Day 2 of Sam Bankman-Fried's trial: 5 things you should know

Wednesday commenced the second day of Sam Bankman-Fried’s trial. He stands accused of seven counts of fraud and conspiracy, including wire fraud and conspiracy to commit money laundering.

The prosecution and the defense both delivered their opening statements following the selection of a jury. Here’s what you need to know:

1. The prosecution wants the jury to believe Bankman-Fried is the villain

Prosecutor Thane Rehn spoke at the podium and told the jury that one year ago, Bankman-Fried was on top of the world.

He hobnobbed with celebrities like Tom Brady — whose commercial endorsing FTX was later shown to the jury — and politicians like former President Bill Clinton. He was wealthy, and he had a lot of power and influence, Rehn said.

“All of that was built on lies,” Rehn concluded.

All while he was living his best life from 2019 to early 2022, Bankman-Fried was knowingly and actively stealing FTX customer money, Rehn claimed.

Newsletter

Subscribe to The Breakdown

That money was spent on real estate in the Bahamas, political donations, and perhaps most crucially, used to pay off outstanding loans to creditors of Alameda Research, his crypto hedge fund, according to the prosecution.

2. The defense says the state’s conception of Bankman-Fried is “cartoonish”

Mark Cohen, Bankman-Fried’s attorney, described his client far differently than the jet-setting, beachfront property-owning criminal that the government believes him to be.

“Sam,” as Cohen referred to Bankman-Fried, is just a “math nerd who didn’t drink or party,” he told the jury.

Bankman-Fried “didn’t defraud anyone” or “intend to defraud anyone,” Cohen added.

Instead, he acted in “good faith,” executing sound business decisions prior to and during the collapse of FTX – which Cohen alluded to as the “storm” – that were reasonable at the time.

3. Bankman-Fried’s friend turned foe

The government’s second witness – former FTX developer Adam Yedidia – may have come as a disappointing shock to Bankman-Fried, who once again appeared in court in an apparently oversized suit.

Yedidia, Bankman-Fried’s former college roommate and “close friend,” told jurors he quit his position at the exchange in early November 2022 after another co-worker told him that FTX customer funds had been used to repay Alameda creditors.

Yedidia was offered immunity in exchange for his cooperation with the prosecution and truthful testimony. The government will continue their questioning of Yedidia and the defense will have the opportunity to cross-examine on Thursday.

4. The state accuses Bankman-Fried of being secretive

It’s not just the allegation that Bankman-Fried stole from his customers that concerns the prosecution. It’s that he allegedly tried to engage in a cover-up to conceal potential crimes.

Don’t feel left out. Keep up with news from Sam Bankman-Fried’s trial.

Rehn claimed that the former FTX CEO “secretly” gave Alameda “special access” to money individuals had put into FTX accounts. As part of FTX’s code, Alameda was granted “unlimited withdrawals” from the exchange, Rehn alleged.

This claim is the bedrock of the state’s case against Bankman-Fried: that he covertly stole money without his customers’ consent.

5. What to expect going forward

Now that the second day of trial is in the books and witness testimony has begun, the government will be in the driver’s seat for much of the trial going forward. The next two witnesses for the government are former Sequoia partner Matt Huang and co-founder of FTX Gary Wang. Their testimony is expected to last until the end of this week.

As the judge explained to the potential jurors during jury selection and now the assembled jury during trial, the burden of proof is on the state. Therefore, the state will be calling witnesses first. Of course, the defense has the right to cross examine them to try to poke holes in their testimony.

The defense is under no obligation to call witnesses and can simply rest after the prosecution finishes presenting evidence. However, they can present their own evidence if they so choose.

Get the news in your inbox. Explore Blockworks newsletters: