Unchained - SBF Trial, Day 15: Prosecutors Hammer Bankman-Fried’s Contradictions With Reams of Evidence

Episode Date: October 31, 2023

In a trial during which he has suffered many low points, former FTX CEO Sam Bankman-Fried may have reached a nadir on day 15 as prosecutor Danielle Sassoon used his own words to show stark contradictions from his earlier testimony and a seemingly callous disregard for customer assets. The tenacious, methodical Sassoon punctuated her more than four hours of interrogation on Monday afternoon with devastating audio and visual evidence of Bankman-Fried, including memos to himself, internal FTX and Alameda documents, and testimony to Congress that countered statements he’d made under his defense team team’s kinder questioning. In one instance, Sassoon showed a Signal chat in which Bankman-Fried expressed his interest in purchasing MAPs token, a direct refutation of his testifying that he “was not involved at all in any way” in trading.  In another instance, she illustrated Bankman-Fried’s alleged lack of regard for his Twitter followers, showing a screenshot of a Twitter DM with Kelsy Piper in which he admits to being insincere about his support for regulation that protects customers, telling Piper at one point, “just PR, fuck regulators.” Bankman-Fried claimed not to remember a spreadsheet with seven, different balance sheets created by then Alameda Research CEO Caroline Ellison to make the company’s balance sheet look better than it was, a key piece of evidence that Ellison addressed in her testimony. Sassoon presented Google metadata showing Bankman-Fried had read the document.  Dressed in a light gray suit with a purple tie, Bankman-Fried claimed repeatedly not to remember other events or his responses in conversations, and he answered other questions with curt yeses and nos, unlike the windy, often convoluted responses that he provided to his defense team earlier in the day and on Monday. And as Sassoon continued to catch him in contradictions, he seemed to grow irritable and occasionally rocked back and forth in his chair.  Prosecutors will continue their cross-examination on Tuesday followed by redirect for one or two hours before the defense closes its case. The prosecution will then call two rebuttal witnesses. Catch up on Unchained’s previous coverage:  SBF Trial, Day 1: Possible Witnesses Include FTX Insiders, Big Names in Crypto, and SBF’s Family SBF Trial, Day 2: DOJ Says Sam Bankman-Fried ‘Lied’ While Defense Claims His Actions Were ‘Reasonable’ SBF Trial, Day 3: Why a True Believer in FTX Flipped Once He Learned One Fact SBF Trial, Day 4: SBF’s Lawyers Annoy Judge Kaplan, While Wang Reveals Alameda’s Special Privileges SBF Trial, Day 5: SBF's Defense Finally Found Its Legs, But Can It Counter Caroline Ellison? SBF Trial, Day 6: Caroline Ellison Recalls 'The Worst Week of My Life' SBF Trial, Day 7: In SBF Trial, Did the Defense Lose Its Opportunity With the Star Witness? SBF Trial, Day 8: Former BlockFi CEO Adds Credibility to Fraud Charges SBF Trial, Day 9: Nishad Singh Describes Former FTX CEO as a Bully and Big Spender SBF Trial, Day 10: Defense Struggles to Discredit Nishad Singh's Testimony SBF Trial, Day 11: How Alameda Got FTX Into a $9 Billion Hole SBF Trial, Day 12: Former FTX General Counsel Speaks Out Against SBF SBF Trial, Day 13: Before Judge, Former FTX CEO Sam Bankman-Fried Gives Few Straight Answers SBF Trial, Day 14: Sam Bankman-Fried Casts Blame on Others for Key Decisions at FTX Did Sam Bankman-Fried Have Intent to Defraud FTX Investors? Why These Lawyers Say It's Over for SBF-But His Only Hail Mary Is to Testify Here’s How Sam Bankman-Fried’s High-Stakes Trial Could Play Out SBF Trial: How Sam Bankman-Fried’s Lawyers Might Try and Win His Case The High-Stakes Trial of Sam Bankman-Fried Begins: What to Expect Learn more about your ad choices. Visit megaphone.fm/adchoices

