FTX fraud trial of Sam Bankman-Fried

Fri, 20 Oct 2023 15:34:11 -0400

The trial of Sam Bankman-Fried over the collapse of FTX will kickoff its 13th day next Thursday as his medication, or lack, of is garnering more attention.

Bankman-Fried has been denied regular access to Adderall, a drug used to ease anxiety, for a number of reasons. Now, his Defense team may use the situation to beef up their case.

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Thu, 19 Oct 2023 16:08:16 -0400

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Court has ended for the week and will return next Thursday 10/26. Defense said that it will be prepared to present next week. Originally asked for Friday but Judge Kaplan said they can start after lunch on Thursday. Judge has told the Jury that they will not finish later than Nov. 3 – “faster than I had hoped” remarked.

Thu, 19 Oct 2023 16:06:32 -0400

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Can Sun, former FTX lawyer took the stand. Sun, like the other witnessess said he was not aware how funds were being used. He helped review and negotiate some investments by Alameda and was never told customer funds were used. Sun said he wouldn’t have documented loans if he had known.

Still, Sun also received a loan as part of a company incentive to buy property in Bahamas. Sun has a non-prosecution agreement

Thu, 19 Oct 2023 08:38:33 -0400

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Throughout the trial Bankman-Fried has had limited access to Adderall, a drug that helps ease anxiety and boost concentration. His lawyers are arguing he is having trouble focusing. On Thursday he is expected to try a new, longer lasting, ADHD medication in hopes it will aid him.

Legal experts tell FOX Business the medication access (if not resolved) could not only be setting up grounds for an appeal, but also used to seed doubt with the jury about Bankman-Fried’s ability to focus and make decisions while CEO. Teva Pharmaceuticals makes the drug.

Separately, FTX’s former legal counsel will take the stand today.

Wed, 18 Oct 2023 14:00:53 -0400

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Eloria Katz, FTX lobbyist met Bankman-Fried in Washingon D.C. She says he was very engaged in meeting with policy makers and when he testified before Congress in 2022. The jury was shown video of that appearance.

He stated that FTX has a 24/7 risk engine, transparent system, monitoring in real time and he had never experienced customer clawbacks. The Jury was also shown series of Bankman-Fried tweets either saying hes excited to attend a hearing or thanking the committee.

Highlights from testimony submitted before Senate Ag Committee transcript:

FTX’s key principles for ensuring investor protection

FTX believes customer protection is important

Maintaining adequate resources to returning customer’s assets

FTX segregates customer assets from its own

Wed, 18 Oct 2023 09:07:11 -0400

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The inner circle of Sam Bankman-Fried, Caroline Ellison, Gary Wang and Nishad Singh have finished testifying for the prosecution.

The Defense finally scored a win when Singh admitted to buying a multi-million dollar house with customer funds after supposedly feeling sick over the state of FTX and Bankman-Fried’s spending. He also took at $10 million loan for friends and family.

Separately, all three star witnesses struggled to remember things they said in documented interviews with the prosecution.

The Defense pointed this out to the jury and shared they are still deciding if they will present a case once the prosecution rests which could be today or tomorrow.

It is still unclear if Bankman-Fried will testify, with no smoking gun, he has an opportunity to sow doubt regarding criminal intent, but risks alienating the jury and increasing potential jail time.

Additionally, his Adderall issue remains unresolved, a timed release pill is available to try tomorrow.

Tue, 17 Oct 2023 09:08:33 -0400

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Following testimony Monday by former FTX employee Nishad Singh, who said that Bankman-Fried’s spending spree soared to over $1.13 billion, even as funds were not there, resumes today with the defense taking their turn.

Bankman-Fried used customer money to butter up celebs such as Tom Brady and Larry David and buy influence with stadium naming and hefty Democratic donations, said Singh.

Unresovled is Bankman-Fried’s mental health, his attorney’s say he has trouble concentrating due to the lack of access to Adderall. A timed release pill may not be available until Thursday

Mon, 16 Oct 2023 17:32:07 -0400

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Nishad Singh detailed Sam Bankman-Fried’s heavy spending including:

Endorsement deals

Stadium naming rights (Miami Heat arena) $205 million

Roughly $150M for MLB

Steph Curry and his charity

Kevin O’Leary

Tom Brady & Gisele

Larry David’s Super Bowl Ad

Michael Kives who ran a company K5 that received $200M investment from FTX, attendees included Hillary Clinton, Doug Emhoff, Katy Perry, Jeff Bezos to name a few and maybe a few Kardashians but “honestly cant say what they do”,,,SBF said that K5/Kives relationship could get them endorsement deal and political connectionsSaw it as a “one stop shop” for relationships.

