The trial of Sam Bankman-Fried is currently taking place in New York, with prosecutors attempting to demonstrate that the cryptocurrency entrepreneur mishandled billions of dollars of customers' funds. The initial witness to testify was a cocoa bean trader, who testified to losing $100,000 via FTX. A guilty verdict could result in a life sentence for Bankman-Fried.
Marc-Antoine Julliard, a London-based commodities broker, typically traded cocoa beans; however, in the spring of 2021, he made the decision to diversify into cryptocurrency trading and chose FTX as his platform. Two years later, Julliard testified as the prosecution's first witness in the fraud trial against FTX founder Sam Bankman-Fried, who is accused of misappropriating billions of dollars from clients. During his fifty minutes of testimony, Julliard described his experience with FTX, including his "extremely anxious" feeling upon unsuccessfully attempting to withdraw part of the $100,000 worth of crypto and cash he had stored on the site. He, along with many other FTX customers, lost almost all of their investments when the exchange crashed late last year. Julliard stated that he felt misled by the clever marketing tactics, with no reason to assume that the funds he holds in the exchange were not secure. Bankman-Fried is now on trial for seven federal charges, including wire fraud, securities fraud, and money laundering, that could lead to life in prison. As part of the prosecution's narrative, Julliard mentioned how he was drawn to FTX due to the celebrity endorsements and venture fund investments. He did not engage in any margin trading or the idle crypto program offered by the company.
Mark Cohen, Bankman-Fried's attorney, contested the defense's claims in his opening statement, claiming that "Sam didn't defraud anyone." He presented the trial as a "hindsight case" and argued that just because people lost money does not automatically mean the 31-year-old Bankman-Fried was responsible for any fraud. Bankman-Fried was in court wearing a fresh suit and a purple tie, very different from the sandals, beach shorts, and wild curls that he was known for back in the crypto's golden days. Cohen described Bankman-Fried as a "math nerd who didn't party or drink", and observed him taking notes on his laptop while speaking with his attorneys. Through the proceedings, Bankman-Fried kept his eyes on the jury, the group who will ultimately decide his fate. His parents, who are also being sued by the new FTX management, were present in court with him. Cohen portrayed Bankman-Fried as a startup founder, and compared running FTX and Alameda Research to "building a plane while flying on it." He went on to point out that there was no risk management in place, and that the company didn't have a chief risk officer. In order to counter the "cartoon of a villain" that the government presented, Cohen offered different explanations for his client's alleged unlawful actions. For example, the secret backdoor that the prosecution brought up in the code base was explained by Cohen as something that was initially put in place for the liquidity of the crypto exchange, as Alameda was set up as a market maker for FTX, needing the extra access. Cohen reminded the jury that the three witnesses who will testify against Bankman-Fried had all made cooperation agreements with the government.
Assistant U.S. Attorney Thane Rehn expounded upon the prosecution's opening statement for around thirty minutes, focusing on the fact that everyday investors had been taken advantage of by FTX's scheme. Rehn claimed that by the summer of 2022, a total of $10 billion had been stolen from thousands of FTX customers who had faith in the platform with their crypto and cash. He proceeded to demonstrate how Bankman-Fried had duped FTX users, investors and lenders, and how a considerable amount of the money stolen had been used for his own benefit, referring to campaign contributions as an example. Rehn furthermore proclaimed Alameda, founded and directed by Bankman-Fried, to be a "secondary, lesser and more confidential company" that was critical to the defendant's supposed plan.Additionally, the government highlighted Caroline Ellison, their star witness and the former CEO of Alameda, as she previously pleaded guilty in December for multiple charges and has been supplying cooperation with the U.S. attorney in Manhattan over the past several months. Rehn plans to attest that Bankman-Fried had put his girlfriend in charge of his hedge fund, even though he himself had been the one calling the shots from the shadows.
No mention was made of Sam Trabucco, Bankman-Fried's co-CEO, who studied at the Massachusetts Institute of Technology alongside him. Having left FTX in August 2022, Trabucco has largely been out of the public eye.Central to the prosecution's case is the purported concealment of Bankman-Fried's actions, including backdated contracts and encrypted messenger applications that would auto-delete in order to prevent a path of evidence. Rein closed his statement by saying, "This man swindled billions of dollars from thousands of people."Adam Yedidia was the government's second witness and was a college associate of Bankman-Fried. Yedida testified to having worked at Alameda for two months in 2017, and later as a software programmer at FTX commencing in January 2021. He affirmed that he resigned from FTX just before the exchange went bankrupt, after a colleague told him that customer deposits had been employed to pay back creditors.Yedida spoke in a rapid yet cool manner, and when asked about his testimony under an immunity arrangement, he mentioned concern about potentially having "unwittingly written software that took part in a crime."The prosecution's questioning of Yedida lasted for half an hour and will resume Thursday morning.Gary Wang, FTX's other co-founder, is also due to testify this week for the prosecution.
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