Indicted FTX founder Sam Bankman-Fried arrives on the U.S. Courthouse in New York City, July 26, 2023.
Amr Alfiky | Reuters
Twelve jurors in a decrease Manhattan courtroom have begun to deliberate the fate of FTX founder Sam Bankman-Fried following a month of testimony from almost 20 witnesses.
The case was handed to the jury round 3:15 p.m. on Thursday, after U.S. District Judge Lewis Kaplan completed studying aloud 60 pages price of directions. A verdict may come as early as Thursday afternoon, and Judge Kaplan beforehand ordered the jury to stay until 8:15 p.m, providing free pizza and Uber rides dwelling.
Bankman-Fried, who began digital asset change FTX in 2019, and sister hedge fund Alameda Research two years earlier, is charged with seven counts, together with wire fraud, securities fraud and cash laundering, associated to the implosion of his crypto empire late final 12 months.
He faces greater than 100 years in jail if convicted. The 31-year-old graduate of Massachusetts Institute of Technology and son of two Stanford authorized students has pleaded not guilty to all fees.
In order for Bankman-Fried to be discovered responsible, the jury should unanimously determine past an affordable doubt that the entrepreneur, as soon as hailed as a crypto genius, supposed to defraud traders and prospects.
The trial, initially anticipated to run till the Thanksgiving vacation, has moved swiftly. The authorities curtailed its witness checklist, and finally did not convey a rebuttal case after the protection rested. The protection known as solely three witnesses to the stand, with the majority of its argument counting on the sworn testimony of the defendant.
Both sides have additionally moved extra rapidly than anticipated on direct and cross-examinations.
Judge Kaplan has inspired the expedited timeline, holding jurors till 6:30 p.m. on Wednesday in order to complete closing arguments. It’s unclear how lengthy the jury will deliberate, however the choose — whereas emphasizing that he is not dashing a choice — mentioned he is keen to remain till 8:15 p.m. Thursday and advised jurors the federal government would cowl dinner and sure pay for his or her journey dwelling.
Jurors hearken to testimony through the fraud trial of Sam Bankman-Fried over the collapse of FTX, the bankrupt cryptocurrency change, at Federal Court in New York City, U.S., October 6, 2023 in this courtroom sketch.
Jane Rosenberg | Reuters
Mark Cohen, Bankman-Fried’s protection lawyer, made his remaining plea for his consumer on Wednesday, arguing that the defendant ought to be discovered not responsible on all counts, in half as a result of the FTX founder had acted in good religion and with out criminal intent, believing all the pieces would work out.
“Every film wants a villain,” Cohen mentioned of the prosecution’s case in opposition to Bankman-Fried, including that the federal government had incorrectly portrayed him as a “monster,” a “dangerous man,” and a “criminal mastermind.”
Cohen claimed the case in opposition to his consumer was constructed on the false premise that FTX was a fraudulent enterprise established to deliberately steal buyer funds from its “very earliest days.”
While FTX’s lack of a danger administration system or chief danger officer mirrored poor system controls, dangerous enterprise choices aren’t crimes, Cohen mentioned.
Cohen advised the jury that if any members of Bankman-Fried’s interior circle really thought one thing nefarious was occurring, that they had choices, together with resigning, leaving the Bahamas or “blowing the whistle.” None of them did, he mentioned.
‘Meant to cut back his position’
The protection’s chief witness was Bankman-Fried himself, and most of his testimony amounted to a distraction, Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities and Commodities Fraud Section, advised CNBC earlier this week. As an instance, he cited Bankman-Fried’s blaming of Caroline Ellison, his ex-girlfriend and former head of Alameda, for failing to correctly hedge.
His testimony was “meant to cut back his position, like his frequent reminders that others had been concerned, that he had rather a lot on his plate, that he was younger, or that he wasn’t a programmer,” mentioned Mariotti, who’s now a trial accomplice in Chicago with Bryan Cave Leighton Paisner.
Caroline Ellison, former chief govt officer of Alameda Research LLC, leaves Manhattan Federal Court after testifying through the trial of FTX CEO Sam Bankman-Fried, on October 10, 2023 in New York City.
Michael M. Santiago | Getty Images
During the federal government’s closing arguments, prosecutors reminded jurors of the mountain of proof key witnesses had supplied.
“The defendant schemed and lied to get cash, which he spent,” Assistant U.S. Attorney Nicolas Roos advised the courtroom.
Roos mentioned there’s “no severe dispute” that $10 billion in buyer cash that was sitting in FTX’s crypto change went lacking, with a few of it going to pay for actual property, investments, mortgage repayments and political donations.
“A pyramid of deceit was constructed by the defendant,” Roos mentioned. “That finally collapsed.”
Critical to the failure of FTX was the usage of buyer funds to cowl losses in Alameda’s books following the plunge in crypto costs final 12 months. Roos mentioned Bankman-Fried is the one who gave particular privileges to Alameda, permitting the hedge fund to siphon buyer cash. He knew it was mistaken, Roos mentioned, which is why he saved it secretive.
Roos introduced up testimony from three firsthand witnesses who mentioned that they’d spoken with Bankman-Fried in regards to the chief situation — a large gap in the stability sheet.
Bankman-Fried “had the vanity to assume he may get away with it,” Roos mentioned.
Bankman-Fried knew Alameda had a detrimental internet asset worth of $2.7 billion, Roos mentioned, however needed to make one other $3 billion in enterprise investments. The solely manner to try this was with FTX buyer funds, he mentioned.
Additionally, Roos advised the jury, consumer cash went to $100 million in actual property bills, together with a $30 million penthouse in the Bahamas and $16 million for his dad and mom’ dwelling.
In referencing the Super Bowl image with Katy Perry and others, Roos known as Bankman-Fried a “superstar chaser.”
In closing, the prosecution reminded the courtroom that Bankman-Fried directed losses to be shifted to Alameda and that FTX’s insurance coverage fund had made up numbers. Add all of it up, Roos mentioned, and it debunks the protection’s principal argument that Bankman-Fried acted in good religion and believed all the pieces would work out.
“This was a fraud that occurred on an enormous scale,” he mentioned.