Sam Bankman-Fried’s defense team fails to land a blow as he takes the stand

Sam Bankman-Fried took the stand in a New York courtroom on Thursday, as he and his defense team auditioned their greatest authorized materials for U.S. District Judge Lewis Kaplan.

The former crypto billionaire had initially been scheduled to testify earlier than the jury, however the choose despatched jurors dwelling early to take into account whether or not some elements of Bankman-Fried’s deliberate testimony, associated to authorized recommendation he obtained whereas operating FTX, could be admissible in court docket.

In a form of mini-hearing inside the trial, defense legal professional Mark Cohen guided Bankman-Fried by way of a sequence of questions designed to showcase the defense’s strongest arguments of his innocence, together with suggesting that he relied on FTX’s former chief regulatory officer and in-house legal professional, Dan Friedberg, to information some actions that the authorities claims are unlawful.

Bankman-Fried faces seven prison counts, together with wire fraud, securities fraud and cash laundering, that would land him in jail for greater than 100 years if he is convicted at his trial in Manhattan federal court docket. Bankman-Fried, the son of two Stanford authorized students, has pleaded not responsible in the case.

“Before the trial, I used to be satisfied that SBF was headed to near-certain conviction on severe felony counts, and it was obvious to me that his defense team had not give you something that would derail that end result,” mentioned Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities & Commodities Fraud Section and now a trial accomplice in Chicago with Bryan Cave Leighton Paisner.

“Nothing that has occurred throughout the trial has modified my view. The proof of his guilt seems to be overwhelming,” added Mariotti.

In the final 4 weeks of trial, a number of members of the C-suite at crypto alternate FTX, and its sister hedge fund Alameda Research, have all singled out Bankman-Fried as the mastermind behind the scenes. Several of those witnesses have themselves pleaded responsible to a number of fees, together with Bankman-Fried’s ex-girlfriend Caroline Ellison, who faces a most sentence of 110 years for crimes dedicated whereas she was the CEO of Alameda.

Prosecutors have additionally entered proof to corroborate witness accounts, together with encrypted Signal messages and different inside paperwork that seem to present Bankman-Fried orchestrating the spending of FTX buyer cash.

The defense’s case — which is comprised of Bankman-Fried’s upcoming testimony together with that of two witnesses who each wrapped in simply over an hour on Thursday morning — hinges on whether or not the jury believes the defendant when he takes the stand.

“He has all the time been satisfied that he’s the smartest man in the room and that he can speak his method out of any drawback,” continued Mariotti.

“But the greatest drawback with SBF’s testimony shall be SBF himself. Given that the core subject shall be intent to defraud, SBF needs to be portraying himself as clueless, inattentive, and in over his head. But for years he had portrayed himself as a visionary genius, and I do not anticipate that to change on the stand,” he mentioned.

Judge Kaplan previously ruled that Bankman-Fried’s attorneys couldn’t make a so-called recommendation of counsel argument of their opening remarks since it would threat prejudicing the jury. On Thursday, Kaplan despatched the jury dwelling early to rethink in a closed-door session whether or not to permit this line of testimony.

Under questioning led by Cohen, Bankman-Fried appeared to place a lot of the prison blame on FTX’s chief regulatory officer, Friedberg, as properly as outdoors counsel Fenwick & West, which suggested the crypto alternate. Bankman-Fried spoke about Friedberg’s energetic involvement in every thing from the company-wide auto deletion coverage on messaging apps like Signal, to the creation of Alameda’s North Dimension checking account, the place billions of {dollars} price of FTX buyer cash was funneled.

The former FTX chief additionally mentioned that the lots of of hundreds of thousands of {dollars} in private loans to himself and different founders of the platform had been structured by way of promissory notes drafted by his in-house authorized team and mentioned in live performance along with his common counsel and Friedberg. Having the blessing of his authorized counsel was one thing that SBF mentioned he “took consolation in.”

While taking the stand affords Bankman-Fried the alternative to inform his facet of the story to jurors, it additionally opens the door for federal prosecutors to go for the jugular in cross-examination. Following damning testimony from Bankman-Fried’s closest ex-confidantes and top deputies, defense attorneys for the FTX founder have failed to flip the narrative in cross-examining key witnesses or to undermine the most troubling allegations concerning their shopper.

Indeed, Bankman-Fried’s apply run on Thursday was powerful to watch. While he got here throughout as direct and credible in his direct examination, the grilling by prosecutors was aggressive and efficient. At a number of factors, the choose appeared exasperated by Bankman-Fried’s responses, as soon as saying that the defendant had an “fascinating method of answering questions.”

The defendant’s demeanor flipped 180 levels when U.S. assistant legal professional Danielle Sassoon started her questioning. He swiveled forwards and backwards in his chair, nervously shook a piece of paper he held in his arms, repeatedly grabbed for his water bottle earlier than responding, and skirted a lot of questions by saying he could not recall what had occurred.

Judge Kaplan interjected at one level, telling the defendant to “pay attention to the query and reply the query instantly.”

On Friday morning, we’ll get a ruling from the choose on what’s admissible from the defense’s want record of matters – as properly as Bankman-Fried’s debut earlier than the jury from the stand.

“Given that he seems headed for defeat, taking the stand could be a ‘Hail Mary’ of kinds,” mentioned Mariotti.

“SBF shall be hamstrung by his many prior statements, which may very well be used to impeach him. It shall be tough for SBF to weave his testimony round these prior statements.”

This week’s testimony is simply the newest instance of the defense team’s battle to land a blow in the prison fraud case.

Prosecutors spent 4 weeks of the trial strolling former leaders of FTX and Alameda Research by way of particular actions taken by their boss that resulted in shoppers losing billions of dollars late final yr.

In attempting to poke holes in witness accounts, Bankman-Fried’s attorneys have repeatedly jumped round, unable to preserve a constant timeline or coherent argument, whereas additionally opening the door for witnesses to provide extra testimony in furtherance of what they’d beforehand advised the jury.

The scattershot strategy is probably troubling for Bankman-Fried, who’s relying on his defense attorneys to preserve him out of jail in what may very well be a life sentence if convicted. The central declare the defense has been unable to knock down is that Bankman-Fried knowingly used billions of {dollars} in FTX buyer funds to pay for his lavish way of life, to make political donations and, most dramatically, to cowl a gaping gap in Alameda’s books following the cratering of cryptocurrency costs final yr.

Cohen, a co-founder of the New York legislation agency Cohen & Gresser, is being joined at trial by Christian Everdell, a member of the agency’s white collar defense team. Cohen, a graduate of the University of Michigan Law School, began his agency 21 years in the past and beforehand served as an assistant U.S. legal professional for the Eastern District of New York. Everdell began at Cohen & Gresser in 2017 after nearly a decade working as a prosecutor for the Southern District of New York.

— CNBC’s Dawn Giel contributed to this report.