Thanks for tuning in to the day 15 recap of the SPF trial. Sorry, it's a little bit late. I had to head to the courthouse at an ungodly hour in order to try to make it into the courtroom on Monday. And while I succeeded, it made me unable to work on the video Monday evening. Sam Pinkman-Fried's attorneys ended their direct examination of their client Monday morning, allowing the government to cross-examine SBF for four hours. During that time, Assistant U.S. attorney Danielle Sassoon, relentlessly highlighted contradictions in his testimony against previous statements,

severely undermining his credibility and potentially ending Bankman Freed's chance to win over a single jury member. The prosecution's intense and relentlessly devastating interrogation of the defendant repeatedly used SBF's own words against him. When he would evade her questions or not admit to an act or a statement he had made, she would pull up audio, video, and print interviews of Bankman Fried, testimony he sent to Congress, memos to himself, internal Alameda or FTCS documents, spreadsheets, etc., in which his own words or actions contradicted his testimony. At one point, she raised the fact that the defendant had months to look over the government's evidence.

The inference was that he had chosen to testify under oath in contradiction of the evidence anyway. Sassoon's cross-examination was a seemingly endless presentation of direct evidence of the SBF's previous statements contradicting his current or recent testimony. She began her questioning by saying, Mr. Bankman-Fried, you testified a bunch about Alameda. Up through November of 2022, you owned 90% of Alameda, correct? With her voice ringing out clearly in the courtroom, the energy of her statement shouted confidence. Early on, Sassoon questioned whether Bankman-Fried recalled saying in 2022 that he was, quote, walled off from Alameda's trading. He responded, quote, I would say I was not involved for the most part. I would not say I was not involved at all in any way.

Pulling up a signal chat composed of Bankman Freed, Caroline Ellison, Sam Tribucco, and Ben Shia, Sassoon pointed out that, in the messages, Bankman Freed expressed his desire to buy MAP's tokens to decrease Alameda's time-weighted average price of the asset. Although he did not agree that that was trading, Sassoon also brought up SBF's instructions to Ellison to properly hedge, which he then admitted is a form of trading. Sassoon raised the many media interviews he conducted after FTX's bankruptcy. She got him to agree that as CEO, it was important for him to be truthful and precise when talking about FTX. Then Sassoon played a clip from a Twitter spaces in which he said, quote, I was intentionally not getting involved in Alameda because I was concerned about a conflict of interest.

She read aloud a part of a Financial Times article about Alameda that said, The FTCS founder insisted that he had walled himself off from trading and risk management. at the Alameda Research Trading firm. Another contradiction she pointed out was in his public support for regulation and customer protection versus his private statements on it. She asked him, quote, Do you recall yes or no, telling your followers on Twitter in October that your support for regulation was contingent upon protecting customers?

Though he claimed he did not recall, she showed a tweet from him saying exactly that. Then she showed him contradicting himself by drawing up a screenshot of his Twitter DMs with journalist Kelsey Piper, which was for a question. were published in Vox. Sassoon read a loud Piper's question. Quote, you said a lot of stuff about how you wanted to make regulations, just good ones. Was that pretty much just PR too? And then Sassoon asked SVF to read aloud the last two texts in his response. He said in front of the jury, quote, yeah, just PR. Fuck regulators. Sassoon's next question was, quote, you called members of crypto-twitter, which included your own followers and customers, dumb motherfuckers, right? He admitted calling, quote,

specific subset of them in private conversation that way. One recurring theme was Bankman Fried's inability to answer basic questions about FTX. He responded, I may have, or something similar, to the following questions by Sassoon. You said publicly while you were CEO of FTX that FTCS had reformed how crypto exchanges worked, didn't you? You recall saying that you had built a responsible system. Do you recall describing FTCS as a thoughtful exchange? Do you recall describing FTCS as having a healthy take on risk management? Do you recall saying that you are providing clarity and to the crypto system? Isn't it true? You also told customers that there always has been regulation in crypto and we always have had duties. Over and over again in public forums, you described

