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Sam Bankman-Fried seen leaving a Manhattan Federal Court earlier this year.
Hard Numbers: FTX’s 'altruistic' donations, Government-funded AI, Microsoft’s payoff, Chip wars, Anthropic cash infusion
$6.5 million: The disgraced cryptocurrency firm FTX, whose founder is on trial for a litany of fraud charges, is trying to claw back as much money as it can to pay off investors, lenders, and customers. Founder Sam Bankman-Fried, a devotee of effective altruism — a kind of philosophical commitment to philanthropy — gave $6.5 million last year to the Center for AI Safety, a US-based nonprofit. Now, FTX’s bankruptcy-era leadership is looking at whether they can get the money back.
$32 billion: At an AI forum last week, Senate Majority Leader Chuck Schumer said the US government needs at least $32 billion to fund AI development in the coming years. The number is derived from a 2021 report by the now-defunct US National Security Commission on Artificial Intelligence, a Trump-era commission led by former Google CEO Eric Schmidt. It’s unclear how close Schumer is to getting his desired funding through Congress — the government notably spent $3.3 billion on AI-related contracts in 2022 alone — but he noted that almost all of the forum’s attendees were in agreement that “robust, sustained federal investment” is needed.
18,000: A whopping 18,000 organizations are using Microsoft’s new artificial intelligence tools — dubbed Azure OpenAI. Microsoft has invested $13 billion into OpenAI since 2019, and the PC giant’s most recent earnings report indicates that the big bet may already be paying off.
30: One year after the Biden administration issued stringent rules limiting sales of high-powered semiconductors to China, it revised them this month to close big loopholes. (Chinese firms were still buying lower-grade chips necessary to power their artificial intelligence models, and using third-party countries to acquire them.) Nvidia, among the most powerful names in graphics chips, must halt shipments of its products to China under recently revised US regulations.
$2 billion: Google agreed to invest $2 billion in Anthropic, the AI startup behind the chatbot Claude. The company was founded in 2021 by ex-employees of OpenAI and has quickly grown into a $4 billion business, after its most recent funding round this summer. Google’s cash infusion comes mere weeks after Amazon pledged $4 billion to Anthropic in late September.The Graphic Truth: Crypto's annus horribilis
Crypto bros can't wait for 2022 to be over. The year kicked off with cryptocurrencies riding the wave of the global post-pandemic economic boom. But then Russia's war in Ukraine upended global markets and worsening inflation prompted central banks to start hiking rates, which slashed investors' appetite for risk. What's more, a string of scandals — mainly the collapses of the TerraUSD stable coin and the FTX crypto exchange — undermined overall trust in crypto, leading to the worst annual performance in the industry's history. We track how Bitcoin and Ethereum, which together accounts for more than half of global crypto transactions, have traded since the beginning of the year.
Sam Bankman-Fried, who founded and led FTX, arrested in the Bahamas.
Hard Numbers: SBF’s illegal foray into politics, Meta’s role in Ethiopia’s war, more bad news for Trump, Kosovo’s EU long shot
40 million: The now-disgraced FTX founder Sam Bankman-Fried, known as SBF, pumped around $40 million into the recent US election cycle, most of which went to Democratic-aligned super-PACS. Federal prosecutors say SBF illegally siphoned these funds from his crypto hedge fund.
2 billion: Meta, Facebook’s parent company, is being sued for $2 billion for allegedly enabling inflammatory rhetoric that fanned the flames of Ethiopia’s recent civil war. Among the plaintiffs is Abrham Meareg, whose father – a Tigrayan academic – was murdered in 2021 after Facebook refused to remove provocative posts written about him.
56: Most Republican-leaning voters – 56% – would prefer Florida’s Governor Ron DeSantis to be the party’s presidential nominee in 2024, compared to 33% who favor Donald Trump, according to a new Suffolk University/USA Today poll. Don’t overestimate just one poll you say? Well, a new Wall Street Journal survey found similar results. Still, it’s early days.
5: Kosovo, Europe’s youngest state, officially applied for EU member status, in a move that’s seen as a long shot. Kosovo’s path to membership is being blocked in part by five EU member states – Spain, Romania, Slovakia, Greece and Cyprus – that don’t recognize its independence.
Biden's Africa Summit won't gain influence for US without investment
Ian Bremmer shares his insights on global politics this week on World In :60.
What does Biden hope to achieve from his Africa summit?
Dozens of African leaders in Washington DC, potentially the most stillborn summit the Americans have hosted since the Summit of the Americas, Latin America, in LA months ago, because the United States doesn't have much of a strategy. Certainly want to have more influence given how much the Chinese have been economically locking up so much of the political orientation of these countries. But that means money, and the Americans, this is at the end of the day not the top priority, not even close for the United States, given GDP and given role in the world. So I suspect it's going to be a lot of happy talk. There'll be some political alignment, but it's not going to be a lot of influence.
Why did Putin cancel his annual press conference?
