<\/p>\n
The third week of former FTX CEO Sam Bankman-Fried just wrapped, bringing the prosecution one step closer to resting their case.<\/p>\n
The government called ten witnesses this week, marking week three the busiest yet and bringing the prosecution\u2019s total count so far to 17 witnesses.\u00a0<\/p>\n
Southern District of New York senior Judge Lewis Kaplan was less than pleased with some of the government\u2019s choices, but held off expressing his frustration until the jury was out of the room.\u00a0<\/p>\n
\u201cThis is a joke,\u201d he told counsel on Oct. 18 after their third witness of the day left the stand. \u201cWe had a witness this morning who knew absolutely nothing\u2026and this afternoon we fly somebody in from Texas to put in documents about [which] he knows nothing or next to nothing.\u201d\u00a0<\/p>\n
Neither the prosecution nor the defense offered an apology to the judge, but the government did appear to pick up the pace later in the afternoon.\u00a0<\/p>\n
The defense is expected to begin their case on Thursday, Oct. 26, a date they tried to push back but which Kaplan insisted they start, as soon as the prosecution rests. As a compromise, the defense is allowed to start presenting their case after the lunch break on Oct. 26.\u00a0<\/p>\n
Former FTX<\/a> head of engineering, Nishad Singh, accounting professor Peter Easton, FBI\u00a0 forensic accountant Paige Owens and former FTX attorney Can Sun had some of the most interesting testimonies. Here\u2019s a recap of what happened in court this week.\u00a0<\/p>\n Former FTX lawyer Can Sun revealed on Thursday that he hopped on Zoom with Apollo Capital back on Nov. 7, 2022 in a last-ditch effort to raise capital to fill their $7 billion hole.\u00a0<\/p>\n In a meeting that same day with Bankman-Fried<\/a>, Sun, Nishad Singh and someone Sun referred to a \u201cJoe\u201d (potentially Bankman-Fried\u2019s father), Bankman-Fried announced that Apollo wouldn\u2019t be handing over any cash until the team could provide a \u201clegal justification\u201d for the missing funds. Sun said he toyed with some potential ideas, but there was no legal reason he could find to explain the hole in the balance sheet.\u00a0<\/p>\n \u201cThere were theoretical arguments, but none of them was supported by the facts,\u201d Sun told the jury.\u00a0<\/p>\n After a long night in the Bahamas, complete with private discussions with both Singh and Bankman-Fried, Singh confirmed Sun\u2019s \u201cgrowing suspicion\u201d that Alameda had taken customer funds. Sun handed in his resignation the next morning.\u00a0<\/p>\n That evening on Nov. 7 had \u201cbasically confirmed my suspicion that had been rising all day that FTX did not have the funds to satisfy customer withdrawals and that they had been misappropriated by Alameda,\u201d Sun said.\u00a0<\/p>\n Singh sang like a bird for the prosecution, following in the footsteps of FTX co-founder Gary Wang and ex-Alameda CEO Caroline Ellison<\/a>. He confessed to his crimes right as he took the stand.\u00a0<\/p>\n When grilled by the government, he backed up Ellison and Wang\u2019s previous statements that said SBF had the \u201cfinal say\u201d with Alameda decisions, despite having both Ellison and ex-co-CEO Sam Trabucco in charge.\u00a0<\/p>\n Read more: <\/strong>Sam Bankman-Fried scores rare victory in Singh cross-examination<\/a><\/p>\n The celebrity endorsement deals \u2014 a focal point for the government so far \u2014 were brought up with Singh confessing that he didn\u2019t know what Kendall and Kris Jenner do, though he was able to define the careers of Katy Perry, Jeff Bezos and Leonardo DiCaprio.<\/p>\n Bankman-Fried allegedly wanted to grow \u201cFTX\u2019s influence\u201d to \u201chelp propel its success\u201d as \u201cendorsement deals and celebrities can promote FTX.