The Journal. - The Trial of Crypto’s Golden Boy: Cross Examining Caroline Ellison

Episode Date: October 13, 2023

Caroline Ellison took the stand for a third day as attorneys for Sam Bankman-Fried questioned her about her role in the collapse of FTX and Alameda Research. Rachel Humphreys and Caitlin Ostroff caught up with WSJ’s James Fanelli after court to unpack the defense’s strategy.   Further Reading: - What’s Happening Today at the Sam Bankman-Fried Trial  Further Listening: - The Trial of Crypto’s Golden Boy  Learn more about your ad choices. Visit megaphone.fm/adchoices

outside court on the end of day seven of sam bankman freed's trial kayla reached our limit a little bit today but uh not as much i shouldn't have thought as caroline ellison who was on the witness stand again and is now finished. She was being questioned by Sam Bankman-Fried's defense team. How would you say that went? It was honestly a bit hard to kind of figure out how well the defense was doing in their questioning of Ellison. And so we decided to phone a friend, our colleague James Finelli, who covers courts for the Wall Street Journal.

Yeah, because we wanted to know from him what the defense team strategy is, if the defense team has any tricks up its sleeve, and ultimately where this trial is right now, now that we've finished hearing from the star witness. From the Journal, this is the trial of crypto's golden boy. I'm Caitlin Ostroth. And I'm Rachel Humphries. Boy. I'm Caitlin Ostroff. And I'm Rachel Humphries.

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Bear! Run! Collect more moments with more ways to earn. Air Mile. Today was the final day of Caroline Ellison's testimony. Today, Bankman Free's lawyers had their chance to cross-examine her. And to help us make sense of that, we're here with our colleague, James Finnelli. Hi, Jim.

Hi, how are you doing? I'm good. How are you? Good. How would you describe your beat at the Wall Street Journal? I cover federal prosecutions in New York. A lot of the federal prosecutions are white-collar crimes. And so this case against Sam McInfrey is a big one. Yeah, you've covered tons of these trials.

What do you make of how this trial is going so far? I think that Caroline Ellison was probably the most interesting part of the trial so far. And I think that was expected, right? She's a star witness. And she gave really riveting testimony over the last three days, in particular how she described basically the demise of FTX and also just kind of gave a little window into her relationship with Sam Beckenfried as well as Sam Beckenfried as this kind of quirky, eccentric entrepreneur. And I think she provided really strong testimony for the prosecution because she not only talked about, you know, the alleged crimes that Sam committed, but she talked about, like, her personal relationship with Sam and how messy that was because it was a work relationship,

but it also bled into their personal life because they dated on and off. And also, we just learned a lot about Sam and some of the risks that he was willing to take. One of the things that stood out to me was Caroline Ellison talked about how Sam had posed this idea of like a coin flip, right? Because he was a risk taker. And he said, like, if there was a coin flip where if it landed on tails, the world would end. But if it landed

on heads, the world would be, I think, what, twice as good or twice as better. And he said he was willing to take that risk. And that's like pretty like startling testimony to hear. What do you make of her role in the prosecution's case thus far? I think, you know, she is the star witness. And that means like they are putting a lot of their case into what she says. And what she says is what jurors will probably take into strong consideration. Right. There's one thing for prosecutors to lay out these allegations. But when you start hearing from people who are actually there when these alleged crimes were happening, that's really powerful. And today, Bankman Freed's attorneys got to cross-examine Ellison. Mark Cohen was asking her questions about her testimony. What did you make of how that went? It was a fine cross-examination. I don't think there was any major revelations that came about,

nor did the defense land any real blows to the credibility of Ellison. I think what they were trying to do was trying to catch her in maybe some inconsistencies. One of the things that came up for me was when they were asking about whether or not she ever considered resigning from Alameda. And she said, I considered it, but I never did it. And I think what the defense was trying to get at there was, well, if you really were concerned about, you know, some of these alleged crimes,

how come you never acted to do anything about it, including resigning? How effective did you think the cross-examination was? I think the cross-examination was? I think the cross-examination didn't reveal any inconsistencies in what she said, or at least not any major inconsistencies. So as far as trying to neutralize Caroline Ellison as an important witness for the government, I don't know if that came across to the jury. And did it give you any insight into what the defense's strategy is? I don't know if it gave me insight into what their strategy is,

but I think overall, you know, what they're trying to convey to the jury is that Sam wasn't concealing anything and that he was acting in good faith in trying to build this FTX business. You mentioned the jury there, Jim. And just one thing I was thinking about, just as someone who was in the courtroom, there's a very different presentation that we're getting from the prosecution versus what we're getting from the defense. You know, Danielle Sassoon, who's the lawyer for the prosecution,

