Sam Bankman-Fried is put to the test: a week’s review

Luxury real estate, political donations, investments and magazine covers. This was the life of Sam Bankman-Fried a year ago, Assistant US Attorney Thane Ren said during the opening statements of the world famous crypto trial.

“It's all built on lies,” continued Rehn, co-founder of Alameda Research and FTX lobbying in Washington to get richer and increase influence. He described his client as an entrepreneur who made a mistake during a time of accelerated growth. “It wasn't theft,” he told jurors.

In the gallery, among reporters and lawyers, were the defendant's parents, Joseph Bankman and Barbara Fried. While Joseph had rarely smiled in the past few days, Barbara had stared at her son for hours in the courtroom.

Four witnesses testified this week at a trial in US District Court in Manhattan. The list includes a French businessman, an investor in FTX, along with Adam Yedidia and Gary Wang, former close friends of Bankman-Fried.

The highlights of the Sam Bankman-Fried test are covered on Cointelegraph ground.

Mark Julliard

The prosecution's first witness to the jury was a cocoa merchant from Paris who now lives in London. In the year In November 2022, one of the victims of the FTX crash, Mark Juilliard, told the jury that he had four bitcoins on FTX, worth nearly $100,000 at the time. They recalled feeling anxious after trying to withdraw money without getting a refund.

On FTX, I never trade futures. Bitcoin shares were a big part of Juilliard's savings. Prosecutors used his testimony to show how customers who trusted FTX money were harmed after the events of last year.

Bankuman-Fried's defense tried to mitigate the prosecutor's argument by saying that the trader was a licensed professional in London and did not make decisions based on celebrities. Cohen says he has no problem hiring Tom Brady to run an ad for FTX.

Adam Yedidia

Adam Yedidia and Bankman-Fried became friends at the Massachusetts Institute of Technology (MIT). Before joining FTX as a developer in January 2021, Yedidia worked briefly as an intern at Alameda in 2017. He was one of the residents of FTX's $35 million luxury estate in the Bahamas.

According to the testimony, the fiat funds were received from customers by FTX through Alameda subsidiary North Dimension. Every deposit made by an FTX customer was considered a debt from Alameda to FTX. At the time of the exchange's collapse, this liability reached $8 billion.

Yedidia found out about the billionaire's debt between his companies months before the bankruptcy. Referring to Alameda's liability, “Are things okay?” Yedidia asked Bankman-Fried on the paddle tennis court. He did not get a positive response. “We're not bulletproof anymore,” Bankmann-Fried said, adding that it takes six months to three years for the companies to settle their accounts. “He looked shocked,” Yedidia recalled.

By the fall of November, Yedidia had seen FTX dominate its competitors Binance and Coinbase. He even spent his millionaire bonus to get a 5% stake in the company.

“I trust Sam and Caroline and everyone else in Alameda to handle the situation.”

Yedidia resigned in November 2022 after discovering that Alameda was using funds sent from FTX clients to pay off debts. It has been cooperating with the US Department of Justice since last year.

Matthew Huang

Venture capital firm founder Matthew Huang has invested a total of $278 million in two funding rounds between 2021 and 2022.

According to Huang, the firm was unaware of the financial merger between FTX and Alameda, as well as Alameda's exclusive rights to the crypto exchange. According to evidence prosecutors brought from the FTX code and database, the Alameda was exempt from the FTX liquid engine, which closes the areas in liquid danger.

Below Independence, Alameda was able to leverage its position and maintain a negative balance with FTX.

Huang admitted that he did not do due diligence on FTX, but instead relied on information provided by Bankman-Fried.

Day 3 of the #SBF trial, here we are bright and early! ☀️ pic.twitter.com/PQ1rQV38Px

— Cointelegraph (@Cointelegraph) October 5, 2023

According to Huang, Bahnmann-Fried was “strongly opposed” to the idea of ​​having investors on FTX's board of directors, but promised to build one and appoint experienced executives.

Gary Wang

Wang and Bankman-Fried, the founders of two once-famous companies, find themselves on opposite sides of the court this week. “I'm here because I committed wire fraud, securities fraud and commodity fraud,” he told jurors. Former Director of Engineering.

“I'm here because I committed wire fraud, securities fraud, and commodity fraud.”

Wang is considered a key witness in the case. The investigation by the prosecutors began on October 5 and should be completed on October 10, the second week of the trial will begin. Wang demonstrates in depth how FTX and Alameda work with the Bankman-Fried Guide.

In the year In 2019, a few months after FTX was founded, Alameda was granted exclusive rights to the FTX code, Wang said. Through screenshots of FTX's database and code on GitHub, prosecutors showed Alameda had an unlimited negative balance, a $65 billion special line of credit and was free of interest.

Bankuman-Fried's defense counsel argued that these privileges were similar to those received by other market makers on FTX. The defense also pointed out that Alameda was the main market maker on FTX; Therefore, the role of having the ability to have a negative balance was important.

According to Wang, the financial integration between the companies has grown over time. In the year In 2020, Bankman-Fried Wang ordered Alameda's negative balance to remain in FTX earnings. Alameda's negative balance increased, and so did its line of credit with FTX. Alameda's debt at the end of 2021 was $3 billion, up from $300 million in 2020.

Asked why he supports Alameda's rights, Wang replied, “I believe in the judgment.”

Prosecutors have highlighted the exploitation of Mobile Coin (MOB) in 2021. In an attempt to hide the loss from FTX investors, Banman-Fried told Wang and Ellison to add the millionaire deficit to Alameda's balance sheet instead of placing it on FTX Financial.

Another key revelation is FTX's use of insurance fund data, Wang said.

In the months leading up to the FTX collapse, Banman-Fried, Wang and Singh discussed the possibility of closing Alameda and replacing it with other market makers. At the time, however, the company's debt to FTX was $14 billion. In November 2022, Alameda ceased operations.

Wang is also cooperating with prosecutors. His testimony will continue on October 10. Caroline Ellison will be heard on the same day.

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