The jury was shown a picture of Bankman-Fried attending the Super Bowl last year with multiple celebs and Kives. Singh said he was shocked by the money going to K5.

Singh says he learned of most of these deals late 2022 after he was shown the sheet by an employee.

Mon, 16 Oct 2023 15:23:30 -0400

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Former FTX engineer Nishad Singh provided more detail on what is being described as “excessive” spending in 2022 by Sam Bankman-Fried who had a 6-monitor setup for personal computer, with one regularly showing Alameda trading position.

Singh had many conversations about Bankman-Fried’s psending and often learned of its after the fact or if it was too large. The two frequently disagreed on spending, and said that his opposition was already taken into consideration, says he didn’t understand how that was the case.

Billions were spent on VC investments, edorsement deals for the likes of Tom Brady and Steph Currey as well as Miami Heat arena stadium naming rights.

Mon, 16 Oct 2023 15:09:07 -0400

Singh, Fmr. FTX Director of Engineering, met Sam Bankman-Fried sophomore year of high school and knew his brother. Started to work at Alameda in late 2017 by 2019 he had moved to FTX as a software engineer. He wrote code at Sam Bankman-Fried’s direction as well as that of Gary Wang. Bankman-Fried did not know code but was very involved in the architecture of FTX. He directed how code should run and what it should be doing, Wang executed it.

His responsibilities changed in 2020 and he started to manage more of the team. He received personal loans from FTX and used that money to make large investments, gave gifts to friends and family and made donations. 

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Mon, 16 Oct 2023 14:41:07 -0400

Tareq Morad, an FTX customer, testified for the prosecution. He opened an account in 2021 with a deposit of $500,000. He treated the account as liquid and planned to withdraw the funds anytime he needed. On November 1, 2022 he had $250,000-$280,000, the drop tied to the decline cryptos. But by November 10 he tried to withdraw but was unable to.

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Mon, 16 Oct 2023 08:37:39 -0400

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The trial of FTX’s Sam Bankman-Fried resumes Monday with expected testimony from his inner circle including Nishad Singh, who is a cooperating government witness & allegedly served as a straw man for Bankman-Fried’s Democratic donations.

Bankman-Fried may also testify, the defense indicated in court filing which also said he is struggling to focus during the trial due to lack of ADHD meds and will try a timed release pill today.

Sat, 14 Oct 2023 13:44:20 -0400

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CEO of bankrupt digital lender BlockFi took the stand on Friday. At time of the bankruptcy, Blockfi had $350 million on FTX’s exchange and about $650 million loaned to Alameda which could not repay its loans forcing BlockFi to go belly-up.

Prince said that if he knew Alameda was borrowing from FTX it would have led to more questions and maybe no lending. He also wasn’t aware the money was loaned to Sam Bankman-Fried and others. He also didn’t know money was loaned to SBF or other employees. It would have given us “a lot of pause” said Prince.

If he had known it was FTX customer money, he wouldn’t have done business with them.

Sat, 14 Oct 2023 13:43:06 -0400

In the trial of Sam Bankman-Fried last week, an interesting exchange over his hairstyle caused some pushback from his attorney but the prosecution felt it was relevant to their case.

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Fri, 13 Oct 2023 09:19:50 -0400

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Friday kicks off a slate of new witnesses in the trial of Sam Bankman-Fried following explosive testimony from ex-girlfriend Caroline Ellison for three days.

BlockFi’s Founder & CEO Brock Prince is expected to take the stand and explain how a $650 million loan to Alameda and exposure to FTX forced company into bankruptcy.

Two other potential witnesses Nishad Singh and Ryan Salame.

Thu, 12 Oct 2023 16:55:17 -0400

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Lawyers for the prosecution argued to use clips from the all-hands meeting as the defense mounts objection.

They only want to play select clips regarding Alamedas borrowing customer deposits and what they were used for.

Defense says if a clip is admitted, they will also want clips added to evidence.  

Thu, 12 Oct 2023 16:52:32 -0400

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With FTX teetering, Sam Bankman-Fried went to the Middle East in an attempt to get Crown Prince Mohammed bin Salman Al Saud (MBS) to invest. The move failed.

