Sam Bankman-Fried seems at federal courtroom in New York on Oct. 4, 2023, on this courtroom sketch.
Artist: Claudia Johnson
Much of the federal government’s case in opposition to Sam Bankman-Fried hinges on the testimony and textual content messages from these in his crypto interior circle who turned in opposition to him late final yr after the implosion of FTX and sister hedge fund Alameda Research.
Of the handfuls of things entered into proof within the first three weeks of the trial, a financial institution of messages on encrypted app Signal paint maybe the clearest image of Bankman-Fried’s alleged crimes.
Bankman-Fried faces seven legal counts, together with wire fraud, securities fraud and cash laundering that would land him in jail for all times. Bankman-Fried, the son of two Stanford authorized students, pleaded not responsible to all costs.
In attempting to show its case to a Manhattan jury, the federal government has offered a collection of Signal exchanges involving Bankman-Fried, Caroline Ellison (his ex-girlfriend and the ex-CEO of Alameda Research), and former mates and high enterprise execs Gary Wang, Nishad Singh and Ryan Salame. They date again to November 2021.
The messages gave jurors a uncommon look contained in the informal conversations that culminated in a scheme described by U.S. Attorney Damian Williams as “one of the biggest financial frauds in American history.”
We’re quoting straight from the Signal messages that have been entered as proof, and never making spelling or different grammatical adjustments.
Caroline Ellison, former chief govt officer of Alameda Research LLC, heart, arrives at courtroom in New York, US, on Tuesday, Oct. 10, 2023.
Yuki Iwamura | Bloomberg | Getty Images
‘Small group chat’
The Signal thread dubbed “small group chat” consists of 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 common counsel, Constance Wang, ex-operating chief, in addition to Salame, Singh, Wang and 4 others.
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
The thread begins with two messages from Bankman-Fried posted at 3:47 a.m. on Nov. 7, 2022, the day FTX introduced a liquidity disaster and commenced looking for money to plug the gaping gap in its stability sheet.
At the time, Bankman-Fried pretended in public that each one was nicely.
“FTX is fine. Assets are fine,” he wrote in a tweet that day. The submit has since been deleted.
But as Bankman-Fried was tweeting reassurances and promising that buyer funds have been secure, executives have been rising more and more alarmed on the increasing shortfall, based on prosecutors.
In the “small group chat” thread, Bankman-Fried put forth some “potential todos,” together with halting withdrawals, sending a “confident tweet thread” and reaching out to corporations like Silverlake, Sequoia, and Apollo as they “wake up over the next few hours” to attempt to shore up money.
Later that morning, at about 5:22 a.m., 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 best way to benefit from the submit in an obvious effort to supply 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 in opposition to 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%, and a high-tech financial institution run was in full drive. Out of choices, Bankman-Fried turned to Binance CEO Changpeng Zhao, who introduced he’d signed a non-binding letter of intent to acquire FTX.
Prosecutors are relying heavily on text messages sent among FTX and Alameda Research executives in the case against Sam Bankman-Fried.
Source: SDNY
On Nov. 9, Ellison again looked to the group for guidance about how to handle the now infamous all-hands meeting of Alameda’s roughly 30 employees.
She proposed saying, “Alameda is probably going to wind down” and that there was “no pressure” to stay but help with “stuff like making sure our lenders get paid” would be “super appreciated.”
Bankman-Fried suggested she say something about there “being a future of some sort for those who are excited.”
Ellison ended up divulging a lot more than that in the staff meeting.
“Alameda borrowed a bunch of money,” which it used to make investments, Ellison said at the meeting, a secret recording of which was played by the prosecution. But as crypto prices fell, “FTX had a shortfall of user funds” and then “users started withdrawing their funds” and they “realized they would not be able to continue.”
When she was asked by a staffer whose idea it was to plug Alameda’s loan losses with FTX customer money, she said, “Um, Sam, I guess,” and giggled.
“FTX basically always allowed Alameda to, like, borrow user funds, as far as I know,” Ellison said on the recording.
Meanwhile, a day after signing the non-binding purchase agreement, Binance withdrew the offer, citing reports of “mishandled customer funds” and federal investigations.
Prosecutors are relying heavily on text messages sent among FTX and Alameda Research executives in the case against Sam Bankman-Fried.
Source: SDNY
‘Lots of withdrawals’
Zhao, an early investor in FTX before becoming a principal rival, had made himself a central character in the FTX downfall days earlier.
On Nov. 6, he tweeted that due to “recent revelations that have came [sic] to light, we have decided to liquidate any remaining FTT on our books.”
In a bunch chat with Bankman-Fried, Ellison, and Singh beginning that day, Singh wrote “lots of withdrawals on ftx are queueing up,” with internet adjustments of $1.25 billion within the final day, $230 million within the final three hours, and $120 million within the final hour.
Ellison responded with a “:(” and Bankman-Fried with an “oof” after first mistakenly writing “of.”
The three continued to strategize. Singh steered just a few hours later that they attain out to Zhao privately and “ask for a truce” to “stem the bleed,” although he and Bankman-Fried each anxious that Binance would not deescalate in public.