\u201d<\/p>\n Read more:<\/strong> Inside the \u2018war room\u2019 at FTX: SBF\u2019s high school buddy takes the stand<\/a><\/p>\n Singh objected to the money being spent, saying that it was \u201creally toxic\u201d to the cultures of Alameda and FTX. He claimed that the team was building a culture where both \u201cpoliticking and social climbing\u201d were not rewarded, \u201c and yet \u201chere [they] were, rewarding people in exorbitant amounts.\u201d<\/p>\n SBF\u2019s high school friend, Singh, pleaded guilty to six federal charges \u2014 including conspiracy to defraud the US by violating campaign finance laws.\u00a0<\/p>\n The current trial is not centered around the political donations made by Bankman-Fried or Singh, prosecutors do intend to target Bankman-Fried for running an alleged \u201cillegal campaign finance scheme,\u201d according to a superseding indictment<\/a> filed in August by US attorney Damian Williams.<\/p>\n However, the topic was broached during Singh\u2019s testimony \u2014 both by prosecutors and the defense.\u00a0<\/p>\n While at FTX, Singh\u2019s name and bank account were used to make some political donations \u2014 though the actual money came from Alameda loans.\u00a0<\/p>\n Singh said he \u201cinitially\u201d cared about the donations and was \u201cinvested\u201d in them, but \u201cfor the majority of them\u2026[his] role was to click a button\u201d and verify \u2014 through his Prime Trust bank account \u2014 that the withdrawals were not fraudulent.<\/p>\n In the government\u2019s opening statements, prosecutor Thane Rehn said that SBF \u201chad [his friends] make political donations in their own names, even though the money came from the defendant.\u201d<\/p>\n However, during cross-examination, Singh admitted to Bankman-Fried\u2019s attorneys<\/a> that he was \u201cnot required\u201d to be the face of the political donations.<\/p>\n Rounding out the prosecution\u2019s case this week were the money experts: a Notre Dame professor and a FBI forensic accountant. With them came even more spreadsheets, but also some revelations the jury probably found alarming, or at least the government hopes.\u00a0<\/p>\n Professor Peter Easton\u2019s findings, which he had collected more than $100,000 to put together, showed a simple conclusion: Alameda and FTX had, in the end, nowhere near enough funds to satisfy what FTX customers were owed<\/a>.\u00a0<\/p>\n Bankman-Fried and his teams\u2019 bookkeeping was shoddy at best, Easton added, pointing to the 47 bank accounts that accepted fiat FTX customer deposits. In terms of cryptocurrency deposits, by the end of October 2022, FTX had only $1.1 billion of the $11.4 billion it owed to exchange customers.\u00a0<\/p>\n Read more:<\/strong> FTX customer money bought SBF\u2019s parents a $16.4M house in the Bahamas, expert says<\/a><\/p>\n Adding to Easton\u2019s damning findings, the government opted to show various slack messages and internal communications between Bankman-Fried and his team in which he directed the transfer of funds to various investments and recipients.\u00a0<\/p>\n Later, the prosecution called on the FBI\u2019s Paige Owens, a CPA specializing in tracing political donation money. Owens corroborated Easton\u2019s work, adding that her analysis showed that Alameda definitely wired money through Ryan Salame<\/a>, former CEO of FTX Digital Markets, to make campaign contributions.\u00a0<\/p>\n Her conclusions, however, depended on the \u201clast in, first out\u201d method, which stipulates that the most recent deposit funds the following withdrawal. The defense countered this basis, asking why, for instance, Owens did not use the \u201clast in, first out\u201d method, which would have resulted in different conclusions about the origins of various transfers.\u00a0<\/p>\n Owens confirmed that \u201clast in, first out\u201d is also a commonly used method for this type of accounting analysis and agreed that yes, it could result in different findings.