Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Over the previous month, attorneys within the prison trial of Sam Bankman-Fried have introduced shut to twenty witnesses to the stand and offered a whole lot of displays to the 12 jurors who will resolve the destiny of the boy as soon as deemed the king of crypto.
The jury, which started deliberations on Thursday afternoon, has a mountain of proof to think about in figuring out whether or not the 31-year-old founding father of FTX is responsible of seven prison counts, which embrace wire fraud, securities fraud and cash laundering. Bankman-Fried, who has pleaded not responsible to all prices, faces greater than 100 years in jail if convicted.
While prosecutors have been in a position to current the jury with testimony from members of the defendant’s internal circle, Bankman-Fried’s case rests largely on his personal look on the witness stand.
“From beginning to end, Sam Bankman-Fried’s team failed to come up with a real game changer,” mentioned Renato Mariotti, a former prosecutor within the U.S. Justice Department’s Securities and Commodities Fraud Section and now a trial companion in Chicago with Bryan Cave Leighton Paisner. “His fraud was brazen and difficult to explain away, and he lacked the discipline to keep his mouth shut even after it was apparent that he was under criminal investigation.”
In addition to oral testimony, the federal government introduced in different proof to attempt to show its case and to color an image of an govt who bought an excessive amount of, too quick, and spent nicely in extra of his means. These displays embrace encrypted textual content messages, emails, promissory notes, Google docs, spreadsheets, leaked movies and photographs displaying Bankman-Fried’s lavish life-style, together with of his $35 million condominium within the Bahamas.
Lawyers for the U.S. Attorney’s workplace entered into proof a sequence of photographs that includes the $35 million penthouse the place Sam Bankman-Fried and his fellow co-workers resided.
Source: SDNY
$1.1 billion in promissory notes
For weeks, prosecutors have proven the jury how billions of {dollars} in FTX buyer cash went to political donations, enterprise investments and luxurious actual property. They traced the a whole lot of thousands and thousands of {dollars} that went from firm coffers to Bankman-Fried’s private accounts.
The prosecution offered a sequence of comparatively easy, two-page promissory notes. According to agreements signed by the defendant and Caroline Ellison, who ran hedge fund Alameda Research, Bankman-Fried borrowed extra $1.1 billion within the 12 months earlier than his firms — FTX and Alameda — filed for chapter.
Bankman-Fried admitted on the stand that there have been seemingly extra loans that weren’t correctly documented, so the borrowing most likely exceeded what was offered into proof.
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Secret emails
Much of the federal government’s case towards Bankman-Fried hinges on the testimony, emails, and textual content messages from former high lieutenants who turned towards him late final 12 months.
In one electronic mail, shared by prosecutors, Bankman-Fried promised preferential therapy to Bahamian prospects on the FTX cryptocurrency trade.
In a message to Ryan Pinder, the legal professional normal and minister of authorized affairs for the Bahamas, Bankman-Fried claimed FTX had “segregated funds for all Bahamian customers” and could be “more than happy to open up withdrawals for all Bahamian customers on FTX, so that they can, tomorrow, fully withdraw all of their assets, making them fully whole.”
The electronic mail was despatched Nov. 9, sooner or later after FTX had halted withdrawals and two days earlier than it filed for chapter. FTX customers had collectively pulled $5 billion off the platform in what amounted to a financial institution run.
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Two different separate electronic mail chains present that Bankman-Fried critically mischaracterized his position at Alameda Research, in accordance with prosecutors.
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
In a message to Rob Creamer, the CEO of Geneva Trading and chairman of FIA Principal Traders Group, Bankman-Fried wrote “Alameda has a totally separate team” that he did not handle.
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Bankman-Fried wrote in an electronic mail to a Wall Street Journal reporter that Alameda’s account entry “is the same as others” and that its merchants do not have “any special access to client information, marketdata, or trading.” According to the federal government, these claims have been debunked by way of witness testimony and inner firm paperwork and textual content messages.
