👀 Ellison on deck

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Tonight: The site formerly known as Twitter has become even more untrustworthy under Elon Musk. Plus, the most anticipated witness in the trial of Sam Bankman-Fried is on deck to testify against him. Let's get into it.

By Allison Morrow

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Last updated October 9 at 7:44 PM ET

📱WAR AND MISINFORMATION

X is no longer just the new name for the site we once called Twitter.

X, the moniker bestowed by the platform's owner, Elon Musk, refers to an entirely new beast, as the past 48 hours have made painfully clear.

Here's the deal: A war is playing out in horrifying scenes across Israel and Gaza. Naturally, there's a lot of bad intel circulating online, and much of it could be found going viral on X.

There was a fake White House news release falsely claiming the US was sending billions of dollars in new aid to Israel in response.
An account impersonating the Jerusalem Post shared a bogus report that Israeli Prime Minister Benjamin Netanyahu had been hospitalized. (The account was later suspended.)
One video, viewed more than 1.7 million times, purported to show Israeli generals after being captured by Hamas fighters. (It was, in fact, footage from the detention of separatists in Azerbaijan.)
Another post viewed more than 500,000 times on X purported to show an airplane getting shot down with the hashtag #PalestineUnderAttack. The video is in fact a clip from a videogame.

You might assume that the public face of the platform might want to, like, try to stop the spread of lies. But Musk on Sunday instead recommended that users follow Israel-Hamas conflict via an account that is notorious for spreading misinformation. He later deleted the post, and followed up with a statement, urging users to "stay as close to the truth as possible, even for stuff you don't like." (That ought to do the trick...)

CNN has requested comment from Musk and X.

Of course, Twitter doesn't have a perfect track record of keeping out hateful or false content, nor does any other social media platform. But Musk has, in his one year of ownership, laid off hundreds of employees, including those focused on detecting misinformation.

Under Musk, X has incentivized propagandists and scam artists, according to Emerson Brooking, senior resident fellow at the Atlantic Council's Digital Forensic Research Lab.

"Paid verification means that you cannot distinguish between a vetted journalist and a scam artist," Brooking told CNN. "The for-profit 'views' system incentivizes accounts to impersonate news outlets and to post as frequently as possible, drawing from whatever source they can or just making things up."

X has become a uniquely toxic hotbed of misinformation, in no small part because of Musk, who "takes part in the chaos," said Joe Galvin, a journalist who specializes in open-source intelligence.

"The fact is that malicious users, state-backed and otherwise, have become better at spreading falsehoods ... The platforms are in a perpetual state of catch-up."

READ MORE

Live updates: Israel is at war with Hamas.
Multiple airlines have canceled flights in and out of Tel Aviv.
US business leaders vow solidarity with Israel.

NUMBER OF THE DAY

200

US stocks whipsawed Monday, falling sharply early in the trading and then rallying in the afternoon as traders digested the reality of war between Hamas and Israel.

The Dow rose nearly 200 points, or 0.6%. The S&P 500 added 0.6% and the Nasdaq Composite rose 0.4%.

The mood swing on Wall Street signals that investors are taking a wait-and-see approach when it comes to risk.

"Right now there are a lot of 'maybes' and 'ifs' — and a real lack of clarity," said David Donabedian, chief investment officer at CIBC Private Wealth US, adding that "markets will continue to look at everything it usually looks at," including climbing bond yields and the Federal Reserve's future monetary policy decisions.

👀 ELLISON ON DECK

Caroline Ellison, the 28-year-old star witness in one of the most closely watched fraud trials in US history, is expected to take the stand as soon as Tuesday and offer rare insight into the collapse last year of a multibillion-dollar crypto empire.

Her testimony is crucial to prosecutors' case against Sam Bankman-Fried, whom they accuse of orchestrating a scheme to steal billions of dollars from customer accounts in FTX, his now-bankrupt crypto trading platform.

