Home Feature News Secret audio, a star witness, and ‘Thai prostitutes’ complicate Sam Bankman-Fried’s protection...

Secret audio, a star witness, and ‘Thai prostitutes’ complicate Sam Bankman-Fried’s protection | CNN Enterprise


New York

Two weeks into what might be a four-to-six-week trial, jurors listening to the case in opposition to fallen crypto mogul Sam Bankman-Fried have been inundated with proof that appears, for now, fairly damning.

Whereas the protection has but to name its personal witnesses, it has stumbled incessantly in cross-examining the federal government’s, a number of of whose testimony positioned Bankman-Fried on the middle of a yearslong conspiracy to steal from prospects, defraud traders and bend over backwards to cowl all of it up.

Bankman-Fried, 31, has pleaded not responsible to seven counts of fraud and conspiracy. He’s been accused of stealing billions of {dollars} in deposits from prospects of his FTX crypto change in an effort to cowl losses at his different agency, a crypto buying and selling home referred to as Alameda Analysis.

The prosecutors introduced out their large weapons in week two of the trial. Listed below are the highlights.

By the far essentially the most vital witness for the prosecution is a 28-year-old named Caroline Ellison, who was the CEO of Alameda on the time it collapsed and likewise dated Bankman-Fried on and off for 2 years.

“In a case like this, you really want a narrator — someone who can inform the story in a means that the jury can perceive,” mentioned Jordan Estes, a former federal prosecutor with the US Lawyer’s Workplace who’s now a companion at Kramer Levin. “And the very best narrator, in any kind of legal scheme is the individual closest to the defendant … She was the final word insider.”

Her testimony, which stretched over three days, was necessary for a number of causes.

  • As each a detailed adviser and romantic companion of SBF’s, Ellison is uniquely positioned to touch upon what was taking place throughout the tight interior circle of Alameda and FTX executives, a lot of whom lived collectively in a $30 million luxurious house within the Bahamas.
  • She walked jurors by means of monetary paperwork that she ready, stating that they have been “dishonest” and designed to masks the unsteady monetary footing that Alameda was on. In a single occasion, she ready seven “various” steadiness sheets to current to a lender that had been asking for monetary disclosures.
  • Her statements to the jury have been at occasions tinged with emotion, and he or she fought again tears as she recounted her “fixed state of dread” and stress about mendacity to traders, the general public and even her personal staff.
  • She corroborated testimony from one other FTX government, Gary Wang, who testified earlier that Alameda had a secret and just about limitless line of credit score to faucet FTX buyer funds (all of which, after all, was taking place with out prospects’ data or permission, and flies within the face of Bankman-Fried’s public assertions that FTX by no means touched buyer deposits.)
  • Ellison described Bankman-Fried’s trademark matted look — together with his unkempt hair and wardrobe of cargo shorts and T-shirts — as a calculated PR transfer to painting himself as an eccentric entrepreneur.

Backside line: Her testimony provided a story of occasions through which just about each determination at each Alameda and FTX got here right down to Bankman-Fried, who based and was the bulk proprietor of each corporations. A typical chorus from Ellison, when requested who directed her to hold out varied actions, legal or in any other case, was a variation on the phrases “Sam did.”

To be clear, Ellison has pleaded responsible and has been cooperating with prosecutors for practically a 12 months within the hopes of securing a lighter sentence for herself. Like Bankman-Fried, Ellison faces the prospect of 110 years in jail if given a most sentence.

Bankman-Fried’s protection workforce cross-examined Ellison for about six hours on Thursday in a meandering, halting back-and-forth that repeatedly prompted objections from the prosecution. At occasions, Decide Lewis Kaplan sounded exasperated and interrupted to ask lead protection counsel Mark Cohen to make clear what he meant.

Caroline Ellison, former chief executive of Alameda Research, leaves federal court in Manhattan on Thursday.

Jurors later heard from a former software program developer at Alameda named Christian Drappi, who recounted an all-hands assembly on the agency’s Hong Kong workplace on November 9, two days earlier than the complete enterprise folded.

Ellison led the assembly, which, unbeknownst to her, was being recorded by a dealer who joined Alameda simply three days earlier. In responding to an worker’s query, Ellison says the choice to repay loans with buyer funds was “Sam’s, I suppose.”

The recording is especially necessary due to the timing.

Statements like those Ellison made within the recording are generally known as “prior constant statements of a witness,” Estes mentioned. “They’re very efficient, as a result of they present statements which might be in line with the witness’s testimony earlier than they’ve ever been approached by legislation enforcement.”

In different phrases, Bankman-Fried’s protection would have a tough time arguing that Ellison had been coerced by prosecutors or fed a false narrative, as a result of the tape has her each admitting wrongdoing and stating that Bankman-Fried made the decision earlier than anybody was arrested.

Chinese language bribes and ‘Thai prostitutes’

Though Bankman-Fried doesn’t face bribery prices on this trial, Ellison was allowed to testify about an occasion when she believes he ordered Alameda to wire “within the ballpark of $100 million” to 2 crypto wallets in China. She mentioned she believed the funds have been a bribe to get Chinese language officers to unfreeze two crypto buying and selling accounts value about $1 billion that Alameda held in China.

She described the funds as a final resort after different ways to maneuver the funds out of China failed. A kind of failed schemes, she mentioned, concerned utilizing accounts belonging to “Thai prostitutes” to arrange trades that might drain Alameda’s China accounts and switch worth to the intercourse employees’ accounts, the place Alameda might reclaim them.

The largest query now could be whether or not Bankman-Fried will testify in his personal protection.

In a case the place the prosecution’s proof has been sturdy, mentioned Estes, that’s a Hail Mary that may “completely change the dynamic of a trial.”

Whether or not or to not testify is case-dependent, and there are dangers both means. However “in case you have not gotten out your aspect of the story by means of cross examination, then which may be one in all your solely avenues to do it.”

Prosecutors had anticipated to complete presenting their case round October 25, although there’s a minimum of an honest likelihood they cull their listing of witnesses and wrap sooner.

“There’s a typical authorities technique referred to as ‘skinny to win,’” Estes instructed CNN. “Should you’ve obtained out many of the proof of the fraud and the displays you want, then there’s kind of solely hazard in including extra.”

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