Unchained - SBF’s Lawyers Could Be Annoying the Judge. How Might That Impact the Trial? - Ep. 554

Episode Date: October 9, 2023

The first week of the criminal trial of former FTX CEO Sam Bankman-Fried has come to a close, with his former friends and FTX colleagues Adam Yedidia and Gary Wang delivering powerful testimonies that are forming the foundations for the prosecution’s arguments — arguments that the defense may have a difficult time surmounting. Sam Enzer, partner at Cahill Gordon & Reindel, and Brian Klein, partner at Waymaker, discuss Alameda’s special privileges coded into the FTX software, the reason why a scorched FTX customer may have been chosen as the first witness, and why upcoming key witnesses are going to be a “real problem” for the defense. Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, Amazon Music, or your favorite podcast platform. Show highlights: What we learned about the prosecution and defenses strategies after the first week of the trial How the jury being mostly professionals may impact deliberations Why Brian believes someone “out of the mainstream” would make an ideal juror for the defense Why Sam believes the defense’s opening was stronger than the prosecution’s Which arguments may be the most difficult for Sam Bankman-Fried's lawyers to defend Why the defense’s “building a plane as you’re flying” analogy may come back to hurt them in closing Why Sam believes the order of the witness testimony so far is helping the prosecution build the foundation of its case Whether Adam Yedidia’s testimony was effective at establishing him as a credible witness Whether the fact that some witnesses are cooperating to avoid jail time will impact the jury’s decision What Gary Wang, former CTO of FTX, revealed about Alameda's special privileges coded into FTX software and how it wasn’t an “oversight” Whether Judge Kaplan is growing impatient with the defense Whether the prosecution's objections were sustained reasonably by Judge Kaplan Why upcoming insider witnesses pose a “real problem” to the defense Why it's "not even an open question" that the defense team will appeal if they lose the case Thank you to our sponsors! Crypto.com LayerZero Popcorn Network Guest: Sam Enzer, partner at Cahill Gordon & Reindel. Previous appearance on Unchained: SBF Trial: How Sam Bankman-Fried’s Lawyers Might Try and Win His Case Brian Klein, partner at Waymaker Previous appearance on Unchained: SBF Behind Bars: Why Revoked Bail Is a Big Deal for Crypto’s Biggest Trial Links Previous coverage by Unchained on the trial of Sam Bankman-Fried: Sam Bankman-Fried Trial: Here's Everything That Happened So Far 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 Did Sam Bankman-Fried Have Intent to Defraud FTX Investors? 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 In the SBF Case, Elite Corruption Is What’s Really on Trial Learn more about your ad choices. Visit megaphone.fm/adchoices

I think that, you know, you're getting right into the peeking behind the curtain, seeing what's happened there. They're telling you what they say and what they saw and what they did. And they're just going to be a number of them in a row. So they started with a smaller one. I think to build to the credibility of each one as they go along, right? They do Yuditya first, then they go Wang, and now they're going to Ellison. So I think that's intentional. It's like putting these stepping or these stones in place to build it up with its founding.

And so I think it's a good, that's a smart strategy on the government's part. Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto eight years ago, and as a senior editor of Forbes, was the first mainstream meter reporter to cover cryptocurrency full-time. This is the October 9th, 2023 episode of Unchained. Defi just got way easier with VaultCraft,

Popcorn's No-Code Defy Toolkit for building, deploying, and monetizing automated yield strategies. From institutional service providers to Defi DGens, anyone can use VaultCraft to supercharge their crypto with custom cross-chain yield strategies. Learn more on VaultCraft.io. The game has changed. The Google Cloud Oracle built for Layer Zero is now securing every Layer Zero message by default. Their custom end-to-end solution sets itself up to bring its world-class security to Web3, and establish itself as the HTPS within Layer Zero messaging. Visit Layer Zero.network to learn more.

Buy, trade, and spend crypto on the Crypto.com app. New users can enjoy zero credit card fees on crypto purchases in the first seven days. Download the crypto.com app and get $25 with the code Laura. Link in the description. Today's topic is the ongoing criminal trial of Sam Bankman-Fried. Here to discuss are Sam Enzer, partner at Cahill, Gordon, and Rindell, and Brian Klein, partner at Waymaker. Welcome, Sam, and Brian.

Thanks for having us on, Laura. Thank you, Laura, for inviting us on. So you were both recent guests, so I'm not going to go into your backgrounds first, but to help people differentiate your voices, Sam, why don't you start by telling us what your top takeaway is so far from the trial? I think the top takeaway is you see the government honing in on their theory, a big part of their theory of the alleged fraud is this notion that FTCS told customers, hey, deposit your money it's safe without disclosing that they were going to let an affiliate

Alameda research use the funds to trade and have special privileges that other customers of FTX did not have. That, I think, is one interesting thing. And then we've seen from the defense side, some of their defense themes come out, like that Sam Bankman-Fried thought it was legitimate for Alameda to have these privileges, that he didn't think there was anything wrong with that because there was enough collateral for the money Alameda was borrowing, and some of the defense themes in terms of normalizing the conduct. So things like they were building the plane while they were flying it to help the jury sort of understand that things were chaotic, and they shouldn't necessarily infer criminal intent

from things that may have just been sloppy, negligent, overlooked. And Brian, what would you say your top takeaway is so far? I think the government's diving into this case and going to the deep end very quickly. I mean, they're calling key witnesses right off the bat. Gary Wang's up now. And then they're going to call Carolyn Ellison. These are the people, everyone's been waiting to hear for them. and they're coming up right away.

And so one of my questions is, how is this case going to go five to six weeks? I don't know what's had it take that long if they're going through key witnesses off the bat. Now, we can all anticipate other types of witnesses they'll call, things they'll do. But, I mean, they're really going right at it right away. All right. So let's dive in with the very beginning of the trial, which was this new term I learned at some point in the last couple weeks, voir dire. Wadir, did I say that right?

Correct. Which, Sam, I love this term. I've known I said this multiple times. It's jury D selection. And what we ended up with is a jury that consisted of people with these professional backgrounds. There was a physician's assistant, a social worker, a Metro North Train conductor, a librarian, a United States Postal Service vehicle maintenance worker,

a special ed teacher, a nurse, a Ukrainian advertising person. And then there was a retired I banker. And, yeah, it was about three-quarters women and I think a fourth men. And so I wondered how you thought these people, you know, the fact that, for instance, nearly none of them have financial backgrounds would affect how the trial unfolds. I think what's interesting about jury selection, and it's not surprising there's a postal worker there because almost every case I had, there was a postal worker. So a lot of government employees get called all the time.