Alameda’s preferential therapy is spelled out within the two displays listed under. They present Alameda’s “allow negative” function, and a line of credit score on FTX that was $65 billion in comparison with $150 million or much less for all different prospects on the trade.
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Google Docs
Executives at FTX and Alameda used Google Docs and Sheets to share essential monetary info, in accordance with their testimony.
Ellison would ship various variations of steadiness sheets, some omitting key financials like the quantity of buyer funds borrowed by Alameda to cowl its liabilities, to Bankman-Fried. He would then resolve what to ship to lenders.
Bankman-Fried would additionally take into account bigger technique selections in memos to his high execs.
In one memo, Bankman-Fried laid out the deserves of shuttering Alameda, pointing to the “PR hit from Alameda and FTX both existing.” He wrote that, “the current Alameda leadership is good, but not good enough to be able to trust with such a big operation.”
He additionally wrote private memos after the enterprise had collapsed.
In a Google Doc dated Dec. 25, Bankman-Fried referenced the $600 million-plus stake in Robinhood he’d acquired with capital from Alameda. He questioned whether or not he ought to “try calling up the broker HOOD is with and see if they’ll just give me the shares without thinking about it.”
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
A giant a part of the federal government’s case revolves across the methods Bankman-Fried allegedly directed spending of cash at Alameda lengthy after he was not formally operating the hedge fund.
In a message to FTX’s then normal counsel Can Sun, Bankman-Fried pushed to get a $250 million switch to hedge fund Modulo Capital expedited in full inside eight hours. Sun later testified in regards to the transaction beneath a non-prosecution settlement with the federal government.
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Getting chummy with celebrities
Bankman-Fried’s chummy ties with celebrities and his enthusiasm for spending a whole lot of thousands and thousands of {dollars} on endorsement offers have been areas of focus for the federal government.
Prosecutors confirmed the court docket a spreadsheet of investments made in 2021. They included $205 million for FTX’s naming rights to Miami’s NBA enviornment, $150 million to Major League Baseball, $28.5 million to NBA star Stephen Curry, $50 million to quarterback Tom Brady and his then spouse Giselle Bundchen, and $10 million to comic Larry David. The offers on the spreadsheet amounted to a complete of $1.13 billion.
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Nishad Singh, who was FTX’s director of engineering, testified that the $300 million outlay on funding agency K5 was among the many most troubling. He mentioned Bankman-Fried despatched him a time period sheet detailing a whole lot of thousands and thousands of {dollars} of bonuses to house owners Michael Kives and Bryan Baum. That adopted a K5 dinner Bankman-Fried attended alongside Hillary Clinton, Katy Perry, Orlando Bloom, Leonardo DiCaprio, and Kris and Kylie Jenner.
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Singh mentioned he advised Bankman-Fried he was very involved and that the K5 funding was “value extractive.” He additionally mentioned he requested Bankman-Fried if the funding was made along with his cash or FTX’s. The spreadsheet confirmed it got here from Alameda.
In a movement to dismiss a grievance in chapter court docket towards K5, the agency’s attorneys mentioned the “plaintiffs attempt to make Kives and Baum complicit in SBF’s wrongdoing has no basis in fact.”
Government exhibit within the case towards former FTX CEO Sam Bankman-Fried.
Source: SDNY
Leaked audio
In an all-hands assembly on the night of Nov. 9, 2022, Alameda Research staff gathered in a circle to hearken to Ellison, the CEO, who was sitting on a beanbag. She advised staffers about Alameda’s borrowing from FTX, and mentioned the trade now had a “shortfall of user funds.”
Christian Drappi, a former software program engineer at Alameda, was one of many 15 individuals in attendance on the assembly within the Hong Kong workplace. Ten others joined by way of video from the Bahamas.
In his testimony, Drappi described Ellison’s demeanor that night time as “sunken.” He mentioned she was “kinda slouching” and “did not display confident body language.”
