CoinCu reports real-time updates following the Sam Bankman-Fried trial live at the US District Court for the Southern District of New York. The trial may last six weeks; stay updated.
Day Eight – October 16, 2023
Testimony of Nishad Singh: Bankman-Fried’s Excessive Spending
The trial of Sam Bankman-Fried continued with the testimony of Nishad Singh, the former director of engineering at FTX. Singh, like other witnesses, has pleaded guilty to fraud and conspiracy counts and is cooperating with prosecutors.
In his testimony, Singh mentioned Bankman-Fried’s excessive spending and described him as a formidable character. He also admitted to committing crimes with Bankman-Fried, Caroline Ellison, Gary Wang, and Ryan Salame, including defrauding customers and investors.
Singh, who had close ties to Bankman-Fried, described a “crazy, blame game” in the final days leading up to FTX’s demise. He testified that he asked Bankman-Fried to clarify everyone’s role in the fraud scheme and wanted Bankman-Fried to take the blame for orchestrating everything.
Intertwining of FTX Bahamas and US Arm Revealed by Singh
Singh also revealed that FTX Bahamas and its US arm were more intertwined than publicly suggested, with loans from Alameda being used to fund investments and acquisitions for FTX’s US unit. He mentioned that political donations were often made through his accounts, with funds taken from Alameda’s account and wired to Singh’s Prime Trust account.
Furthermore, Singh testified about discussions to shut down Alameda in September 2022 and his attempts to stop spending on endorsements and other expenses. He considered leaving the company every day due to the worsening financial condition and feeling betrayed.
During the trial, Bankman-Fried’s lawyers raised the issue of his access to Adderall, a drug prescribed for his ADHD and depression, stating that he may not be able to meaningfully participate in his own defense without his full dose. However, the judge rejected proposed solutions and expressed an inclination to push ahead with the trial.
Day Seven – October 12, 2023
Relationship Between Ellison and SBF After Breakup
During this morning’s cross-examination of Caroline Ellison, defense attorney Mark Cohen did not mention anything about bribery or sex workers. However, he did suggest that Bankman-Fried might need to be made aware that FTX customer deposits were still being directed towards Alameda-controlled North Dimension accounts, even after FTX established its own accounts.
Cohen also repeatedly asked Ellison if she had hedged enough to reduce Alameda’s risk and emphasized the loss that Alameda suffered on the UST, the Terra-Luna stablecoin, possibly to highlight poor business decisions.
Cohen asked about the nature of Ellison and SBF’s relationship after they finally broke up in the spring of 2022. Ellison testified that she avoided meeting SBF one-on-one and social interactions but still participated in Signal communications and work meetings.
Ellison Personally Wanted to Crush Modulo
In the afternoon session, defense attorney Mark Cohen brought up the rivalry between Alameda Research and Modulo, a fellow trading firm backed by FTX. Cohen asked Ellison if Modulo was similar to Alameda and if she saw them as competitors.
He also alluded that one of Modulo’s founders, Lily Zhang, used to date Bankman-Fried. Cohen then asked if Ellison saw Modulo as a form of personal competition and if part of her wanted to crush them. Ellison admitted that she did remember having such feelings at some point.
Ellison’s Cross-examination Ending: Balance Sheets, Mid-Year Review, and All-Hands Meeting
Cohen again questioned her about the balance sheets she made for external investors for the rest of the cross-examination of Ellison. He emphasized that even though some versions made Alameda seem less risky than it was by renaming its borrowing from FTX, they technically had the same net asset value.
Cohen also asked her about the 2022 mid-year review she sent to Alameda employees, which seemed optimistic. Ellison responded that she did it to preserve morale. Finally, prosecutor Danielle Sassoon brought up the Alameda all-hands meeting, where Ellison revealed that Alameda had been using FTX customer deposits.
At the very end, the prosecution briefly questioned the BlockFi CEO, Zac Prince. The court proceedings have ended for the day and will resume on Friday, with Prince returning to the stand.
Day Six – October 11, 2023
Alleged Chinese Bribe and Financial Manipulation
Caroline Ellison testified about an alleged bribe paid to Chinese officials by Alameda to unfreeze trading accounts. After almost a year of trying to fix the issue, Alameda paid around $150 million to Chinese officials to resolve the issue. Ellison also created balance sheets to show lenders, including one to the crypto lending desk Genesis. However, upon seeing it, SBF allegedly asked her to find “alternative ways of presenting the information.”
Ellison also testified about SBF’s stressors, including “getting regulators to crack down on Binance,” bad PR, raising money from Saudi Crown Prince Mohammed bin Salman, and possibly buying Snapchat. She also discussed tension between Alameda and Modulo, an FTX-backed hedge fund, and feeling pressured to talk to the media and provide reassuring comments.
At the very end of Sam Bankman-Fried trial live today, Ellison testified that $1.6B of FTX investor funds went to Alameda. She also claimed that SBF believed his hair played a role in higher bonuses at Jane Street. They used to drive luxury cars in the Bahamas but later switched to Toyotas and Hondas for a better image.