They get full pay weather and jury duty. So it's easier for them to serve, which is a part of an interesting thing. That sounds like a Manhattan jury to me. I mean, you've got a lot of well-educated people. You've got people from professional backgrounds, some of them. And you've got a pretty diverse array of people who would live in the Southern District of New York, which stretches from, you know, Staten Island, Manhattan, the Bronx, and up. And so I think this jury, you know,

reflects a cross-section of that district. You know, you can read into, well, you've got three-quarters women, one-quarter of men, and there's only one or two hard-financed people there. I don't think that really matters here. I think the prosecutor are putting their theory forward in something that lay people can understand. And they need to do that anyways, because you're always speaking to the juror or the jurors who aren't the highest-educated people or aren't the most professionals who don't have the special maybe skill set that's relevant for your trial. Because if you're a prosecutor, you've got to get 12 people to agree unanimously on something. So you can't be talking above the head of anybody. And I think that's going to be a real focus of the prosecutors here is making this simple, understandable case. And, you know, often the defense tries to make things seem more complex than they are. Or it may be complex and just explain the complexities. I agree with all of that. And I'll just say, I think the makeup of the jury, I think,

would be it doesn't favor one side or the other from what's described. But I think one thing to remember is the jurors can talk to each other, right? So if you have one or two that you educate and they get a point, they can educate the rest of the jury. And so I think the way both sides look at it is they think about who do I need to arm with the points who can then advocate in the jury room when it comes to deliberation. So maybe they're not all finance people. But if one finance person gets it and they can explain it to the others, that makes sense. And then there may be something that is, you know, more understandable for the postal worker that they can relate to more, that they make more sense.

And, you know, another important thing is regardless of finance, a big part of the jury's job is to evaluate witness credibility. And that's something everybody is equipped to do. indeed, the folks who may not be in front of a computer all day, but rather are delivering the mail to lots of people, talking to lots of people, may have a pretty good sense of what to look at when they're evaluating demeanor to determine whether somebody's lying or not, and they have value to add in that room. I just add to one point that the jurors can't talk now about the case, and I think Sam's saying at the end, when they're set out to deliver it, they can talk among themselves.

I think that is an important point. I suspect every time I've done a trial, you pretty quickly try to figure out who the four person's going to be and usually you're right. You know, and so oftentimes, to Sam's point, you are trying to get one or two people to be advocates for you, but you really need everybody to kind of understand what's happening. Otherwise, you're going to have a problem, particularly gear across. Wait, and I'm sorry, who the four person's going to be. What does that mean? So the jurors at the end, when they go back, they'll select somebody who's the four person.

That's the lead juror who will communicate the notes usually and communicate the final verdict when they come back. They're kind of the head juror. They don't their votes the same as every other jurors. It's not different. But they're sort of the nominal head juror. But oftentimes it's a person who may be in a finance case, the person with the finance background, because the other jurors will look to that person and say, hey, why don't you help us lead us through this? Because to Sam's point, you can explain this to us also. Yeah. The person who was the retired investment banker also had a Stanford MBA. But I think what...

I put my money on that person being the four-person. I was a betting game right now. Yeah, I should also say their spouse also was retired and had worked at Berkshire Hathaway. But anyway, oh, I did so the reason, and maybe I should have said this in the phrasing of my question, but the other reason I had wondered about the professional backgrounds of these people is that when you were actually in the room and you were listening to all the prospective of jurors, like a very large proportion of them actually worked in finance, probably because it is lower Manhattan. So just to see that it all got whittled down to only one, I was like,

oh, okay, because it just felt like, you know, there was like a FINRA person and they were like RIAs and like accounting people. They were just like a lot. So anyway, we don't need to belabor at this point, but it was just something. One thing I think would be interesting, I'd love to hear Brian's take on this. If you were defending Sam Beckman-Fried, would you want to find person or would you want to exclude them? Because I think, you know, on the one hand, they're going to get a lot of the concepts, which is relevant to some of the defenses. But on the other hand, if they're in a traditional financial background, they may be accustomed to more controls than we're in place here and may find some of this stuff to be Fugazi. What do you think? I don't think if I were, you know, representing San Bacon Free, I would want an accountant, a traditional finance person, I would want some out of the mainstream. I'd want younger people in general. There's certain, you know, you do trade in stereotypes when you're selecting a jury because you have to because it's a very quick process.

And listen to you're trying to like figure out what a person might believe. And you're also doing just to go in the little bit of deep dive here. Sometimes if you have a robust defense team, you're looking up their, you know, social media posts. You're trying to, you're quickly Googling their names. You're trying to figure out about them to learn about their views. And they're generally like pro-government. or if there's someone who has, you know, had views that are skeptical of government. And if you're in the defense, of course, you're looking for people who are skeptical.

And one last question I wanted to ask about this was one of the questions that the prospective jurors had to face was whether or not they had served on a jury before. And if so, whether or not they'd reached a verdict. But the judge did not want to know what the verdict was. I wondered, what was the purpose of that question? And I wondered, like, you know, would the prosecution be more motivated to, pick people who had reached a verdict and then the defense wouldn't want to pick those people. I was like trying to figure that out. The other question is asked for every juror in every type of case, even civil cases.

It's a standard question. And I think the goal is if you're the lawyer, you know, trying to pick a good juror, you want to know if they've been able to reach a verdict. If you're a prosecutor, since 95% of people who go to trial in criminal cases are convicted, it's probably safe to assume that they voted to convict. But if they didn't reach a verdict, and you know that there was a hung juror, and that there was some element of whether that juror or others who weren't able to reach a conclusion, and that you would look potentially favorably on depending on how the juror described it.

So that is an important question if you're a prosecutor or defense lawyer, and for the judge. The judge doesn't want people who are disruptive. On the jury, he wants this case to go through and he wants the jury to deliberate and reach a verdict. This judge isn't supposed to have a thought about, you know, whether conviction or acquittal, but this judge Kaplan wants an orderly process. And that's what he's looking. Okay. Yeah.

By the way, if I remember correctly, I should have checked through my notes. But I'm pretty sure everybody who said that they had served on a jury said that they had reached a verdict. I don't think there was anybody who said they didn't. So that's kind of interesting. All right. So let's move to opening statements. What did you each think of the opening from the prosecution? So I thought it was a textbook government, STNY opening in terms of the style, well done in terms of being accessible to the jury, simplifying the issues executed well, as I can tell from the transcript.

And I think the general theme was, you know, to explain at a very simple level how a fraud was committed by, Sam Bankman freed and the essence of the of the the fraud. What was it that made this fraudulent telling customers that their money would be safe, repeating that to Congress, saying it in tweets when in fact the money could be given out the back door to Alameda. The controls weren't disclosed. Alameda, the funds were going to Alameda to literally to an Alameda bank account when customers thought they were depositing at FTX, and according to the government, Bankman

Freed is taking the money and using it for his own purposes as he wasn't authorized to do. They also gave, I thought, a pretty good roadmap of, you know, here's how we're going to prove the case. We've got documents. We've got cooperating witnesses, and they previewed. These are folks who committed crimes. They've admitted the crimes, scrutinized their testimony, but look for corroborating evidence. what I thought that they did not, you know, I thought they elided over some complicated issues in ways that the defense could exploit, things that are more complicated than they seem, and were not necessarily nefarious, but the government is trying to paint them as nefarious by just sort of glossing over the details.

