Sam Bankman Fried, the onetime cryptocurrency mogul, constructed his FTX crypto alternate right into a “pyramid of deceit” resting on a “basis of lies and false guarantees,” a federal prosecutor stated on Wednesday on the legal fraud trial.
Mr. Bankman-Fried’s lawyer countered that his 31-year-old consumer was merely a “math nerd” who could have made some dangerous enterprise choices, however had dedicated no crimes and by no means instructed anybody to interrupt the regulation.
These divergent messages shaped the core of the closing arguments in Mr. Bankman-Fried’s trial on Wednesday in a Manhattan courtroom. Nicolas Roos, the prosecutor, started by saying that Mr. Bankman-Fried was a liar who was accountable for FTX’s collapse final 12 months, which had left clients unable to get better their deposits.
Mr. Bankman-Fried, who had testified in the course of the trial in his personal protection, had “lied about large issues and small issues,” Mr. Roos stated, declaring that the defendant stated he “couldn’t recall” greater than 140 occasions in response to questions on cross-examination.
Then Mark Cohen, a lawyer for Mr. Bankman-Fried, stated in his closing argument that the FTX founder had acted in good religion. “Again and again, the prosecution has sought to show Sam into some kind of villain, some kind of monster,” he stated.
Their dueling closing arguments got here after 15 days of testimony in Mr. Bankman-Fried’s trial, which is without doubt one of the most high-profile monetary crime instances in years and which has moved much more speedily than anticipated. The end result of the case will likely be seen as a referendum not solely on the fast rise and fall of Mr. Bankman-Fried’s enterprise empire, which at its peak was valued at $32 billion, but additionally on the unstable crypto trade, which solely two years in the past was using excessive earlier than melting down final 12 months.
The spectacular implosion of FTX final November set off a sequence response that led to the collapse of different crypto corporations. Mr. Bankman-Fried’s arrest and subsequent prices additionally set off regulatory crackdowns throughout the crypto universe.
On the coronary heart of Mr. Bankman-Fried’s case is whether or not he dedicated fraud and handled FTX as his private piggy financial institution. Prosecutors contend that he stole as a lot as $10 billion from FTX’s clients to pay for investments in different crypto corporations, purchase lavish real-estate within the Bahamas, the place the alternate was headquartered, and prop up a crypto buying and selling agency he additionally based, Alameda Analysis.
Mr. Bankman-Fried has pleaded not responsible to seven counts of fraud, conspiracy and cash laundering. If convicted, he might face what quantities to a life sentence.
Carl Tobias, a professor on the College of Richmond College of Legislation, stated the prosecution introduced a powerful case and made a good move in “framing this matter as a garden-variety fraud case, relatively than a extra advanced cryptocurrency case.”
Mr. Bankman-Fried’s trial, which started on Oct. 4, has featured loads of damaging testimony. Prosecutors referred to as 16 witnesses, together with three of Mr. Bankman-Fried’s former high lieutenants, every of whom had pleaded responsible to fraud and conspiracy prices and agreed to testify towards their former boss. The protection, for its half, referred to as simply three witnesses, one among whom was Mr. Bankman-Fried.
On the trial, the prosecution’s three star witnesses — Caroline Ellison, Nishad Singh and Gary Wang, who all labored with Mr. Bankman-Fried — testified that the FTX founder knew for a lot of months that his spending spree was unsustainable and improperly fueled by FTX buyer cash that had been transferred to Alameda. In addition they stated Mr. Bankman-Fried knew Alameda couldn’t pay again the billions that it had misappropriated from FTX, with Alameda’s debt to FTX hid from clients and traders.
In response, Mr. Bankman-Fried and his attorneys argued that he was unaware till just some weeks earlier than FTX collapsed that billions in buyer cash had been misused. Mr. Bankman-Fried testified that he had thought Alameda’s spending got here from company cash, not buyer cash. Any errors that have been made, Mr. Bankman-Fried stated, have been made in good religion and never meant to defraud anybody.
FTX was purported to “transfer the ecosystem ahead,” he testified at one level. “It turned out the other of that.”
Below cross-examination for almost seven hours over two days, Mr. Bankman-Fried was requested repeatedly about his many public statements about FTX and the way these ran counter to what unfolded behind the scenes on the alternate. Mr. Bankman-Fried usually hemmed and hawed in response to questions on his public claims that FTX was one of many most secure crypto exchanges within the enterprise.
He was additionally unable to clarify how FTX buyer cash might have been funneled to Alameda to pay for constructing out his crypto empire with out him figuring out about it. At occasions, he successfully stated that former workers who testified towards him weren’t telling the reality.
For closing arguments on Wednesday, Damian Williams, the highest federal prosecutor in New York, sat within the entrance row of the courtroom, accompanied by different authorities officers. Mr. Bankman-Fried’s dad and mom, who’ve been fixtures within the gallery all through the trial, huddled within the courtroom within the morning however left earlier than the federal government’s presentation started. Mr. Bankman-Fried sat together with his attorneys, carrying the identical grey swimsuit and purple tie he wore on the stand in latest days.
Standing on the lectern, Mr. Roos went over the highlights of the testimony from the prosecution witnesses, together with their statements that Alameda had particular privileges with FTX, equivalent to a $65 billion line of credit score that permitted the buying and selling agency to borrow billions from FTX’s clients. Mr. Bankman-Fried stored these particular privileges secret, Mr. Roos stated, “as a result of he knew they have been flawed.”
The prosecutor additionally went over the inconsistencies in Mr. Bankman-Fried’s testimony with these of his former workers. He displayed charts with headings like “The defendant’s lies to the general public” and “The defendant’s false tweets in November.” He introduced digital data that confirmed Mr. Bankman-Fried had checked out incriminating paperwork that he stated he couldn’t recall having seen.
Mr. Roos additionally identified situations the place Mr. Bankman-Fried appeared to intentionally use FTX’s buyer deposits, together with to purchase again FTX fairness from Binance, a competing crypto alternate.
Mr. Cohen started his closing argument by saying prosecutors went out of their technique to concentrate on Mr. Bankman-Fried’s look. “We’ll agree there was a time when Sam was in all probability the worst-dressed C.E.O. and had the worst haircut,” Mr. Cohen stated, including that these weren’t crimes.
The prosecution’s retelling of FTX’s collapse was exaggerated and cinematic, Mr. Cohen stated. “In the actual world, in contrast to the film world, issues can get messy,” he stated, including that the massive spending by FTX and Alameda “have been cheap company bills” and never a misuse of buyer cash.
Mr. Bankman-Fried acted in good religion together with his enterprise choices and lacked the legal intent to defraud anybody, Mr. Cohen stated. It was the prosecution’s burden to show guilt past an inexpensive doubt, he added, and Mr. Bankman-Fried was not obligated to show something.
Mr. Bankman-Fried testified “as a result of he needed to let you know what occurred,” Mr. Cohen stated. “It’s arduous to consider a extra irritating state of affairs than that. He was removed from polished. He was himself, he was Sam. He instructed you when he didn’t keep in mind issues.”
The jury of 9 girls and three males is predicted to start deliberating on a verdict after Choose Lewis A. Kaplan of U.S. District Courtroom instructs the jurors on the related regulation.