| | | | | | | Presented By Instagram | | | | Axios AM | | By Mike Allen · Dec 13, 2022 | | Happy Tuesday! Smart Brevity™ count: 1,484 words ... 5½ minutes. Edited by Noah Bressner. 💻 Please join Axios' Caitlin Owens and Victoria Knight tomorrow at 12:30 p.m. ET for a virtual event looking at the future of telehealth. Sign up here. | | | | | | 👀 1 big thing: "I f---ed up" | | Sam Bankman-Fried speaks at a benefit in New York City in June. Photo: Craig Barritt/Getty Images In prepared testimony he planned to deliver to the House Financial Services Committee this morning, fallen crypto prodigy Sam Bankman-Fried declared: - "I would like to start by formally stating, under oath: I f---ed up."
That opening line for the ages, in written testimony obtained by Reuters, will have to wait. - On the eve of his Capitol Hill appearance, Bankman-Fried, 30 — founder and former CEO of bankrupt crypto exchange FTX — was arrested by police in the Bahamas, where his business was based.
- Bankman-Fried was arrested shortly after 6 p.m. at his apartment complex, a luxury gated community.
This appears to set up an extradition of Bankman-Fried to the U.S., Axios business editor Dan Primack reports. - The U.S. Attorney for the Southern District of New York tweeted: "Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning."
⚖️ The criminal charges include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, The New York Times reports (subscription). - The SEC filed a civil complaint against SBF early today.
💭 Our thought bubble: The timing is surprising, given that prosecutors could have had sworn testimony from Bankman-Fried had they waited just 24 hours. In the testimony obtained by Reuters, Bankman-Fried planned to say he was pressured by lawyers to step down as FTX CEO following the sudden exodus of customer funds. - He says he changed his mind less than 10 minutes later, when he received "a potential funding offer for billions of dollars."
He says he tried to rescind the appointment of the new CEO, John Ray III. SBF's lawyer told him it was too late. - Bankman-Fried said he had since been cut off from FTX's systems, and Ray hasn't responded to his emails offering help or other information.
"Last year, my net worth was valued at $20b," Bankman-Fried says. The bottom line: During a Twitter Spaces interview yesterday, Bankman-Fried said, "I don't think I will be arrested." He was wrong. 🚨 See the SEC charges, out this morning ... Share this story. |     | | | | | | 2. 🥊 New CEO: FTX bosses were "grossly inexperienced" | | Drone photo of the roof of FTX Arena in Miami. Photo: Rebecca Blackwell/AP This morning's House hearing on FTX will go on without SBF, with testimony by new CEO John Ray III, who cleaned up Enron after its collapse in the early 2000s — and has said FTX was worse. - In a draft of Ray's testimony I obtained, he says: "[T]he FTX Group's collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people's money or assets."
Among the "unacceptable management practices" Ray says he has identified so far: "The use of computer infrastructure that gave individuals in senior management access to systems that stored customer assets, without security controls to prevent them from redirecting those assets." - "The storing of certain private keys to access hundreds of millions of dollars in crypto assets without effective security controls or encryption."
- "The commingling of assets."
- "The lack of complete documentation for transactions involving nearly 500 investments made with FTX Group funds and assets."
- "The lack of personnel in financial and risk management functions."
The bottom line: "I would like to especially say to regulators — in the U.S. and abroad," Ray says in the testimony, "that I completely understand the depth of outrage and frustration with what happened." | | | | | | | | 3. Axios interview: Bari Weiss reveals business plan | | Bari Weiss on Thursday during the company's launch. Photo: Andy Mills/The Free Press Bari Weiss, the New York Times columnist turned entrepreneur, has hired 10 full-time employees and over a dozen contractors to help build her new media company, The Free Press, Weiss tells Axios' Sara Fischer. - "I'm responding to a demand, and I'm expanding based on the hunger of the audience," Weiss said. "And that hunger and appetite is just huge. We're at the very, very beginning of what this could be."
Why it matters: The success of Weiss' Substack newsletter and podcast, both of which she launched last year after leaving The Times, shows the appetite for coverage that's meant to rebuke traditional media products. 🖼️ The big picture: Weiss and other independent writers — including Matt Taibbi and Glenn Greenwald — are gaining even greater attention with Elon Musk's ownership of Twitter. - Weiss said: "I think there's a lot of people in this country who are politically homeless, who feel like the old labels — Republican, Democrat, conservative, liberal — no longer fit them or no longer mean what they used to."
Weiss launched The Free Press last Thursday, four days ahead of schedule, to capitalize on the media coverage around her "Twitter Files" reporting. - In less than a week, The Free Press has accrued more than 105,000 Twitter followers. Its flagship newsletter has 25,000+ free and paid subscribers.