One thing I didn't see when I was last on, I said the STMI prosecutors love to say at the end, there are three things. we ask you to do three things. Pay close attention to the evidence. Follow Judge Kaplan's instructions on the law. Use your common sense. They did not do that here. That was a departure. I'm going to have to talk to Damien Williams,

the U.S. attorney, about why they chose not to do that after this. I thought it was a standard, you know, opening statement by prosecutors. One thing I didn't, couldn't tell, it didn't seem like there were visuals tied to it or if there were, they weren't really discussing them. And a lot of times there was a lot of them. There were some, I think. I wasn't in the courtroom, so I didn't see them, but there were a few. There were presentations for both.

Yeah, the defense definitely was clear from the transcript they were using them, because the lawyer was having somebody like put it up, right? And so usually you want a simple story with some visuals. And, you know, prosecutors, everything comes down to the close, really. I mean, you want the jury to understand what you're trying to do. You want them to know what to pay attention to. But you're not expecting them to make up their mind. They're not supposed to.

the opening statement. So you're really trying to give them a roadmap of how to understand the trial both sides are and how to look at it. And I think, you know, the defense made that a little clear in how they were presenting it. The lawyer made it very veryx, they're like, hey, this is how I want you to try to look at things. This is the prism I want you to see things. But I thought both were pretty standard and nothing really strayed from what was expected in either one. Interesting. I have to say, like, my experience in the courtroom was like the prosecution was very easy because they used simple words like lie, stole, things like that. But parts of the defense, they used terms that were technical, like security, collateral, margin. And so even though I know this in and out, like, I was also like having a slightly hard time to follow. There was a point where they moved away from that. But I remember thinking, how was that going over with this particular jury? Because I was like a, a little lost also because he was also speaking, I felt like a little bit more quickly than the prosecution. I personally thought that if I was comparing the two, I thought the defense opening was better

and not typical of what you would see in most trials because they really engaged with the substance of the case. However, I do agree that there were times where Mr. Cohen was sort of not explaining the background, you know, like just jumping in with stuff that the jury had not been given any context for. And I think Brian can tell you, like on the defense side, what does that happen? The defense is much more reactive. So the government gets to plan their opening. They can execute it as they plan it. They can practice it a thousand times. The defense lawyer is hearing the government opening for the first time, has to react to it and may have a lot of things going on in terms of the prep. And so, you know, you could sort of see in that defense opening, oh, you got the wrong

slide up. Oh, could you go back to that to that other slide? You know, they're much more, they have to deal much more in the moment of what's happening. But I still thought on the substance that the defense opening was stronger. Oh, interesting. Yeah, maybe what I also picked up was it definitely felt like the prosecution delivery was like, like I said, it was just, it felt like it was delivered a bit more slowly. And anyway, for whatever reason, I felt like in the court um, I had a easier time following it. You need to talk slower than you think, actually. It's one of the hard things about, you know, presenting to a jury is it's not meant to be

rapid fire conversation usually. I mean, you need to be yourself, of course. You can't, shouldn't change your personality. But oftentimes myself, you know, there's a lot of adrenaline. You need to like take a beat, take a breath. and remember it just goes slower because again you've been living and breathing this case both sides for over a year now or whatever almost a year now and everything you understand and you've got to remember these you know people the 12 plus the alternates yeah i'm sure they've heard about it but they don't

you're now throwing them in the deep end of the pool with you and so i think your point is in the stew one laura because if you're knowledgeable and you're wondering about some of these terms you can imagine what some of the jurors are thinking what what the heck's a margin like where was it that even? And so I think that could be a danger for them. But I do think that the defense did use this analogy or metaphor, whatever it is, about a building a plane why it's flying, which is somewhat common defense theme for financial cases. And I thought that I'm sure we're going to hear that again. But I would tell you what, right now the prosecutors love when defense lawyers use those kind of metaphors, because they will slam them, in my opinion, in the

close with that. Oh, interesting. They'll talk about the plane and how, I mean, they, they love that. That's always a danger. I don't like using analogies or metaphors and things like that in the opening defense, that I always worry that it will get turned on me because I've seen it and I've done it when I was a prosecutor and I've seen what happened on both sides. So you've got to be very careful in your opening because you will comment on someone's

opening at the close. You will say if you're done, remember when they told you this, this and this. I'm going to tell you right now, those three things didn't happen. or you've heard this and it's different. The government will do the same thing. Remember when that defense lawyer got up and told you this? When we talked about that plane? Well, guess I'm going to talk to you about a plane right now.

So let's talk about the government's first witness who was a trader on, or I should say, customer on FTCS, Mark Antoine Juilliard. Why do you think, and he had lost, by the way, I think in another episode I said $140,000. It turned out it was $100,000. He had initially put $140,000 there. So he apparently lost $100,000 on FTCS. Why do you think they chose him as their first witness? I personally think that the significance of his testimony was to focus on the period in November of 2022 when, let's say, the likelihood that Bankman Freed knew there weren't enough assets at FTX to cover withdrawals.

And the Alameda situation had really come to a head. They're days away from filing for bankruptcy. and yet he's saying on Twitter, our competitors are trying to hurt us. It's not true. We have enough assets to cover everything. We've always taken safe. So at that moment in time, that is the hardest statement.

That's the tweet that gets deleted, I believe, as well. That is the hardest statement for the defense to defend, to explain why that would have been okay, reasonable, or in good faith. That is the toughest one. It's the most likely to be established as a lie. And this particular customer actually read it, remembers it, and can introduce it. I think that's why they picked him. Interesting. And what about you, Brian? Well, they mentioned there were two types of people who lost money here. You know, retail customers and institutional. So it's not surprising they're trying to put a human face on both right away. You present.

a financial fraud case, you're going to want to put the victims up, or at least people who are in the buckets of victims, because you can't put every victim up here, or everyone who lost money because there's, you know, whatever, reported over a million people, right? So I don't think that's surprising. I think that was pretty expected, is to put those people up and show what people were seeing and hearing, and then go right into those cooperators, you know, go right into or the insiders, which is where they are now. They're just doing a series of insiders. And what about the cross-examination of Mark Antoine-Jouliard? Well, first of all, what do you feel the defense tried to do in its cross-examination and, you know, were they effective?

