Sam Bankman Fried’s cryptocurrency fraud trial drew to an in depth with closing arguments Wednesday in Manhattan federal court docket after weeks of testimony that lifted the veil on FTX’s gorgeous collapse — and the broader thriller surrounding the cryptocurrency markets. The prosecution rapidly painted Sam Bankman-Fried as an unabashed fraud somewhat than the picture of a wayward math geek offered by the protection all through the trial, saying he had created a “pyramid of deception” by means of his cryptocurrency change, FTX.
Assistant U.S. Legal professional Nicholas Ross additionally used Bankman-Fried’s testimony towards him.
“FTX was bankrupt. Billions of {dollars} had disappeared from 1000’s of individuals,” Ross stated. “He spent his purchasers’ cash, and lied about it.”
Simply earlier than 10 a.m., Ross started his closing argument by describing the ultimate days of FTX in November of final yr, which started with the cryptocurrency equal of a financial institution run. Be taught change brokers on the forex desk condition Alameda Analysis, FTX’s sister hedge fund, owned billions of {dollars} in FTX’s cryptocurrency, FTT, and used it as collateral to take out huge loans.
Following the report, Binance CEO Changpeng Zhao tweeted that his change would unload $500 million of FTT holdings. FTT collapsed, bringing FTX and Alameda down with it.
“With daily, the withdrawals had been rising – thousands and thousands of {dollars} become a whole bunch of thousands and thousands of {dollars}, which become billions of {dollars}. 1000’s of individuals around the globe had been attempting to withdraw their investments, financial savings, and nest eggs for the long run, however their withdrawals weren’t being processed. “The cash was not returned,” Ross instructed jurors.
They had been overcome with anxiousness. With every extra click on of the draw button, their concern become despair. Their cash is gone.”
Bankman-Fried faces seven counts of conspiracy and fraud for allegedly funneling FTX buyer funds to Alameda; The prosecution asserts that he did this to cowl Alameda’s mounting money owed after the collapse of cryptocurrencies within the spring of 2022. He has pleaded not responsible.
Ross described Bankman-Fried’s alleged actions as “a pyramid of deception constructed by the defendant on a basis of lies and damaged guarantees, all to get cash. It will definitely collapsed, abandoning numerous victims.”
“The defendant is accountable,” Ross stated, referring to Bankman-Fried at a number of factors.
Ross’s closing argument additionally made clear that Bankman-Fried’s choice to testify in his personal protection final week — a uncommon transfer for legal defendants, given the dangers of cross-examination — was not definitely worth the threat.
“The defendant took the stand and instructed a narrative — and he lied to you,” Ross stated of Bankman-Fried’s direct testimony. “Did you see on Friday how easy his testimony was, because it had been rehearsed a number of occasions?”
Ross famous that Bankman-Fried testified about “a bunch of issues that weren’t actually related” within the case — like his bookish dwelling state of affairs at MIT. When it got here to explaining various things throughout direct examination, he appeared to have a “good reminiscence.”
“He by no means stated he could not bear in mind,” Ross stated, however when it was prosecutors’ flip, this declared lack of reminiscence occurred “greater than 140 occasions throughout his questioning.”
“He needed to be requested and re-asked. He regarded away. ‘He lied in regards to the large issues and he lied in regards to the little issues,'” Ross stated. “He requested to outline the phrases he had used so freely within the direct examination earlier.
Ross continued: “He handled every query as if it had been the highest from the underside and the underside from the highest… He got here up with a narrative that was conveniently packaged right into a story that excluded him from fraud.”
The prosecutor argued that Bankman-Fried used a high-tech ruse to deceive prospects who trusted that FTX was as secure as he claimed — and handled their funds as his “private piggy financial institution.”
Alameda, FTX’s sister hedge fund, was capable of borrow cash from the change’s purchasers and accumulate debt with a large $65 billion line of credit score, in contrast to different purchasers of the change.
“He created a public system for everybody and a secret system only for Alameda, and directed others to make it work that method,” Ross stated. “No different shopper had a setup like Alameda.”
There was additionally the issue of liquidity. FTX had a system in place that prevented purchasers from persevering with to commerce on margin when their liquidity dropped beneath a sure stage; This was not the case together with his hedge fund.
“He knew that Alameda was exempt from the foundations that utilized to all different prospects,” Ross stated. “What’s the consequence of the Alameda Secret Exemption? The defendant took billions of {dollars} in buyer funds, leaving an enormous hole between what he stated he had… and what he really had in his cryptocurrency wallets.”
All alongside, Ross argued, Bankman-Fried was selling a false sense of safety.
“He ran advertisements saying FTX is safe, the most secure and simplest way to purchase and promote cryptocurrencies, and he instructed Congress and the general public by, quote, ‘Logging right into a shopper account at FTX prospects can immediately view the belongings they personal at FTX,’” Ross stated. “That final half is important — the belongings they personal, that FTX holds.
“It wasn’t true. When prospects logged into their accounts, they noticed a stability. Behind the scenes, that cash did not exist.” Commercials that includes Seinfeld creator Larry David and soccer legend Tom Brady had been a part of this net of deception.
Ross additionally argued: “He was taking cash from FTX prospects when he was publicly saying one thing totally different — and that makes him responsible of fraud.”
The prosecution is anticipated to stay closed for hours after the lunch break. The protection then presents its closing argument.
