Sam Bankman-Fried ‘doubled down’ by buying Binance stake in FTX – US prosecutors

Federal prosecutors say Sam “SBF” Bankman-Fried “doubled down” on the use of customer funds when he bought Binance's $2 billion in FTX in 2021. Attorneys for the U.S. government said Banman-Fried paid for the purchase with money from FTX customers. .

Prosecutors will make closing arguments on November 1 in New York's Southern District Court for Bankman-Fried's trial, which has been ongoing since October 3. In the case, jurors reportedly heard from Assistant U.S. Attorney Nicholas Ross:

“The defendant had a choice: come plain or double? It has doubled. Here's how it doubles. Used customer funds to buy back FTX stock from Binance. […] It cost $2 billion.

In 2019, Binance invested in FTX through a strategic partnership. Two years later, in 2021, Bankman-Fried sought to buy FTX shares, paying the competitor $2.1 billion in Binance's BUSD stablecoin and FTX Token (FTT).

In addition, prosecutors said FTX made other payments and purchases with client funds, including millions of dollars in political donations, luxury real estate in the Bahamas and venture capital investments.

“He spends on K5 — here's a payment document, signed by the defendant. Nishad Singh said it was a bad idea. The guy who ran K5 hung out with famous people,” said Ross, who runs K5 Ventures, a venture capital fund focused on early-stage startups.

The components of the K5 By 2022, they have received a $700 million investment from FTX. FTX's sister company, Alameda Research, has invested $300 million in K5 Global. According to prosecutors, FTX customer deposits were the source of the funds. Russ continued:

“The defendant knew that Alameda could not pay his debts. Nishad saw the huge hole and got scared. The defendant, not much. He agreed. He wanted to use the money. He used the money. He used to be arrogant,” he said.

Bankuman-Fried's defense argued that FTX's own funds — whose revenue is expected to rise from $89 million in 2020 to $1.02 billion in 2021 — were used for venture investments, political contributions and property purchases. According to the defense team, the $8 billion difference between FTX and Alameda Research was caused by Alameda's risk management and trading errors.

Bankman-Fried faces seven counts of fraud and conspiracy to defraud and could face up to 115 years in prison if convicted. The defense is expected to begin closing arguments on Nov. 1 before the jury makes a final verdict.

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