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Barnini Chakraborty, Senior Investigations Reporter


NextImg:Sam Bankman-Fried trial: Key testimony takeaways as jury considers case

FTX founder Sam Bankman-Fried's federal fraud trial has delivered the drama. 

For four weeks, jurors have heard about accusations of bribing Chinese officials, a bizarre plan to swindle Thai hookers, endorsement deals with Tom Brady and Steph Curry, and penthouse confrontations between onetime lovers Bankman-Fried and Alameda CEO Caroline Ellison.

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Jurors have also watched a parade of the former crypto king's closest confidants turn on him, claiming one by one that he called the shots and directed them to break the law by using customer accounts to fund an over-the-top lifestyle and make risky bets.

There were also some self-inflicted wounds stemming from the defense's decision to put Bankman-Fried on the stand for three days, during which he said his colleagues made sophomoric mistakes that led to the colossal collapse of Alameda Research, a cryptocurrency hedge fund he owns, and FTX.

Once on the stand, Bankman-Fried was hammered by prosecutors who used his own words against him, quoting from interviews he gave to the press and his posts on social media.

Assistant U.S. Attorney Nicolas Roos told jurors during closing arguments that Bankman-Fried said he "did not recall" information 140 times during the prosecution's cross-examination but never made those claims when his own attorneys questioned him.

Bankman-Fried's defense team has centered its case around the ex-billionaire's quirky image. It admitted he made mistakes but claimed he acted in good faith and shouldn't be punished for it. Bankman-Fried said he didn't focus on the day-to-day tasks at his businesses and left those decisions to his top lieutenants who were woefully underqualified to handle the task.

Bankman-Fried is facing seven criminal charges, including money laundering and securities fraud, tied to FTX's implosion. He has pleaded not guilty. If convicted of all the charges, he could be sentenced to more than 100 years behind bars.

As we wait for the jury's decision, here are some of the key moments from the trial. 

Bankman-Fried takes the stand 

In this courtroom sketch, FTX founder Sam Bankman-Fried, right, is cross-examined by Assistant U.S. Attorney Danielle Sassoon, left, while Judge Lewis Kaplan listens, center, in Manhattan federal court, Monday, Oct. 30, 2023, in New York.

Bankman-Fried was the third and final witness for the defense.

Putting him on the stand was a risky move, and one most defense attorneys are reluctant to do because it opens their client up to intense cross-examination, which is exactly what happened in this case.

Bankman-Fried faced tough pushback from Assistant U.S. Attorney Danielle Sassoon, who spent much of her time attacking his credibility by using his own words against him and highlighting public statements he made leading up to and after the collapse of his multibillion-dollar cryptocurrency exchange.

While he admitted to making "a number of small mistakes and a number of big mistakes," he has denied intentional wrongdoing.

He also denied knowing that billions of dollars had been misused until just a few months before the company's collapse last November.

When asked if he had explicitly told his employees not to spend FTX customer money on investments, real estate deals, and endorsement deals, Bankman-Fried fumbled his answer. He also came up short when asked to name an employee who might have authorized the FTX funds to be used for those purposes.

He was also pressed on his "cozy relationship" with Bahamian officials, specifically the country's prime minister, Philip Davis, and his wife. FTX was based in the Bahamas.

Bankman-Fried admits to being a newbie 

In this courtroom sketch, FTX founder Sam Bankman-Fried, right, testifies as Judge Lewis Kaplan, upper left, presides during Bankman-Fried's trial in Manhattan federal court, Tuesday, Oct. 31, 2023, in New York.

Bankman-Fried testified he knew little to nothing about the fast-paced crypto world when he started FTX, a crypto exchange.

"I had absolutely no idea how they worked," he said under oath, adding that he thought his team "might be able to build the best product on the market" and move the ecosystem forward.

Unfortunately for him, and thousands of users, that's not how it went down.

"It turned out basically the opposite of that," he said. "A lot of people got hurt, customers, employees, and the company ended up in bankruptcy."

His testimony lined up with the narrative the defense has been pushing — that he acted in good faith but made multiple mistakes because he was a novice, not a fraudster.

