On Tuesday, Sam Bankman-Fried, the founder of FTX, will be appearing in court for the third and final time for his criminal trial. Bankman-Fried has pleaded not guilty to fraud charges, and this will be his last opportunity to persuade the Manhattan jury of his innocence. Much of the four-week trial has consisted of witnesses testifying against the defendant, mostly consisting of former associates and high-ranking figures.
Sam Bankman-Fried, who has pleaded not guilty in regards to criminal fraud claims related to the fall of his crypto enterprise, will be presented with a last opportunity on Tuesday to get a Manhattan jury to believe his story. After two days on the stand, Bankman-Fried is expected to conclude his testimony, only needing to go through a couple of hours of cross-examination by the prosecution and a redirect examination by Bankman-Fried's defense team. The defense will then rest its case.The trial, which has been taking place for roughly four weeks, has mainly included testimony from Bankman-Fried's previous close associates, confidants, and top executives from his crypto exchange FTX and sister hedge fund Alameda Research. All of the aforementioned uttered their consensus of Bankman-Fried being the designer of a plan to employ FTX customer capital to provide financing for a range of activities, from venture investments to a high-priced condo in the Bahamas and also to pay for Alameda's crypto losses when the market declined last year.The defense failed to make any substantial counterpunches in cross-examining the key witnesses for the prosecution, including Caroline Ellison, Bankman-Fried's past girlfriend and former head of Alameda. When it came time for Mark Cohen of the defense to take the lead, he only called three witnesses, largely relying on Bankman-Fried's capacity to gain the trust of the jury with his narrative.The 31-year-old ex-billionaire who saw his crypto business become bankrupt in a few days last November told members of the jury on his first day on the stand last Friday that he had not attempted any fraud and that he was under the assumption that payments coming from FTX, such as for the naming rights of a sports arena, were established with company profits.When asked by Cohen on Friday morning if he had defrauded anyone or taken customer money, Bankman-Fried answered with a resounding "No" on both accounts.
Bankman-Fried, the offspring of two Stanford University legal academics, is being charged with seven criminal infractions, potentially leading to imprisonment for life if convicted. He states that his missteps, including the lack of a risk management squad, resulted in "remarkable omissions". But in response to the essential query - what happened to billions of dollars in customer funds - he does not offer any clear clarification and insists that he does not really comprehend. Ellison, one of many witnesses aiding the government via a plea agreement, delivered a more thorough answer during her Oct. 10 statement. She proclaimed that they ultimately obtained approximately $14 billion and were able to refund a portion, as well as having sent out balance sheets to lenders on Bankman-Fried’s command containing false information regarding Alameda’s possessions and liabilities. In addition, she added that Bankman-Fried had established a system to snatch the funds and adviced her and others to use customer capital to pay the loans of up to $10 billion. Meanwhile, Bankman-Fried consenters that he was unaware of Alameda’s loan sum or its highest probable worth. He also mentioned that as long as Alameda’s net value was positive and the degree of borrowing was sensible, extending its line of credit so that orders would be able to be fulfilled was okay. Former engineering head Singh and co-founder Wang’s testimony indicated the line of credit was extended to $65 billion, a detail of which Bankman-Fried declared he was unaware. Prosecutors put in corroborative materials, such as encrypted Signal messages and other internal documents that seem to show Bankman-Fried managing the usage of FTX customer money.
Bankman-Fried sought to justify some of these expenses. One such instance was the $10 million per year devoted to naming rights for Miami's basketball arena, which he claimed would eventually yield a return greater than the initial investment due to its value in generating brand awareness. He stated that these resources were generated from revenue from the exchange and venture investments, and not from customer funds. Additionally, he maintained that the high-end Bahamas properties had been paid from FTX operational cash which had been acquired through revenue and venture investments, emphasizing that having such properties available was essential in order to secure top developers from organisations such as Facebook and Google. On Monday, Bankman-Fried shifted his tactics and began to blame many of his previous associates who had testified against him.
When it came to Ellison, Bankman-Fried testified that he had repeatedly attempted to ensure Alameda was employing proper hedging strategies to prevent the fund from tipping over in light of a plummeting crypto market.The conversations occurred between June and September 2022, and he was particularly worried as the net asset value had gone from $40 billion to a mere $10 billion in the previous year.With the market already having gone down by 70% and the potential for a further 50% drop, he feared Alameda could go bankrupt.Bankman-Fried further testified that Ellison burst into tears when he warned her of this, and acknowledged his points.The defendant responded by offering to resign but said he was more focused on stopping any further harm rather than apportioning responsibility.In September, Bankman-Fried asked once again if hedging had been initiated and Ellison said it had. Nonetheless, upon going through spreadsheets provided by her, Bankman-Fried concluded there was more scope for hedging and she then went ahead with it. Bankman-Fried additionally discussed the role of Singh, who was called as a government witness.He remarked on Singh's financial woes, as well as his state of mind which included suicidal tendencies and having a therapist available 24/7.He mentioned that withdrawals had skyrocketed from $50 million to an incredible $1 billion per day, which was like a bank run.Bankman-Fried justified his tweets from the start of November which were supposedly created to ease customers' worries.Regarding the tweet he wrote that "assets are fine," he said he was of the opinion that Alameda's net asset value was roughly $10 billion and that FTX didn't have any holes in its balance sheet.He explained he believed the exchange was in an acceptable position and that there were no issues with the assets. fundingOn Monday, Bankman-Fried testified in court and was faced with cross-examination by the government. He responded to the prosecutors' queries with one-word answers like "Yep" and "I don't recall," which were sometimes followed by exhibits like tweets, interview transcripts, congressional testimony or emails that were intended to contradict his responses. For example, Assistant U.S. Attorney Danielle Sassoon asked Bankman-Fried if he had ever assured people that Alameda played by the same rules as others on the FTX exchange; Bankman-Fried said he wasn't sure, but the government provided a tweet from him regarding the topic as well as an email he had written indicating Alameda's account was like everyone else's.The government is expected to finish questioning on Tuesday, after which the defense will get its chance for redirect. Following this, two witness rebuttals from the prosecution – from an FBI data analyst and an employee of investment firm Apollo – will take place. At that point, details of Bankman-Fried's fate will rest in the hands of the 12 jurors that have been present in court for the last four weeks.
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