Caroline Ellison’s cross-examination began towards the end of today’s court session and will continue tomorrow. Stay tuned for the dramatic details. Thanks for reading!
Day Five – October 10, 2023
Testimony of Caroline Ellison – “Sam Directed Me to Commit These Crimes“
The Sam Bankman-Fried trial live of day five started with Wang’s testimony, after which Caroline Ellison, wearing a gray blazer and light red crepe dress, was called to the stand.
The morning session focused on the defense’s argument that Bankman-Fried made reasonable business decisions and wanted to repay Alameda lenders. They discussed the loans Wang took and his claim of trusting Bankman-Fried. The prosecution showed that the order came after Bankman-Fried had already started meeting with authorities.
In the afternoon session, Former Alameda CEO Caroline Ellison testified that she and FTX founder Sam Bankman-Fried committed crimes together. She discussed the risks Bankman-Fried was willing to take and how he directed her to commit these crimes.
“He was originally the CEO of Alameda and the owner of Alameda and he directed me to commit these crimes,” she said.
The prosecution used her memos and spreadsheets to demonstrate the extent of Bankman-Fried’s risk appetite. They also highlighted how Bankman-Fried and Ellison relied on customer deposits from FTX to support Alameda. Caroline Ellison said that Bankman-Fried told her there was a 5% chance he would become US president someday.his willingness to take extreme risks.
Day Four – October 6, 2023
CTO Gary Wang Reveals Unfair Secrets of Alameda
The Sam Bankman-Fried trial live of Day Four mainly focused on the testimony of FTX co-founder and CTO, Gary Wang. Wang provided technical details regarding the alleged special privileges enjoyed by Alameda, such as faster trading, a negative account balance, and a $65 billion line of credit.
Nishad Singh, the director of engineering, had built a feature that allowed Alameda to have a negative balance. This feature was enabled exclusively for them on July 31, 2019, coinciding with Bankman-Fried’s public statement that Alameda’s account was no different from others.
Bankman-Fried allegedly stated that it was acceptable as long as Alameda’s withdrawals were less than FTX’s total revenue, which was around $50 to $100 million at the time. However, Alameda’s borrowing eventually exceeded FTX’s revenue.
The Sam Bankman-Fried Trial will continue on Tuesday morning with Caroline Ellison as the next witness.
Day Three – October 5, 2023
Lavish Spending, Geofencing, and Preferential Treatment Revealed
During the Sam Bankman-Fried trial, the prosecution presented evidence about FTX platform usage and customer trust. They showed screenshots of the sign-up page and celebrity advertisements.
Adam Yedidia, Bankman-Fried’s college friend and former Alameda intern, discussed automating customer withdrawals and discovering a bug in an Alameda Research-controlled account. Yedidia expressed concern about the company’s situation and extravagant spending. The defense argued that Bankman-Fried did not own a yacht and emphasized proper business practices.
Judge Lewis Kaplan expressed disapproval of repetitive questions and called for a private discussion with the lawyers. The prosecution asked Yedidia about his experience living in the penthouse, and a comparison was made to his time at MIT. Matt Huang, cofounder of Paradigm, expressed concerns about FTX’s governance structure and potential preferential treatment.
Day Two – October 4, 2023
Defense Argues Good Faith, Bankman-Fried Denies Wrongdoing
On the second day of Sam Bankman-Fried trial live, jury selection was completed and opening arguments began. The prosecution alleged that Sam Bankman-Fried diverted customer funds from FTX to Alameda for personal gain. The defense argued that Bankman-Fried acted in good faith as CEO of a bankrupt company.
Witness testimonies started in the afternoon. The prosecution’s first witness, Marc-Antoine Julliard, claimed to have lost $100,000 to FTX. The second witness, Adam Yedidia, testified that he resigned from FTX when he discovered Alameda’s use of customer deposits.
The defense portrayed Bankman-Fried as an innocent math nerd, while the prosecution accused him of building wealth and influence through deception. Defense lawyer Mark Cohen raised doubts about the credibility of co-conspirator witnesses, pointing out their self-interest due to guilty pleas and cooperation agreements.
Day One – October 3, 2023
Sam Bankman-Fried Trial Begins Amidst a Stunning Courthouse Backdrop!
Outside the courthouse
The first day of the Sam Bankman-Fried Trial unfolded with tight security measures in Foley Square. The NYPD erected steel barricades, managed traffic, and created media zones.
Jurors lined up in a designated area while police ensured their summonses were ready. The media presence was significant, with densely packed reporters and news trucks in the vicinity. It was a clear morning outside the county and federal courthouses.
Inside the courthouse
Inside the courthouse, Bankman-Fried seated next to his attorney, Christian, in the front row, surrounded by other attorneys, while prospective jurors sit behind him.
An ample number of qualified individuals were present to select the necessary 18 jurors. Both sides expect to present opening arguments totaling approximately 90 minutes.