Caroline Ellison testified she warned Bankman-Fried trouble was brewing

In this courtroom sketch, Caroline Ellison weeps as she testifies during FTX founder Sam Bankman-Fried's trial in Manhattan federal court, Wednesday, Oct. 11, 2023, in New York.

Part of Bankman-Fried's defense strategy is that he never knew Alameda or FTX was about to go under.

That was called into question when Ellison, Alameda CEO and Bankman-Fried's former girlfriend, testified that she had personally shown Bankman-Fried several spreadsheets over the course of a year that predicted a crypto crash could wipe out Alameda, which, at the time, was "borrowing" billions of dollars from FTX customers.

Bankman-Fried even responded on Google Docs and agreed.

"Yup, and could also get worse," he wrote.

He asked Ellison how a $3 billion investment into early-stage companies might affect Alameda's financial health. She advised against it, but Bankman-Fried ignored her. At the time, Alameda's net asset value was negative $2.7 billion, making it already impossible to pay off its loans if they were all called at once.

Ellison airs dirty laundry

In this courtroom sketch, Caroline Ellison testifies in Manhattan federal court, Tuesday, Oct. 10, 2023, in New York.

Multiple members of Bankman-Fried's inner circle have already pleaded guilty to similar charges and have turned on their former friend.

Among the most notable was Ellison, who provided insight into his private life.

Her explosive testimony took place over three days and included a look at the comically wild schemes hatched by Bankman-Fried and other top executives to keep the companies solvent, which included bribing Chinese officials and Thai prostitutes.

Ellison also revealed information about the personal grooming habits and sloppy dress code of her former boyfriend, which she claimed was part of a carefully crafted public relations strategy to make the 31-year-old billionaire seem more approachable.

Prosecutors called Ellison, widely considered to be Bankman-Fried's chief accomplice, as the star witness.

She repeatedly blamed Bankman-Fried for masterminding a scheme that siphoned $8 billion in customer funds from FTX to boost Alameda. She told jurors that Bankman-Fried should be held accountable for the crimes.

Ellison also provided details of their love affair, the power dynamics in the office, and the sophomoric ideas Bankman-Fried and his executives floated for ways to get back $1 billion in funds that China had frozen.

Ellison testified that she, Bankman-Fried, top executives, and two other employees held multiple meetings about how to unfreeze the funds. One of the ways included using an employee's father, a Chinese government official, to see if he could use his influence to get it done. When that didn't work, Alameda hired a lawyer to work with the Chinese government, but that, too, was futile.

Another idea was to hire Thai prostitutes and use their accounts to arrange trades with Alameda that they knew would be bad and, therefore, would transfer value away from Alameda's accounts and to the sex workers, Ellison said. Alameda would then reclaim the assets from the Thai prostitutes through nonfrozen accounts.

Ellison told jurors she lied to her employees about the illegal payout because she "didn't want the facts of our crimes to get out."

On her second day on the stand, she claimed Bankman-Fried's brown frizzy hair, cargo shorts, and untucked T-shirt were all part of a highly choreographed plan to make himself look more like an effective altruist and less like a billionaire braggart.

Gary Wang 

This courtroom sketch shows FTX co-founder Gary Wang on the witness stand as he testifies during FTX co-founder Sam Bankman Fried's fraud trial on Friday, Oct. 6, 2023, in New York.

Wang, who met Bankman-Fried at math camp, was another big witness for the prosecution.

Like Ellison, he testified that Bankman-Fried was the final decision-maker and had personally directed Alameda to misuse billions of dollars from FTX customers. He added that Bankman-Fried had lied in his public statements in November about FTX customer assets being safe and secure.

The Securities and Exchange Commission has claimed Wang was a willing partner in Bankman-Fried's scheme to bilk customers and investors out of billions of dollars.

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Wang created the software that allowed the diversion of funds to take place. At his plea hearing in December 2022, Wang, FTX's chief coder, pleaded guilty to wire fraud and three conspiracy counts of wire and securities fraud.

He's also facing civil fraud charges from the SEC and Commodity Futures Trading Commission.