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: Caroline Ellison’s cross-examination is officially underway after a bit of a hectic direct examination. On Wednesday, Ellison alleged bribes to Chinese officials, fake balance sheets, and a careful approach to written communication for fear of “legal trouble.” Read more here.

5:40 pm ET: And that’s a wrap…on Ellison

Ellison’s testimony is over, which elicited surprise out of the courtroom as many expected her testimony to last throughout Thursday and even possibly through Friday.

Cohen’s cross-examination of Ellison continued after lunch but was mostly retreaded ground, with Cohen bringing up the seven alternative balance sheets that Ellison alleges Bankman-Fried requested.

Other topics included the infamous “things Sam is freaking out about” list and the potential investment from a Saudi prince — did we move on from this too quickly? — and the relationship between crypto trading firm Modulo and Alameda. SBF invested in Modulo, which is run by former Jane Street employees (and another ex-girlfriend of his).

“Didn’t part of you want to crush them?” Cohen asked Ellison, referring to Modulo. Ellison confirmed she did.

Ellison admitted to “wrongdoing” at the Alameda all-hands meeting back on Nov. 9 when pressed by Cohen.

Prosecutor Sassoon once again brought up the meeting when she took over redirect after the defense rested.

Ellison said she “was asked many follow ups” by Alameda employees at the meeting, which was later revealed to be attended by 25 people. Ellison told her subordinates that she, Bankman-Fried, Gary Wang, Nishad Singh were aware of Alameda borrowing FTX funds and that it was Bankman-Fried’s decision to do so. What a sigh of relief that must have been for Ellison, who admitted how guilty she felt about lying when she was on the stand Wednesday.

“I never liked misleading my employees…but I felt trapped in the summer of 2022,” Ellison said. But now that FTX was already crumbling and would go bankrupt in just two days, she explained she felt more free to disclose the truth.

Ellison was excused shortly after this, and the government then called former Alameda software engineer Christian Drappi to the stand.

Before he was called, it was revealed that the government would be playing six clips of — you guessed it! — the aforementioned all-hands meeting.

Drappi, on the stand, gave the courtroom a sneak peek into what it was like to work for Alameda in the moments leading up to what we now know as the beginning of the end of both Alameda and FTX. He referred to Ellison as “sunken” and said that the in-person attendees (15, to be exact) gathered in a circle around the CEO, who was on a bean bag.

“She did not display confident body language,” Drappi testified, adding that she was “kind of slouching.”

As an added bonus, the Alameda employee who recorded the all-hands meeting had been employed by the soon-to-be bankrupt firm for — drumroll, please — three days.

To sum up, Ellison tells her employees that Alameda had sought open term loans to fund illiquid investments. To pay back those loans, Alameda doubled up and borrowed from FTX customers, she further explained.

Alameda employees at the time, including Drappi, are heard on the recording asking Ellison questions about whether there was a plan to pay back FTX customers, what the illiquid investments were, and which people were in the know about this “wrongdoing,” as Ellison described in her testimony.

Ellison’s responses to her employees were marked by nervous laughter, a lot of ‘likes,’ and a lot of ‘ums.’

BlockFi’s ex-CEO Zac Prince is in the building. Or, rather, on the stand. His testimony, which began late Thursday, is expected to pick back up on Friday morning.

In the roughly eight minutes prosecutor Nicholas Roos had with Prince, the jury was informed that Alameda owed BlockFi, a crypto lender, $650 million at the time Alameda and FTX collapsed.

“Because of our lending to Alameda” but also “FTX exposure” BlockFi was forced into bankruptcy,” Prince testified

1:10 pm ET — The spreadsheets return

Caroline Ellison, ex-Alameda Research CEO and the on-again-off-again girlfriend of Sam Bankman-Fried, remained on the stand Thursday. Defense attorney Mark Cohen got to start his cross examination of the government’s emerging star witness on the seventh day of trial after being cut off by Judge Lewis Kaplan on Wednesday afternoon.

There were several revelations worth noting.

Ellison testified about a particular Google document she wrote before the collapse of FTX and Alameda. She had noted that she and Sam Trabucco — who was co-CEO of Alameda before he “took a step back” at the end of 2021 and eventually resigned in the summer of 2022 — weren’t the best managers with respect to pushing their employees to be better.

Cohen was also able to establish that Bankman-Fried wasn’t always looking over Ellison’s shoulder at Alameda, bolstering the defense’s argument that perhaps he wasn’t as involved in the day-to-day decisions as the government claims he was.

“There were times when” Bankman-Fried wouldn’t be paying much attention to Alameda, Ellison said.

Cohen also zoomed in on the previously-mentioned bug in Alameda’s code that overstated its fiat liability to FTX by roughly $8 billion. Ellison confirmed that after the bug was fixed sometime in June 2022, Alameda’s net asset value (NAV) was positive.

What Cohen didn’t get Ellison to admit was that Alameda was, in fact, solvent at that time. This was no doubt a strategy to portray Alameda in a decent position. Ellison didn’t answer yes or no to the question, saying it depended on market conditions.

Alameda’s balance sheets were also a popular topic of questioning for the government during its direct examination on Wednesday.

Ellison referred to many of the balance sheets she sent to Genesis and other third party lenders as “dishonest.” Bankman-Fried asked her to prepare seven different alternative balance sheets to send to lenders that portrayed Alameda’s financial condition in a better light, she testified Wednesday.

Cohen inquired about the quarterly balance sheets Ellison prepared in 2021. Ellison responded that she didn’t find those misleading, unlike the ones she’d prepare and send to lenders later.

There were a total of three sidebars, each one wearing on the patience of Judge Kaplan. When the defense asked for a second sidebar at around 9:50 am ET, less than 20 minutes into the start of the day, the judge shook his head, visibly exasperated.

