Sam Bankman-Fried Trial seems at Federal Court docket in New York on Oct. 4th, 2023.
Artist: Claudia Johnson
Marc-Antoine Julliard usually trades cocoa beans. However within the spring of 2021, the London-based commodities dealer determined to diversify into cryptocurrency buying and selling. His platform of alternative was FTX.
Two years later, Julliard stood because the prosecution’s first witness within the prison fraud trial towards FTX founder Sam Bankman-Fried, who’s accused of misusing billions of {dollars} in consumer cash.
In testimony that lasted round 50 minutes on Wednesday, Julliard recounted his expertise with FTX, together with the “extraordinarily anxious” feeling he had the day he unsuccessfully tried to withdraw a part of the $100,000 value of crypto and money he had saved on the location. He and 1000’s of different FTX clients had been virtually worn out when the trade went stomach up late final yr.
Like many others, Julliard mentioned he he was beneath the impression that there have been “robust financials behind the corporate.”
Julliard is the poster baby for the case the prosecution specified by its opening assertion because it tries to show to a jury that shoppers had been led to consider the cash they saved with FTX was protected. Potential clients, Julliard mentioned, had been drawn in by savvy advertising and marketing, with no motive to consider that FTX can be repurposing their crypto funds.
In a trial that is set to final six weeks, Bankman-Fried, a person as soon as revered because the “white knight” of crypto, faces seven federal prices, together with wire fraud, securities fraud and cash laundering, that might put him in jail for the remainder of his life.
A jury was seated shortly after 11:30 a.m. (although 4 of the 12 jurors had been already trying to be dismissed). Opening statements started about an hour later. Julliard took the stand simply earlier than 2 p.m. to a packed courthouse in Manhattan.
Because the lead witness, Julliard helped lay out the federal government’s narrative. A lot of his determination to purchase into FTX needed to do with the celebrities and enterprise funds hooked up to the model. He referenced an advert with supermodel Gisele Bündchen and Components 1 advertising and marketing. He additionally pointed to prolific media protection, which bolstered his belief within the firm.
Julliard wasn’t an aggressive crypto dealer. He mentioned he by no means participated in margin buying and selling, or borrowing cash to make purchases, nor did he have interaction in a lending program supplied by the corporate that allowed customers to earn curiosity on idle crypto.
Sam Bankman-Fried sits along with his protection crew throughout his fraud trial over the collapse of FTX, the bankrupt cryptocurrency trade, at Federal Court docket in New York Metropolis, U.S., October 4, 2023 on this courtroom sketch.
Jane Rosenberg | Reuters
Protection desires clients to shoulder blame
The protection is attempting to make shoppers accountable for what it says had been their decisions to purchase and commerce crypto.
“Sam did not defraud anybody,” mentioned Mark Cohen, Bankman-Fried’s lawyer, in his opening assertion. Cohen known as it a “hindsight case” introduced by the federal government, and mentioned that simply because folks misplaced cash, does not imply the 31-year-old Bankman-Fried dedicated fraud.
Bankman-Fried donned a contemporary go well with with a purple tie and a clear haircut — a a lot completely different look than the seashore shorts, sandals and wild curls that helped outline his picture throughout crypto’s heyday. The entrepreneur, who Cohen described as a “math nerd that did not drink or celebration,” diligently took notes on his air-gapped laptop computer as he conversed with each of his attorneys and, throughout breaks, generally stood whereas emphatically motioning along with his arms as he spoke to his counsel.
All through each side’ opening statements, Bankman-Fried saved his eyes skilled on the jury field. His head was turned 90 levels to his proper to observe those that will finally resolve his destiny. Bankman-Fried was joined in court docket by his mother and father, who’re each being sued by FTX’s new administration for having allegedly “exploited their entry and affect inside the FTX enterprise to complement themselves…by hundreds of thousands of {dollars}.”