Overview of Sam Bankman-Fried Trial
The Sam Bankman-Fried Trial has been taking place at the US District Court for the Southern District of New York. The trial is expected to last up to six weeks, with a verdict likely to be reached just before Thanksgiving in the US.
Bankman-Fried’s inner circle, including:
- Caroline Ellison: The CEO of Alameda Research and on-and-off romantic partner of Bankman-Fried. The pair met at Jane Street, a quantitative trading firm where they both worked after college.
- Gary Wang: The cofounder of FTX and Alameda Research and CTO for both firms. Wang met Bankman-Fried in high school, and the pair were later roommates at MIT.
- Nishad Singh: The director of engineering at FTX. Singh worked as an engineer at Meta before being headhunted by Bankman-Fried.
The prosecution aims to demonstrate Bankman-Fried’s control over the FTX operation and the deliberate nature of the alleged fraud.
Judge Lewis Kaplan, a highly experienced judge with three decades of high-profile cases, is overseeing the trial.
Overview – The collapse of FTX
Cryptocurrency exchange FTX and its now-jailed founder and former CEO, Sam Bankman-Fried, had a complex bond.
Founded in 2018 by Sam Bankman-Fried, a graduate of the Massachusetts Institute of Technology (MIT) and a former trader at Jane Street Capital specializing in international exchange-traded funds (ETFs), FTX offered a diverse range of trading products including derivatives, options, volatility products, and leveraged tokens.
In the beginning, FTX’s extensive product offering and user-friendly desktop and mobile trading apps, coupled with the fact that FTX platform offered various order types, from basic market orders to more complex trailing stop orders, attracted crypto investors of all skill levels, from newbies to whales.
Furthermore, the exchange facilitated spot markets for over 300 cryptocurrency trading pairs, including its own native token, FTT. Since its listing on CMC in 2019, the value of the FTT token has experienced incredible growth.
FTT’s price in 2017 was a mere $1.90. Fast forward to September 2021, and its value peaked at $85.60, representing an extraordinary gain of 3,500%.
FTX gained recognition in 2021 as a leading centralized cryptocurrency exchange (CEX), ranking as the world’s third-largest exchange that year. At the time, the exchange was so famous for its derivatives and leveraged products.
However, in early November 2022, FTX and its affiliated companies faced a significant decline in their reputation. FTX, based in the Bahamas, and its US affiliate, FTX US, shared management teams but had separate capital structures. Only US residents were permitted to trade on FTX US.
During this period, FTX encountered a liquidity crisis. Bankman-Fried reassured FTX investors about the stability of its assets, but customers demanded withdrawals totaling $6 billion shortly after the CoinDesk report.
Bankman-Fried sought additional funding from venture capitalists. As a result, the value of FTT plummeted by over 98% in just two days, reaching $1.10 by late November 2022.
FTX Files For Bankruptcy
FTX filed for Chapter 11 bankruptcy protection on Nov. 11, 2022, revealing that roughly 130 other affiliated companies were also part of the proceedings. Bankman-Fried stepped down on Nov. 11 as CEO of FTX, replaced by court-appointed FTX CEO John Ray, who led energy trading firm Enron through bankruptcy proceedings years before.
According to its bankruptcy filing, FTX, which was once valued at $32 billion and has $8 billion of liabilities it can’t pay to as many as 1 million creditors.
The exchange’s collapse was the result of “a complete failure of corporate control,” according to John J. Ray III, the new, court-appointed chief executive of FTX. Ray, who has experience with massive business failures such as energy trader Enron following its collapse in an accounting scandal in 2001, told a U.S. House of Representatives committee hearing on Dec. 13, 2022, that FTX appeared to be a case of “old-fashioned embezzlement,” and that investors and creditors are unlikely to get all their money back.
Sam Bank-Fried’s Indictment
On December 12, 2022, Bankman-Fried was arrested by Bahamian authorities on multiple fraud charges related to FTX. The following day, the U.S. Attorney for the Southern District of New York, Damian Williams, announced an eight-point fraud indictment against the former CEO.
The charges allege that Bankman-Fried defrauded FTX customers and investors, lenders to FTX-affiliated hedge fund Alameda Research, and violated campaign finance laws. Williams stated that this was one of the largest frauds in financial history.
Bankman-Fried was indicted by the U.S. District Court in Manhattan on eight counts, including securities fraud and money laundering. On December 22, a federal judge ordered his release from custody after his attorneys and prosecutors agreed to a record-breaking $250 million bond.
Bankman-Fried, who is 30 years old, will live with his parents, both of whom are Stanford law professors, in Palo Alto, California. He will be confined to the Northern California area, wear an electronic monitoring bracelet, and undergo mental health and substance abuse counseling.
On January 3, Bankman-Fried pleaded not guilty to all charges in a New York federal court. His trial is set for October 2.
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Source: https://coincu.com/222263-sam-bankman-fried-trial-live-new-york-court-case/