FTX Founder Sam Bankman-Fried leaves Manhattan Federal Court docket after a courtroom look on June 15, 2023 in New York Metropolis.
Michael M. Santiago | Getty Pictures
As legal professionals in Sam Bankman-Fried’s prison trial introduced their closing arguments on Wednesday, prosecutors reminded jurors of the mountain of proof offered by key witnesses, whereas protection counsel accused the federal government of portraying the FTX founder as a “monster.”
The prosecution kicked off the proceedings, making an attempt to offer the 12 jurors a transparent sense of why they’ve spent the previous 4 weeks sitting in a decrease Manhattan courtroom.
“Virtually a yr in the past, hundreds of individuals from everywhere in the world who deposited cash with FTX began withdrawing funds,” Assistant U.S. Legal professional Nicolas Roos instructed the courtroom.
Roos stated there’s “no severe dispute” that $10 billion in buyer cash that was sitting in FTX’s crypto alternate went lacking, with a few of it going to to pay for actual property, investments, mortgage repayments and political donations.
The primary factor the jury has to determine, Roos stated, is whether or not Bankman-Fried knew that taking the cash was flawed.
“The defendant schemed and lied to get cash, which he spent,” Roos stated.
Bankman-Fried, the 31-year previous son of two Stanford authorized students and graduate of Massachusetts Institute of Know-how, faces a possible life sentence if convicted on fees, which embrace wire fraud, securities fraud and cash laundering, all tied to the collapse late final yr of FTX and sister hedge fund Alameda Analysis. He pleaded not responsible.
The trial, which started in early October and is about to wrap up within the coming days, has largely pitted the testimony of Bankman-Fried’s former shut associates and prime lieutenants in opposition to the sworn statements of their former boss and, for a lot of of them, former roommate.
The federal government’s key witnesses included Caroline Ellison, Bankman-Fried’s ex-girlfriend and the previous head of Alameda, and FTX co-founder Gary Wang, who was Bankman-Fried’s childhood pal from math camp. Each pleaded responsible in December to a number of fees and cooperated as witnesses for the prosecution.
FTX founder Sam Bankman-Fried is questioned by prosecutor Danielle Sassoon (not seen) throughout his fraud trial over the collapse of the bankrupt cryptocurrency alternate at federal courtroom in New York Metropolis, U.S., October 31, 2023 on this courtroom sketch.
Jane Rosenberg | Reuters
When it was time for Bankman-Fried’s staff to mount a protection, lead counsel Mark Cohen left the majority of the case to his consumer, who spent three days on the stand telling the jury that he did not defraud anybody, did not take buyer cash and tried to work along with his deputies to maintain FTX from failing.
Roos spent Wednesday morning asking the jury to take a look at the proof. At one level, he requested, “Who’s accountable? He then stepped out from behind the rostrum and in direction of the protection desk, pointed on the defendant and stated, “This man, Samuel-Bankman-Fried.”
“A pyramid of deceit was constructed by the defendant,” Roos stated. “That finally collapsed.”
The information, as listed by Roos, had been that prospects believed their deposits had been their very own and never for use by anybody else; that FTX advertisements regularly stated the alternate was the most secure and simplest way to purchase cryptocurrency; and that $10 billion was lacking.
‘Uncomfortable to listen to’
Roos instructed the jury that Bankman-Fried lied to them, reminding them how clean the defendant was in answering questions from his personal legal professional however how “he was a unique individual” when it was the prosecutors’ flip. He had an ideal reminiscence on Friday, Roos stated, telling the jury that Bankman-Fried knew the small print concerning the format of his Airbnb workplace in California, the explanation he went to Hong Kong and why he picked the Miami Warmth enviornment because the one for FTX to sponsor.
That every one modified when the federal government was asking the questions.
“It was uncomfortable to listen to,” Roos stated, including that Bankman-Fried stated “I am unable to recall” over 140 instances throughout questioning by the federal government.
“To imagine his story, you’d must ignore the proof,” Roos stated. “You’d must imagine the defendant, who graduated from MIT and constructed two multibillion-dollar corporations, was really clueless.”
Crucial to the failure of FTX was using buyer funds to cowl losses in Alameda’s books following the plunge in crypto costs final yr. Roos stated Bankman-Fried is the one who gave particular privileges to Alameda, which he began earlier than founding FTX, permitting it to siphon buyer cash. He knew it was flawed, Roos stated, which is why he saved it secretive.
Roos stated Bankman-Fried had been mendacity to the general public about Alameda’s “secret benefits,” and was being untruthful when he instructed the general public and the media that Alameda was similar to everybody else.
“These had been lies,” Roos stated. Had they recognized the reality, “buyers would have run for the exits,” he stated.
Bankman-Fried blamed “messy accounting,” Roos stated, including “give me a break.” He stated these feedback contradicted what he instructed Congress, that he’d reconciled the books.
Decide Lewis Kaplan, who presided over the trial, began courtroom nearly a half hour late on Wednesday as a result of a juror was caught in site visitors. Then there have been technical points, because the second row of screens within the jury field stopped working. That led to a 1- minute break.
Later in Roos’s closing, he introduced up the notorious spreadsheet of the seven alternate variations of Alameda’s funds that Ellison had put collectively when third-party lenders had been asking for an replace. Bankman-Fried testified that he’d seen a spreadsheet however did not keep in mind the small print and did not ask Ellison questions on it. Roos referred to as the reason “implausible.”
