The Journal. - The Trial of Crypto’s Golden Boy: The Government Grills SBF

Episode Date: October 31, 2023

Prosecutors have started to cross examine Sam Bankman-Fried on the witness stand. Rachel Humphreys and Caitlin Ostroff explore the competing narratives being painted by the government and the defense. 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

Today we got to hear Bankman-Fried cross-examined by the government. And Rachel, you were in the courtroom for it. What do you make of how that went? Well, I was in the courtroom to see a kind of new Sam Bankman-Fried. Today, his answers were short, they were sharp. And I don't know would be the way I would sum it up. I think that was just his general tone in response to the prosecution's questions. and he kept in different versions saying, I don't recall, I don't know. And to me, it was, you know, quite shocking,

especially for, you know, some of the information they presented to him, where he was saying, you know, I really don't remember how this came to be. Yeah, I mean, to the point that she, the prosecutor Danielle Sassoon, would pull up an article where he had been quoted or an interview he had done, and she would say to Bankman-Fried, did you say this? And he would essentially say, I don't recall. And it's there in black and white. Yeah. And so, I mean, I think it was a very different image of Bankman-Fried than we saw without the jury present, but still one that I think may not be convincing to a jury. They're going to have to sit there and assess Bankman-Fried's

credibility based off of his testimony in court. And like Rachel, I don't know. How are the jurors reacting during all this? I mean, they were just trying to keep up, honestly, with the barrage of questions that was coming at Bankman Freed from the prosecutor, Sassoon, and then the barrages of I don't know or I don't recall from Bankman Freed. It was very tense. And I have no idea what opinion they're going to be taking away at the end of this. It's not over. We still have more to come tomorrow. But, I mean, I didn't predict this was going to be how it goes. And this is just the theme of this trial. That is the overarching narrative of Bankman Free.

It is you think things are going to happen one way and they never quite do. From the Journal, this is the trial of crypto's golden boy. I'm Caitlin Ostroff. And I'm Rachel Humphries. From The Journal, this is the trial of crypto's golden boy. I'm Caitlin Ostroff. And I'm Rachel Humphries. Coming up, the government grills Sam Bankman-Fraid. We'll see you next time. Delivered with Uber Eats. Order now. Alcohol in select markets. See app for details. I think it's important, Caitlin, that people know that it is extremely glamorous at the Southern District of New York courthouse. It is apparently the place to be.

Yeah. Today there was high excitement at the courthouse, wasn't there? Why? to be. Yeah. Today, there was high excitement at the courthouse, wasn't there? Why? Because we accidentally bumped into Robert De Niro. He was standing behind us in the line for security at one point. But today was a big day in the trial of Sam Bankman-Fried. But it began with his lawyers continuing to question him, which was a continuation of what we'd heard on Friday. And Bankman-Fried was calm, confident. He was making jokes at times and smiling. And he testified that he was largely unaware of how bad things were at Alameda until after FTX collapsed. Yeah, it was interesting. And we talked previously about hedging. And today we returned to that. You know, Bankman-Fried previously said that he wanted Caroline Ellison to protect against risks with her trading positions.

And he advised her to do that. And he said today that eventually she did put those on, only they didn't work. And so the whole thing was moot. It was kind of interesting, wasn't it, that we'd heard so much from him about how he'd been telling Caroline Ellison to put these hedges on and how that would have been the thing that would have helped. And then he said on the stand today that it didn't do anything. I sort of thought that idea would end with this kind of like triumphant, like, yes, I was right. And then it kind of like faltered out.

Yeah, it's a bit of a damp end to that. And after the defense finished their questioning of Sam Bankman-Fried, which was around the 11 a.m. break, prosecutors started their cross-examination of him. Now, we had a taster of this last Thursday when Danielle Sassoon got to question Bankman-Fried, and she was up again. And, you know, she'd really grilled him last time. So we were very interested to see what was going to happen. She's very tenacious. She's direct. And Bankman-Fried today immediately was on the

defensive. Yeah. For example, Sassoon asked Bankman-Fried about his use of private planes. And first of all, it should be noted that Bankman-Fried spent $15 million on private plane travel, according to prosecutors. Some of that even to fly Amazon packages to the Bahamas. Well, whatever you need it for. You know, sometimes you just, time doesn't cut it. And Sassoon asked Bankman-Fried if he used a private jet to fly to the Super Bowl. And he said he didn't recall. And she immediately retorted with, quote, is that because you fly on private planes that often? Yeah. I was in the courtroom where we're not supposed to be reacting to anything,

but I could see some small smiles. I wonder if you and the overflow had a different experience. It was people were laughing so hard. Well, and then just to add to this, Danielle Sassoon then put into evidence a photo of Bankman-Fried asleep in his signature shorts and t-shirts on a private plane. But the bigger topic of Sassoon's cross-examination of Bankman-Fried today was Alameda research. Yeah, after hearing Bankman-Fried testify that he was largely not involved with Alameda in the collapse, Sassoon began her cross-examination by just kind of going over some basic points, including that Bankman-Fried owned a 90% stake in the company through its collapse, and making him, you know, testify before the jury that because of that, he benefited when Alameda made money.