Although I thought the defense opening was excellent, one of the best and, frankly, better than the government's opening in many ways, I think that this cross and most of the crosses have been pretty ineffectual so far. So I think what they were trying to do, and I think I talked about this the last time I was on, is that. is sometimes there are affirmative facts, very basic facts, that the defense wants to make sure they can use in closing. And they want to have the option of not calling Sam Bankman-Fried or other, they want to have the option of not putting on a defense case. So I think some of what they were doing was just getting some very basic information in a format they like that they could use in closing. And then part of it is normalizing things. So you heard, questions like you would expect a CEO to do ads, right? You would expect a Formula One ad. You would expect,

and you didn't invest because of a Formula One ad, right? So they're trying to just sort of, there are these atmospherics that the government has painted, like Sam Bank, Penfried made all this money, high flying. That is sort of negative in the jury's mind. It's not really like a basis to convict, but it paints him in a certain light as a greedy monster who was, you know, trying to get power and become very influential and it's all a lie. And they're trying to sort of take the sting out of some of those atmospherics. And Judge Kaplan, although that stuff is really important to the jury dynamic, Judge Kaplan has no patience for it because he doesn't see how it affects the bottom line elements of each crime,

and he starts cutting off the defense pretty quickly. And that can be a problem when the judge sustains too many objections or doesn't let the defense do a robust cross. I mean, there is an element. I mean, of course, if the defense loses, and I think that's to be expected, they're going to appeal. And I think, you know, part of any defense case, no matter what you think your odds are, is thinking about what record you want to have to have if you need it for appeal. I've seen appeals where if a judge cuts the defense off too much and you sort of take the totality at the end of the trial,

one of their arguments is, hey, we weren't allowed to put our case in. The judge kept cutting us off. And they point to like, I've seen studies done it like, oh, there were 200 objections and 197 of them. I'm sustained by the government. You know, so that kind of thing, you know, let's see how this trial plays out. There's a lot more to go here. But, you know, Judge Kaplan's impatient now. I don't think he's going to grow more patient as this trial goes on week after week after week.

I think there were a lot of missed opportunities in this cross and a lot of the crosses. So I think one thing, and I'd love to get Brian's take on this because I know he's, tried many cases on both sides for the government and for the defense. I think one thing that the defense needs to do here is convince the jury that there's no way to convict without the cooperators to set up the arguments that we expect they'll make that the cooperators aren't credible. And so I think they missed opportunities on the lay witnesses, you know, Mr. Julian and the witness from Paradigm to sort of establish that, hey, you don't know enough to establish the elements of the crime here, right? You don't know this tweet the government showed you. Do you know what Sam

was thinking when he said it? Do you know if it was not true? Have you ever seen the internal ledgers? Do you have any, you know, do you know whether that was a false statement? And just sort of pin down that there's these little, these witnesses here and there that the government calls almost as pallet cleansers between the cooperators, they don't move the needle. The bottom line is the, is the the witnesses who may have an incentive to lie. So, you know, one question is if the government were to try to say that, or sorry, not the government, the defense, if they were to try to say, oh, you don't really know if Sam was lying in his tweet.

Isn't it obvious that he did? Because the tweet said, you know, assets are fine. Your assets are safe. And then he has never gotten the money back. So isn't that why they're not doing that? Well, it may be just because it's not true, doesn't mean Bankman Fried knew it was not true, right? So for example, suppose Bankman Freed, for whatever reason, was told, let's say Carolyn or Gary or Nashad said to him,

don't worry, it's fine. We talk to the accountants. There's enough. We got a new investment. Whatever it is. Now, whether that was true or not, you know, there's, it's not enough that the state be provable as incorrect, he has to believe and know that it's not true. And so there's a, there's that extra step along the way. I see. Okay. All right. So now let's move on to Adam Yadiddea, who, I mean, his testimony was, I felt very strong. What were your top takeaways from reading his testimony? I think with these next witnesses, the insiders. This is a real problem or the defense. I think that you're getting right into the peeking behind the curtain, seeing what's happened there. They're telling you what they say and what they

saw and what they did. And they're just going to be a number of them in a row. So they started with a smaller one. I think to build to the credibility of each one as they go along. They do Yudidia first, then they knew Wang and now they're going to Ellison. So I think that's intention. It's like putting these stepping or these stones in place to build it up with this foundation. And so I think it's a good. That's a smart strategy on the government's part. And I think, you know, the fact that he had immunity. I don't know how much jurors really care about that.

I think the defense will make a big deal about it. They always do. I would, I were a defense lawyer. But ultimately, if they think this guy's telling the truth, they don't care if he got immunity or not. He comes across his credible. And again, this is one thing where you really need to be in the courtroom because I think Sam will agree. agree. You can read a transcript and someone can sound very convincing, but if you're there and you see them and they're looking down why they're answering or they're like not making eye contact,

there's all these ways we read credibility that actually in the jury instruction they'll get later or tone of voice. So, you know, I think a lot's going to depend on what those jurors are seeing and hearing in the courtroom that's hard to really understand if you're not there and just reading a transcript. Yeah, so I will actually tell you what Adam Yuditya's demeanor was, but first we're going to take a quick word from the sponsors who make this show possible. The game has changed. The Google Cloud Oracle built for Layer Zero is now securing every Layer Zero message by default. Their custom end-to-end solution sets itself up to bring its world-class security to Web3 and establish itself as the HTTPS within Layer Zero messaging.

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Coupling is quick, steamy, and sometimes in hot tubs. When morning arrives, they do it all over again. Canada Shore, new original series, now streaming on Paramount Plus. Back to my conversation with Sam and Brian. So Adam Yudidia definitely came across as very honest, and thoughtful. You know, he looked straight ahead. He kind of had this sort of staccato way of talking, I felt, where he would pause to sort of take in the question, and then he would very clearly give the answer, but it was kind of a bit rapid when it came out. The reason why I say he felt

very honest is I remember, I think it was the defense asked him something like, oh, well, you know, you were a senior developer at FTX. And he said, by senior, do you mean that I was there a long time or that I was high in the ranking or something like I don't remember if that was the exact thing but it was like he wanted to be very specific about everything and make sure everything he was saying was accurate and so it's just interesting I mean he seemed also super young they you know a lot of a lot of them seem quite young so let's actually talk about the one thing about his testimony that both the prosecution then the defense revisited and then the prosecution revisited again and it was the conversation on the paddle tennis courts so paddle

apparently is like some game with like Spanish or Mexican origins or something. I feel like I keep seeing it misspelled because people don't understand. It's not like the way we would write paddle in English, but it's like a Spanish thing. Anyway, okay. So in this conversation, Adam had found out that there was $8 billion, this million billion. Everybody keeps always being like, what did you say million or billion? There was $8 billion dollars that Alameda owed to FTX. And this conversation happened in, I think it was June of 2022.

And so he said something to Sam, you know, mentioned this and then said something like, Are we OK? And Sam replied, we were bulletproof last year. We're not bulletproof this year. You know, what was your take on like why they kept going back to this conversation? And what do you feel it was that the prosecution got across by, you know, relaying this anecdote and what the defense was able to get across? I would say there were a couple.

key points of Adam Udida's testimony. This is one of them. And the purpose of that particular anecdote was to establish knowledge. Okay. If Sam Bankman-Fried is saying from his own lips in June of 2022, which is several months before the tweet, the witness before described where he says we have enough money, is saying we're not bulletproof. And I believe the rest of what he said in that conversation was it could be months to years before we're bulletproof again. Six months to three years. Right. Yeah.

