Sam Bankman-Fried trial live updates: Caroline Ellison to testify next week

On Thursday, Wang confessed to committing a litany of crimes alongside Sam Bankman-Fried

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Artwork by Crystal Le

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FTX co-founder Sam Bankman-Fried faces seven federal charges in a criminal trial taking place in Manhattan. The former crypto exchange exec is accused of misappropriating billions of dollars of customer funds for real estate, donations, political contributions and investments. 

The current state of play: Both the prosecution and the defense made their opening statements, and the court heard testimony about SBF’s paddle tennis meeting and the ‘special privileges’ granted to the FTX’s closely-linked fund, Alameda Research.


3:35 pm ET: And that’s a wrap… on week one

Gary Wang stayed on the stand to close out Friday, which saw Judge Lewis Kaplan grow visibly irritated with the defense at the end of the day. 

Thankfully, court wrapped a little early, so maybe a fresh start can be made on Tuesday. 

Oh, and about Tuesday: changes are already being made. 

Caroline Ellison is expected to take the stand once Wang’s cross-examination is complete. It looks like both the testimony of BlockFi’s Zac Prince and Elan Dekel was pushed. It’s unclear, at this point, when or if the prosecution will call them as witnesses. 

Anyway, back to Gary. 

We’ve now heard that Alameda, according to testimonies from Wang and Yedidia, was deep in the financial hole. Deep, as in Alameda Research had an $11 billion fiat liability to FTX and had the ability to withdraw unlimited funds thanks to Wang, Bankman-Fried and Singh.

After the $11 billion hole was uncovered in June 2022, Wang and SBF met (sounds like this meeting was not, sadly, held on a paddle-tennis court) and Bankman-Fried wanted to have Alameda return the money it borrowed to lenders — specifically mentioning Genesis.

The money that would be used to pay back the lenders? According to Wang, those funds would’ve had to come from FTX customer assets.

Fast forward to September — just a couple months before FTX’s collapse — when Bankman-Fried seeks to shut down Alameda ahead of a Bloomberg article that would prove Alameda and FTX were deeply interconnected. 

Alameda also operated as a market maker for FTX, but to skirt that, Bankman-Fried debated turning to another ex-girlfriend, Xiaoyun Zhang, who operated a crypto-trading firm with Duncan Rhenigans-Yoo. 

SBF, who held a 16% stake in the firm called Modulo, floated that firm as a possible market maker replacement for Alameda. Both Zhang and Rhenigans-Yoo are ex-Jane Street employees, as is Bankman-Fried.

Wang testified that he learned from former Alameda CEO Ellison that Alameda borrowed $14 billion from FTX, meaning it couldn’t be shut down. 

Now, let’s move to November 2022. 

On Nov. 7, Bankman-Fried infamously tweeted (back when it was called Twitter, not X) that “FTX is fine. Assets are fine.”

Those assets, Wang testified Friday, were not fine. A few days later, FTX sought protection from the courts.

Wang said he and Bankman-Fried traveled to the offices of the Bahamas Securities Commission. During the drive, Bankman-Fried asked Wang to transfer the FTX assets to the Bahamian liquidators. Wang testified that the Bahamian regulators would be more deferential than, say, the Americans. 

Days later, Wang was back in the US and meeting with US officials. 

Molly Jane Zuckerman contributed to reporting.

2:00 pm ET: From the courtroom floor

Don’t forget to tune into the latest episode of Empire to hear senior reporter Casey Wagner spill the tea on the courtroom drama. Here’s some of our favorite highlights: 

While Casey has to wake up at four in the morning to snag a seat in the gallery, one juror with a front row seat has been taking a nap this week. 

They were seen dozing off on Wednesday and Thursday as the prosecution got into the nitty gritty of futures trading and wire deposits. In the juror’s defense, it was pretty dry. 

Judge Kaplan tells the defense they are on thin ice. 

After a particularly painful cross-examination Thursday (during which Sam’s mother Barbara Fried was seen with her head bowed and hands over her face), Kaplan told SBF attorney Christian Everdell he was “wearing out [his] welcome on repetition.” 

SBF’s latest defense strategy: He drove a Toyota Corolla. 

Sam’s attorney, in an apparent effort to prove the FTX founder did not spend frivolously, pressed witness Adam Yedidia, former friend and employee at FTX, on what kind of car Sam drove. When Adam said he did not recall, Everdell asked if he had ever seen a Toyota Corolla around. 

“I don’t think there’s anyone in the room who hasn’t seen one, so let’s get on with it,” Kaplan interjected.

12:27 pm ET: “Fake” numbers and Alameda privileges

We have your lunch break covered — for court updates, anyway.

Wang’s testimony continues, revealing that — back in 2019 — Bankman-Fried responded to a tweet alleging “Alameda is a liquidity provider on FTX but their account is just like everyone else’s.” 

Meanwhile, at the FTX offices on the same day — July 31, 2019 — Alameda was granted the negative balance feature, meaning it could withdraw funds even if the balance was, well, negative.

Oh, and Wang reiterated that SBF specifically asked for the coding that enabled the negative feature.