she's very confident. She questions in quick fire. She doesn't have that many oppositions to her questions from the defense. Whereas, you know, the defense lawyer, Mark Cohen, he's a little bit halting. He diverts away from subjects and quickly onto other ones. Does that make any difference, do you think, to a jury to see the different performances like that? Yes. Like you said, the prosecutor, Danielle Sassoon, was really good. She's good on her feet and she kind of kept moving Caroline along at like a really good pace. And also the trial breaks at certain points. And

she was aware of that. And she knew just when to end. She also knew like when maybe some of the subject matter was getting a little too jargony or in the weeds, she pulled it back. And, you know, like I said, I think the things that make a trial interesting to us is like the human drama. And she knew that. And a few times during the defense's questioning of Ellison today, we got some sidebars. Can you explain what a sidebar is? Right. So there's certain things that the jury can and cannot hear. Right. The whole idea is that like they're only supposed to be

hearing the stuff that they're going to be considering when they start deliberating. Right. And deciding whether or not someone is guilty. So at some points, there's arguments over whether certain testimony should be allowed or certain evidence should be allowed into as exhibits. And they don't want the jury to hear it. So they have a sidebar where the prosecutors and the defense team, you know, kind of huddle up with the judge out of earshot of the jury and try to hash out like a way to go forward. And today that happened a lot. Oh, it was a lot. It was definitely a lot.

And you could sense that Judge Kaplan was getting annoyed by it. And I think at some point he's like said, let's try to reduce these sidebars. And I think he said something very similar yesterday. He doesn't, he likes a quick trial. He wants it to keep moving. And that's part of the judge's job is to keep it moving. And it interrupts the flow of the court because whenever a sidebar happens, they play like white noise.

It almost sounds like TV static in the courtroom so the jury can't hear what they're talking about. And yeah, it really gives the sense of things being interrupted in the room. It sounds like something's broken. Yeah, it breaks the momentum, especially for like, I think there's a rhythm that like, you know, either the prosecutor or the defense lawyer wants to get into where they're asking questions, right? And then if there's constant objections or like these requests for sidebars, that kind of disrupts the flow. And there was a sidebar yesterday where Sam McManfreed's behavior in court was raised, wasn't there? That's right. And that's something actually we only really learn about what was said in the sidebar from the transcripts that get released at the end of the day.

And in the transcript yesterday, there was a there was talk about a sidebar where prosecutor Danielle Sassoon accused Sam of inappropriate behavior where he was laughing and scoffing while Caroline Ellison was testifying. And she said that he shouldn't be allowed to do that. It led to Mark Cohen, Sam Bankman-Fried's lawyer, saying that was a ridiculous allegation. And there was a back and forth until ultimately the judge said, just have a talk with Sam Bankman-Fried. And if he didn't do anything, that's fine. If he did, just tell him to stop.

Ellison has now finished on the witness stand and we're already starting on some new witnesses in this trial. Where does the prosecution go from here? I think there is still one, you know, big witness left and that's Nishad Singh, one of the top former FTX executives. He's also a member of Sam Bankman-Fried's inner circle. So that will be a big one. You've covered so many trials.

I guess, what are you looking for as the trial moves forward? I think the main thing that everybody is looking for to find out is whether or not Sam Bankman-Fried will testify, right? Yes. Everybody's looking for to find out is whether or not Sam Bankman-Fried will testify. Right. And and we won't know that until like literally the prosecution rests. Right. And then Bankman-Fried could say, yeah, I want to get up there. And I think we all know that Bankman-Fried is a bit of a wild card and marches to the beat of his own drum. So even if his lawyers say you should not get up there, he might just very well do it. And the judge made that very clear, actually, the first day of the trial to Bankman-Fried of, you know, get up there, he might just very well do it. And the judge made that very clear actually the first day of the trial to Bankman Freed of,

you know, at any moment, even if your lawyers do not advise it, you may testify on your behalf. That's right. I think typically most defense lawyers would say it's not a good idea to testify. And it's not necessarily because they don't believe their client or his credibility. It's the cross-examination, right? It opens the door for the prosecution to really grill him about some of the past things that he said. And we know that Megan Freed has spoken a lot, even after he was charged. So there would be a lot for them to kind of pick at if he were to take the stand. Well, Jim, we'll let you get back into the courthouse.

We really appreciate it. Okay. Thank you very much. That's all for today, Friday, October 13th. The Trial of Crypto's golden boy is part of The Journal, which is a co-production of Spotify and The Wall Street Journal. I'm Caitlin Ostroff. And I'm Rachel Humphries. Thanks for listening.

Check back here for trial updates.