Sam Bankman-Fried has one more shot at avoiding prison as criminal trial set to wrap up
Sam Bankman-Fried has one more shot at avoiding prison as criminal trial set to wrap up

FTX Founder Sam Bankman-Fried arrives at Manhattan Federal Court for a courtroom look in New York, United States on June 15, 2023. 

Fatih Aktas/ | Anadolu Agency | Getty Images

Sam Bankman-Fried, who pleaded not guilty to criminal fraud prices tied to the collapse of his crypto empire, has one final probability to get a Manhattan jury to imagine him.

After two days on the witness stand, Bankman-Fried is set to wrap up his testimony on Tuesday. All that is left is a pair more hours of cross-examination by prosecutors, adopted by a redirect examination by Bankman-Fried’s workforce. After that, the protection plans to relaxation its case.

The roughly four-week trial has largely consisted of government-supported testimony from Bankman-Fried’s former shut buddies, confidants and prime executives at crypto alternate FTX and sister hedge fund Alameda Research. They all singled out Bankman-Fried as the mastermind of a scheme to use FTX buyer cash to fund every little thing from enterprise investments and a high-priced condo in the Bahamas to protecting Alameda’s crypto losses after the market crashed final 12 months.

Bankman-Fried’s protection failed to land any important blows in cross-examining the prosecution’s key witnesses, together with Caroline Ellison, the defendant’s ex-girlfriend and the previous head of Alameda. When it was protection legal professional Mark Cohen’s probability to take the lead, he solely known as three witnesses, with the majority of his case driving on Bankman-Fried’s capacity to persuade the jury of his story.

The 31-year-old former billionaire, whose crypto companies spiraled into bankruptcy over the course of some days final November, instructed jurors in his first day on the stand on Friday that he did not commit fraud and that he thought FTX’s exterior expenditures, like paying for the naming rights at a sports activities enviornment, got here out of firm earnings.

When requested by Cohen on Friday morning if he defrauded anybody, Bankman-Fried mentioned, “No, I didn’t.” His lawyer then requested if he took buyer cash, to which Bankman-Fried mentioned, “No.”

FTX founder Sam Bankman-Fried is questioned by prosecutor Danielle Sassoon throughout his fraud trial over the collapse of the bankrupt cryptocurrency alternate, earlier than U.S. District Judge Lewis Kaplan at federal courtroom in New York City, U.S., October 30, 2023 on this courtroom sketch. 

Jane Rosenberg | Reuters

Bankman-Fried, the son of two Stanford University authorized students, faces seven criminal counts, together with wire fraud, securities fraud and cash laundering, that might land him in prison for all times if he is convicted. His argument to the jury is that he made errors, like not having a danger administration workforce in place, which led to “important oversights.” But when it comes to the central query — what occurred to billions of {dollars} in buyer cash — Bankman-Fried does not supply any clear explanations and claims to not likely know.

Ellison, who was one of a number of witnesses cooperating with the federal government on a plea deal, had a more exact reply, in her Oct. 10 look on the stand.

“We in the end took round $14 billion, a few of which we had been in a position to pay again,” she mentioned. “I despatched stability sheets to lenders at the course of Sam that incorrectly said Alameda’s property and liabilities.”

Ellison mentioned Alameda siphoned a number of billion {dollars} from FTX clients and that Bankman-Fried had not solely set up a system to steal the funds but in addition directed Ellison and others to use buyer funds to repay loans within the ballpark of $10 billion.

Bankman-Fried testified that he wasn’t conscious of the quantity Alameda was borrowing from FTX, or its theoretical max. As lengthy as Alameda’s internet asset worth was constructive and the dimensions of borrowing was cheap, rising its line of credit score in order that Alameda may preserve filling orders was high quality, he mentioned. Earlier testimony from former engineering director Nishad Singh and co-founder Gary Wang urged the road of credit score was raised to $65 billion, a quantity Bankman-Fried mentioned he wasn’t conscious of.

Prosecutors entered corroborating supplies, together with encrypted Signal messages and different inner paperwork that seem to present Bankman-Fried orchestrating the spending of FTX buyer cash.