With lots of employees asking what was going on, Ellison held an all-hands meeting and diclosed how Alameda & FTX had gotten into a financial situation and Alameda was going to wind down. She said employees didn’t have to keep working but still hoped some would stay.

In the re-direct, she said she told employees that open term loans had been paid for with FTX customer funds stating that she, Bankman-Fried and Gary Wang and Nishad Singh were all involved.

Ellison said the meeting went well and employees appreciated that she told the truth. She felt relieved. When asked why she disclosed her wrongdoing then?…Ellison said she had felt trapped but now that it was all falling apart she felt comfortable telling employees what was going on.

Thu, 12 Oct 2023 11:27:48 -0400

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The prosection accused Sam Bankman-Fried of attempting to intimidate Caroline Ellison during her second day on the witness stand. They claim he rolled his eyes, scoffed, laughed and visibly shook head.

The judge said he hadn’t noticed but told defense to keep client in check.

Thu, 12 Oct 2023 08:49:36 -0400

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Ellison is expected to be on the stand for a third day, this time around the defense will get a chance to cross examination her and likely attempt to discredit her two days of testimony.

She has said Sam Bankman-Fried, her former boyfriend, knew the two were commiting fraud and instructed her on how to carry out that fraud.

Wed, 11 Oct 2023 18:57:58 -0400

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In the final few hours of testimony, Caroline Ellison started to cry on the stand, in describing the final months of FTX.

November 2022:

Alameda’s balance sheet was leaked to crypto news site Coindesk which led to run on money, the tip of the iceberg. Ellison started to preserve Signal messages, an encrypted messaging app, because others were doing it for legal reasons.

During the run, FTX withdrawals were piling up – roughly $120 million per hour, according to another FTX founder Nishad Singh on a 11/6/22 Signal chat.

Ellison responded with a sad face emoji, Bankman-Fried responded with “oof”, according to testimony.

Ryan Salame, a former high ranking FTX executive, asked if the firm could meet all withdrawals, Ellison didn’t know how to respond “What should I say?” she asked Bankman-Fried. He wasn’t sure how to respond.

In the end, Alameda had borrowed $14B from FTX but had $6B in assets.

When it all happened, Ellison said she felt better as she had been dreading this scenario for over a year and now it was happening. She said felt relief when she could finally tell the truth, even though she felt bad about the FTX customers. She said Bankman-Fried knew they were keeping customers in the dark.

Wed, 11 Oct 2023 16:27:01 -0400

Ellison described Bankman-Fried as being ambitious when it came to growing FTX, but also his foray into political circles through donations. He even mulled his chances of becoming President of the United States, she revealed in testimony.

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Wed, 11 Oct 2023 16:34:29 -0400

Caroline Ellison, in ongoing testimony, said her former boyfriend Sam Bankman-Fried wanted FTX to have an image that was an exciting place to trade as well as safe and reliable. He thought X, formerly known as Twitter would be a good way to that build image.

The FTX account on X is now controlled by creditors.

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She added, Bankman-Fried didn’t put a lot into personal appearance and believed his hair was valuable & good for image. He hair has been trimmed for the trial compared to the longer style he sported when arrested.

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Wed, 11 Oct 2023 15:40:39 -0400

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Caroline Ellison, with a hat and glasses, made her way into the courtroom to testify against former lover Sam Bankman-Fried.

Wed, 11 Oct 2023 15:03:47 -0400

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May 2022:

Ellison begins to get worried about company’s position as cryptocurrencies began sinking infecting Alameda’s value and SBF was asking for updates on Alameda more frequently.

June 2022:

Alameda’s lenders begin to ask for their loans to be paid back, Genesis was one of those lenders

Ellison became stressed out because billions were going to be needed to pay back lenders and FTX customer funds would be needed to do so

Part of the liquidity problem for Alameda was the loans to SBF, Wang and Singh in addition to the declining cryptos“Constant state of dread” over FTX customers wanting to pull out their funds

FTX money would be used to repay lenders that June and following months

Before Alameda paid back loans, the company had already taken $3B from FTX

At one point, FTX had taken $13.25B from FTX customers (~100% FTX customer funds)

SBF said NOT to put anything about that money coming from FTX customers on their liquid liabilities spreadsheet

SBF said having that in writing would create legal problems in U.S.