In the recording of the Ellison assembly that was performed for the jury, Drappi may be heard asking about FTX’s plan to pay again prospects. Ellison mentioned the corporate would elevate cash to fill the outlet. Drappi requested Ellison if Alameda’s loans have been collateralized by way of the spot margin group. She mentioned they weren’t, and Drappi mentioned, “That seems pretty bad.”
Caroline Ellison is questioned throughout Sam Bankman-Fried’s fraud trial over the collapse of FTX, the bankrupt cryptocurrency trade, at Federal Court in New York City, U.S., October 11, 2023 on this courtroom sketch.
Jane Rosenberg | Reuters
Encrypted messages
Of the a whole lot of things entered into proof, a financial institution of messages on encrypted app Signal paint maybe the clearest image of Bankman-Fried’s alleged crimes.
One thread, dubbed “small group chat,” included Ellison, Bankman-Fried, and Joe Bankman, the defendant’s father, who suggested the corporate on tax-related points and different issues. Also within the group have been Ramnik Arora, a former product lead for FTX; Ryne Miller, who was the corporate’s normal counsel; Constance Wang, ex-operating chief; and former FTX govt Ryan Salame.
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case towards Sam Bankman-Fried.
Source: SDNY
Early within the morning on Nov. 7, the defendant put forth some “potential todos,” together with halting withdrawals, sending a “confident tweet thread” and reaching out to corporations reminiscent of Silverlake, Sequoia, and Apollo as they “wake up over the next few hours” to attempt to shore up money.
Later that morning, Salame linked to a tweet from an nameless crypto dealer saying, “cant wait for my FTX airdrop for not moving any of my funds.”
Bankman-Fried chimed in with completely different concepts about the right way to make the most of the submit in an obvious effort to offer false hope to FTX prospects that they’d obtain free tokens in the event that they saved their funds on the platform.
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case towards Sam Bankman-Fried.
Source: SDNY
The subsequent day, Nov. 8, Ellison appealed to the group for assistance on optics and public messaging.
She wrote, “multiple people internally asking me whether they should continue to make statements to external parties like ‘Alameda is solvent.’ should i suggest they stall instead? just stall on responding to their messages? or what?”
That’s the identical day FTX issued a pause on all buyer withdrawals. The value of FTT, FTX’s native token, plummeted by over 75%. Out of choices, Bankman-Fried turned to Binance CEO Changpeng Zhao, who introduced he’d signed a nonbinding letter of intent to accumulate FTX.
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case towards Sam Bankman-Fried.
Source: SDNY
On Nov. 9, Ellison once more regarded to the group for steering about the right way to deal with the now notorious all-hands assembly of Alameda’s roughly 30 staff.
She proposed saying, “Alameda is probably going to wind down” and that there was “no pressure” to remain however assist with “stuff like making sure our lenders get paid” could be “super appreciated.”
Bankman-Fried instructed she say one thing about there “being a future of some sort for those who are excited.”
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case towards Sam Bankman-Fried.
Source: SDNY
The writer’s go to
Author Michael Lewis, whose e book profiling Bankman-Fried was printed the day the trial started, was additionally the topic of some Signal exchanges.
In a chat on Jan. 5, 2022, Bankman-Fried alerted a bunch that included Ellison and Singh that Lewis could be coming to the Bahamas the following month to do reporting.
Ellison mentioned her “instincts are more toward under the radar.” Bankman-Fried, a infamous press hound, responded, “same, except exactly the opposite.”
As the grand scheme collapsed months later, Ellison expressed an excessive amount of reduction in a non-public chat with Bankman-Fried.
Ellison wrote, “this is the best mood I’ve been in in like a year tbh” (“tbh” is brief for “to be honest”).
In three consecutive messages, Bankman-Fried responded, “wow,” “uh,” “congrats?”
Ellison wrote, “I think I just had an increasing dread of this day that was weighing on me for a long time, and now that it’s actually happening, it just feels great to get it over with one way or another.”
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case towards Sam Bankman-Fried.
Source: SDNY
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