Ellison is one of three former executives in Bankman-Fried's inner circle who have since turned their back on him, agreeing to plead guilty and cooperate with prosecutors in the hopes of securing a lighter sentence.

But Ellison, the former CEO of FTX's sister firm Alameda Research, is perhaps the second-most important person in the case after Bankman-Fried, who has pleaded not guilty and repeatedly tried to disperse blame for what he sees as ultimately bad business decisions rather than fraud.

As the former head of Alameda — and as Bankman-Fried's on-again-off-again girlfriend — Ellison is uniquely positioned to testify about how the crypto business spiraled out of control and ultimately collapsed into bankruptcy.

Prosecutors' case hinges on evidence that FTX and Alameda were deeply financially intertwined, despite repeated assurances from Bankman-Fried that they were separate companies, operating independently from one another. The reality, prosecutors say, is that SBF founded both companies and used them as his own personal piggy bank. With money siphoned directly from FTX customer accounts, they say, Bankman-Fried splurged on luxury real estate for himself and his family, placed risky wagers on digital assets, and funneled millions of dollars in donations to US political campaigns.

Ellison, a Stanford graduate with a degree in mathematics, told the court at hearing in December that Alameda had a virtually unlimited borrowing facility in FTX, and that she agreed to keep the two firms' relationship hidden from investors and customers.

"I am truly sorry for what I did," Ellison said. "I knew that it was wrong."

Messy romantic drama

So far, jurors in the trial have heard exclusively from male witnesses, often speaking at length about technical aspects of the business, walking jurors through spreadsheets, repeating the definition of a cryptocurrency, computer code, and what it means to carry a negative balance.

Ellison, based on her now-public writings, could offer a more personal, raw testimony that the majority-female jury may be sympathetic to.

Already, elements of her fraught relationship with SBF have become public — not least because Bankman-Fried himself leaked some of her private writings to the New York Times, an act that ultimately landed him jail after prosecutors argued he was trying to intimidate Ellison ahead of trial. (SBF's lawyers argued it wasn't witness tampering, but rather an attempt to counter a "toxic" media environment that had maligned his reputation).

In a Google document addressed to Bankman-Fried from the spring of 2022 Ellison wrote that their breakup had "significantly decreased" her excitement about her job, and that life at Alameda "felt too associated with you in a way that was painful."

Key moment under scrutiny

Prosecutors have hinted in court documents that one particular meeting, captured in an audio recording, will be part of their line of questioning.

As Alameda was spiraling last fall, Ellison told her employees that the fund had borrowed money from FTX customer accounts to pay back lenders. According to court documents, when one employee asks who made the decision, Ellison responds: "Um … Sam, I guess."

Catch up

The trial began last Tuesday in Manhattan federal court, and is expected to last up to six weeks. Already, prosecutors have presented evidence that looks bad for Bankman-Fried, though the defense has yet to present its case. For everything you missed last week, check out my story about the biggest bombshells so far.

WHAT ELSE IS GOING ON?

💊 Pharmacy staff at multiple Walgreens walked off the job Monday, citing harsh working conditions that make it difficult to safely fill prescriptions. Organizers, who are not unionized, told CNN there were 500 interested stores out of approximately 9,000 across the country. (CNN)

🎬 Hollywood writers voted overwhelmingly to ratify their union's new contract with studios, capping a monthslong fight that forced movie and TV production to a halt. (CNN)

👀 An ExxonMobil executive who oversees a division involved in a potential $60 billion mega-merger was arrested late last week in Texas on suspicion of committing sexual assault. (CNN)

📉 Nelson Peltz, the activist investor and longtime thorn in Bob Iger's side, is expected to request multiple seats on Disney's board following a relentless slide in the company's share price. (WSJ)

💸 Claudia Goldin, a Harvard University professor, was awarded the Nobel Prize in economics for her research into women's income and employment. (CNN)

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