So the government, we haven't heard yet what does it mean when he says not bulletproof? But you can expect that they'll argue in closing or maybe other witnesses will elaborate on this. Bulletproof may be a reference to we don't have enough to cover the withdrawals, right? The other thing, and I think that's why it's so important. And as Brian's telling you, so they bring Adida out to do several things, right? first, they have him introduce the cast of characters. All right? So like before Brian Klein, one of the greatest trial lawyers for crypto in America,

takes the stage, you don't have him just take the stage cold. Somebody says, let me introduce you to Brian Klein, right? So they're using Adida as an introductory witness to tell everybody about the relationships. You've got Sam, you've got Gary, you've got Nishad, you have Caroline. That wasn't, those names did not come out in the government opening. need to acclimate the jury to them. Then you've got this very important pivotal conversation about the paddle tennis court conversation, not bulletproof. And you notice the prosecutors in an ideal world, they would have this written, okay? They would be an email or something in writing that they can

point the jury to and there's no disputed habit. This is somebody remembering something. Memory is frail. So what they try to try to do is what we defense lawyers sometimes call oak tree kharata. They try to do things to make it seem more credible by building, like, here's a photo of where it happened. This is where I was standing. Yes, they showed a photo of the paddle tennis courts, and then they said, where did you have this conversation? And it was like, oh, Sam was under this hut in between these two courts. It was very specific.

So they're trying to create the impression that even though this wasn't written in stone, it's written in his memory in stone. And they want the jury to remember it with the photo. in the association. There were a couple other things that he talked about, which one thing that is going to be significant is, Yadita mentioned that Bankman-Fried instructed everybody at FTCS to communicate in signal to have auto-delete.

And he said that the reason that they wanted auto-delete was because it would look bad if regulators saw the communications, not a helpful fact for the defense, very helpful for the government to argue consciousness of guilt. And then on cross, I do think, you know, I thought there were two very important points that the defense made on cross. So one of them has to do with this idea that when you deposit money to FTX, it's actually going to Alameda in an account at North Dimension Bank within Silvergate Bank. Okay, this is a very important fact for whether or not customers were misled. And let me just, if I can just go to the transcript here, this is at page 2365, I think, of the transcript.

What the defense got on cross was that customers were told that their deposits for FTX would go to North Dimension in the wire instructions. Okay, this is in the testimony on cross, and it was something the defense mentioned in the opening. So you see, you've got a problem here, a hole in the government's theory. If this is a fraud that the money can go to FTX, how do we reconcile that with the fact that customers were notified? It was disclosed to them in the form of these wiring instructions. Now, is that enough? Did the customers appreciate it?

But it's different than saying there was absolutely no disclosure. The other thing they did on Cross, which I think we should get Brian's take on, is the Defense did a pretty standard thing where they talk about you're getting immunity, who decides whether you're lying or not, how many times did you meet with the government? Brian, what's the significance of that? Why is the defense doing that? Well, it is standard. And they're just trying to give an alternate reason why this person might shade their testimony or talk, tell things in a certain way. So if they close, they can say, look, everyone who's pointed the finger at Sam, and not same answer.

But SBF, you know, they all cut deals with the government. They all, you know, have reasons to lie. That's what the defense is going to say at the end. And they said it in their opening. They laid out this theory. And so that's very standard is to get the jury from the dissent's perspective to understand the deal the person's cut and how many times they met and all these things. The government usually elicits that in the direct too just because they want to blunt that blow.

they wouldn't say, hey, you're testifying here today, but you have an agreement, right? And what is like, you know, they blunt that blow a little bit, but the defense really wants to harp on it and make it a big deal. And that's very standard. One thing that I, I can't remember if this was Adam, Yadiddeo's testimony or if it was Gary's. But I think it was Adams. When the defense was cross-examining, you know, they kept asking about this. But the funny thing was they kept saying, who was it that? yet decides whether you actually get this immunity?

You know, is it the prosecutors? Or like, who does the evaluation? And he kept saying, well, I don't know who actually does it. So it's just so funny because they asked multiple times, but he really didn't know the answer, so he couldn't. And anyway, it was, again, I felt it was one of those points where, again, he's just being so honest and making sure it's like literally as he was instructed, just the truth.

knows, but since he didn't actually know, he, like, couldn't really respond the way I think they wanted him to. That's a critical component of setting up the impeachment of a cooperator or somebody with immunity. And I think what you saw there was what happens when a defense lawyer doesn't execute the question properly. They need to ask foundational questions that are simple for the witness to lock it in. And I think my friend who was doing that cross, Chris Everdale, and I were prosecutors together at STNY. why we worked together on the defense side, very good lawyer. For whatever reason, he just did, he tried to jump to the ultimate question without taking the methodical, you know, do it step by step to lock the witness into that.

And as a result, he kind of lost the opportunity to make that argument. Well, he doesn't have the testimony he needs to make that argument, but I'm sure he'll be able to establish it later. And remind me, was it Yadidia that he had that? Okay, okay. And if it's helpful, I found the, so it's page 235 of the transcript. and this is what I was referring to. And it says, Everdale is asking witnesses, asking questions of Yidia.

And he says, customers also were aware that their money was going to North Dimension Bank account, right? Answer, yes. Question. Is it 236? Okay. Because that was on the wire instructions that they were given, right? Answer, yes. And when they did make their deposits, they got a credit on their FTCS account, right?

Answer, yes. So this is clearly going to be one of the arguments the defense makes. There was no fraud. We disclosed it. The government told you in their opening statement, their opening statement is a promise, members of the jury. They told you, they promised that the evidence will show what we say. Okay.

They made a promise to you that there was a lie about customers' money going to Alameda and this bank account. Well, that promise they made is not true. I know, but I'm pretty sure when the prosecution went back, I think she said, was it ever disclosed to customers that Alameda was the ultimate owner of that bank account and that North Dimension was owned by Alameda, and that was not. So I think she was able to- Laura Schin for the government.

No, I'm not, I'm just pointing out that later, you know, I was in the courtroom. So I just remember like, oh, yeah, she went back and went over that point again. And this will be the debate, right? Is it enough to set, like, does the fact that it's going to this other bank account put them on notice that it's actually Alameda? You know, we'll see. And I don't know if there are other pieces of this puzzle that are going to connect North Dimension to Alameda in the minds of customers. Okay. It's going to be, you know, we're going to hear, though, from these insiders who are all going to say, Sam knew and we were we were defrauding people, right?

I mean, this is the, you know, I mean, we haven't heard from Carolyn yet. of working to hear from others. I think as this plays out, the government, you know, Sam Enzo was raising a good point. You know, the defense is trying to take these issues and elicit testimony that's helpful. And of course, the government's, they, they're sitting there right, you know, at the same time, listing, and they're, they know what they're trying to do, and they're preparing that, and they're going to presumably work with their witnesses coming forward and elicit questions and try to close off this area of attack. So I think there will be a dynamic, as Sam saying here back and forth during this trial and they close about this.

But I think, you know, the real headwind here for the defense is going to be what these inside, people inside, say, how they describe what happened. Yeah, well, actually, this reminds me of one emotional moment, I guess you would say, with the Adamia Didia testimony, which is that the prosecutor said, okay, so in the summer of 2022, you believed in FTX. And even as it started to implode, you sent Sam a signal message saying, I love you, I'm not going anywhere, I'm here for you, don't worry. But you resigned a few days later and you no longer believed in FTX, what changed your mind? And his response was, well, FTCS defrauded all of its customers. That's devastating testimony. You're going to see that in quotes in the clothes from the government. Well, the thing is that right at that moment, though, so like everyone was a little bit like, and I can't remember what happened. Maybe maybe the defense tried to make an objection or I don't remember, but Danielle says soon the prosecutor. She immediately was like, I didn't know he was going to respond that way, but she agreed to have it stricken from the record. So what does that mean?

