This week, one of OpenAI's social media accounts was hacked for the fifth time in 20 months.
Telegram will now share user data with authorities upon request.
Caroline Ellison, former CEO of Alameda Research was sentenced to two years in prison for her role in the 2022 FTX saga.
CZ, the former CEO of Binance was released from prison after his four-month sentence.
An industry exec alleged that the Biden administration might have played a deliberate role in the collapse of Silvergate Bank.
The crypto market was particularly eventful in the previous week.
Several major events popped up within the week, including the fifth hack of OpenAI-affiliated social media accounts in 20 months.
The industry also saw a major shift in Telegram's privacy policy, which mandates them to share private information with the authorities after formal requests.
Caroline Ellison, former CEO of Alameda Research and Sam Bankman-Fried’s ex-girlfriend was sentenced to two years behind bars.
However, while Ellison is set to go to prison, reports also surfaced that Changpeng CZ Zhao, the former CEO of Binance had been released after four months in jail.
Here are some of the biggest crypto stories from the previous week, in a little more detail.
Hackers gained access to OpenAI's Twitter (X) account on 23 September and used it to promote a phishing link.
The posts promoting the link urged ChatGPT users to click and claim alleged "$OPENAI" tokens.
Users began reporting that the account seemed to have been hacked as late as 10 pm UTC, with multiple screenshots popping up all over Twitter.
Within the scam posts, the hackers marketed the $OPENAI tokens as a medium of “bridging the gap” between blockchain and AI.
The tweets also claimed that ChatGPT users are eligible to claim a piece of the token’s supply, as well as access to the firm’s future beta programs.
The hackers also turned off commenting underneath the scam posts, which is a major strategy they use to prevent victims from warning others.
So far, the scam posts have been deleted with no reports of victims.
However, it is also interesting how this is the fourth time an OpenAI social account has been since June 2023.
Telegram, once hailed as one of the most secure social messaging apps because of its privacy features, has now made a major pivot.
The app will now begin sharing user data with relevant authorities if it gets valid requests from authorities.
This adds Telegram to the list of top messaging apps like WhatsApp and Messenger that do the same.
Telegram CEO Pavel Durov mentioned on 23 September that users who break the messaging app's policies might have their IP addresses and phone numbers shared.
Telegram to share user data.
The main aim of the latest policy shift is to stop illegal conduct on the network. This is despite the privacy issues it might cause for users.
Durov also stated that the app will now use human reviewers and AI algorithms to exclude any "problematic content" from Telegram Search.
This is part of the attempts to make the messaging service safer.
Telegram’s compelling feature gone
Overall, Twitter is now swarming with complaints about Telegram's "most compelling feature" being gone.
This week in one of the biggest milestones in the ongoing FTX saga, Caroline Ellison was sentenced to two years behind bars for her involvement in the 2022 scandal.
Judge Lewis Kaplan of the District Court of Southern New York passed the sentence on 24 September.
In his ruling, Ellison also has to forfeit approximately $11 billion in earnings she received from FTX.
Ellison initially faced a maximum sentence of around 110 years in prison.
However, considering her “impressive” cooperation with the authorities, federal prosecutors themselves recommended a lighter sentence.
Overall, considering Ellison’s sentence, it is likely that other former FTX executives Nishad Singh and Gary Wang will also go to jail.
Singh will get his sentencing on 30 October, along with Wang on 20 November.
Just like Ellison, both have entered a guilty plea and should get relatively lighter sentences compared to Bankman-Fried.
Ryan Salame, another former FTX executive was sentenced to seven and a half years in Jaul this May, with Bankman-Fried still serving his 25-year term.
Remember Silvergate Bank? The crypto-friendly bank with internal affairs closely related to the crypto economy in the US?
According to Nic Carter, an industry executive from Castle Island Ventures in an article on 25 September, the Biden administration deliberately killed this bank off.
Recall that its financial troubles started right around the time that FTX collapsed.
In January 2023 its earnings report showed that after its clients withdrew $8.1 billion during the FTX saga, it lost $1 billion in a single quarter.
Biden killed Silvergate
The bank then made a filing on 1 March of the same year, claiming that its financial situation had gotten worse since.
Carter, in this report, mentioned that Joe Biden’s administration told the bank that it must cap crypto deposits at 15% or face consequences.
He also alleged that the FDIC and US Senators like Elizabeth Warren put "inordinate pressure" on the banks.
They demanded information about their dealings with FTX, enforced the 15% mandate, and threatened consequences for failure to comply.
This, along with several other issues, caused the bank's shutdown, setting crypto backward in one of the harshest bear markets so far.
When one door closes, another opens.
While Ellison found her way to prison last week, another prominent crypto exec found his way out of one.
Last week, Changpeng CZ Zhao, the former CEO of Binance walked out of jail after four months of incarceration.
CZ is free
Recall that Zhao was sentenced to four months in prison after allegedly failing to maintain an effective Anti-Money Laundering program at the exchange.
Zhao, unfortunately, will not be returning to Binance as its CEO.
This is because according to his plea deal, Zhao is prohibited from “any present or future involvement in operating or managing” Binance.
CZ, in his farewell post, noted that “Binance is no longer a baby. It is time for me to let it walk and run.”
He will instead focus on passive investment in “blockchain/Web3/DeFi, AI and biotech” startups, as well as private mentorships for upcoming entrepreneurs.
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