Here’s what you missed during week 2 of the Sam Bankman-Fried trial

The government continues to assert that Sam Bankman-Fried was the ringleader of FTX and Alameda

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Artwork by Crystal Le

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What do Chinese bribes, Saudi Crown Prince Mohammed Bin Salman, Toyota Corollas, Thai sex workers, and a lack of haircuts all have in common? Sam Bankman-Fried, allegedly.

Bankman-Fried, who faces seven counts of fraud and conspiracy related to the collapse of his companies Alameda Research and FTX, wrapped up his second week in court Friday afternoon in Manhattan.

The jury trial is scheduled to last six weeks, although prosecutors might be slightly ahead of schedule, they told the court Friday. The government expects to rest its case on Oct. 26 – one day earlier than planned – perhaps thanks to the defense taking just half a day on their cross-examination of ex-Alameda CEO Caroline Ellison. 

During the second week, four government witnesses testified. This has allowed the prosecution to start illustrating the alleged inner workings of Bankman-Fried’s now-tumbled empire to the jury. Here’s what you missed during the last four days of trial: 

Who knew what and when did they know it? 

The question of who exactly knew what was going on at Alameda and FTX — and, importantly, when they discovered it — is essential in the government’s quest to prove that Bankman-Fried and his top executives conspired to commit fraud. 

One, and perhaps the only, win the defense got when cross-examining Ellison Thursday was when the ex-CEO admitted that she told prosecutors early on that at one point, Bankman-Fried may not have known exactly where fiat FTX customer deposits were being held. 

“I recalled saying that…he might not know this was happening,” Ellison said on the stand, referring to what she may have told prosecutors during a December 2022 meeting. “Something like that.” 

Read more: 5 hidden gems from Caroline Ellison’s FTX testimony you might’ve missed

Defense lead counsel Mark Cohen was specifically wondering if Ellison had spilled to the government that Bankman-Fried may have been unaware that FTX customer fiat wire transfers were still going to the Alameda-controlled “North Dimension” bank account, even after the exchange made a switch. 

Some legacy FTX customers still transferred funds to North Dimension even after exchange operators had created an account under the FTX name, Ellison said. 

The government has maintained that Bankman-Fried was the ringleader at Alameda, even though on paper it appeared to be co-CEOs Caroline Ellison and Sam Trabucco. Ex-employees have backed up this narrative. 

“[Bankman-Fried maintained direct communication with Alameda employees,” former software engineer Christian Drappi told the court Thursday. 

Bankman-Fried still had access to trading data and weighed in on big decisions even after he publicly stepped away from the trading firm, Drappi added. 

Caroline spent a lot of time “very stressed out” 

Between the allegations of bribes to Chinese officials and taking nearly a minute to identify her ex-boyfriend and former boss in the courtroom, it’s no wonder Ellison’s days-long testimony has ruled headlines this week. 

Most of her time at Alameda was spent under pressure, she told jurors Wednesday. She uttered the phrase “very stressed out” three separate times during her testimony. Her fears stemmed from Alameda’s balance sheet, which became more troubling by the day as its liabilities increased throughout 2022, she said. 

Ellison testified that at Bankman-Fried’s direction, she created seven false, or, as Bankman-Fried called them, “alternative,” balance sheets to send over to Genesis. Given worsening market conditions, Matt Ballensweig, head of lending at Genesis, asked for an update on Alameda’s financials. 

“I was very stressed out,” Ellison said about the request, marking the second time she mentioned her tense mental state. 

“I wanted to reassure them about Alameda’s financial state, but the facts were that Alameda was in a very bad situation… we had been borrowing increasing amounts of money from FTX customers,” Ellison added. 

Read more: Sam Bankman-Fried ‘lied to the world,’ prosecution posits in opening statement

“I don’t think we can send this to Genesis,” Ellison told Bankman-Fried after she had crunched the real numbers, which tallied Alameda’s total liabilities at more than $14 billion in June 2022. 

The pair picked one of the seven aforementioned “alternative” balance sheets to share with Ballensweig instead, Ellison testified. 