Because it's in the transcript, but what does that mean that it was stricken from the record? Oh, that's right. It was stricken. So they can't use it in the clothes. but it's a legal conclusion, I guess. You're drawing the ultimate conclusion. I'm guessing why the objection was. I haven't read the transcript of that.

Sam, do you know what the objection was? I don't remember the specific objection, but basically, if it's stricken, it means the government, as Brian is telling you, it means the government can't, neither side can quote to it and the jury's supposed to disregard it. However, like, you know, the bell cannot be unwrung, okay? That is something that the jurors will remember. They're not supposed to rely on it. They're not supposed to talk about it when they deliberate. And they'll be reminded of that in the jury charge at the end of the trial after closings

when they're told the rules for how to deliberate. But nonetheless, how can you forget that? Yeah, because also, if I remember correctly, I think that was the, when the, so what is it called when the prosecution goes back after the cross-examination? Redirect. Okay. So I'm pretty sure that's how the redirect ended. So it's like.

if you remember it, the jurors remember it. Yeah. To Sam's point, having something, you can't unring the bell. And I'm sure the judge will instruct them that any strict intestinal they can't consider and, you know, et cetera, et cetera. But that's going to be there in their memory. And, you know, they're going to hear a lot of evidence between now and the end of this trial in five or six weeks. So maybe it'll be other moments like that. But, you know, you can't unring the bell, really.

All right. So let's briefly talk about the next pallet cleanser, which is Matt Huang of paradigm. I didn't feel there were like a ton of big takeaways necessarily from this. And obviously Gary Wong was the next witness. So that was a huge one. But did you too have any takeaways from Matt Huang's testimony? I think he boils down to one sentence, which is paradigm thought when they were investing that there would be no preferential treatment. That's basically, that's basically, the essence of it, that they relied in making an investment decision on the concept, the representation, that there would be no preferential treatment. It would have been important to them in making decision to know Alameda was exempt from the liquidation engine at FTX, that they were never told that Alameda could get a negative balance, that these things would have mattered, that that would have been, in other words, been material to them as an investor. That's it. That's basically it. But yes, it's a basic thing they need to prove to prove their case.

and in some ways a pallet cleanser before they get to the show to the show stop or Gary, Gary Wink. Yeah. And just one last bit actually also is they did flag the lack of governance controls and said that it could lead to value leakage. So clearly, you know, the fact that there wasn't a board and things like that, that was another issue that they got to raise and show that they had, you know, flagged it to FDX. And yet, you know, they invested anyway, which the defense. did point out to them. All right, so let's talk about Gary Wang. Oh, my God, there's so much to discuss with him.

But the very first thing that to me was, and I can't remember if this had gotten reported somewhat previously, but here we had hard proof, like they showed screenshots of the GitHub commits and stuff, that on July 31st, 2019, which is, I believe FTCS launched in April 2019, so a mere three months in is when they coded this special privilege that Alameda could have a negative balance, basically meaning that it could dip into the money in FTX for its own expenses.

And the other thing that, at least in the courtroom, that felt astonishing, is they showed a tweet where Sam replied to somebody else who said, hey, you know, what about the fact that you own one of the trading firms that's trading on your exchange? Like, this is a conflict. You know, what are you going to do about that? And his response was that Alameda was just going to be treated like everybody else on FTX. And it was literally tweeted the very same day that they were actually, at least, you know, Gary said in at Sam's direction and they were coding in this special privilege. So that was, you know, for me and I, other people in the courtroom, a notable thing. What is your reaction to that and what the prosecution was,

to get across generally with their first questioning with him. That's just devastating evidence, right? That's just if you're in the jury, if you're in the courtroom, you're feeling that way, the jury, everyone's feeling that, seeing that. So, you know, when you can match something that's actually happening up with someone commenting on it in real time and close together, I mean, that's just critical piece of evidence the government's going to rely on later. And I'm sure the jury, you know, saw that and paid attention to it.

It sounds like nicely presented to them. So that's a, that's a serious, one of the many serious problems the defense faces here. Yeah. And I think what's really damning for the defense there is look at how active it is. Okay. To get the special privilege, they had to actively code it. This is not like an oversight. Okay.

This isn't we're building the plane as we're flying. oh, we forgot a wing. We had to actively do this. It had to code it in affirmatively. And clearly, Sam knew about that, according to the testimony. And clearly he knows that what he's saying on the same day that they're coding it is contrary to that. Not helpful for the defense, very powerful for the government. Yeah. Another aspect was this line of credit, which initially, I guess they'd made at just a few million dollars. But I guess Elameda kept bumping up against that, then they had to make it a few hundred million dollars.

And then the funny thing is, at one point, in the cross-examination, the defense asked Gary, so when you brought it up to a number that you felt couldn't be breached, Gary said, oh, well, do you mean the first time or the second time? Because he was like the first time I thought, you know, they would never hit one billion dollars, but then they did. So then I bumped it up to 65 billion. So that was sort of a funny moment. I'm not getting the phrasing exact there. But again, like, yeah, this was obviously a poor, I guess we would call this a poor fact for the defense. But yeah, what's your take? That's an understatement. I mean, and also 65 billion. I mean, again, clear self in the places these children. jurors. Like, these are incredible amounts of money for anybody, right? And these are eye-opening amounts of money. Like, you know, if it was 300,000 or some people were like, okay, a line of credit,

I get it with my house. You know, these are numbers people relate to. But when you're talking $65 billion, really nobody can relate to that, okay? I mean, that's just an, it was an incredible amount of money. So that's just a devastating fact for the defense. I don't know what they're going to, how they're going to try to spend that, but that's a worry about the stadium five. Yeah, and I agree with Brian completely. And also, you know, one of the things the defense did in the opening was they said, well, they tried to weave this, they planted a seed that the reason Bankman Fried could believe that this was reasonable that it was okay for Alameda to borrow customer funds is that he

reasonably believed there was enough collateral, okay, that Alameda was putting up some kind of collateral, and this is a normal thing that happens, right? There's margin trading. It's okay. You give me collateral, I loan you money, no problem. Eight billion dollars. Where's the eight, where is the collateral for eight billion dollars of customer money? That's a lot of money. That's a lot of customer money. Where is the collateral for? What is the collateral to secure customers? How is that safe? I think what the other industry part, Gary is, look, Gary's, you know, a quote, co-founder of the company. He's the ultimate insider here, too. And when you're talking about code, what's interesting is that's, that's this is not like a conversation on a court, right? This is like

literally code is there. And the defense can't, I don't think, dispute that the code has that written into it or are going to be. It won't be credible. So this is just sort of very devastating. Yeah. Something that was sort of interesting just about, you know, being there and taking in the whole testimony. there was like a long explication period where they had to talk about what a line of credit was. They had to explain how this got coded in this, allow underscore negative was the name of the code function. They had to explain how margin was an actual thing you could do on the platform, but how this was different. I mean, it just felt like there was just a lot of like, okay, we're putting this bucket here.

