The week in business: The collapse of FTX

Over the days, the collapse of one of the largest cryptocurrency exchanges, FTX, has prompted a slew of revelations – about the corporate dysfunction within FTX, the entangled personal lives of the people who ran it, and what the exchange’s new head has said efforts seemed to be too be to “conceal misuse of client funds”. The company has filed for bankruptcy and federal prosecutors are now investigating what happened to the lost funds of possibly more than a million creditors. The fall of Sam Bankman-Fried, the founder and former chief executive officer of FTX, has cast doubt on the future of the crypto industry, as well as that of a tightly knit movement in which he has been heavily invested. Centered on a moral philosophy known as effective altruism, this movement was funded in large part by donations from FTX’s philanthropic arm.

Elizabeth Holmes was sentenced to more than 11 years in prison on Friday after being convicted on four counts of defrauding investors over the technology and business practices of Theranos, her failed blood testing start-up. It was a lighter sentence than the 20-year maximum prison sentence she was facing, but still much harsher than the 18-month house arrest her lawyers had asked for. The decision was made by the same judge who oversaw Ms. Holmes’ trial last year, and in doing so he considered a cache of letters and documents filed by attorneys and prosecutors on the case. Among them were family photos of Mrs. Holmes, her partner Billy Evans and their son, as well as comments from figures such as Senator Cory Booker, who praised Ms. Holmes’ “determination to make a difference”. Her critics saw the case as an opportunity to send a message to fellow tech founders who may be falsifying the truth in their quest for success in an industry where few executives are ever found guilty of fraud.

Faced with the ultimatum of leaving Elon Musk’s Twitter or staying with the company and “building a groundbreaking Twitter 2.0,” around 1,200 employees appeared to be making the decision on Thursday. They submitted their resignations hours before the 5 p.m. Eastern deadline, which Mr. Musk said the previous day in an email with the subject line “A Fork in the Road.” The remaining employees, Mr. Musk wrote, would have to be “extremely hard core” and work long hours at high intensity. With the departures being followed by mass layoffs of about half of the company’s employees, the question of how the site will hold up is growing. Large sections of Twitter’s workforce have been eliminated, such as the communications department, which no longer exists, and the platform’s infrastructure teams, which are effectively defunct. On Friday Mr. Musk asked “anyone who actually writes software” to report to Twitter headquarters on the 10th floor.

There is much to suggest that despite the crushing inflation consumers have experienced this year, many plan to shop enthusiastically this holiday season. Retail sales rose 1.3 percent last month, beating expectations as retailers including Amazon, Target and Kohl’s rolled out holiday deals earlier than usual. The sales surge coincided with the first signs of easing inflation: In October, prices rose 7.7 percent year-on-year, still a fast pace but less than 8.2 percent in September. But shoppers’ eagerness for holiday sales suggested they were looking for discounts, increasing the pressure on retailers – who not too long ago had more power to price products at will – to slash prices. At Target, for example, demand fell when those sales ended. What has changed since last season? Consumers had more money saved and spending on clothing and electronics in 2021 as they emerged from the pandemic. This year, customers have become much more concerned about rising prices and reduced their discretionary spending.

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