Ballensweig later told Ellison and Bankman-Fried that Genesis needed $500 million repaid from their loans. Genesis was in a dire situation, Ellison testified. 

“Genesis really needed the money and implied that they might go under or have to default on some loans if they didn’t get it,” Ellison told the jury. 

Genesis declared bankruptcy in January, roughly two months after FTX and Alameda did the same. 

Not just the Ellison show

The week was undoubtedly dominated by the testimony of the ex-Alameda CEO, but three other witnesses also took the stand.

One such witness, an ex-Alameda employee, not only gave insight into what it was like in the final days of the company, but also into the fateful all-hands meeting hosted by Ellison on November 9, 2022.

The government played six audio clips from the meeting, which a former Alameda employee who had worked there less than a week recorded. The defense played one additional clip from the recording during their cross-examination. 

Prior to the clips being played for the court, Drappi set the scene. 

He said that he was “utterly shocked” about the Bankman-Fried tweet in 2022 declaring that Binance was planning to acquire FTX. A plan that would later fall through

“[Ellison told us that FTX] had a shortfall of user funds and that this was caused by Alameda borrowing user funds from FTX to repay its prior loans, and it had used those prior loans to make illiquid investments in various different ventures and just companies,” Drappi testified. 

While delivering this “utterly shocking” news, Ellison was slouched on a bean bag chair in the Hong Kong office, Drappi added.

Read more: Alameda was spending more trading than FTX was making in revenue: Co-founder

In the clips played for the jury, Ellison told Alameda employees that FTX was trying to raise investor money in order to repay customers, a response that raised alarm bells for Drappi. 

“Generally, when a company raises money, it’s about, you know, an exciting, you know, future growth and not to fill a hole in a balance sheet,” he said. 

Also caught on tape, Drappi asked Ellison who knew about all this secret borrowing Alameda had been doing. 

“I’m not even sure if I knew exactly who was aware,” Ellison responded on the recording. 

“Sam [Bankman-Fried], I guess” allowed it, she added. 

Ellison’s demeanor at the all-hands was described by Drappi as being “sunken.” 

She can be heard on the clips laughing, a fact defense was keen to point out, but Drappi testified that he’d classify this as “nervous laughter.” 

“Thanks,” Ellison said after an employee thanked her for her honesty in the final clip, which was played by the defense. 

“I mean, it was kind of fun,” she added, again laughing. 

The government is telling a story, and it’s pretty good 

Rounding out four days of explosive testimony was the government’s final witness of the week: Zac Prince, founder and former CEO of now-bankrupt lending firm BlockFi. 

The jury has heard from FTX customers and ex-employees – and there will be more witnesses from both categories, the government has said – but Prince offers a unique perspective. 

BlockFi not only lent to Alameda, it also kept assets – some of which were on behalf of their own customers – on the FTX exchange. Combined, the values add up to $1 billion, Prince told the jury Friday. His company filed for bankruptcy in November 2022, just over two weeks after FTX and Alameda had themselves filed. 

“Once it became clear that repayment of the Alameda loans and being able to access the funds that we had on FTX was impaired… Our view of the financial health of BlockFi’s business was such that we needed to declare bankruptcy,” Prince testified. 

During roughly an hour of cross-examination on Friday, Bankman-Fried’s attorneys did manage to find some inconsistencies in Prince’s testimony.

Cohen referenced several internal documents at BlockFi where the lenders and their risk team outlined the many risks associated with lending to Alameda. BlockFi never received audited financial statements, Alameda was already over on its credit limit and its posted collateral was volatile, to name a few. 

Still though, Prince maintained that he believes BlockFi would still be running had Alameda and FTX not collapsed. 

“I don’t think BlockFi would have filed for bankruptcy in November of 2022 if the Alameda loans were still in good standing and the funds we had at FTX were accessible,” he said. 

The jury trial continues Monday in Manhattan with the government’s next witnesses, FTX customer Elan Dekel and FBI special agent Richard Busick.


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