Well, if you were Putin, wouldn't you cancel your annual press conference? I mean, look, they are generally friendlies, and he does control the media, and if you ask something really sharp, that can be it for you and your family. But he doesn't even want the hint of something that may not be scripted. He's been talking about and meeting with, for example, some of the families of the soldiers that are over there, some that have sacrificed, of course, an awful lot, but they've been very carefully vetted. He doesn't want to talk to anyone who's going to be in any way critical, and that's kind of what this annual press conference is like, usually hours long, very voluble. Putin who likes to opine on any topic that is not what you'd be seeing this year, and as a consequence, he's canceling it. It's clearly not a health reason, he's been doing a lot of other public meetings and traveling.
SBF is busted. That's right. At some point he's probably going to end up in jail. What does this mean for crypto exchanges around the world?
Well, it means less investor-friendly regulation for these exchanges. Remember, SBF was giving massive amounts of money to political figures in the United States to ensure that he could capture the regulatory process. That money gone up in smoke, probably have to give it back. And even if they don't, he's not going to have much influence with it from The Bahamas or from prison. And what that means is that a chilling effect on others in the industry. Lots of big questions from major financial institutions as to use-cases for crypto, as opposed to the blockchain, which people are very optimistic about the underlying technology. And again, it means regulations are going to be much more government-oriented, much more citizen protection-oriented, and much less crypto exchange-oriented.
- Russia and the West battle it out in Africa ›
- What We're Watching: EU-Qatar bribery probe, US-Africa talk shop ›
- What do Russians really think of the war? ›
- What We're Watching: Crypto chaos, China-El Salvador trade, inflation across the Atlantic, Biden-Xi meeting ›
- What We're Watching: Bankman-Fried in cuffs, China after "zero," Peru's next vote, Japan's proposed tax hike ›
- Where the US is gaining and losing influence - GZERO Media ›
FTX CEO Sam Bankman-Fried attends a press conference at the FTX Arena in downtown Miami.
What We're Watching: Bankman-Fried in cuffs, China after "zero," Peru's next vote, Japan's proposed tax hike
FTX’s Sam Bankman-Fried in cuffs
Sam Bankman-Fried, the shaggy-haired founder of FTX known colloquially as SBF, was arrested Monday night at his apartment in the Bahamas. FTX, the once booming crypto exchange, imploded last month after investors grew worried about the firm’s financial standing, leading to massive withdrawals. Unable to pay customers out, SBF had been funneling investors’ funds to a crypto hedge fund, while Bankman-Fried had also used billions of dollars to fund risky wagers. SBF, who ultimately declared bankruptcy last month, has recently been compared to infamous con artists like Bernie Madoff. On Tuesday, US federal prosecutors are set to release the indictment, which includes a host of financial crimes, including wire fraud and money laundering. What’s more, SBF’s arrest came the night before he was due to testify to the US Congress about the collapse of his $32 billion empire. It's unclear whether the former crypto whiz will fight extradition efforts.
China after “zero”: how bad will it get?
Just days after China relaxed some of the world’s most draconian COVID rules in response to widespread anti-lockdown protests, authorities are holding their breath as signs of an infection wave grow. Having eased testing requirements, loosened quarantine restrictions, and scrapped a government COVID tracking app, officials say visits to health clinics have now skyrocketed. For three years, President Xi Jinping has tried to show the world that his authoritarian COVID approach was more effective and humane than the repeated cycles of infection and death that have swept across the Western democracies since 2020. But the downside is that few people in China have natural immunity to the disease, and with vaccination rates relatively low — particularly among the vulnerable elderly who are under-vaccinated — he could soon face precisely the wave he wants to avoid. The rest of the planet has a direct economic stake in this as well, particularly if the world’s second largest economy, already laid low by lockdowns, now catches a COVID crisis of its own.
Peru to hold early elections… but not that early
Interim president Dina Boluarte has pledged to hold early general elections following deadly clashes between police and supporters of her predecessor, Pedro Castillo, who was ousted last week after attempting to dissolve Congress. Boluarte, who was the left-populist Castillo’s vice president, said she would aim to hold the vote in April 2024, two years ahead of schedule. It’s unclear whether that will placate Castillo’s mainly rural and indigenous supporters, who want a fresh vote as soon as possible, and who are demanding the former president’s release from police custody. Meanwhile, the country’s fractious and unloved Congress is living up to its do-nothing-in-a-crisis reputation: at a weekend meeting, members ended up beating the crap out of each other rather than solving any of the issues facing their country. Boluarte is now Peru’s 6th president in as many years.