“Let’s try to reduce these sidebars,” the judge said.

Even before the sidebar bonanza, Cohen’s start was decidedly unusual, even by Kaplan’s standards. Bankman-Fried’s lead defense attorney started by asking about Ellison’s cooperation agreement with the government, which the judge found to be quite unusual.

“In almost thirty years…most cross examiners have ended with what you just did,” Kaplan said.

Cohen’s response? He was just “trying to switch it up.”

12:40 pm ET: A review of the defense

Being a lawyer seems tough. Now that we’re on day seven, we’re kind of court experts. Well, experts when it comes to this courtroom with Judge Lewis Kaplan and this set of lawyers.

Blockworks opinion editor Molly Jane Zuckerman reviewed the defense’s strategy — so far, mind you, it’s only day seven — and found that the defense’s strategy wasn’t as strong as she might have expected prior to her day [visiting] in court.

Throughout the trial so far, there have been moments where the judge has been seen growing slightly frustrated with both the prosecution and the defense. In the defense’s case, it was evident last week when the judge scolded one of Bankman-Fried’s attorneys, Christian Everdell, for being too repetitive.

On Tuesday, however, Judge Kaplan turned his attention to prosecutor Danielle Sassoon.

“A little repetitive,” he warned after the morning break.

Read more: White-collar defense lawyer weighs in on SBF trial: ‘If I had to place a wager…’

Both the prosecution and defense were asked by Kaplan mid-day if they could “try to hold the sidebars to a minimum from now on.”

Additionally, in sidebar conversation (held after Kaplan asked for the sidebars to be held to a minimum) Kaplan had to tell both the prosecution and the defense to “stop interrupting each other.”

He also asked, after a flurry of “midnight” letters in the case — filed by both the prosecution and the defense in relation to topics that could be broached with witnesses on the stand, among other things — the judge seemed to lose his patience with the filings.

“No, no, no, no, no,” Judge Kaplan said. “We’re having a moratorium on late-evening letters.”

The judge’s impatient answer came after prosecutor Danielle Sassoon said she was “weary” of filing a “late-evening letter.”

For those of you intent on learning more about legal strategy, Blockworks reporter Ben Strack chatted with a white-collar lawyer to gauge his thoughts on how the defense and prosecution should approach the trial.

10:00 am ET: Caroline Ellison’s cross-examination really begins

In the four-hour-long direct examination of the former Alameda co-CEO and on-again-off-again Sam Bankman-Fried love interest, Caroline Ellison, a lot of tea was spilled.

Specifically, she alleged Chinese bribes using Thai sex workers, and that Genesis reportedly requested a return of $500 million due to potential concerns in the summer of 2022, before the bankruptcy filing in January 2023. Moreover, former executives at FTX are said to have embraced a culture of secrecy in hopes of avoiding, well, a trial. Guess that idea didn’t pan out.

Read more: SBF demanded 7 versions of Alameda’s balance sheet, Ellison testifies

Let’s go over some highlights that may have been overlooked yesterday.

Ellison alleges that SBF “said that he wanted FTX to have the image of being a, you know, exciting, innovative place to trade on, similar to offshore exchanges, but also being safe, reliable, audited, and highly regulated, like other US exchanges.”

If what Ellison, FTX co-founder Gary Wang and former FTX employee Adam Yedidia have said about FTX so far during this trial has any ounce of truth, then the key word there is “image.”

Bankman-Fried, Ellison alleges, “always directed us to be careful about what we put in writing” so that they wouldn’t “get in legal trouble.” Boy, do we have news for you, Sam…

Ah, and SBF’s Toyota Corolla got another mention in testimony yesterday. Specifically, Ellison alleges that she and Bankman-Fried were both originally “assigned luxury company cars” but then SBF swapped to a Corolla and Ellison got a Civic, because it was better for their images.

Last week, the defense — specifically Chrisitan Everdell — asked former FTX employee Adam Yedidia if he recalled seeing a Corolla, in an apparent attempt to show that Bankman-Fried didn’t splurge on expensive items.

Ellison also added that personal image was very important to SBF. When asked what Bankman-Fried’s personal appearance looked like in 2022, she said “I would say he looked like he didn’t put a lot of effort into his personal appearance. He dressed sort of sloppily and didn’t cut his hair often.”

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

But actually, Bankman-Fried allegedly believed, “his hair had been very valuable. He said ever since Jane Street, he thought he had gotten higher bonuses because of his hair and that it was an important part of FTX’s narrative and image.” Perhaps that explains the pre-trial haircut.

Another moment worth highlighting was a sidebar that we’re now privy to thanks to the invaluable work of court reporters. According to Wednesday’s Court transcripts, the prosecution complained to Judge Lewis Kaplan and SBF’s lawyer, Mark Cohen, in a sidebar conversation.

Prosecutor Danielle Sassoon alleged that Bankman-Fried “has laughed, visibly shaken his head, and scoffed.” Sassoon was concerned, she said, about the impact it could have on Ellison due to the “history of this relationship, the prior attempts to intimidate her, the power dynamic, their romantic relationship.”

Sassoon, presumably, was referring to the alleged leaking of Ellison’s diary to a New York Times reporter. Bankman-Fried was accused of the leak by the prosecution, and his bail was revoked just months before the trial started.

In response, the judge admitted that he had not been looking for a response from Bankman-Fried and therefore did not see anything. However, he directed Cohen to talk to SBF “and if he’s doing anything, it should stop; and if he’s not, then no harm, no foul.”

There were actually so many sidebars yesterday that the Judge — at the end of the day Wednesday — instructed the lawyers to “hold the sidebars to a minimum from now on.”

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