The prosecution of Bankman-Fried, 31, put a spotlight on the emerging industry of cryptocurrency and a group of young executives in their 20s who lived together in a US$30 million luxury apartment in the Bahamas as they dreamed of becoming the most powerful player in a new financial field.
US Attorney Damian Williams said they engaged in one of the biggest frauds in US history.
Prosecutors made sure jurors knew that the defendant they saw in court with short hair and a suit was not the man with big messy hair and shorts that became his trademark appearance after he started his cryptocurrency hedge fund, Alameda Research, in 2017 and FTX, his cryptocurrency exchange, two years later.
They showed the jury pictures of Bankman-Fried sleeping on a private jet, sitting with a deck of cards and mingling at the Super Bowl with celebrities including the singer Katy Perry. Assistant US Attorney Nicolas Roos called Bankman-Fried someone who liked “celebrity chasing”.
In a closing argument, defence lawyer Mark Cohen said prosecutors were trying to turn “Sam into some sort of villain, some sort of monster”.
“It’s both wrong and unfair, and I hope and believe that you have seen that it’s simply not true,” he said. “According to the government, everything Sam ever touched and said was fraudulent.”
The government relied heavily on the testimony of three former members of Bankman-Fried’s inner circle, his top executives including his former girlfriend, Caroline Ellison, to explain how Bankman-Fried used Alameda Research to siphon billions of dollars from customer accounts at FTX.
With that money, prosecutors said, the Massachusetts Institute of Technology graduate gained influence and power through investments, contributions, tens of millions of dollars in political contributions, Congressional testimony and a publicity campaign that enlisted celebrities like comedian Larry David and football quarterback Tom Brady.
Ellison, 28, testified that Bankman-Fried directed her while she was chief executive of Alameda Research to commit fraud as he pursued ambitions to lead huge companies, spend money influentially and run for US president someday. She said he thought he had a 5 per cent chance of being US president someday.
Becoming tearful as she described the collapse of the cryptocurrency empire last November, Ellison said the revelations that caused customers collectively to demand their money back, exposing the fraud, brought a “relief that I didn’t have to lie any more”.
FTX cofounder Gary Wang, who was FTX’s chief technology officer, revealed in his testimony Bankman-Fried directed him to insert code into FTX’s operations so Alameda Research could make unlimited withdrawals from FTX and have a credit line up to US$65b. Wang said the money came from customers.
Nishad Singh, the former head of engineering at FTX, testified he felt “blindsided and horrified” at the result of the actions of a man he once admired when he saw the extent of the fraud as the collapse last November left him suicidal.
Ellison, Wang and Singh all pleaded guilty to fraud charges and testified against Bankman-Fried in the hopes of leniency at sentencing.
Bankman-Fried was arrested in the Bahamas last December and extradited to the United States, where he was freed on a US$250m personal recognisance bond with electronic monitoring and a requirement that he remain at the home of his parents in Palo Alto, California.
His communications, including hundreds of phone calls with journalists and internet influencers, along with emails and texts, eventually got him in trouble when the judge concluded he was trying to influence prospective trial witnesses and ordered him jailed in August.
During the trial, prosecutors used Bankman-Fried’s public statements, online announcements and his Congressional testimony against him, showing how the entrepreneur repeatedly promised customers that their deposits were safe and secure as late as last November 7 when he tweeted “FTX is fine. Assets are fine” as customers furiously tried to withdraw their money. He deleted the tweet the next day. FTX filed for bankruptcy four days later.
In his closing, Roos mocked Bankman-Fried’s testimony, saying that under questioning from his lawyer, the defendant’s words were “smooth, like it had been rehearsed a bunch of times?”
But under cross-examination, “he was a different person,” the prosecutor said.
“Suddenly, on cross-examination, he couldn’t remember a single detail about his company or what he said publicly. It was uncomfortable to hear. He never said he couldn’t recall during his direct examination, but it happened over 140 times during his cross-examination.”
- AP
