller’s spectacular fall.

Calling Bankman-Fried’s seven-count conviction reflective of the defendant’s “unmatched greed and hubris,” the government’s sentencing request argues for significant jail time in light of fraud it estimates at more than $10 billion.

Moreover, a lengthy sentence is necessary to “protect the public,” argued US Attorney Damian Williams, who characterized Bankman-Fried as an “adept” spin doctor capable of additional malfeasance.

If quickly freed, “it is realistic that he will settle on a narrative, lean into it, and convince other people to part with their money based on lies and the promise of false hope,” Williams said in a 113-page legal filing, accompanied by testimonials from dozens of victims.

Calling the government’s proposed sentence “barbaric,” Bankman-Fried’s attorneys depicted their client as a diligent young man motivated by philanthropy who got in over his head.

Their portrayal is similar to the one SBF’s defense presented at trial — which was quickly rejected by jurors after just five hours of deliberation.

Bankman-Fried, 32, should serve about six years in prison, a sentence “that returns Sam promptly to a productive role in society,” said attorneys led by Marc Mukasey.

The final sentence will be meted out by US District Judge Lewis Kaplan. Bankman-Fried will be given an opportunity to address the court prior to sentencing. 

– FTX Implosion –

A graduate of the Massachusetts Institute of Technology and a billionaire before the age of 30, Bankman-Fried conquered the crypto world at breakneck speed, turning FTX, a small start-up he cofounded in 2019, into the world’s second largest exchange platform.

But in November 2022, the FTX empire imploded, unable to cope with massive withdrawal requests from customers panicked to learn that some of the funds stored at the company had been committed to risky operations at Bankman-Fried’s personal hedge fund, Alameda Research.

During the trial, some of Bankman-Fried’s closest associates said that he was key to all the decisions that saw $8 billion vanish from FTX.

This group included Caroline Ellison, the former Alameda CEO and Bankman-Fried’s on-and-off-again girlfriend, who testified that Alameda had stolen “around $14 billion” from FTX clients and that Bankman-Fried “directed me to commit those crimes.”

Filings from the prosecution and defense offered starkly different takes on Bankman-Fried, the son of two well regarded law professors at tony Stanford University.

“The lack of contrition is galling,” said Williams, who took issue with the image of Bankman-Fried as “selfless” and “altruistic,” as championed by the defense, noting he used funds for “luxury” real estate, donations to rub shoulders with political leaders, a Super Bowl television ad and “access to celebrities.”

The defense’s statement describes Bankman-Fried as “wracked” with remorse over the implosion of FTX. 

– Recovered funds –

Bankman-Fried’s attorneys also pointed to statements from FTX’s current leaders expressing confidence that FTX customers and creditors would get back their money, saying in the brief, that “the harm to customers, lenders and investors is zero.” 

That argument drew a scathing response from FTX Trading Chief Executive John Ray, who said ongoing recoveries of ill-gotten gains do not make up for fraud.

“That things he stole… were successfully recovered through the efforts of a dedicated group” of professionals “does not mean the things were not stolen,” Ray said in a letter to the court. 

“What it means is that we got some of them back.”

The recoveries are not likely to significantly affect the sentencing, said Jacob Frenkel, an attorney at Dickinson Wright who previously worked at the Department of Justice and the Securities and Exchange Commission.

“The sentencing determinant is not about a speculative return of funds,” Frenkel said. “It is about what was the fraud when he was convicted.”

Frenkel said he would be “shocked” by a sentence under 20 years, in part because of the need for the judge to send a strong signal that fraud in the emerging cryptocurrency sector will be taken as seriously as any other.

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Hyundai to invest more than $50 bn in South Korea in major EV push

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South Korea's Hyundai is one of the world's biggest automakers
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Hyundai on Wednesday revealed plans to invest more than $50 billion in South Korea by 2026, with a huge chunk dedicated to boosting the development and production of electric vehicles.

Along with its affiliate Kia, Hyundai is the world’s third-largest automaker by sales, but the South Korean giant lags in the EV sector behind Elon Musk’s Tesla and Chinese firm BYD.

Hyundai is keen to break into the global EV top three, saying last year that it was aiming to boost electric car production to more than 3.6 million units by 2030.

With the 68 trillion won ($50.5 billion) investment announced Wednesday, Hyundai Motor Group said it wants to “secure future growth engines in an uncertain business environment through constant change and innovation”.

“The automotive sector, including future mobility projects, accounts for… 63 percent of the Group’s total investment,” it added.

Under the plan, Hyundai will create 80,000 jobs in South Korea and build three new EV factories, with the aim of increasing annual EV production in the country to 1.51 million units by 2030.

The group’s EV strategy also includes investments in infrastructure, software, battery technology and autonomous driving.

A Greenpeace report in November said Hyundai’s growing sales of gas-guzzling sport utility vehicles had offset any climate gains from its transition to EVs.

It noted that Hyundai-Kia had posted SUV sales increases of more than 150 percent over the past decade.

SUVs emit approximately 12 percent more carbon dioxide than sedans, the environmental group said, urging Hyundai to reduce SUV sales.

When asked about the report, Hyundai said it was expanding its fleet of “fully electric SUV vehicles”, including Kia’s EV6 and EV9.

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