You know, this is what Alameda could do. These were the other buckets available on the platform, but these were, you know, they had rules like around liquidation and like if you're a balance, went below this amount. And those rules were put in place to keep FTCS and its customers from losing money. And so there was just like a lot. And then at the very end, it just felt like there was a lot where finally kind of all the meat came out. But, yeah, they set a long time kind of setting it up. And because it was a little complex, I did wonder how well this was landing with the jury. The jury's going to remember 65 billion.

I mean, that's just, they might not remember the details of all the net in the lead up. But they're going to remember, I think, there was a special coded permission. No one else had Malameda could lose up to, or, you know, be negative up to 65 billion, right? Right. And we're talking about, Laura, you're talking about like the meat of, of the testimony, but you have to remember, right, the government at the very beginning of Gary's testimony, I'll just read from the transcript. After Gary introduces himself and says he's a co-founder and the CTO of FTX, he's asked, did you commit financial crimes while working at FTCS? Yes.

What types of crimes did you commit? Wire fraud, securities fraud, commodities fraud. Did you commit these crimes by yourself or with other people? With other people. Who were the main people you committed the crimes with. Sam Bankman-Freet, Nishad Singh, Aralyn Ellison. Do you see any of the people you committed those crimes with in this courtroom today? Can you stand up? And he points at Sam-Bankan-Freet, right? In general terms, Mr. Wang, what did you do with the defendant that was wire fraud? We gave special privileges to Alameda research on FTX, which allowed it to withdraw unlimited amounts of funds from the platform, and we lied about this to the public. When you say withdrew unlimited funds from the platform. What were you referring to? It had the ability to, regardless of

what was in the account, to withdraw unlimited amounts of money. So, like, even if the jury gets lost in the weeds of all this other stuff, which the government, they have to lay the foundation in the transcript so that they can argue it in closing. And then in closing, they will take what they need and explain it again in a way that will be usable for the jury. They just have to have the building blocks in the record. Well, even if the jury doesn't follow the middle, they just heard a guy say, crimes with this guy right here, and here's the gist of the crime. Yeah, and I have to say in the courtroom, because you're right, that statement was made in the first minute or two that he took the stand.

I remember being like, whoa, whoa. It's a shock and odd strategy on prosecutors. They like to just throw you right in it, so you're just like, whoa. And then it's like, this guy just admitted he committed all these crimes. It just layers his credibility on to everything he's saying. says. And he's the co-founder. It's like, this is like, you know, it's just you're like, how much more do I, I mean, on some level, jurors might be thinking like, how much more do do I need to hear in this trial? Why are we here? I'm sure some of them wouldn't surprisingly

thought, like, why are we here for another five weeks? But there is, you know, there's a lot more to come. But, you know. One other thing about the credibility. And this goes back to what we were saying about Adamia Didia about how it was clear he was making an effort to make sure everything he said was fully accurate. When Gary was asked to identify Sam, he couldn't really see him. So that's why they asked him to stand because he kept going like this, like just, he was like looking. And so finally he had to like, you know, kind of stand up because it took him so, and it still took him a long time. It was like an awkward silence while he tried to find Sam in the courtroom. So the fact that he made that much effort to make sure that he actually saw Sam, I don't know, it sort of said,

something to me. Well, he's an engineer too. And engineers are very precise people, right? Software engineers are other type of new. So you did, I believe this too. So like these are not surprising traits for those kinds of people, right? That makes sense. If you read trade and stereotypes, maybe like a salesperson, we're like, oh, he's over there.

I know he's over there at that table. No offense to any salespeople listening to the show. So let's talk about the defense because I've been reporting a little bit, like on my Twitter and some of these short recaps that I'm releasing on the podcast every day. But one of the really notable things to me is that the defense seems to be irritating Judge Kaplan. I frankly sort of, I don't know if agree is quite the right word, but let's just put it this way. I believe it was Mark Antoine Juilliard and then, you know, Matt Juan, like Adamia Didia, Matt Juan, like pretty much like all the witnesses. Whenever they do their cross-examination, there will be sometimes multiple times throughout the questioning a section where they just ask super basic questions that have already been covered that are not even like anything complicated. Like I remember for Gary Wang, he said, you met Sam at math camp in high school. Like, why? Are you repeating that? We don't care. It's not important. Things like that. He even asked him, you know, how many people were at, it was either FTX or Alameda when you started there and started working there. And because he's the co-founder, he was like, it was me and Sam. And so it was just there were things like that. But early on when he had done this with Mark Antoine Julliard, because it was the first time, Judge Kaplan kind of didn't say anything for a while. but then he finally said like, hey, can you stop it with these repetitive questions?

And when he did, I remember thinking, oh, thank God. Like I was kind of getting a little bit like, I was wondering like, why are we wasting all this time just covering this ground we've already covered? But he keeps, or sorry, that team keeps doing it. And Judge Kaplan keeps having to say something about it. And so you'll notice, like even in the transcript, you know, one of the times he said something like, you know, what about let's not keep repeating, did you not understand, or some phrase like that, you know, or what about that was obscure? So I was curious what you thought about, first of all, why it is that they keep doing that? Like, let's just start with that. Why do you think they're

doing that? I'll let Sam answer. Sam has had a lot of capital experience and I think little bit of shed the most light on this. No, no, why the, I'm asking why the defense is asking repetitive. I think that, first of all, you have to have some compassion on that. them, okay, because they don't get to depose the witnesses before trial, right? The government has met with these witnesses three, five, ten, fifteen times, gotten to know them, know how they talk, has heard, has gotten, you know, they have written questions and answers and they refine it. The defense does not, almost never gets to speak to the government witnesses.

They're hearing it for the first time. So part of it is, you know, they, you have to just, the realities of life are that they are dealing with the testimony live. There's that aspect of it. Part of it is the defense is trying to humanize Sam Bankman-Fried, right? So they're trying to, like you were, one of the things you heard the opening was that Sam was a math nerd. Well, so that innocuous detail, we were at math camp together or whatever corroborates. It corroborates that little fact and it takes some of the sting out of the bad testimony.

But, you know, Judge Kaplan is not patient. He expects things to run efficiently. I think it's been a long. He used to be a trial lawyer. I think it's been a long time, though, since he lived on the defense side and was in the realities of what it's like to, you know, get the government's witness statements the night before and be up all night, you know, preparing your cross. And frankly, I think it would be better for him to be a bit more patient with the defense. Because look, the kid is facing a long time in prison. He gets due process.

At the end of the day, if we waste a minute or here or two on a couple questions that may not move the needle, let them do it. Right? Let them do it. And I think a lot of judges would be more solicitous of the defense, but that is not Judge Kaplan's MO. I think I said last time, Judge Kaplan is a brilliant judge. He's great, very smart, but he's tough. draconian, I said, and I even described him as a hanging judge when it comes to sentencing. And you're seeing some of that behavior.