- Weiss' personal Twitter following exploded from 500,000 to 900,000+ in less than a week.
Catch up quick: Weiss left The Times as an op-ed columnist in July 2020, arguing she had become a victim of "a 'new McCarthyism' that has taken root at the paper of record." - Her wife, Nellie Bowles — a co-founder of The Free Press, who covered tech and internet culture for The Times from San Francisco — left the paper shortly after, in 2021.
The pair created The Free Press from their kitchen table in L.A. - Last year, MarketWatch reported Weiss made over $800,000 from her newsletter, which had 14,000 paid subscribers. The newsletter now has more than double that number of paid subscribers.
🔮 What's next: Weiss plans to launch a slate of newsletters and podcasts to accompany her own, all under the umbrella of The Free Press. - Several other independent writers — including Katherine Boyle, a general partner at Andreessen Horowitz, and author and Substack writer Michael Shellenberger — are joining as columnists.
Share this story. | | | | | | | | A message from Instagram | | Explore 30+ Instagram tools helping teens have positive experiences | | |  | | | | Instagram's tools can help parents keep their teens safe on social media, help teens see less sensitive content and help them spend less time on our platform. Because teens' experiences on Instagram should be positive and supportive. Explore our tools and set them up today. | | | | | | 4. 🌕 Moon is back in reach |  | | | Illustration: Shoshana Gordon/Axios | | | | NASA's successful Artemis I mission paves the way for what could be the most exciting space moment in decades — landing people back on the Moon for the first time in more than 50 years. - Why it matters: The mission moves a crewed Moon landing from the realm of the theoretical to a likely event for the first time since the Apollo era, Miriam Kramer writes for Axios Space.
🚀 What's next: NASA's second Artemis mission flight will send a crew of astronauts around the Moon without landing before coming back to Earth. - The four-person crew is expected to be named in early 2023.
Keep reading. | | | | | | | | 5. 🤧 Mapped: Flu wave |  Data: CDC. Map: Erin Davis/Axios Visuals The number of flu deaths in the U.S. is far outpacing rates seen at this time over the past two years, Axios Vitals author Tina Reed writes. | | | | | | | | 6. 🎒 Indictments in Loudoun County | | This Loudoun County School Board meeting in 2021 was part of the culture wars over education. Photo: Evelyn Hockstein/Reuters Scott Ziegler — the former superintendent of Loudoun County (Va.) Public Schools — has been indicted on three misdemeanor charges by a special grand jury that investigated the response to two sexual assaults committed by a student last year, AP reports. - The grand jury also issued a felony perjury indictment against the school system's primary spokesman, Wayde Byard.
Why it matters: The indictments, unsealed yesterday, "mark a triumph for Gov. Glenn Youngkin, who won the governor's office largely by campaigning on education," The Washington Post notes. - "He often targeted Loudoun, lambasting the district's handling of the two sexual assaults and its policies allowing transgender students to access school activities and facilities matching their gender identities."
Keep reading. | | | | | | | | 7. 📉 Charted: Melting net worth |  Data: FactSet, Federal Reserve. Chart: Erin Davis/Axios Visuals American households saw the third consecutive decline in net worth during Q3 — as stocks were pummeled by rising interest rates, Matt Phillips writes for Axios Markets. | | | | | | | | 8. 🎬 Premiering today: Pelosi as you've never seen her | | Photo: Jonathan Karl HBO today debuts "Pelosi in the House" — filmed, produced, and directed by Alexandra Pelosi, an Emmy-winning documentarian who delivers an intimate, captivating behind-the-scenes chronicle of the decades of history made by her mother, House Speaker Nancy Pelosi. - The film follows her at work and home — capturing pivotal moments from her election to House in 1987 and through her historic speakership, including passage of the Affordable Care Act and the trauma of the Capitol attack.
In the photo above, you see Alexandra Pelosi with her parents, Speaker Pelosi and Paul Pelosi, at last night's premiere at the National Archives. - Attendees, many of whom have known Pelosi for years, buzzed about how surprising and revealing they found the Oscar-worthy film.
Alexandra Pelosi films Nancy Pelosi. Photo: HBO | | | | | | | | A message from Instagram | | Set up supervision on Instagram to help keep your teen safe online | | |  | | | | Parents have support when it comes to keeping their teens safe on Instagram. They can see who their teen follows, who follows them and any reports their teen shares once supervision on Family Center is set up. Explore Family Center and set it up today. | | | | 📬 Thanks for starting your day with us. Please invite your friends to sign up to get their daily essentials — Axios AM, PM and Finish Line. |  | | Are you a fan of this email format? Your essential communications — to staff, clients and other stakeholders — can have the same style. Axios HQ, a powerful platform, will help you do it. | | | |
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