The accounts with access to this feature included two Alameda accounts, the FTT sub-account, and two more bookkeeping accounts. In other words, Alameda was the only one with access to these special privileges.

SBF, according to Wang, “never” wanted Alameda’s account liquidated.

And that backstop or insurance fund that FTX once advertised? The numbers were “fake,” according to Wang. There wasn’t $5 million available or 5.25 million FTT. The amounts in those accounts were “lower,” he explained.

The backstop funds didn’t always have enough to cover large losses on the FTX platform, so that they wouldn’t impact the average Joe. 

The testimony echoes threads of what Wang told the court yesterday. Namely, that Alameda had a line of credit from FTX in the billions — “with a B,” he clarified just in case.

11:00 am ET: Up next in the Sam Bankman-Fried trial we have…

When the prosecution finishes with Wang, the defense will have the opportunity to cross-examine. Then, it’s back to the government for final questions and next witnesses. 

Taking the stand: Zac Prince, founder and CEO of BlockFi, and Elan Dekel, vice president of product at Pinecone. The latter is a management system company that works with startups, according to LinkedIn

Judge Kaplan noted earlier this week that Friday’s court session will finish early, likely around 3 pm ET. If both sides can’t get through Prince and Dekel by the end of today, they will resume questioning on Tuesday. (Monday is a court holiday.)

Prince is scheduled to go first. Here’s what you need to know about Prince, BlockFi and the relationships to FTX and Alameda:

BlockFi declared bankruptcy in late November 2022, weeks after FTX fell apart. Back in July, a committee of unsecured BlockFi creditors released a 92-page investigation into the firm’s collapse. The report detailed not only the relationship between the former lender and crypto hedge fund but also that the risk management team warned Prince of potential risks related to the Alameda loans.

A 2021 memo from BlockFi’s credit risk team cautioned that Alameda had “wrong-way risk, had unaudited financials, relied on illiquid tokens, and was offering volatile collateral.” 

According to the report, former Chief Risk Officer Rene van Kesteren was “uncomfortable with the risk profile presented by additional FTT as collateral.” 

However, Prince reportedly “expressed interest” in doing more business with Alameda. Per the report, he even “pushed to increase exposure to (and revenue from) Alameda by allowing Alameda to use FTT as collateral, despite concerns from the risk management team regarding its illiquidity.”

What do we know about Dekel? If we’re being honest, not much. 

While LinkedIn gives an idea of what Dekel does, it’s not immediately clear why the prosecution wants him on the stand. His name was mentioned in the list given earlier this week by the prosecution of names who may be called to the stand or just mentioned throughout the trial.

It’s unclear, however, when the witnesses will be called to the stand. It all depends on how long the prosecution takes to finish questioning and how long Bankman-Fried’s team will conduct their cross-examination. 

Yesterday, defense team attorney Christian Everdell spent about an hour and ten minutes on his cross-examination of Yedidia. 

The prosecution told the judge that “we just need to reassess whether [Prince and Dekel] will be Tuesday witnesses or whether, given the fact that we’re now into the next week, we need to make a change.”

9:30 am ET: Gary Wang round two

FTX co-founder Gary Wang is back on the stand today to follow up on his bombshell testimony from yesterday.

ICYMI: Wang told the court that he had committed a litany of crimes alongside Bankman-Fried, former Alameda CEO (and romantic partner) Caroline Ellison, and FTX’s former director of engineering Nishad Singh. 

Wang also informed the court that Alameda was granted “special privileges,” at SBF’s direction. 

While Wang had an equity stake in FTX and co-owned Alameda, he said that when there were disagreements, “in the end, it was Sam’s decision to make.”

Wang is scheduled for cross-examination later this morning, during which the defense will have the opportunity to question him. So far, only prosecutors have asked Wang questions. 

Two other witnesses testified yesterday, Paradigm’s Matt Huang, and former SBF roommate and FTX employee, Adam Yedidia. 

Of the three testimonies yesterday, Huang’s didn’t present any shocking revelations. He told the court that he tried to push for a governance model for FTX. However, Bankman-Fried seemed “resistant” to grant investors a board seat. While SBF did mention to Huang that a board of directors was a potential future consideration, such a plan never came to fruition.

Yedidia, who initially took the stand on Wednesday, was back on Thursday to finish both his testimony and cross-examination. The latter part, as Blockworks reported yesterday, saw sleepy jurors, a lot of objections and a judge’s warning. 

There were some interesting soundbites, however, with Yedidia recounting a meeting he had with SBF in June 2022. Bankman-Fried, at a paddle tennis court (what a great meeting spot), told Yedidia that FTX was “bulletproof last year” but not “bulletproof” in 2022, and expected that it could take six months to three years to become “bulletproof” again. 

Narrator’s voice: FTX fell roughly five months later.

Following the conversation, SBF reportedly became “worried or nervous.”

This is a developing story.

Blockworks reporters Casey Wagner and James Cirrone are covering Sam Bankman-Fried’s trial from the courtroom in New York. Follow for instant trial updates on their X accounts.


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