Cohen is projecting Bankman-Fried as a startup founder and equated operating FTX and Alameda Analysis, his sister hedge fund, to “constructing a airplane whereas flying on it.” He informed the jury that there was no threat administration in place. Particularly, he mentioned the agency did not have a chief threat officer.
Removed from the “cartoon of a villain” that the federal government offered, Cohen gave completely different explanations for his consumer’s supposedly unlawful actions. One instance handled the key backdoor baked into FTX’s code that prosecutors say gave Alameda a strategy to borrow a lot wanted capital.
Cohen mentioned there was nothing secretive about this backchannel within the code base and mentioned the particular entry to FTX was there as a result of Alameda was initially arrange as a market maker for the crypto trade, which wanted the liquidity, particularly in its early days.
Cohen reminded the jury that the three insiders who will take the stand towards Bankman-Fried have all signed cooperation agreements with the federal government.
A $10 billion fraud
The prosecution’s opening assertion was delivered by Assistant U.S. Lawyer Thane Rehn. Over the course of a few half hour, Rehn drove house the purpose that on a regular basis buyers had been those who fell sufferer to FTX’s scheme. By the summer time of 2022, he mentioned, greater than $10 billion had been stolen from 1000’s of FTX clients who had trusted custody of their crypto and money to the platform.
Rehn mentioned the proof would present jurors how Bankman-Fried lied to FTX customers, buyers and lenders, and the way he spent a superb quantity of the cash he stole for his personal good. Rehn referenced marketing campaign contributions, for instance, as a technique that Bankman-Fried appeared to curry favor on Capitol Hill.
Rehn known as Alameda a “second, smaller and extra secretive firm” based and managed by Bankman-Fried that was integral to the defendant’s alleged scheme.
The federal government additionally teed up its star witness, ex-girlfriend and Alameda’s ex-CEO, Caroline Ellison. She pleaded responsible in December to a number of prices and has been cooperating with the U.S. lawyer’s workplace in Manhattan for months.
Rehn plans to point out that Bankman-Fried put in his girlfriend on the high of his hedge fund, although he remained the one calling the pictures behind the scenes.
Allan Joseph Bankman, father of FTX Co-Founder Sam Bankman-Fried, and Barbara Fried, mom of FTX Co-Founder Sam Bankman-Fried, arrive at court docket in New York, US, on Wednesday, Oct. 4, 2023.
Stephanie Keith | Bloomberg | Getty Photographs
Noticeably absent was the point out of Ellison’s co-CEO Sam Trabucco, who was a classmate of Bankman-Fried at MIT. Trabucco left FTX in Aug. 2022, and has stayed comparatively beneath the radar.
Additionally central to the federal government’s case is the alleged coverup to cover Bankman-Fried’s crimes. These techniques embody backdating contracts and utilizing encrypted messaging apps set to auto-delete to keep away from a paper path.
“This man stole billions of {dollars} from 1000’s of individuals,” Rein mentioned, as he closed his assertion.
The prosecution’s second witness was Adam Yedidia, who met Bankman-Fried in school on the Massachusetts Institute of Know-how. The pair remained good mates.
Yedida detailed his expertise working first as a dealer at Alameda for 2 months in 2017, and later as a software program engineer for FTX starting in January 2021. He mentioned he resigned from FTX the day earlier than the trade filed for chapter after a fellow developer informed him that Alameda had used FTX buyer deposits to pay again collectors.
Talking rapidly and intentionally with an air of practiced nonchalance, Yedida testified that he hadn’t talked to Bankman-Fried or seen him in individual since Nov. 2022.
When requested why he was showing beneath an immunity order, Yedida mentioned he was involved that as an FTX developer, he “could have unwittingly written code that contributed to against the law.”
Prosecutors received by a half hour of testimony earlier than breaking for the day. The federal government will proceed its questioning of Yedida at 9:30 A.M. on Thursday.
FTX co-founder Gary Wang may even be taking the stand this week for the federal government.