And that was just the beginning. Bankman-Fried had said he didn't recall giving Caroline Ellison crypto trading advice. And right after that, Sassoon showed chat messages in which Bankman-Fried appeared to be giving trading instructions to Ellison and others. And that was pretty much the pattern for today, wasn't it? Sassoon would get Bankman-Fried to confirm or deny a statement and then contrast that with statements he made before, which she would put into evidence. And Sassoon was really trying to make the point again and again to the jury that Bankman-Fried is inconsistent. Yeah, and Bankman-Fried has made a ton of public statements. FTX had its own podcast.

He did tons of interviews with the media, including the Wall Street Journal. And many of those statements, even private statements, are being presented as evidence in court. Like, one thing that came up today was an email that Bankman Freed sent to my colleague Patricia Kosman and me. Hang on, what was that moment like for you?

Like, seeing that email come up in evidence and thinking, wait. I, like, my heart raced for a second. Like, I was so surprised to see it. And, like, everyone in the overflow room kind of turned to me. And I'm just like, I had no idea, guys. But in the email, Bankman-Fried had told us that, point blank, Alameda didn't have any special privileges on FTX.

And this is what Sassoon presented in court to show that Bankman-Fried knew Alameda had special privileges, but he wasn't being transparent about that. Yeah, and that was along with a lot of other evidence that she showed, which she said demonstrated that he misled the public about Alameda's privileges on FTX. But generally, the Bankman-Fried testimony today kind of demonstrated that, according to him, he didn't really know a lot of what was going on at Alameda, even at one point saying that he wasn't aware that Alameda lenders had been paid using FTX customer funds, which was something Caroline Ellison had testified about.

Yeah, and Bankman's Read said today that he thought Alameda was in good financial health, basically up until FTX collapsed, which contrasted with what we heard from Ellison. Yeah, I think in general, like sitting there in the courtroom, it felt to me like today's testimony was this sparring match between Sassoon and Bankman-Fried. And next, we're going to dig in to their different strategies. Imagine you're in Ottawa strolling through artistic landscapes at the National Gallery of Canada. Oh. Then cycling past Parliament Hill.

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Wherever you go, we'll go together. That's the powerful backing of American Express. Visit amex.ca slash yamx. Benefits vary by card. Terms apply. One topic that keeps coming up in this trial, and I understand this as someone with dark curly hair, as do you, Caitlin, have dark curly hair. But one thing that keeps coming up in this trial is Bankman-Fried's public image, namely his hair. Right. The messy curly hair, which again, you and I can somewhat relate to, but also the t-shirts and the cargo shorts. And Bankman-Fried had testified that he appeared

this way because he was busy and lazy. Fair enough. But today, Sassoon asked him if he cultivated this image because he thought it was important that people thought he looked crazy. Yeah. And this was a moment on the stand today that I saw happen a few times where Bankman-Fried seemed kind of annoyed at this question. Yeah. And then Sassoon showed the jury a New York Times article that quoted one of Bankman-Fried's colleagues. And the colleague recalled Bankman-Fried saying that, quote, I think it's important for people to think I look crazy. Yeah, it was an interesting moment in court when he'd been quite adamant that he hadn't asserted

that. But what Sassoon was doing, he was essentially saying that Bankman-Fried made a huge effort to cultivate his image. And she found ways today amidst all his denials to tease some answers out of him about what he thinks about himself. Like she didn't go chronologically in her questions today, which she has been doing with previous witnesses. She went all over the place. So she'd probe on a topic for a while and then suddenly ask something like, you think of yourself as a smart guy? And Bankman-Fried said in reply to that question, in many ways, not in all ways.

Right. And Sassoon tried to make the case that a lot of Bankman-Fried's public statements were made to make FTX seem safer than it was. But that, in effect, it was a PR strategy more than anything else. For example, she brought up statements Bankman-Fried made to regulators in Washington. As you know, Bankman-Fried spent a lot of time on the Hill encouraging lawmakers to regulate crypto. But Sassoon pointed out statements that he then made that contradicted that. She showed this one statement he made to a Vox reporter

where he said, quote, F regulators. Yeah, and she actually made Bankman-Fried read these messages out in court, which was actually kind of an uncomfortable moment, and he really seemed not to want to do that. But overall, what did you think about Sassoon's strategy today, Caitlin, in the cross-examination? It felt like a really effective strategy. You really got the sense that Sassoon had read or watched almost every statement Bankman-Fried has ever made. Something you can sympathize with, I think. Just too much. And Bankman-Fried, last week, he was kind of all over the place when he was on the

stand questioned by Sassoon, again, without the jury present. But today, he was kind of on the defensive. And he, a lot of the time said he didn't recall whether he'd said something or that he might have said something he wasn't sure. I think what was on display today were these two competing narratives. You know, Sassoon wants to show that Bankman-Fried was directing the fraud that the government alleges was going on at FTX and Alameda. And Bankman-Fried wants to show that actually he was so busy being a CEO, traveling all over the world, that he couldn't possibly be across the detail. The question is, which story will the jury believe? And I think the kind of thought I have in my head is how

effective the I don't know strategy is going to be for Bankman Freed. Because ultimately they have to decide whether Bankman Freed is credible or his inner circle is. Exactly. That's all for today, Tuesday, October 31st. 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. This episode was produced by Enrique Perez de la Rosa, and it was edited by Catherine Whalen. Additional reporting from James Finelli, Corinne Ramey, and Vicky Gohuang. Our engineer is Peter Leonard. Our theme music is by So Wiley and remix by Peter Leonard. Additional music in this episode by Peter Leonard. Thanks for listening.

Check back here for trial updates.