Sam Bankman Fried, the onetime cryptocurrency mogul, constructed his FTX crypto trade right into a “pyramid of deceit” resting on a “foundation of lies and false promises,” a federal prosecutor mentioned 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 unhealthy enterprise selections, however had dedicated no crimes and by no means informed anybody to interrupt the regulation.
Those 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 liable for FTX’s collapse final 12 months, which had left clients unable to get better their deposits.
Mr. Bankman-Fried, who had testified throughout the trial in his personal protection, had “lied about big things and small things,” Mr. Roos mentioned, mentioning that the defendant mentioned he “couldn’t recall” greater than 140 instances in response to questions on cross-examination.
Then Mark Cohen, a lawyer for Mr. Bankman-Fried, mentioned in his closing argument that the FTX founder had acted in good religion. “Time and again, the prosecution has sought to turn Sam into some sort of villain, some sort of monster,” he mentioned.
Their dueling closing arguments got here after 15 days of testimony in Mr. Bankman-Fried’s trial, which is among the most high-profile monetary crime circumstances in years and has moved much more speedily than anticipated. The end result of the case shall 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 in addition 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 companies. Mr. Bankman-Fried’s arrest and subsequent expenses additionally set off regulatory crackdowns throughout the crypto universe.
At the center 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 companies, purchase lavish real-estate within the Bahamas, the place the trade was headquartered, and prop up a crypto buying and selling agency he additionally based, Alameda Research.
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 University of Richmond School of Law, mentioned the prosecution offered a powerful case and made a good move in “framing this matter as a garden-variety fraud case, rather than a more complex 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 expenses and agreed to testify in opposition to their former boss. The protection, for its half, referred to as simply three witnesses, one among whom was Mr. Bankman-Fried.
At 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’s buyer cash that had been transferred to Alameda. They additionally mentioned 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 mentioned, have been made in good religion and never meant to defraud anybody.
FTX was speculated to “move the ecosystem forward,” he testified at one level. “It turned out the opposite of that.”
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 mother and father, who’ve been fixtures within the gallery all through the trial, skipped the federal government’s presentation however returned to the courtroom to see Mr. Cohen defend their son. Mr. Bankman-Fried sat between his attorneys, carrying the identical grey go well with 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, such as a $65 billion line of credit score that permitted the buying and selling agency to borrow billions from FTX’s clients. Mr. Bankman-Fried saved these particular privileges secret, Mr. Roos mentioned, “because he knew they were wrong.”
The prosecutor additionally went over the inconsistencies in Mr. Bankman-Fried’s testimony with these of his former staff. He displayed charts with headings like “The defendant’s lies to the public” and “The defendant’s false tweets in November.” He offered digital information that confirmed Mr. Bankman-Fried had checked out incriminating paperwork that he mentioned 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 trade.
Mr. Cohen started his closing argument by saying prosecutors went out of their option to give attention to Mr. Bankman-Fried’s look. “We’ll agree there was a time when Sam was probably the worst dressed C.E.O. and had the worst haircut,” Mr. Cohen mentioned, including that these weren’t crimes.
The prosecution’s retelling of FTX’s collapse was exaggerated and cinematic, Mr. Cohen mentioned. “In the real world, unlike the movie world, things can get messy,” he mentioned, including that the massive spending by FTX and Alameda “were reasonable corporate expenses” and never a misuse of buyer cash.
Mr. Bankman-Fried acted in good religion along with his enterprise selections and lacked the legal intent to defraud anybody, Mr. Cohen mentioned. 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 “because he wanted to tell you what happened,” Mr. Cohen mentioned. “It is hard to think of a more stressful situation than that. He was far from polished. He was himself, he was Sam. He told you when he didn’t remember things.”
Mr. Cohen additionally tried to discredit Ms. Ellison, Mr. Wang and Mr. Singh. He displayed a chart displaying that every of them might face a long time in jail, and argued that they have been appearing out of self-preservation by cooperating with prosecutors.
As he completed his presentation, Mr. Cohen implored the jury to maintain an open thoughts. He emphasised how rapidly Mr. Bankman-Fried’s life had modified — a school pupil in the future, a crypto mogul the following and now a defendant at a federal fraud trial.
As Mr. Cohen completed, Mr. Bankman-Fried appeared near tears. He blinked rapidly, glancing forwards and backwards from the lectern to his mother and father within the gallery. One of his attorneys put an arm round him, earlier than a pair of U.S. marshals led him out of the room.
On Thursday, the jury of 9 ladies and three males is anticipated to start deliberating on a verdict after Judge Lewis A. Kaplan of U.S. District Court instructs them on the related regulation.