Ellison individually tried to determine what to inform Salame about whether or not FTX may meet all withdrawals. Bankman-Fried steered she write, “we can meet a ton, though it’s already getting large.”
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
Later, Sam Trabucco, who had already departed as co-CEO of Alameda Research in August 2022, in addition to Ellison, Ben Xie (Alameda’s head of buying and selling), and Bankman-Fried, have been in a bunch chat discussing how to reply to Zhao’s menace to liquidate his FTT tokens.
Ellison, who instructed jurors that she largely prevented social media, stated she would tweet at CZ, a nickname for Zhao, that FTX would purchase his complete stake at $22 per coin. Ellison additionally testified concerning the apply of utilizing FTX buyer funds funneled by Alameda to purchase FTT to buoy the value throughout occasions of market volatility.
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
Bankman-Fried weighed in inside minutes, writing, “I think the main point is just to counter the PR/narrative here — and Binance probably won’t take us up on it; I also think FWIW that the market is likely to buy more if we tweet it, but idk.” (FWIW is an acronym for for what it is price. IDK stands for I do not know.)
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
The creator’s go to
Author Michael Lewis, whose e book profiling Bankman-Fried was revealed 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 can be coming to the Bahamas the subsequent month to do reporting.
Ellison stated her “instincts are more toward under the radar.” Bankman-Fried, a infamous press hound, responded, “same, except exactly the opposite.”
‘People of the House’
Adam Yedidia, one of many prosecution’s lead witnesses, met Bankman-Fried in faculty on the Massachusetts Institute of Technology, and the pair remained shut mates.
In his testimony, Yedidia referred to a Signal thread known as “People of the House,” referring to Bankman-Fried’s $35 million penthouse, the place many staff lived.
In phrases of who was paying the hire, Yedidia recalled Bankman-Fried saying he “assumed it’s just alameda paying for it in the end.”
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
The topic of marketing campaign donations was pivotal to Singh’s testimony. The former FTX engineering chief, who pleaded responsible to 6 costs in February, alleged that his former boss was behind a lot of the scheme to funnel cash to political campaigns.
Singh testified that Bankman-Fried directed cash held in accounts belonging to Alameda Research be used for political donations. That continued even after Bankman-Fried was apparently conscious that his crypto hedge fund could not pay again the $13 billion in FTX buyer funds it had borrowed.
While Bankman-Fried would not face chares for marketing campaign violations on this trial, a superseding indictment alleged he used buyer funds to make greater than $100 million in marketing campaign contributions for the 2022 midterm elections. The authorities has included that accusation inside two of the fees which might be nonetheless standing: wire fraud and cash laundering.
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
‘Donation Processing’
Singh walked the jury by how the method labored.
He described a Signal chat dubbed “Donation Processing” that included Bankman-Fried and his brother, Gabe, Salame, and a political guide named Michael Sadowsky, amongst others. Singh testified that Bankman-Fried or his brother would use this chat to request donations be made in Singh’s identify. Salame, who had entry to Singh’s checking account at Prime Trust Bank, would arrange the switch after which ping Singh within the channel to immediate him to go to his electronic mail and approve the wire request.
“My role was to click a button,” Singh stated of the operation, including that Salame had different methods to make the switch from Singh’s funds that didn’t contain Singh having to do something in any respect.
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
In a separate Signal chat between Singh and Sadowsky, Singh wrote on Jul. 5, 2022, that he was “averse” to “explicitly-woke stuff” however added that it was “hard to interact productively with democrats without that.”
Sadowsky known as Singh the “center left face of our spending,” which means that he can be “giving to a lot of woke s—.”
So, “if you’re not comfortable about it, you should think about that a lot,” wrote Sadowsky.
Singh responded, “don’t love boxing myself into only associating with people i don’t like” and stated he would look to see if there have been “other viable people at FTX for it.”
In questioning witnesses, the federal government homed in on loans made to Wang and Singh within the vary of a whole bunch of thousands and thousands of {dollars}.
Direct messages between Singh and Bankman-Fried confirmed an try by the witness to be cleared of those debt obligations.
In a direct attraction to Bankman-Fried, Singh wrote on Nov. 6, 2022, “one thing that’d seriously help me is if I didn’t have debts.”
He wrote, “I think most of them are loans: 500m for me exercising, more for US investments. I hope we can unwind these but not sure.” He stated he would return something he had in his checking account, however there wasn’t a lot there.
I “(will think about this),” Bankman-Fried wrote.
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
In the identical thread, on Nov. 8, Singh wrote that Ryne Miller, FTX’s common counsel, appeared “super on edge” and “likely to resign” in the event that they did not get it proper.
Singh wrote, “this is wildly selfish of me, but they may need to know that it wasn’t a ton of people orchestrating it.” He added that, “it makes them more likely to want to be here to help save the situation and the others at least.”
Prosecutors are relying closely on textual content messages despatched amongst FTX and Alameda Research executives within the case in opposition to Sam Bankman-Fried.
Source: SDNY
As the grand scheme collapsed, Ellison expressed an excessive amount of reduction in a personal 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 sincere.)
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 in opposition to Sam Bankman-Fried.
Source: SDNY
Source: www.cnbc.com”