YouTube will begin sharing ad revenue with Shorts creators on February 1st

YouTube’s long-awaited revenue-sharing program for Shorts creators is nearly ready. Starting today, the company is rolling out a new Partner Program agreement ahead of February 1st, when creators can begin earning ad share revenue on their Shorts views. Creators have until July 10th to accept YouTube’s new Partner Program terms. As part of the change, the company is introducing new “Monetization Modules” to give creators more flexibility over how they earn money on YouTube — though the company recommends accepting all of them to unlock your full earning potential on the platform. As previously announced, creators with at least 1,000 subscribers and more than 10 million views on Shorts over a 90-day period can apply for the Partner Program. They then need to accept the new “Shorts Monetization Module.”

With Shorts revenue sharing rolling out, YouTube notes its $100 million creator fund is going away. However, the company expects most fund recipients to earn more through revenue sharing than they did through the fund. The formula YouTube has devised for determining how much each creator will make for their Shorts is complicated due to the involvement of music licensing. As YouTube users watch Shorts, the company will display ads between clips in the Shorts Feed. YouTube says the money generated by those ads will go towards paying music licensing companies and creators through a shared pool the company will divvy out at the end of each month. How much money ends up going to the creator pool will depend on the number of musical tracks creators feature in their Shorts. If you upload a clip with no music, then all the revenue associated with that video will go toward the creator pool. Conversely, when it comes to a Short with a single song, one-third of the related revenue will go toward paying for licensing. In a Short with two songs, two-thirds will go toward licensing. 

Once that’s all sorted out, YouTube will determine how to distribute the creator fund. The company will dole out the fund based on a creator’s share of total Shorts views. So say your videos accounted for 5 percent of all eligible Shorts views in your country for the month of February, you would then get 5 percent of the money in the fund, whether you used licensed music in your Shorts or not. YouTube then takes its 55 percent revenue cut, leaving you with 45 percent of what’s left. If your contribution to the Creator Pool was $1,000 one month, you would get $450 once everything is said and done.

New York State sues former Celsius CEO over alleged cryptocurrency fraud

Crypto lender Celsius Network is still facing the consequences of its tumultuous 2022 long after it declared bankruptcy. New York State Attorney General Letitia James has sued former Celsius CEO Alex Mashinsky for allegedly defrauding investors out of “billions of dollars” in cryptocurrency. The executive purportedly misled customers about Celsius’ worsening financial health, and didn’t register either as a salesperson or as a commodities and securities dealer.

The Attorney General’s office claims Mashinsky falsely boasted of low-risk investments and reliable lending partners while “routinely” exposing investors to high-risk approaches that resulted in losses the company chief hid from customers. He also made untrue statements about safety, strategies and user numbers, according to the lawsuit. Celsius’ ex-chief supposedly deceived hundreds of thousands of investors (over 26,000 in the state), some of which James says suffered “financial ruin.”

New York hopes to ban Mashinsky from doing business in the state. It also wants him to pay damages and otherwise compensate investors. In a statement to Engadget, Celsius would only reiterate that Mashinsky resigned as CEO in September and is “no longer involved” in managing the firm.

Celsius is one of the more prominent casualties of last year’s crypto crash. Its token’s value plunged from $7 in 2021 to just $3 last spring. That was particularly damaging to a company that offered loans with little collateral and promised yields as high as 18.6 percent — it didn’t have the resources needed to endure the crisis. It tried freezing withdrawals last June to stabilize its assets, but opted for bankruptcy the following month to restructure and otherwise give it a better chance to regroup.

The lawsuit isn’t likely to be the end of the fallout. Several states are investigating Celsius’ practices, and the Securities and Exchange Commission has been in touch. Celsius isn’t alone in dealing with legal repercussions. Just this week, the crypto exchange Coinbase reached a $100 million settlement with New York over alleged financial rule violations. However, it’s notable that the state is going after Mashinsky directly, not just the business he once ran.

Tesla delivered over 405,000 vehicles in Q4 2022, setting a new company record

Tesla delivered 405,278 electric vehicles over the final three months of 2022, the automaker announced on Monday. That number represents a new record for the company, but it also fell short of Wall Street estimates. As recently as December 30th, the consensus among most analysts was that Tesla would deliver about 418,000 vehicles in Q4. A year earlier, the company delivered 308,600 cars during the same period.

