After the selection of 12 jurors, the most-awaited trial of Sam Bankman-Fried (SBF) began on Wednesday, October 4, with opening statements from both sides. The US Department of Justice (DOJ) started the proceedings with harsh language, saying that SBF deliberately defrauded investors for personal gains.
According to Inner City Press, the assistant US Attorney for the Southern District of New York, Thane Rehn, made the opening statement by outrightly accusing SBF of massive fraud that stole billions from thousands of customers, which he spent on himself and political contributions.
The DOJ lawyer said:
“He had wealth, he had power, he had influence. But it was built on lies. He was committing a massive fraud, taking billions of dollars from thousands of victims. He had started FTX. He told customers it was safe. But he was taking it and spending it.”
AUSA Rehn: He had wealth, he had power, he had influence. But it was built on lies. He was committing a massive fraud, taking billions of dollars from thousands of victims. He had started FTX. He told customers it was safe. But he was taking it and spending it
— Inner City Press (@innercitypress) October 4, 2023
SBF Misled Everyone and Used Alameda to Steal, Says DOJ
The opening statement suggests that the DOJ is focusing its arguments on allegations that SBF misled everyone, including investors, customers, and lenders, about the safety of funds at FTX while using Alameda to steal FTX assets secretly.
“Alameda had secret access to FTX assets. Once Alameda had it, the defendant could spend it as he pleased. How did he do it? Two ways. First, customers sometimes deposit dollars on FTX, the company would tell them it was in their accounts,” said Thane Rehn.
AUSA Rehn: Alameda had secret access to FTX assets. Once Alameda had it, the defendant could spend it as he pleased. How did he do it? Two ways. First, customers sometimes deposits dollars on FTX, the company would tell them it was in their accounts.
— Inner City Press (@innercitypress) October 4, 2023
DOJ said SBF stole crypto by designing FTX software that allowed Alameda to withdraw customers’ crypto assets from wallets at the doomed exchange. He then put this into other investments to make himself rich and gain influence by making political donations in Washington DC.
When Alameda’s hole grew, he pulled more money out of FTX. SBF kept lying even after financial info at Alameda was leaked to get more deposits. When things spiraled out of control, they blamed the downturn in the market. However, this was all due to the fraud he committed.
According to Thane Rehn:
“The hole was too big. So, the defendant blamed a downturn in the crypto market. But he had committed fraud. That is what the evidence in this trial will show. You will hear from his inner circle. His girlfriend will tell you how they stole money together.”
AUSA Rehn: The hole was too big. So defendant blamed a downturn in the crypto market. But he had committed fraud. That is what the evidence in this trial will show. You will hear from his inner circle. His girlfriend will tell you how they stole money together
— Inner City Press (@innercitypress) October 4, 2023
In defense, Mark Cohen denied fraud allegations, arguing that SBF was a young entrepreneur who made business decisions that didn’t work out. The defense denied any secret transactions between Alameda and FTX or a backdoor used to steal customer funds.
According to Cohen, SBF acted in good faith, assuming that FTX was allowed to loan funds to Alameda as part of a business relationship with the market maker. Instead, the defense highlighted the tweet of the Binance CEO at a critical time that started a bank run at FTX. Furthermore, they blamed Caroline Ellison, then CEO of Alameda and SBF’s girlfriend, for not putting on the hedges when the crypto market was plunging despite SBF’s instructions.
Mark Cohen said:
“Things were tight. Ms Ellison had not put on the hedges. But Sam believed the companies were good. He spoke to outside investors. The CEO of Binance put out a tweet attacking Alameda. This triggered a run on the bank at FTX.”
SBF's Cohen: Things were tight. Ms. Ellison had not put on the hedges. But Sam believed the companies were good. He spoke to outside investors. The CEO of Binance put out a tweet attacking Alameda. This triggered a run on the bank at FTX.
— Inner City Press (@innercitypress) October 4, 2023
On day 2 of the trial, the jury heard from two witnesses: Mark Julliard, a former client of FTX, and Adam Yedidia, a friend of SBF and former employee at Alameda Research and FTX.
Sam Bankman-Fried has pleaded not guilty to any of the seven charges of wire fraud and conspiracy to commit wire fraud and money laundering. Caroline Ellison, Gary Wang, and Nishad Singh have pleaded guilty and will testify against SBF for his role in FTX’s operations and alleged crimes. The defense also raised doubts about their credibility as the trio has made a cooperation agreement with the government.
As previously reported, the court has ordered the SBF legal team not to blame FTX counsel, dubbed “advice of counsel” defense, for the wrongdoings he committed in the opening statement.
The trial will resume on Thursday, October 5.
