Unchained - SBF Trial, Day 16: In Final Cross Examination, SBF Gets Caught Again by His Own Words

Episode Date: November 1, 2023

For a second, consecutive day, prosecutors pounded away at Sam Bankman-Fried’s credibility, asking the former FTX CEO to explain his obliviousness about how Alameda had spent $8 billion of FTX customer funds. Prosecutors and the defense both rested their cases on Day 16 of the high-profile trial. Both sides will make their closing arguments on Wednesday and jurors could begin deliberating the following day.  While Bankman-Fried claimed that he thought “it was permissible” for Alameda to use FTX customers’ fiat deposits, he also admitted that he didn’t tell his employees not to spend that money or create measures to segregate FTX customer funds from Alameda’s. Prosecutor Danielle Sassoon also grilled him on why he didn’t look into who had spent the FTX customer money. “So it’s your testimony that while you were CEO of Alameda some unknown people spent $8 billion without your knowledge?” prosecutor Danielle Sassoon asked Bankman-Fried, who replied that he didn’t agree that was his testimony. Bankman-Fried later said that he had asked former Alameda CEO Caroline Ellison to explain the $8 billion in spending but did not fire anyone. Under subsequent defense questioning, Bankman-Fried said that he had wanted to look ahead. Earlier in the day, Sassoon had honed in on Bankman-Fried’s allegedly close relationship with government officials in the Bahamas, and presented an email in which he said that the company had “segregated funds for all Bahamian customers on FTX and that it would be “more than happy to open up withdrawals for all Bahamian customers on FTX.” The communication came Nov. 9, 2022, a few days after FTX had halted customer withdrawals as awareness of its financial problems grew.  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 14: Sam Bankman-Fried Casts Blame on Others for Key Decisions at FTX SBF Trial, Day 15: Prosecutors Hammer Bankman-Fried’s Contradictions With Reams of Evidence 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

Hey everyone, Laura here. Welcome to the unchanged recap for day 16 of the SBF trial. Thanks for tuning in. The government wrapped up its cross-examination of former FTX CEO Sam Bankman-F on Tuesday, with Assistant U.S. Attorney Danielle Sassoon shooting more rapid-fire strings of questions at SBF that underscored the incredulity of some of his claims, plus a mic-dropping set of final questions that seemed to indicate the defendant's knowledge of his guilt. In her cross-examination, Sassoon interrogated the defendant's relationship with Bahamian officials, his efforts to determine who had spent the $8 billion of missing FTC's customer funds, his concern, or, lack thereof, about the Fiat ad account,

and his infamous November 7th tweets telling customers' assets were fine, which he deleted the next day. The defense followed with a redirect examination aimed at recreating reasonable doubt that the 31-year-old former FTCX and Alameda Research CEO did not defraud or conspire to defraud customers, investors, and lenders. It used the time to give Bankman-Fried space to further expound on his answers in the cross-examination Monday. The prosecution started its cross-examination by asking Bankman-Freed about whether he cultivated a close relationship with Bahamian officials. For instance, she asked whether SBF recalled, proposing to the Bahamas Prime Minister, Philip Davis,

that FDX pay off the country's national debt of roughly $11.6 billion. SBF said, quote, I don't remember that. Sassouin also asked to SPF about having a conversation with Davis's son about a job in NFTs and giving Davis and his wife, quote, floor side seats at FTX Arena to see the Miami Heat. She brought up a screenshot of a signal group chat named Project Chinchilla Chatter, where SBF had joked that former co-CEO of FTX Digital Markets, Ryan Salem, was a member of the Bahamas government. She also mentioned a private dinner and played a video from the Cryptobahamas conference.

Davis was in attendance at both alongside guests like former U.S. President Bill Clinton, former U.K. Prime Minister Tony Blair, singer Katie Perry, and actor Orlando Bloom. Then she pulled up an email from November 9, 2022, between the defendant and Bahamas Attorney General Ryan Pinder. By that point, FTCS had halted withdrawals, and yet, in the email, Bankman Freed wrote to Pinder, quote, We have segregated funds for all Bahamian customers on FtX,

and we would be more than happy to open up withdrawals for all Bahamian customers on FtX. Bankment Freed admitted that FtX was reopened temporarily solely for Bahamian customers. When Sassoon asked him about what she called Alameda Spending, the FTX customer Fiat deposits from the North Dimension Bank account owned by Alameda, Bankman Freed said he did not learn until September, October 2022, that FDX customer fiat deposits in the North Dimension account had been, quote, used. Under the quick questioning from Sassoon, Sbf admitted that it was, quote, permissible for Alameda to

borrow and use fiat deposits, and yet that he didn't tell his employees not to spend FTCS customer deposits, didn't set up measures to segregate FTCS customer funds from Alameda's funds, didn't tell Alameda employees to keep FTCS customer money in the North Dimension Bank account for the benefit of FDX customers, and yet made representations before Congress about the safeguarding of FDX customer assets. Bankman Freed claimed that in September October 2022, he learned that $8 billion of customer money had been spent. When Sassoon asked him what information he learned about who had spent it. He said, quote, I don't remember knowing anything about particular employees. She rejoined her, so it's your testimony that while you were CEO of Alameda,