According to Tesla, the Model 3 and Model Y made up most of the company’s deliveries in the fourth quarter of 2022, with 388,131 of those vehicles making their way to consumers before the end of the year. Comparatively, Tesla’s more expensive Model S and Model X cars accounted for a modest 17,147 deliveries over the same time frame. Tesla produced 439,701 vehicles in the fourth quarter, setting another record.

It’s fair to say the end of 2022 could have gone better for Tesla. Even before considering how much Elon Musk’s takeover of Twitter has hurt the company, Tesla was faced with macroeconomic and logistical challenges threatening to slow growth. As they did earlier in the year, COVID-19 restrictions in China forced Tesla to suspend and reduce production at its Shanghai Gigafactory. Tesla also closed the facility during the last week of December, adding to concerns the company has been dealing with weakening demand in the world’s biggest automotive market. In Q4, Tesla also had trouble securing transportation for completed vehicles.

Separately, Elon Musk’s handling of Twitter and repeat Tesla stock selloffs saw the value of the company’s shares drop dramatically. In December, Tesla’s stock fell 33 percent (and 45 percent over the last six months) before rallying in anticipation of the company’s fourth-quarter numbers. Tesla will publish its full Q4 results on January 25th and hold its next annual Investor Day presentation on March 1st.

Microsoft and FTC pre-trial hearing set for January 3rd

A federal judge has set a date for the first pre-trial hearing between Microsoft and the Federal Trade Commission (FTC). The two go to court on January 3rd to spar over the fate of Microsoft’s $69 billion bid to buy Call of Duty publisher Activision Bl…

Meta buys smart lensmaker Luxexcel to further AR ambitions

Facebook parent company Meta has acquired Luxexcel, a Dutch startup specializing in smart eyewear. News of the purchase was first reported by De Tijd and later confirmed by TechCrunch. “We’re excited that the Luxexcel team has joined Meta, deepening the existing partnership between the two companies,” a Meta spokesperson told the outlet. The company did not disclose the financial terms of the deal.

Founded in 2009, Luxexcel began life as a prescription lens manufacturer. More recently, the company has made a name for itself in the augmented reality space. At the start of 2021, for instance, it partnered with WaveOptics, the display manufacturer Snap paid $500 million later that same year to buy. As TechCrunch points out, there are also rumors Luxexcel previously worked with Meta on the company’s Project Aria AR glasses.

The acquisition comes as Meta faces regulatory scrutiny from the Federal Trade Commission over its purchase of Supernatural developer Within. The agency sued Meta in July to block the deal. The social media giant also faces criticism over just how much it’s spending to further its metaverse ambitions. In October, a month before the company laid off 11,000 employees, Meta told investors Reality Labs, its virtual and augmented reality unit, lost more than $9 billion in 2022. It went on to predict the division’s operating losses were likely to “grow significantly year-over-year” in 2023.

Here’s everything Sam Bankman-Fried is accused of by the US government

On Monday evening, Bahamian authorities arrested FTX founder and former CEO Sam Bankman-Fried at the request of the US government. The following morning, the Securities and Exchange Commission (SEC), Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC) filed formal civil and criminal charges against Bankman-Fried in “parallel actions.” It was a lot to take in all at once, so below Engadget has broken up current charges against SBF by agency, with some additional context provided.

Those indictments likely represent only the start of Bankman-Fried’s troubles. In addition to the charges it announced on Tuesday, the SEC said it was investigating Bankman-Fried for other securities violations. The agency also announced that it’s actively examining the actions of other FTX executives and employees. As more charges are unsealed, Engadget will continue to update this article.

Securities and Exchange Commission

The Securities and Exchange Commission accused SBF of defrauding FTX investors and customers of more than $1.9 billion. Starting as early as May 2019 until as recently as this past November, “Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customers funds for his own personal benefit and to help grow his crypto empire,” the SEC said.