\u00a0<\/p>\n Bankman-Fried\u2019s team was even successful in finding one example where Owens agreed that it appeared a Political Action Committee donation made by Alameda was actually funded by a deposit from law firm Heller and Robbins, not the North Dimension bank account where customer funds were held.\u00a0<\/p>\n But given that it was already 4:30 pm ET at this point, Kaplan\u2019s preferred adjournment time, it was unclear the jury was following as closely as they had earlier in the day.\u00a0<\/p>\n Throughout the trial, Judge Kaplan has shown a sassier side to his professional handling of the courtroom. Outside of scolding the defense and prosecution for not communicating well enough<\/a>, Kaplan ribbed lawyers from both sides during week three.<\/p>\n During Singh\u2019s testimony on Monday, Oct. 16, he kept referring to the \u201callow negative\u201d feature as a \u201cflag,\u201d prompting Judge Kaplan to ask what kind of flag he was talking about.<\/p>\n \u201cI don\u2019t imagine it\u2019s \u2018Don\u2019t Tread on Me\u2019,\u201d Kaplan said.<\/p>\n Additionally, when Singh was discussing crypto mining, Kaplan sought more clarity.\u00a0<\/p>\n \u201cLet me just interpose another dumb question. When I was your age, mining basically referred to digging in the ground for gold and coal and stuff like that. That\u2019s not what you\u2019re talking about, is it?\u201d he asked.<\/p>\n Kaplan previously issued a moratorium on late-night letter motions after both the defense and prosecution filed a number of papers, so when prosecutor Nicolas Roos misspoke and said that he\u2019d wrap the testimony by 8:30 pm ET instead of 4:30 pm ET, Kaplan shot back that he was \u201cworried\u201d about an 8:30 pm ET finish.<\/p>\n Roos read out on Wednesday a large number of exhibits to put on the court\u2019s record, leading Kaplan to ask Roos if he could \u201crepeat\u201d the 20+ exhibits \u201cbackwards.\u201d<\/p>\n Roos quipped, \u201cthose are my lotto numbers\u201d in return. Kaplan then wished him luck.<\/p>\n A few minutes later, a juror was struggling with a monitor. In return Kaplan said, \u201cif you can get that one fixed, maybe you can work on my PC.\u201d<\/p>\n Christian Everdell, one of the lawyers representing Bankman-Fried, spoke too quickly in front of Kaplan, prompting Kaplan to respond that he listens to \u201c33 RPM records, not 45.\u201d<\/p>\n Read more:<\/strong> The biggest winners from the FTX fiasco? The lawyers, says Santos<\/a><\/p>\n \u201cNobody listens to records,\u201d Kaplan added, leading defense attorney Mark Cohen to say that he remembers 33 RPM records (which were first introduced in 1948, according to Victrola<\/a>).<\/p>\n Cohen and Kaplan shared another moment near the end of Wednesday as the defense counsel said he was looking at the Judge\u2019s calendar to plot when the defense could possibly put on a case. Cohen assured Kaplan that he carries the calendar with him \u201call the time.\u201d<\/p>\n \u201cI\u2019ll treasure that thought,\u201d Kaplan said.<\/p>\n And, finally, Kaplan pushed the lawyers to work out a compromise adding, \u201cIf you can manage that, I\u2019m going to send you to the Middle East.\u201d<\/p>\n Read more:<\/strong> Here\u2019s what you missed during week 2 of the Sam Bankman-Fried trial<\/a><\/p>\n \u201cThat\u2019s above my pay rate, your Honor,\u201d Cohen said in return.<\/p>\n Don\u2019t miss the next big story \u2013 join our\u00a0free daily newsletter<\/a>.<\/strong><\/p>\nApollo said \u2018no, thanks\u2019 after seeing FTX\u2019s $7 billion hole<\/h2>\n
No mandatory political donations here\u00a0<\/h2>\n
The forensic accountants bring some surprising spice\u00a0<\/h2>\n
Judge Kaplan\u2019s sass continues<\/h2>\n
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