FTX platform as safe, correct? In October, you also told the public that customers mattered more than anything, didn't you? You even tweeted that lying to customers breaks sacred rules of conduct everyone knows to follow, didn't you? In your testimony, you described how the risk and clearing model for FTX International's platform worked, right? Since he so often claimed to not remember what he had said, Sassoon often showed evidence of his prior statements. For example, she asked SVF to read his tweet from August 9, 2021, which read, quote, and as always, our user's funds and safety comes first. Sassoon also introduced Bankman Freed's testimony in front of Congress in a document titled FTC's key principles, to emphasize how SBF would lay out how FTX offered protections for

investors in a multitude of ways, including the maintenance of adequate liquidity, as a means to ensure that customers could withdraw their funds upon request. At points, Bankman Free led his annoyance with Sassoon show. For instance, when she asked him to read a phrase on a document, after he read a different part of the text, she redirected him back to the phrase she wanted him to read. Instead of reading it directly, he said, quote, the first word is preventing. The second word is clawbacks. The prosecution showed that SPF's testimony around the government's core allegations was also inconsistent with his prior statements and actions. When the prosecution brought up the Google spreadsheet created by Ellison that had eight tabs, seven containing doctored versions of Alameda's

balance sheets, Sassoun's and Bankman Freeds back and forth on whether he remembered the spreadsheet took up four pages of the transcript. He said, quote, I don't recall it being in this particular document. I remember receiving a document that at least looks like one of the tabs on it. I don't remember exactly what it said, etc. Sassoon finally showed the Google metadata, which revealed that he looked at the document on June 19, 2022. She also pointed out that by the time of his testimony, he knew that the government had gotten metadata from Google about this document. And though she didn't say it, the implication was that he'd chosen to say something under oath

that directly contradicted the evidence anyway. Sassoon brought up Bankman-Fried's testimony from Thursday's evidentiary hearing in which he had said that users who borrowed funds did not have restrictions on what they could do with those funds, that they could buy muffins if they wanted. Then she pointed out that there were rules for when customers could withdraw borrowed funds. they could do so if they had spot margin enabled, and that if they withdrew money, they needed the borrow to be collateralized by assets on the exchange. Although he said he wasn't sure about the rules about collateral on the exchange,

she pointed out that that was an essential feature of the liquidation engine, since it could not liquidate assets it could not access. And that, in fact, he had given this testimony to Congress under oath. Under her questioning, he admitted that there was only one customer besides Alameda that was allowed to withdraw money from FTCS by pledging outside investments as collateral. That was a firm Crypto Lotus that he said had a junior employee with whom he was friendly. However, Crypto Lotus was allowed to withdraw only $100 million. Later on, she drew up an FTC's line of credit agreement.

She began reading one of the terms of the agreement which began, quote, funds advanced through the line of credit. Then she asked SBF to read one of the points below it to finish the sentence. He said, quote, may not be withdrawn from FTX exchange. The prosecution also asked Bankman Freed about his more than $600. million-dollar equity stake in the trading app Robin Hood. Binkman-Fried had purchased a large number of Robin Hood shares via Alameda research, which Notre Dame Professor Peter Easton noted was primarily funded by FTCS customer money. Sassouin and Bankman-Fried had a back-and-forth to establish whether he

was the sole member of Alameda's board of directors, highlighting the defendant's tendency to avoid responding indirect answers. The tension evolved to the point where Judge Kaplan jumped into clarify, asking Bankman-Fried. So did you become director by mistake or accident or something else. Sassune asserted that after FTAX declared bankruptcy, Sassia filed an affidavit to lay claim to the Robin Hood shares. Then she asked him whether FTCS customers could access their deposits at the time SPF filed the affidavit. His lawyer, Mark Cohen, objected, and the lawyers went to the sidebar where Sassoon defended her use of the affidavit by saying, Your Honor, it goes to intent and proof of the crimes, because customer money was spent to buy these shares,

and after the bankruptcy, he was trying to get a hold of this money for himself. Judge Kaplan overruled the objection. Because of the competing versions of SBFs and Sun's testimonies, Ellen may provide outside corroboration to one of them. Thanks for tuning in. And for more updates on the finish of the cross-examination, check back on the pod and check my Twitter and YouTube for more real-time updates. Thanks for listening.