Despite all this, the company continued to use FTX customer money to repay loans.

Ellison thought “it was wrong”

It was “Sam’s decision” to use FTX money to repay lenders

Wed, 11 Oct 2023 08:54:52 -0400

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In day two of Caroline Ellison testimony, prosecution will continue and will be followed by the defense.

On Tuesday, Ellison testified Sam Bankman-Fried directed her to commit fraud, doctor balance sheets for investors, use FTX customer money to pay Alameda loans and make investments, as well as sign loans for campaign donations.

She also detailed their on/off again romance.

Defense shared cooperating witnesses will receive support for lower prison sentences if testimony critical to prosecution’s case – aimed to cast doubt in jury’s minds over credibility.

Tue, 10 Oct 2023 16:59:19 -0400

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Met FTX’s Sam Bankman-Fried as an intern when he was a trader, she started working at Alameda as a trader in March 2018. Fall 2019 they started sleeping together with an on/off relationship over next two years.

When Alameda’s lenders started pulling out, SBF said the big priority was to get more loans for investment, acquisitions and trading. New sources of money were critical. SBF said FTX would be “good source of capital” and set up system for Alameda get money.

FTX made it seem like it was a safe place for customers to invest but it wasnt. Alameda had a setting within code to withdraw money from FTX without collateral.

She asked SBF if the line of credit would show up on an audit around 2020 – SBF said it wont and don’t worry about it.

By late 2021, Alameda borrowing $10-15B from 3rd party lenders. These loans could be called back at any time and were creating risk.

By 2022, they were dating again but it was weird since they were working together.  Thought he didn’t spend enough time with her.

In June 2022, the company wanted to buy out Binance’s $2B stake in FTX but she was worried the company didn’t have enough money to do it – ended up taking $1B of FTX customer money to buyout Binance at SBF’s direction.

She says she never felt equipped to be CEO of Alameda but SBF said she could do it. Reported to SBF and ran all big decisions by him, including balance sheets. Bonuses were twice a year – ranged from $100K to $20M.

She learned that Alameda loaned money to SBF, Gary Wang and Nishad Singh. Money was used for investments and political donations. SBF said you get a lot for the small donations – donated $10M to Biden.

SBF talked about making money and having influence –  quoted him as saying he had “5% chance of being President someday”

learned of Alameda special line of credit when FTX started and thought it was unlimited – wasn’t aware of any terms of when Alameda had to return the money

Tue, 10 Oct 2023 14:19:25 -0400

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Caroline Ellison, ex-girlfriend of Sam Bankman-Fried, was asked to identify him the courtroom before taking the stand.

Tue, 10 Oct 2023 13:11:10 -0400

Ex-gal pal Caroline Ellison took the stand in the Sam Bankman-Fried trial and was asked to identify him in the courtoom, which she did. In her early testimony, she says the two coordinated crimes against investors.

HIGHLIGHTS

Met SBF as intern at Jane Street and later worked together, later dated

Committed crimes with SBF against customers at FTX, investors in FTX & Alameda

SBF was initially CEO of Alameda and directed her to commit crimes

Said Alameda took several billion dollars from FTX and asked for Alameda investments to repay loans

Said that Alameda used about $10B to repay loans

Alameda ultimately took $14B from FTX customers

Made balance sheets for Alameda look better than they actually were for investors at direction of SBF

When FTX customers went to withdraw money it wasn’t there because Alameda had spent it

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Tue, 10 Oct 2023 10:07:39 -0400

Caroline Ellison, who ran Alameda Research, sister company of FTX, arrived at the courthouse Tuesday morning. Many believe her testimony will be damaging for Sam Bankman-Fried.

In late 2022, Ellison said she and FTX co-founder Bankman-Fried misled lenders about how much the company was borrowing from the cryptocurrency exchange as part of her plea deal, as reported by Bloomberg.

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Tue, 10 Oct 2023 08:54:35 -0400

The Trial of Sam Bankman-Fried

Every Monday and Wednesday host Kelly O’Grady speaks with plugged in experts to discuss the latest twists and turns in the case against the FTX CEO. 

Tue, 10 Oct 2023 08:52:19 -0400

Sam Bankman-Fried’s trial over the loss of at least $1 billion in FTX customer funds related to crypto investments is in its second week with more high profile witnesses expected to take the stand this week.

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