Kishida’s tax hike plan irks his own party
Japan’s Prime Minister Fumio Kishida is once again facing backlash after announcing plans to raise taxes in a bid to pay for Japan’s growing defense budget. (Japanese media infer the increase will be to corporate taxes, since Kishida implied that individuals facing high inflation should not be burdened.) Kishida, who replaced Liberal Democratic Party leader Yoshihide Suga as PM in 2021, has long called for a revision of Japan’s pacifist constitution and now plans to boost the country’s defense budget to 2% of GDP – up from 1%– within 5 years. However, in order to pull this off, Kishida will have to find an additional $29 billion – one quarter of which he plans to get from corporate tax hikes. But members of his own conservative LDP have criticized this approach, saying that raising taxes undermines key parts of the government’s economic agenda aimed at raising wages and boosting growth. Kishida, who has the lowest approval rating of any G7 leader (23%), would be tossed out if enough members of the ruling coalition backed a no-confidence motion in the lower chamber. For now, that’s extremely unlikely, but Kishida will have his work cut out for him in uniting his party, particularly as Tokyo contends with continuing political fallout from high inflation and a weak yen.
Correction: Our Signal newsletter incorrectly stated that Kishida replaced Abe. His correct predecessor is Yoshihide Suga.
A police officer blocks the street after an explosion on busy pedestrian Istiklal street in Istanbul, Turkey.
Hard Numbers: Istanbul’s explosion, FTX’s downfall, Ukraine’s win in Kherson, Terminal 2F’s farewell
6: At least 6 people were killed and dozens were wounded on Sunday when an explosion rocked a busy district in central Istanbul, Turkey. The cause remains unknown, but the same location was the target of a 2016 suicide attack carried out by an Islamic State affiliate.
900 million: FTX, the major crypto exchange that filed for bankruptcy and is being investigated for potential financial crimes, held just $900 million in saleable assets against a whopping $9 billion of liabilities. Headed by crypto megastar Sam Bankman-Fried, FTX has been accused of unethical business practices. Meanwhile, its downfall has sent crypto and stock markets into a tailspin.
8: For eight months, residents of Kherson – the only provincial capital held by the Russians – were living under the Kremlin’s control, but the province is now firmly in Ukrainian hands after an embarrassing Russian retreat wrapped up over the weekend. Still, Ukrainian authorities have much work to do to restore electricity, water access, and medical supplies in the province.
18: Mehran Karimi Nasseri, an Iranian refugee who made Paris' Charles de Gaulle airport his home for 18 years, died at the airport’s Terminal 2F on Saturday. Nasseri, whose story inspired the film "The Terminal" starring Tom Hanks, was granted refugee status in France and lived at a hostel for a period but recently returned to the airport where he died.
Logos of FTX and Binance, crypto exchange competitors.
What We're Watching: Crypto chaos, China-El Salvador trade, inflation across the Atlantic, Biden-Xi meeting
Is this crypto’s Lehman moment?
The crypto market’s bad run got even worse this week after FTX, a major crypto exchange, imploded. Headed by billionaire crypto-star Sam Bankman-Fried, FTX was revealed to be in a dire financial position earlier this week, and Binance, the largest exchange and an FTX competitor, considered bailing FTX out, but dropped the idea at the eleventh hour when it became clear FTX was insolvent and its customers couldn’t withdraw assets. Federal investigators are now looking at Bankman-Fried to find out whether his company violated financial regulations. Not only did Bankman-Fried lose more than 90% of his $16 billion fortune in mere days, but the news also sent the broader crypto and stock markets into a tailspin. Bankman-Fried, a big Democratic donor, had been making inroads in recent months with lawmakers on Capitol Hill to shape regulation with favorable terms for the crypto industry. But lawmakers and other crypto lobbyists will now want to distance themselves from the crypto king facing serious allegations of financial impropriety.
China and El Salvador talk trade
China and El Salvador will soon begin negotiations on a free trade deal, Beijing said on Thursday. The relationship is a new one. It was only four years ago that San Salvador cut ties with Taiwan in order to establish formal relations with China. Since then, El Salvador has signed onto Beijing’s ambitious Belt and Road Initiative, and China has agreed – in principle at least – to invest in a number of infrastructure projects in the Central American country, including a sports stadium, water treatment plants, and a $40 million cultural center in the capital. El Salvador’s democracy-flouting President Nayib Bukele needs all the economic help he can get after pinning the country’s economic revival on cryptocurrency, which is clearly not having a very good run. Washington has had to tread carefully with the norm-defying Bukele – China’s bid to rival US influence in Latin America gives the young populist leader options.
Inflation: good news in the US, bad news in Europe
The US economy got some good news on Thursday: Monthly inflation in October dropped to 7.7%, down from 8.2% in September, and is now at its lowest level since January. This suggests that the US Federal Reserve’s ongoing efforts to rein in inflation are working. But across the Atlantic, it's a different story. As the war in Ukraine wages on, inflation remains above 10% in the Eurozone, where the European Central Bank has adopted a more cautious approach to monetary policy out of fear that raising rates too fast could inflict economic pain, particularly on the more sluggish southern European economies. But as cost-of-living pressures persist, thousands of people across Greece, Belgium, and France took to the streets this week to protest “suffocating inflation.” Belgian trade unions say gas prices have gone up by 130% this year, while Greek officials say they’ve risen by more than 300%. European governments are keenly aware that with winter coming, the chill of inflation is only going to get deeper.Putin’s out, but