All the while, Bankman-Fried portrayed himself as a responsible business leader building a safe trading platform with “sophisticated, automated measures to protect customer assets.” In reality, the SEC says, “Bankman-Fried orchestrated a fraud to conceal the diversion of customer funds to his privately-held crypto hedge fund, Alameda Research.”

Bankman-Fried told investors and customers FTX’s sister company was just another platform on the exchange with no special privileges to speak of. “These statements were false and misleading,” according to the SEC. Alameda had access to a “virtually unlimited ‘line of credit” unknowingly funded by FTX customers. In May 2022, when Alameda’s lenders demanded the firm repay loans worth billions of dollars, Bankman-Fried allegedly directed FTX to divert even more money to the hedge fund.

The SEC seeks to bar Bankman-Friend from trading securities in the future. The agency also wants to seize his ill-gotten gains and bar him from acting as an officer or director at another company.

Current FTX CEO John Ray III testified before the House Financial Services Committee on Tuesday — SBF had said he would attend the hearing before his arrest. Ray spoke to some of the allegations detailed by the SEC. “This is really old-fashioned embezzlement,” he told the panel. “We’ve lost $8 billion. I don’t trust a single piece of paper in this organization.”

Department of Justice

In addition to civil charges, Bankman-Fried faces a criminal indictment from the Justice Department. On Tuesday, prosecutors from the Southern District of New York filed eight charges against the former executive, including multiple counts of wire fraud. The Justice Department alleges SBF conspired with other individuals to defraud investors by sharing misleading information about FTX and Alameda’s financial condition. Prosecutors further accused him of attempting to commit commodities and securities fraud. On top of that, Bankman-Fried allegedly broke federal election laws by donating more than is legally allowed and in the names of other people.

SBF spoke about his political donations in a recent interview with journalist Tiffany Fong. “I donated to both parties. I donated about the same amount to both parties,” he said. “All my Republican donations were dark. The reason was not for regulatory reasons, it’s because reporters freak the fuck out if you donate to Republicans.”

It’s worth emphasizing how serious the criminal charges against Bankman-Fried are. For context, a federal judge recently sentenced Theranos founder and former CEO Elizabeth Holmes to 11 years in prison for defrauding the company’s investors and patients. Meanwhile, Ramesh “Sunny” Balwani, the startup’s former chief operating officer, was sentenced to nearly 13 years in prison for his role in the scheme. Sam Bankman-Fried stands accused of defrauding investors of almost $2 billion, or about twice what investors lost to Theranos.

Commodity Futures Trading Commission

Rounding out the current charges against Bankman-Fried, the Commodity Futures Trading Commission accused the former executive of using Alameda Research to “surreptitiously” siphon customer funds. “At Bankman-Fried’s direction, FTX executives created features in the underlying code for FTX that allowed Alameda to maintain an essentially unlimited line of credit on FTX,” the regulator alleges. It adds that Alameda had other “unfair” advantages, including an exemption from the platform’s auto-liquidation risk management process.

As early as May 2019, SBF and “at least one” other Alameda executive directed the firm to use FTX customer funds to trade on competing platforms and buy “high-risk” digital assets. Additionally, the CFTC alleges that Bankman-Fried and his cohorts “took hundreds of millions of dollars in poorly-documented ‘loans’ from Alameda,” which they then used to purchase real estate and make political donations.

For his actions, the CFTC is seeking to ban Bankman-Fried from trading derivatives and impose civil penalties against him. It also wants to bar him from acting as a director or officer in the future.

Eight charged in $114 million pump-and-dump stock scheme on Discord and Twitter

The US government just clamped down on a prominent online financial fraud. A federal grand jury and the Securities and Exchange Commission have charged eight men with allegedly operating a stock pump-and-dump scheme on Discord and Twitter between January 2020 and April 2022. They reportedly used their social media presences (including a combined 1.5 million Twitter followers) to artificially inflate the value of stocks, only to sell their shares without disclosing their plans. They made a $114 million profit off the campaign, the Justice Department said.

In addition to tweets, the group supposedly used a Discord server (Atlas Trading) to share misinformation about stocks. One participant, Daniel Knight, also co-hosted a podcast that apparently played a role in the fraud. He brought some of the others on his show and falsely portrayed them as experts, according to the SEC.

