Re-enacting the dramatic second week of the Sam Bankman-Fried landmark fraud trial

From FTX founder Sam Bankman-Fried's attempt to raise funds for his company by using the identities of Thai prostitutes to liquidate his crypto accounts, the second week of Bankman-Fried's criminal trial marked the disgraced “king of crypto.”

The co-founder of FTX came clean

The week began with FTX co-founder Gary Wang ending his time on the witness stand after admitting that he issued “exclusive rights” in the FTX codename specifically to sister company Alameda Research.

Bankman-Fried's defense, who testified in a cooperation agreement with the U.S. government, made it a point to suggest that Wang might be biased in his answers by thinking that he would be subject to a penalty with every cross-examination he gave. However, prosecutors objected, citing that Wang had given them information before obtaining a cooperation agreement.

The former CEO of Alameda gave a convincing testimony

Shortly after Wang concluded his cross-examination, former Alameda CEO Caroline Ellison took the stand as the prosecution's star witness. In her testimony, she stated that Banman-Fried “directed” her to falsify numerous accounting records in order to make FTX and Alameda more attractive to investors without informing FTX and Alameda of the theft of FTX's client funds. Similarly, Ellison and Bankman-Fried put together several spreadsheets that attempt to predict the chances of Alameda and FTX failing.

Ellison said she felt “unexperienced” when she became Alameda's CEO.

When Ellison tried to quit months before Alameda and FTX went under, Bankman-Fried stopped her and told her it was “very important” to do so.

Prostitutes, bribery and the royal family of Saudi Arabia

According to Ellison's explosive evidence, Banman-Fried began creating fake accounts on OKX and Huobi that appeared to belong to Thai prostitutes in order to control their $1 billion in frozen accounts. However, when the plan failed, Bahnmann-Fried began bribing Chinese government officials. Alison Bankman-Fried revealed that an FTX employee who was concerned about the bribery scheme “shut the fk up!”

In another twist, the founder of the fallen FTX tried to raise money from Saudi Arabia's crown prince, Mohammed bin Salman Al Saud, as his crypto empire struggles to take off in mid-2022. However, these attempts failed, and FTX finally collapsed in November 2022.

Bankman-Fried worried about the optics

Equally significant. Ellison painted Bahnmann-Fried with an intense focus on the image, even though he was “slackly” dressed. According to Ellison, Bankman-Fried believed that his unkempt hair was “very valuable” and “an important part of FTX's narrative and image.” What's more, he said, he received “significant bonuses” during his previous employment at Jane Street Capital, a proprietary trading firm.

Ellison Bankman-Fried then described Twitter as “a valuable way to help generate leads and control the narrative around FTX.” Additionally, the former Alameda CEO alleged that Banman-Fried switched from driving a luxury vehicle to a Toyota Corolla to make it look “better for his image.”

Bankman-Fried was concerned when a Bloomberg article criticized the close relationship between Alameda Research and FTX, saying the companies “need to be more careful to avoid any bad publicity.” In the year In the fall of 2022, Bankman-Fried changed the names of various related investment entities in an attempt to distinguish them from “associations with Alameda.”

Ellison's romance with Bankman-Fried was “uneven.”

Another fascinating part of Ellison's testimony came when she discussed her romantic relationship with the founder of FTX.

In an on-again, off-again relationship for several years, Ellison told jurors she shared her feelings about the “personal texts” with her then-boyfriend. In them, Ellison discussed feelings of “unhappiness” regarding the two's relationship, including “feelings at the severance of our personal and professional relationship.”

Ellison said the dynamic made her “feel bad” and that he was an “equal partner” in their relationship. The two split for the last time in mid-2022.

The former Alameda CEO later testified that her new boyfriend, a former FTX/Alameda employee, was present when the FBI raided her home, according to their investigation.

At one point, prosecutor Banman-Fried said during Ellison's testimony, he “laughed, visibly shook his head and scoffed.” The accused accused the prosecution of trying to paint him as a “very dirty man”.

Ellison broke down on the witness stand

The former Alameda CEO wiped away tears as she recalled her “overwhelming relief” when FTX finally failed.

In the year In a message to Bankman-Fried around November 7, 2022, Ellison wrote that she had a “growing dread of this day,” which she said was “weighing” on her.

“… It feels so good just to be done with everything,” she wrote.

Although she recalled that it was “the worst week” of her life, she was relieved that she “couldn't lie anymore” and that she was “starting to take responsibility” for her crimes.

BlockFi founder testifies.

Zach Prince, the founder of the digital asset lending company, began and ended his testimony at Bankman-Fried Friday in Manhattan federal court.

According to Prince, BlockFi will begin lending to FTX “around the end of 2020 or the first half of 2021,” and FTX lending has been increasing over time. When FTX defaulted on loans and filed for bankruptcy in early November 2022, BlockFi was soon forced to follow suit.

Prince said BlockFi lost “a little over $1 billion” on FTX itself, which includes $650 million in unpaid loans and $350 million in customer funds. Had BlockFi known the truth about FTX and Alameda's funds, Prince said his company “probably wouldn't have loaned to them in the first place.”

Bankman-Fried shook his head during several moments of Prince's testimony. His parents, Stanford Law School professors Joseph Bankman and Barbara Fried, attended the trial every day. If convicted, Bankman-Fried could face up to 110 years in federal prison.