by the way, I think she meant FTX, some unknown people spent $8 billion without your knowledge. Then she asked him, you didn't call in your deputies and employees and say, who spent $8 billion? He said he asked Ellison how it happened. Sassouin asked whether he had fired anyone for spending $8 billion, of after customer deposits. He responded, no. She responded, and so just to be clear, it's your testimony that while you were Alameda's CEO, your employees were spending millions

and then billions of customer funds without you knowing it? SBF denied that it was his testimony. During the defense's redirect, Cohen asked Bankman Freed why he had denied to Sass soon that he had spent the $8 billion. SBF first stated how he didn't think, quote, there was a clear simple pointer decision

where a particular personal group decided to spend the money. Moreover, he, quote, wasn't particularly interested in trying to dole out blame for it. That wasn't my priority. It was generally something I deprioritized as later, and I tried to focus as much as I could on what stuff has happened, what's the best thing we can do going forward. Similar to the earlier line of questioning

about whether or not Bankman Freed had tried to identify who had spent $8 billion of FJX customer money, Sassoon showed multiple times that SBF's actions don't quite match his story. For instance, he described simply overhearing about the Fiat ad account from FTCS co-founder Gary Wong and director of engineering Nasht Singh just after Ellison had feared that Alameda might have gone bankrupt. Earlier, he had testified that at this point, SPF learned that Alameda's liabilities to FDX were $10 billion, not $2 billion as he thought.

In this section of the transcript, Danielle Sassoon says, And you didn't say, hey guys, what's this Fiat ad account that had an $8 billion bug that almost made Alameda bankrupt? SBF replied, when I heard it, I didn't have all that context, but I did ask what the Fiat ad account, that was an account, was referring to. Question. And you were told, weren't you, that it had to do with Alameda's liabilities to FTCS for customer funds, right?

Answer, not at that time. I was told they were busy and I should stop asking questions because it was distracting. Sassoon asked, So it's your testimony that your supervisees told you to stop asking questions? In the overflow room, people laughed. Sassoon aimed at Bankman Freed's credibility, highlighting tweets that, from the government's point of view, demonstrated how the defendant misrepresented FTX's financial status to customers.

She focused on several tweets SBF posted on November 7th, which were deleted the day after, once it became known that FTCS did not have the full amount of assets to process customer withdrawals. Bankman Freed said that before FTCS went bankrupt, but as customers were rapidly withdrawing from the exchange, he was writing tweets because, among other things, he wanted to reassure customers and have them leave their funds on the exchange

instead of withdrawing. Referring to the statement in the November 7th tweet, quote, FTX has enough to cover all client holdings, Sassoon said, quote, your tweet doesn't say that Alameda has enough to cover all client holdings, does it? He agreed. She reminded him that in previous testimony, he said that when he wrote this tweet, he was referring to the fact that Alameda had more in assets than liabilities.

He said he wouldn't put it that way, but then she asked, quote, on November 7th, FTCS itself, if you disregarded Alameda's assets, did not have enough to cover all client holdings. He disagreed. Bankman Freed admitted that even if he and Alameda had liquidated its assets, for example, by either selling their investments in Robin Hood and recalling their money from Modulo, the amount was still less than needed to cover FTC's obligation to its customers. And Sassoon asked him if these assets were investments. He said yes.

Then she said, quote, You tweeted, didn't you, that we don't invest client assets? He said, that is correct. For the final line of questioning for the last line of questioning for the, the cross-examination, Sassoon created a mic-drop moment that indicates SPF knew who the four co-conspirators were, even before all four were publicly known. Sassoon began by asking, quote, Mr. Bankman Freed, you would agree that you, Caroline, Gary, and Ashad were the ones involved in the decisions to spend F-TX customer money by Alameda,

right? He said no. Then she asked if he had learned in December that Caroline and Gary had pleaded guilty. He said yes. When asked if he knew that they were both cooperating with the government, he said he wasn't sure, but, quote, I may have. Then she pointed out that in January, he would have learned that Singh had also pleaded guilty. He said January or February. She asked if, in December, when he'd heard about the guilty pleas of Caroline and Gary, he'd been surprised not to learn anything about Nashad. He agreed. She responded, because Nashad was the fourth person involved in your scheme to use FTCS customer money, right? He said, nope. She pulled up the same Google Doc written on December 25, 2022, in which, in Monday's testimony, Sassoon had shown he'd

been wondering if he could get the Robin Hood shares transferred to himself. However, this time, she focused on a different section of the document, labeled Nishad. Question, do you see it says Nishad? Answer, I do. Question. And A says, quote, lots of the complaints, etc., filed at this point, make claims like the three co-conspirators in a way that doesn't really seem to leave much room for them adding on a fourth. They don't seem to be keeping a seat warm for him as a defendant. Do you see that? Answer, I do see that.

Question. B, also, there's no plea deal, no nothing, yet. Do you see that? Answer, I do see that. And, quote, C, what does this mean? one, he got immunity. Two, they aren't bothering with him. Three, they'll just have a separate parallel set of complaints for him once they get

past whatever the blocker is. Four, something else? You wrote that, Mr. Bankman-Fried, correct? Answer, I think so. After the defense's redirect, the judge and both teams of lawyers had a charging conference to revise the jury's instructions. On Wednesday, the defense and prosecution will give their closing statements. Then the jury deliberates.

The end is in sight.