In their opening statements to a newly sworn-in jury in Manhattan federal court on Wednesday, lawyers laid out previews of their cases, offering two divergent narratives for the collapse of Sam Bankman-Fried’s crypto empire.
Assistant US Attorney Thane Rehn painted a picture of a villainous, greedy businessman whose boundless appetite for wealth and power led him to steal billions of dollars in customer funds.
“He had wealth, he had power, he had influence,” Rehn said. “But all of that — all of it — was built on lies.”
Rehn reiterated the government’s accusations that Bankman-Fried, known as SBF, used his crypto exchange, FTX, as his own personal piggy bank, using the money he took from customers to enrich himself and his family, buy luxury beachfront property in the Bahamas and funnel millions into US political campaigns.
The US government has charged Bankman-Fried, 31, with multiple counts of fraud and conspiracy, following the implosion of his crypto-trading platform, FTX, last year.
“This man,” Rehn said, pointing to Bankman-Fried a few feet away, “stole billions of dollars from thousands of people.” He repeatedly underscored a central argument: that Bankman-Fried stole, enlisted others to help him steal, lied about stealing, and continued to lie to try as he sought to cover up his crimes.
As Rehn spoke, Bankman-Fried, dressed in a suit and tie and flanked by his attorneys, trained his eyes on a laptop, expressing no reaction to the prosecutor’s allegations. But as his own lawyer, Mark Cohen, stepped up to speak, Bankman-Fried’s demeanor softened and his focus shifted to the jury box.
Cohen laid out a starkly different view of his client and the collapse of his businesses.
“Sam didn’t defraud anyone,” he told jurors, arguing that his client acted in good faith throughout the rise and fall of his startups.
“Sam was someone who worked very hard,” Cohen said, adding that SBF was “a math nerd who didn’t drink or party.”
As for the mistakes that led to FTX’s and Alameda’s undoing, Cohen argued that Bankman-Fried and his colleagues, like many entrepreneurs, were “building the plane as they were flying it.” But as the crypto industry flailed in 2022, they were about to fly into “a perfect storm.”
Cohen echoed some of the defenses Bankman-Fried has made over the past year, including that “things were moving quickly” and FTX didn’t have a fully built-out risk management team.
“It’s not a crime to be the CEO of a company that later files for bankruptcy,” he said.
Cohen also sought to undermine the prosecution’s star witness, Caroline Ellison, Bankman-Fried’s ex-girlfriend and former CEO of Alameda. Cohen told the jury that despite Bankman-Fried’s directive to place hedges on Alameda’s risky positions, she failed to do so. Bankman-Fried himself complained in documents leaked to the New York Times that he believed Ellison wasn’t able to handle the job.
Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. Several of his former colleagues, however, have pleaded guilty and plan to testify against him as part of their plea deals. Prosecutors said one of those former colleagues, Gary Wang, the co-founder of FTX, would likely testify this week.
Witnesses take the stand
On Tuesday, US Attorney Danielle Sassoon gave the court a laundry list of people who may appear as witnesses — such as Bankman-Fried’s parents, Joe Bankman and Barbara Fried, both Stanford lawyers who are facing their own legal challenges related to their son’s business.
Others on that list include the defendant’s brother, Gabriel Bankman-Fried, FTX co-founders Gary Wang and Nishad Singh, and even Anthony Scaramucci, the former Trump White House communications director whose investment firm once owned a stake in FTX.
Prosecutors called their first witness Wednesday afternoon, putting the jurors into the mindset of one of thousands of retail investors who wanted to try their hand at crypto trading. Marc-Antoine Julliard, a French cocoa broker who lives in London, testified about his experience as a latecomer to the crypto scene who wanted to invest a “significant” portion of his savings in crypto. FTX appealed to him in part because of the prominent venture capital firms that had backed the company, he said.
“They don’t commit hundreds of millions without doing due diligence,” he said. “That was a vote of confidence for me.”
Julliard said he put about 110,000 British pounds, or roughly $133,000 today, into his FTX account, in the spring of 2022. By early November, as panic about FTX’s finances spread among investors, Julliard said he trusted Bankman-Fried’s reassurances on Twitter that the company and customers’ assets were “fine.”
But as his anxiety grew, he began trying to withdraw funds. At the time, he had roughly $100,000 worth of fiat currency and bitcoin. None of his withdrawals were processed, and he has yet to recover any of those funds.
Prosecutors then called Adam Yedidia, a college friend of Bankman-Fried’s who previously worked for both Alameda and FTX. His questioning lasted about 15 minutes before court was adjourned for the day. Yedidia was due back on the stand Thursday morning.
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