‘Average degree sports activities fan’

Caroline Ellison, former chief govt officer of Alameda Research LLC, leaves Manhattan Federal Court after testifying throughout the trial of FTX CEO Sam Bankman-Fried, on October 10, 2023 in New York City. 

Michael M. Santiago | Getty Images

When it got here to Ellison, Bankman-Fried mentioned that he repeatedly tried to be certain that she was implementing enough hedging methods at Alameda to make sure the fund did not collapse beneath the burden of tumbling crypto costs.

Bankman-Fried testified about a number of conversations on the matter he’d had with Ellison between June and September 2022, and mentioned he was notably involved in regards to the decline in Alameda’s internet asset worth from $40 billion the prior 12 months to $10 billion.

The market had already dropped 70% and if it fell one other 50%, he was afraid the agency could be bancrupt, Bankman-Fried instructed the jury.

“She began crying,” Bankman-Fried mentioned, relating to Ellison’s response when he instructed her that. “She agreed.”

Bankman-Fried mentioned Ellison provided to resign over the matter, however the defendant testified he wasn’t targeted on blame or previous failures however relatively ensuring that Alameda remained solvent.

In September, he checked in once more with Ellison in regards to the hedging exercise, Bankman-Fried testified. Ellison instructed him Alameda had hedged. He requested in regards to the scale of the trades and mentioned his intuition was that they might have been twice the dimensions. After Ellison despatched him spreadsheets in regards to the trades, she agreed there was more room to hedge and she or he did so, Bankman-Fried mentioned.

In strolling by means of FTX’s failure, Bankman-Fried mentioned the function performed by Singh, who was additionally known as as a authorities witness. Bankman-Fried highlighted Singh’s private monetary issues, and mentioned he was suicidal with a therapist on name 24/7 to watch over him. Bankman-Fried mentioned he was attempting to consolation Singh about his loans and bills partly to forestall him from hurting himself.

In describing the swift downfall of FTX, Bankman-Fried mentioned that buyer withdrawals had shortly elevated from $50 million a day to $1 billion a day. He mentioned it was like a run on the financial institution and he was very involved because the solely manner to withdraw all buyer funds was to liquidate each open margin commerce.

Bankman-Fried defended his tweets from early November that he mentioned had been designed to ease buyer considerations.

Regarding the “property are high quality” tweet he wrote throughout the panic, he mentioned he thought Alameda’s internet asset worth was roughly $10 billion and that FTX did not have a gap in its stability sheet.

“My view was the alternate was OK and there was no gap within the property,” he instructed the courtroom.

Shorter solutions

In testimony afterward Monday, Bankman-Fried was confronted with cross-examination as the federal government had its flip with the defendant. Far from the more descriptive solutions Bankman-Fried offered in response to Cohen’s questions, the prosecutors inquiries had been met with plenty of fast replies like “Yep” and “I do not recall.”

In some cases, his solutions had been immediately adopted with a authorities exhibit, such as a tweet, interview transcript, congressional testimony or e mail, meant to dispute his reply.

For instance, Assistant U.S. Attorney Danielle Sassoon requested Bankman-Fried if he assured people who Alameda performed by the identical guidelines as others on the FTX alternate. Bankman-Fried mentioned he wasn’t certain. The authorities adopted by displaying a tweet from him immediately addressing the subject together with an e mail through which he wrote that Alameda’s account is like everybody else’s.

After the federal government wraps its questioning on Tuesday and the protection will get its shot at redirect, all that is left on the docket is 2 witness rebuttals from the prosecution. One will come from an FBI information analyst and the opposite from an worker at funding agency Apollo, which had been in talks to assist finance an FTX rescue.

At that time, Bankman-Fried’s destiny will lie within the fingers of the 12 jurors who’ve spent the previous 4 weeks sitting just a few ft away from the defendant in a decrease Manhattan courtroom.

If you’re having suicidal ideas or are in misery, contact the Suicide & Crisis Lifeline at 988 for assist and help from a educated counselor.

— CNBC’s Dawn Giel contributed to this report

WATCH: Sam Bankman-Fried walks jury through final days of FTX

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