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That reply in the end lies with the jury, which was chosen on Wednesday morning earlier than attorneys for the federal government after which Bankman-Fried swapped two very completely different tales of the previous crypto mogul’s sudden rise and virtually instantaneous fall.
Right here’s what occurred on the second day of the trial, which featured pointed allegations, a good friend from MIT, and an viewers replete with large names, together with Bankman-Fried’s professorial dad and mom and Damian Williams, the U.S. Lawyer for the Southern District.
A aware felony…
The prosecution’s account of the alleged crimes by Bankman-Fried, who spent most of his day in courtroom staring right into a laptop computer whereas seated between his two attorneys, featured a research in contrasts.
“One 12 months in the past, it regarded just like the defendant was on the highest of the world,” started Thane Rehn, a prosecutor for the federal government, in his opening assertion. The previous CEO of FTX oversaw a supposedly thriving crypto alternate, jetted between worldwide locales, and hobnobbed with celebrities like Tom Brady and Larry David. He repeatedly emphasised to clients that their cash was secure and safe.
However “all of that, all of it, was constructed on lies,” Rehn declared to the jury. “Behind the curtains, he was not what he seemed to be.” What adopted was a roughly 30-minute story that repeatedly emphasised how Bankman-Fried allegedly stole buyer funds to facilitate his jet-setting life-style, donate tens of millions to political candidates, and finance dangerous bets.
The important thing to his alleged scheme? Alameda Analysis, a crypto hedge fund he additionally owned, argued Rehn. Utilizing Caroline Ellison, his on-again off-again girlfriend and the CEO of Alameda, as a entrance, Bankman-Fried had “secret entry” to buyer cash—each money and crypto—the federal government claimed.
Furthermore, Bankman-Fried allegedly directed workers to hide the circulation of cash into FTX’s coffers and cast monetary paperwork distributed to lenders and buyers. “The defendant lied to the world,” Rehn alleged.
And who was this defendant? Not a crypto “boy” genius, as so many in media (Fortune included) have written, but a “man” who “stole billions of {dollars} from hundreds of victims,” Rehn mentioned. “You will note the total image.”
…or a well-meaning founder?
However Bankman-Fried, whose cheekbones have been extra distinguished after spending about seven weeks in a Brooklyn prison, was no liar, based on Mark Cohen, one in every of his attorneys. “Sam didn’t defraud anybody,” he mentioned early on in his opening assertion.
What the jury will see is a nerdy startup founder who acted in “good religion,” not the prosecution’s “cartoon of a villain.” (Cohen repeatedly harped on Bankman-Fried’s allegedly good-faith actions all through his deal with to the jury.)
Alameda was not subterranean or shady. It was a profitable hedge fund, he mentioned. FTX was no Ponzi scheme. It was a “very revolutionary, profitable firm.” And the enterprise practices between the 2 have been cheap, he argued, claiming that Alameda acted legally as an FTX buyer, cost processor, and market maker, or monetary entity that acts as a buying and selling associate for purchasers seeking to purchase and promote cryptocurrencies.
In an analogy he employed all through his opening assertion, he mentioned that “working at a startup is like constructing a aircraft as you’re flying it” and that companies typically fail. Actually, he particularly pointed the finger at Ellison, the former CEO of Alameda, who, he mentioned, didn’t adequately shield her hedge fund from the inherent danger of the crypto markets.
When the partitions got here closing in and the aforementioned aircraft approached the “eye of the storm,” Bankman-Fried didn’t act like somebody who was responsible. Reasonably, he was prepared to surrender his private wealth to make clients entire, Cohen argued.
“In the long run, Sam began and constructed two billion-dollar companies,” he concluded. “He didn’t steal any cash.”
A Frenchman who lives in London who testifies in New York
After attorneys from either side depicted two very completely different Bankman-Frieds, the prosecution known as its first two witnesses to the stand—they usually weren’t blockbuster names or former lieutenants-turned-government-cooperators, like Ellison.
The primary was a victim: Marc-Antoine Julliard, a Paris-born cocoa dealer who lives in London. In 2021, Julliard, who had coiffed hair and spoke with a robust French accent, determined to spend money on crypto and landed on FTX as his alternate of selection, the place he traded cryptocurrencies like Bitcoin and Dogecoin.
On Nov. 8, within the crypto alternate’s remaining few days, he tried to drag out his money and crypto. How a lot? Nearly $100,000, he mentioned. And was he ever capable of? “By no means,” he informed prosecutors.
Shortly afterward, because the trial neared the late afternoon, the federal government known as Adam Yedidia to the stand. A quick-talking graduate of MIT, he and Bankman-Fried have been shut mates in faculty, he mentioned. And after Bankman-Fried left Jane Street, the high-frequency buying and selling agency the place the previous billionaire bought his begin in finance after MIT, he persuaded Yedidia to affix him as a dealer at Alameda after which as a developer at FTX.
When Yedidia first took the stand, Danielle Sassoon, one of many lead prosecutors, mentioned that the school good friend of Bankman-Fried had authorized immunity throughout his testimony. Why did he make such a cope with the federal government, she requested.
“I used to be involved that I had unwittingly written code that contributed to a criminal offense,” he mentioned.
Quickly, nevertheless, the clock neared 4:30 p.m., and courtroom adjourned for the day. Yedidia will proceed his testimony on Thursday, adopted by Matt Huang, a former associate on the high-powered enterprise capital agency Sequoia Capital, after which Gary Wang, a key Bankman-Fried lieutenant and one of many authorities’s star witnesses.
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