Group chats, tweets and audio tape: The evidence against FTX’s Sam Bankman-Fried


Sam Bankman-Fried’s phrases in tweets and group chats are getting used as proof towards him in his historic fraud trial. Screenshots of messages, social media posts and inner paperwork have been introduced by prosecutors to display how the 31-year-old allegedly orchestrated a multibillion-dollar scheme at his FTX cryptocurrency alternate, alongside along with his buying and selling agency Alameda Analysis. The paperwork supply a glance into the mechanics of his alleged fraud in addition to the discrepancies between his public statements and personal directions to his inside circle.

Former colleagues — together with Caroline Ellison and Gary Wang — gave jurors perception on how you can decipher the paperwork throughout their testimony on the federal courthouse in New York.

Prosecutors additionally performed audio clips from a secretly recorded assembly of Ellison with Alameda workers in Hong Kong within the ultimate week of the buying and selling agency’s collapse. Requested who made the choice to repay Alameda lenders with FTX buyer funds, Ellison uttered, “Sam, I assume.”


In audio clips from a Nov. 9, 2022, Alameda all-hands assembly — days earlier than the corporate filed for chapter — Ellison spoke concerning the agency’s troubles and advised them it was more likely to shut down. “The fundamental story right here is that beginning final yr, Alameda was sort of borrowing a bunch of cash through open-term loans and used that to make numerous illiquid investments,” she mentioned on the tape. In cross-examination, Ellison was requested if she was admitting wrongdoing to the staff. “Sure, I used to be,” she mentioned. Whereas Alameda workers appeared upset concerning the wrongdoing, they have been grateful she had been open and trustworthy with them, she mentioned. A former Alameda software program engineer, Christian Drappi, advised the court docket that Ellison was laughing nervously through the assembly.


In June 2022, as crypto costs spiraled, Alameda’s lenders have been calling of their loans. Ellison mentioned Bankman-Fried directed her to arrange “various” steadiness sheets in response to a request for monetary info from certainly one of its lenders, Genesis. “I understood him to be directing me to provide you with methods to hide issues in our steadiness sheet that we each agreed would look unhealthy,” she testified. She got here up with seven potential variations, and Bankman-Fried picked “Alt 7” which might conceal Alameda’s massive borrowing from FTX clients. The displays present the primary steadiness sheet with seven further tabs for every various.

The steadiness sheet ‘alt 7’ was finally despatched to Genesis. On this model, the merchandise “alternate borrows” — referring to the $9.9 billion Alameda was borrowing from FTX — was eliminated. It additionally minimize Alameda’s liabilities from $15 billion to round $10 billion. Ellison testified that the doc was “dishonest.”


Gary Wang, FTX-co-founder and long-time buddy of Bankman-Fried, testified that Alameda Analysis had a $65 billion line of credit score on FTX, one of many ways in which allowed the buying and selling agency to misappropriate FTX buyer funds. The exhibit beneath exhibits that underneath the column “borrow,” Alameda’s foremost buying and selling account had the flexibility to borrow as much as $65,355,999,994 from the alternate. The determine was set so excessive that it meant Alameda was capable of make practically limitless withdrawals from FTX.

Moreover, Wang, who went to MIT with Bankman-Fried, testified that his outdated buddy had requested for an “enable detrimental” steadiness function to be added for Alameda, and one other former FTX govt, Nishad Singh, carried out the code change. This allowed Alameda to withdraw extra funds than it really had, one of many methods for it to misappropriate FTX buyer funds. The exhibit beneath exhibits that this function was added in July 2019 — only some months after FTX was based.


Adam Yedidia, one other Massachusetts Institute of Know-how alum who went to work at FTX, was one of many 9 individuals residing and socializing in a luxurious penthouse shared with Bankman-Fried within the Bahamas. Prosecutors confirmed a photograph of them eating to display their close-knit relationship in each skilled and private settings. He testified that in June 2022, Bankman-Fried advised him “We have been bullet proof final yr. We’re not bullet proof this yr,” when requested concerning the monetary well being of FTX. The dialog occurred at a padel tennis court docket in The Albany, the posh resort the place they resided, Yedidia mentioned.


Yedidia mentioned the ten individuals, together with Bankman-Fried, Ellison, Wang and Singh, who lived collectively shared a Sign chat group known as “Folks of the Home.” The exhibit exhibits that when Yedidia and others raised considerations concerning the hire, Bankman-Fried replied he is been “assuming that it is mainly simply Alameda paying for it ultimately.” The response went straight in to the guts of the prosecution’s case that Bankman-Fried was utilizing Alameda’s cash — misappropriated from FTX buyer funds — to fund his costly life-style.


A part of the federal government’s case is that Bankman-Fried not solely deceived clients, but in addition enterprise capital buyers who fueled his fast ascent. Matt Huang, managing accomplice at crypto VC agency Paradigm, testified his agency raised considerations about FTX’s company governance, together with its relationship with Alameda, earlier than investing within the crypto alternate. He mentioned Bankman-Fried reassured them there was no preferential remedy for Alameda. Learn the complete e mail right here and FTX pitch deck right here.


Bankman-Fried thought-about closing Alameda Analysis in September 2022, following publicity considerations about conflicts of curiosity between the 2, Wang testified. The exhibit exhibits Bankman-Fried’s private observe, earlier than he finally determined that he could not shut down the hedge fund as a result of it had accessed and spent a lot of FTX clients’ funds that it will not be capable to repay them, Wang mentioned. The doc exhibits that Bankman-Fried was absolutely conscious of the reputational injury that might happen if the tangled relationships between Alameda and FTX got here to mild. Learn the complete PDF right here.


Ellison testified that she saved a number of Google docs on her to-do record and priorities. Within the exhibit beneath, she wrote about “issues Sam is freaking out about,” together with hedging Alameda’s portfolio dangers. The doc showcases Bankman-Fried’s personal worries about Alameda’s monetary place. Mark Cohen, Bankman-Fried’s lawyer, argued in his opening assertion that Bankman-Fried had turn into involved about dramatic fluctuations in crypto costs months earlier than Alameda’s chapter and urged Ellison to hedge their publicity to additional losses, however she did not do it.Fourth on the record was “getting regulators to crack down on Binance.” Bankman-Fried believed a crackdown on Binance, the biggest crypto alternate and an FTX competitor, can be one of the best ways for FTX to realize market share, she mentioned. Learn the complete PDF right here.


Following the publication of a leaked Alameda Stability sheet by CoinDesk, Binance CEO Changpeng Zhao posted on Twitter that his alternate had determined to liquidate any FTT — FTX’s personal crypto token — on its books ‘as a consequence of latest revelations that got here to mild.” Behind the scenes, high Alameda workers had turn into more and more determined as they tried to stabilize the FTT token worth and meet withdrawal calls for from FTX clients. The exhibit exhibits inner dialogue at Alameda that led to Ellison’s Twitter publish that Alameda can be keen to purchase all of Binance’s FTT for $22 per token.


Within the week of Alameda’s and FTX’s collapse, Ellison confessed to Bankman-Fried that she had an “rising dread of at the present time that was weighing on me for a very long time, and now that it is really taking place it simply feels nice to get it over with a technique or one other.” When requested to learn out her message on the stand, Ellison broke down crying. She defined that the emotional burden of carrying on Alameda’s lies had turn into insufferable within the months resulting in the collapse. “That was general the worst week of my life,” she mentioned on the stand. Ellison and Bankman-Fried by no means met after that.


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