The FTX Trial Revisited: How Do You Make Sense Of Your Testimony? A Case Study Of Jeffrey Bankman-Fried
At this time last year, Bankman-Fried was the CEO of FTX and he enjoyed a nice lifestyle according to the assistant US attorney. Bankman-Fried hung out with Tom Brady. He was on the cover of a magazine, lived in a $30 million penthouse and spent time with world politicians. “All of that was built on lies,” Rehn said.
Bankman-Fried’s trial will last four to six weeks. The prosecution will call all of its witnesses, including FTX customers and alleged coconspirators. The defense will make a decision on how to respond. The US justice system requires the prosecution to prove guilt beyond a reasonable doubt. Therefore, a viable defense strategy, says Jordan Estes, partner at law firm Kramer Levin, is to “just poke holes in the government’s case” and decline to offer up any additional witnesses.
Whether Bankman-Fried takes the stand or not will only be decided, says Estes, once the strength of the prosecution’s case becomes clear. It isn’t necessary for him to testify. “It’s his decision. She says they will have to wait and see. If the case is not going well, there is a chance the defense doesn’t need to do anything.
In any criminal case, the decision to put the defendant on the stand is a “high-stakes moment,” says Allegrante. They are exposed to questions from the prosecution that they could not avoided and also to the ways in which specific jurors might interpret their testimony. It introduces additional variables to an environment the defense hopes to carefully control.
When the jury was called back, Bankman-Fried’s lawyers said that he wasn’t getting his full dose of Adderall in prison. The defense had previously argued that the prison withholding Adderall made it difficult for Bankman-Fried to prepare his defense. I think setting up an appeal is wise given what I saw today. At the minimum, it is risk management.
Adam Yedidia, Bankman-Fried’s college roommate, was called next and I expect to say more about him tomorrow.
Why Was Sam Bankman-Fried’s Defense Even Trying to Win? An Aftermath to Coincidently Adopt a Risk Officer
Things didn’t go well for Julliard in November. He followed Bankman-Fried on the social networking site and read aloud the meaning of the words. Assets are fine” tweets, along with “FTX has enough to cover all client holdings. We don’t invest client assets” and a few others, which gave Julliard the impression that his money was there — the problem might have been technical (anti-spam measures) or regulatory. He tried to withdraw money on November 8th, but it was too late. We saw screenshots of his withdrawal attempts: $20,000 USD and about 4 Bitcoin, which were worth about $20,000 at the time: about $100,000 money, inaccessible.
He noted the glossy ads featuring Gisle Bndchen suggested a high budget. It wouldn’t make sense to spend that much money unless FTX had very strong financials, Juilliard figured. He used an exchange to buy and sell bitcoin and opened an account, transferring his money in and out of it.
Cohen was talking about airplanes and I couldn’t help but think about the missing risk officer. Bringing it up, I thought, was a tremendous mistake. The prosecution didn’t mention it. Either Bankman-Fried is stupid — unlikely — or he deliberately didn’t hire a risk officer. Was he worried about what one might find?
But as Cohen tried to tell me that FTX’s and Alameda’s business relationships were “reasonable under the circumstances,” the lack of risk officer kept elbowing me in the ribs. It’s hard to swallow that Sam did a good job with his business measures and acted in good faith.
Bankman-Fried was a math nerd who didn’t party, as Cohen put it. That paints a picture of someone who’s pretty deliberate, particularly since he immediately left MIT and went to work on Wall Street. If he had been a trainwreck, I could see him overlooking a risk officer in order to do something else important. Why was the defense bringing this up?
Sam Bankman-Fried, a Silicon Valley software developer, is a realist. He was born in New Jersey, but was not born born in Florida
The problem with this metaphor is that if FTX was a plane, it was a plane flying with a key component missing — namely, the risk officer, an executive whose job it is to, well, manage risk. This is sort of an important thing, as risks can be anything from reputational to regulatory to financial.
So how was the defense going to follow it up? I was very curious, having learned yesterday that Bankman-Fried had never been offered a plea deal since he and his attorneys had told the government they wouldn’t negotiate. He would have been so confident if there was some kind of evidence to back it up.
The trial of Sam Bankman-Fried got underway on Wednesday with opening statements from both sides.
His hair was shorn, the result of a haircut from a fellow prisoner, the Wall Street Journal reported. He wore a suit bought at a discount at Macy’s, per the Journal; it hung on him. He appeared to have lost a bit of weight.
Bankman-Fried sat almost motionless, occasionally glancing at Rehn, as the prosecutor told the jury that Bankman-Fried sold stock in FTX and borrowed millions from lenders by lying.
The second was Bankman-Fried’s college roomate and longtime friend Adam Yevidia. He is as cooperating witness, who has been offered immunity. He was hired by SBF as a software developer, after he had worked for Alameda for two months.
Marc-Antoine Juilliard and his cryptocurrency empire: How Bankman-Fried got his money, what he didn’t, and how he managed to hide his wealth
Among the first witnesses called on to testify was a commodities trader from London, Marc-Antoine Juilliard. He said that he was unable to withdraw his entire amount of the currency because the exchange fell apart.
In an attempt to preempt that argument, Rehn urged jurors to “scrutinize their testimony carefully.” He told them that they would offer insight into the fraud the government alleges Bankman-Fried committed with their help.
Cohen encouraged jurors to skepticism of the testimony given by those guilty and might receive a lighter sentence as a result of their cooperation.
Four people in Bankman-Fried’s inner circle, including the CEO of Alameda Research, are facing criminal charges after he was arrested in December.
Cohen accused the government of showing the jury a picture of Bankman-Fried wearing shorts and a t-shirt with unkempt hair, which was his trademark look.
Bankman-Fried, who has been jailed for more than a month, appeared to pay close attention. He was allowed to use a laptop during the trial.
Bankman- Fried was living in a $30 million apartment and traveled all over the world on private planes. Bankman- Fried was close to actors, athletes and politicians.
Rehn charted the rise and equally dramatic fall of Bankman-Fried’s crypto empire, which include the cryptocurrency exchange FTX and a crypto-focused hedge fund, called Alameda Research.
“He had wealth. He had the power to do so. He had influence,” said Thane Rehn, an assistant U.S. attorney for the Southern District of New York. “But all of that — all of that — was built on lies.”
Was SBF involved in Alameda? A case study of a CPA who cheated thousands of customers in an upscale oil refinery
Is SBF involved in Alameda even after the appointment of new CEOs? Sure, but he also owned most of the company, so of course he’d be interested. The millions spent on the penthouse in the Bahamas and the advertising? Any smart business person would do that to boost the company and attract top talent.
Cohen said it was not a crime for the CEO of a company to later file for bankruptcy. The prosecuting lawyer pointed out to his defense team that he was the man who cheated thousands of customers, but SBF did not respond nor did his defense team. The trial is going on.