FTX founder Sam Bankman-Fried is questioned by protection lawyer Mark Cohen as he testifies in his fraud trial over the collapse of the bankrupt cryptocurrency alternate, at federal courtroom in New York Metropolis, U.S., October 30, 2023 on this courtroom sketch.
Jane Rosenberg | Reuters
Roos referred to metadata displaying that Bankman-Fried was a part of a gathering for about half-hour the place the outlet in FTX’s steadiness sheet and repaying lenders had been mentioned. Metadata reveals he was finding out the Google Doc of the corporate’s funds, with numbers indicating the billions in borrowing from FTX.
Roos introduced up testimony from three firsthand witnesses who stated that they’d spoken with Bankman-Fried concerning the large gap within the steadiness sheet. Ellison stated there was no approach to repay it, and Singh testified that Bankman-Fried admitted to him that “we’re a bit of brief on deliverables.”
Bankman-Fried “had the vanity to assume he might get away with it,” Roos stated.
Spending freely
One other level talking to the defendant’s intent, Roos stated, was his tweeting.
Bankman-Fried’s plan final November, when he knew there was solely sufficient cash to course of one-third of consumer belongings, was to ship a assured tweet thread. Singh testified that he wasn’t snug with the plan, but Bankman-Fried went on to tweet that “belongings are advantageous” because the financial institution run was underway, Roos stated.
Bankman-Fried knew Alameda had a damaging internet asset worth of $2.7 billion, Roos stated, however needed to make one other $3 billion in enterprise investments. The one means to do this was with FTX buyer funds, he stated.
Moreover, Roos instructed the jury, consumer cash went to $100 million in actual property bills, together with a $30 million penthouse within the Bahamas and $16 million for his mother and father’ residence.
In referencing the Tremendous Bowl image with Katy Perry and others, Roos referred to as Bankman-Fried a “celeb chaser.”
Roos walked the jury by means of a timeline of key moments, as follows:
- On Sept. 1, Bankman-Fried noticed that FTX had a $13.7 billion gap.
- On Sept. 7, Bankman-Fried wrote an extended memo proposing the shutdown of Alameda. Nonetheless, he spent $45 million for a stake in Skybridge Capital.
- Then, on Sept. 22, he paid $4 million to himself.
- 4 days later, he despatched $250 million to Modulo Capital, a hedge fund within the Bahamas.
- And on Oct. 3, he funneled $6 million for political donations.
“That is all it’s essential to know to seek out him responsible,” Roos stated.
In closing the prosecution’s case, Roos referenced the seven fees dealing with Bankman-Fried and why he might be convicted of every.
In highlighting counts three and 4, which cost the defendant with wire fraud in opposition to Alameda’s lenders, Roos emphasised the significance of Bankman-Fried’s information of the choice steadiness sheet. For depend 5, conspiracy to commit securities fraud on FTX buyers, the first proof got here from buyers who expressed concern a few battle of curiosity between Alameda and FTX and who stated they would not have put in cash in the event that they knew the reality. Bankman-Fried additionally lied about income, Roos stated.
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 stated, and it debunks the protection’s foremost argument that Bankman-Fried acted in good religion and believed every thing would work out.
“This was a fraud that occurred on a large scale,” he stated.
‘Each film wants a villain’
Following the federal government’s closing argument, Cohen started his statements at a bit of earlier than 3 p.m. He stated the federal government is portraying Bankman-Fried as a “monster” and depicting him as a “villain” and a “unhealthy man.” Legal professionals introduced out testimony about his intercourse life and confirmed photographs of him “wanting awkward with celebrities,” Cohen stated.
He stated Bankman-Fried would speak to only about anybody who would pay attention, conduct that would make life messy however is not prison. He stated the prosecution has made the case right into a “film,” and the protection is displaying what it is like in the actual world, the place issues are messy.
“Each film wants a villain,” Cohen stated.
He claimed the case in opposition to his consumer was constructed on the false premise that FTX was a fraudulent enterprise to deliberately steal buyer funds.
Cohen broke the case up into two time durations. The primary was 2019 to 2021, when there isn’t any indication of prison intent. Up till June 2022, everybody concerned thought they had been working essentially the most profitable crypto alternate on this planet, Cohen stated.
The second interval was from June to November of 2022. Crypto winter had led to the failure of numerous companies within the business. That is the primary time it turned clear that Alameda was utilizing buyer funds. Within the fall of that yr, Bankman-Fried noticed a liquidity downside, not a solvency downside, Cohen stated. He all the time thought there have been enough funds on and off the alternate.
Whereas FTX’s lack of a threat administration system or chief threat officer mirrored poor system controls, unhealthy enterprise choices aren’t crimes, Cohen stated.
The federal government carries the heavy burden of proving Bankman-Fried operated with prison intent, and “it has not,” Cohen stated. He stated that prosecutors referred to as Bankman-Fried “evil” and “conceited” and described him as a “prison mastermind.” However in moving into particular actions, “there’s nothing wrongful about margin buying and selling,” he stated.
Cohen stated his consumer offered the courtroom with good religion solutions about what he remembered, and requested why a prison mastermind would go communicate in entrance of Congress. He described the federal government’s assumptions as “heads I win, tales you lose.”
With the protection persevering with its closing argument, Decide Kaplan stated the jury will seemingly be requested to remain late on Wednesday. Kaplan stated he desires jurors to return to a verdict by Thursday night, and is keen to remain late and pay for his or her dinner and trip residence to make it occur.
— CNBC’s Daybreak Giel contributed to this report.