All eight are facing at least one charge of conspiracy to commit securities fraud. Edward Constantinescu (aka Constantin), Perry “PJ” Matlock, John Rybarczyk, Gary Deel, Stefan Hrvatin, Tom Cooperman and Mitchell Hennessey are facing additional charges that revolve around securities fraud and (in Constantinescu’s case) unlawful monetary transactions. The SEC has further charged Knight with aiding and abetting the scheme.

The conspiracy and fraud charges carry a maximum sentence of 25 years in prison for each count, while the transactions charge against Constantinescu carries a 10-year maximum. The SEC charges could add financial penalties, including disgorgement of the ill-gotten profits. 

The nature of the manipulation isn’t surprising. The meme stock saga on Reddit showed that online communities can influence share prices in the right circumstances. However, the charges suggest a trend — fraudsters now see social media as a viable way to fool many investors with relatively little effort. Don’t be surprised if you see more cases like this going forward.

SEC charges FTX co-founder Sam Bankman-Fried with ‘defrauding investors’

Following his arrest in the Bahamas, the US Securities and Exchange Commission (SEC) has charged FTX co-founder Sam Bankman-Fried with “defrauding investors,” it announced. It alleges that Bankman-Fried “concealed his diversion of FTX customers’ funds to [the] crypto trading firm Alameda Research while raising more than $1.8 billion from investors.” 

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said SEC Chair Gary Gensler. “The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws.”

The SEC alleges that since at least May 2019, FTX raised $1.8 billion from equity investors, including $1.1 billion from 90 US investors alone. Bankman-Fried promoted the exchange as a safe trading platform with “sophisticated, automated measures to protect customer assets,” it said. “In reality, though, Bankman-Fried orchestrated a fraud to conceal the diversion of customer funds to his privately-held crypto hedge fund, Alameda Research.”

That fund was given special treatment, “including an unlimited ‘line of credit’ funded by the platform’s customers and exempting Alameda from certain key FTX risk mitigation measures,” the commissioner added. And finally, customers were exposed to undisclosed risk from FTX’s exposure to Alameda holdings of “overvalued, illiquid assets such as FTX-affiliated tokens.” It further alleges that Bankman-Fried used commingled FTX customer funds to make “undisclosed venture investments, lavish real estate purchases and large political donations.” 

Bankman-Fried was set to be testifying today in Congress, but that isn’t happening now. In a draft transcript of his testimony seen by Forbes, he would have led by saying “I fucked up.” Later in the transcript, Bankman-Fried claims Alameda’s position on the platform was twice as large as displayed on FTX’s dashboards due to “a historical accounting quirk,” as opposed to any malfeasance. He also planned to say that FTX’s US business is fully solvent and could pay back customers immediately. Among other statements, he notes that he was pressured into filing for Chapter 11, and that ultimately the Chapter 11 documents were filed against his wishes.

The SEC is seeking injunctions including barring Bankman-Fried from future securities dealings, seizing alleged ill-gotten gains, a civil penalty and an officer and director bar. “FTX operated behind a veneer of legitimacy,” said SEC enforcement director Surbir S. Grewal. “But as we allege in our complaint, that veneer wasn’t just thin, it was fraudulent.”

At the same time, the US Attorney’s Office of the Southern District of New York and the Commodity Futures Trading Commission (CFTC) also announced charges against Bankman-Fried in parallel actions. The unsealed indictment in United States of America v. Samuel Bankman-Fried has eight counts: Conspiracy to commit wire fraud on customers; wire fraud on customers; conspiracy to commit wire fraud on lenders; wire fraud on lenders; conspiracy to commit commodities fraud; conspiracy to commit securities fraud; conspiracy to commit money laundering and conspiracy to defraud the United States and violate the campaign finance laws. 

The CFTC’s suit names Bankman-Fried alongside FTX and Alameda Research. Alongside similar allegations to the criminal and SEC cases, the CFTC claims that Bankman-Fried and other FTX executives took “hundreds of millions of dollars in poorly-documented ‘loans’ from Alameda that they used to purchase luxury real estate and property, make political donations, and for other unauthorized uses.”

Update 12/13 11:30AM ET: This article was updated to include details on the criminal charges and CFTC suits.