I think what you're seeing, even if the judge doesn't mean to do this, in his mind, the defendant's guilty. And he wants to move this along. Let's get to the meat of it. I think I would just add to that, which is if you're a defense lawyer at some point in any trial, you're going to upset the judge. And usually a prosecutor is upset the judge too. So it's not unusual that lawyers do something that bothers the judge.

which often does. It sounds to me like Kaplan here is trying to move things along. And they want to be seen as helpful to the jury because they're probably sitting there thinking, these jurors are bored too. These are repetitive questions. Even some of the reporters. And the reporters, the judges like to be liked by the jurors. They want them to have a good experience.

You know, they take the jury system very seriously. And so they don't want these people to have their time wasted if he feels like it's wasting time. and he's probably, it sounds like from what you're saying, he's got a pretty good read on the room, but how people are feeling about some of the cross-examination questions. So judges do take that role seriously. As a defense lawyer, you sometimes have to ask questions and do things that you may annoy the judge

because it's part of your job is to be a bulldog for your client. You can't be scared of that and can't back down. But you also don't want to necessarily, you don't want to unnecessarily cause a problem with the judge early on a long trial because it's not going to get better five or six weeks soon. Okay. So I have a question because when he asked things like, you know, did you go to math camp with Sam? I, I, so honestly, I'll tell you what was going on in my head when they kept having these

stretches of these repetitive questions. First of, I thought, the first time that he did it before the judge said anything, what was happening was that they would do a block of the repetitive questions. again, this is the point when the judge, you know, had never said, like, stopped doing that. Then they would do a block of questions where the government kept objecting in every, I don't know about literally every, but many of the objections were sustained. And then they would go back to the repetitive, and then they would do another block that were getting objected to and sustained.

So I thought, oh, maybe the line of questioning is like somewhat inappropriate or it toes the line, So they're trying to pad them the way that we were talking about the heavy-hitting witnesses versus the palate cleansers. That's what I thought. And then later, because we didn't end up getting to some witnesses and we're sort of behind schedule, I thought, oh, maybe another thing they're trying to do is to try to keep the government from bringing all its witnesses by running down the clock. What do you think of these theories? The judge is not going to, I don't think, punish the government for the defense cross going too long. So I don't know. But I think you're right.

you seem to have very good instincts about this. Because I think you're right. The defense often will have a series of mundane questions and then put some real nuggets in the middle there to try to get those questions answered in a way that maybe the government's twilling their thumbs and maybe could object but doesn't because they're just gotten bored by everything else.

So that I think seems like probably a strategy here. Also, they may just have not have the best questions. It's possible. I think good cross-examination actually requires you to listen to the direct really closely and adjust your cross for what happens on the direct. To Sam, Enzer's point, you don't know what they're going to have directs. It's going to know exactly the little day, but once you hear it, you need to adjust. And I'll often find myself crossing out questions, not doing them, or changing questions,

or just when I listen to the witness, just having it be more of a conversation. I don't know if that's happened. I don't want to be critical of these lawyers, so I haven't got all the details here, but they are well-known and well-respected defense lawyers. but, you know, when you do cross in general, you really need to be listening to the witness and you need to be paying attention to their direct and adjusting your cross to account for it. Yeah, there may be an aspect of it that is just they're buying time, right? For example, in Gary Wang, I think, you know, I believe the defense is still on cross, right?

Yeah. So probably they, you know, they hear all this devastating testimony on the last day of trial for the week. they get up, they buy some time, and now they're going to have the weekend to study the transcript. And I bet you on Monday you're going to hear a much better cross. Yes, well, this is literal, Judge Kaplan kind of said, I see what you're doing at the end because he said, because again, these were the questions like how many people were there when you started and were you at math camp at Sam. Those were the ones that it was right then that Judge Kaplan said, are you just, you know, going over stuff that's over. been gone over to try to get us to the dot of two because we were supposed to end at 2 p.m. that day and it was like 152 or something.

And so he was like, instead of doing that, why don't we just end early and then you can start afresh on Tuesday. So he acknowledged like, I know what you're doing. You're trying to run down the clock while not ending your cross-examination. Running down the clock, very important part of trial strategy. For both the prosecution and the defense, both sides do it for various reasons. Yes. You try not to make it obvious, but sometimes you do.

want to stretch out to Sam, and there's point, you do want to stretch it out to get to the weekend, to get to the evening, whatever it is, because you need more time. And so that's, and this judge is a smart judge. One of my first closings, or I was trying to case and my partner had not finished writing his closing. I was going to do the rebuttal. He was going to do the closing. We were on the last witness. I had to stall. I had to stall. And he had his laptop in the courtroom writing the thing. And the judge started to call me out and said, you know, we're going to take minutes out of your closing now. Every minute you waste here, we're going to take out of your closing. This is a real thing. Wow. Wow. Okay. Yeah, it feels like, I don't know, a sports,

a sports game. So one thing that I did want to ask is, so, you know, as we discussed, at least so far, more of the objections by the prosecution are being sustained. And then, you know, I'm not joking when I say that it's apparent just because now the judge has had to ask, like, I don't even know, like five times, like stop with the repetitive questions. It's like a large number so far in just what three days of test, two and a half days of testimony. So, you know, between that and then the fact that sometimes with when there's many objections in a row that he has to sustain, he will like kind of wearily say it like sustained like just this sort of like you're doing that again like you know you kind of know this line of questioning isn't going to be admitted and so there's a sort

of weariness and at the very beginning the judge he told the jury you know this is my job I'm supposed to run the trial and I make the rulings of you know what goes in and out but even if I object to you know a lot of what a lawyer does or even if I get it annoyed at a lawyer. None of this reflects my personal views. But I wonder, even though he made that caveat in the beginning, do you think this is affecting the jury's perception of, I guess, in particular, the defense, but, or yeah, but Sam Bingman freed himself. You don't want to, as a defense lawyer, he's just how you get ejected to or have that happen to you. Right. Because again, if you're feeling it, the jurors are too on it. You know,

look, you want to be likable because you want that to rub off on your client as a defense lawyer. And you like it if the judge likes you. Judges usually try to treat everybody professionally and not show favoritism to one side or the other. Most often they do a very good job. But if you constantly are asking questions that are getting objected to and being sustained, juries are like, why are you going, you know, they start to understand that you're asking

questions that aren't proper, right? That's why they're being sustained. So, again, I'm not there. I don't know how this is exactly going down the demeanor and the tone, but this is a long trial. Again, I'll just repeat this over and over. You're living with these people for six weeks. You want them to like you because you want it to rub off on your client. You're the defense.

Yeah, that's exactly right. This undermines the defense's credibility. That's the bottom line, right? The government is following the rules. The defense is not. That's the message the jury gets. And then when you're closing and you're going to need to build up a reserve of credibility during the trial, and then you spend it in the closing.

You're going to ask the jury to make inferences, right? You want them to read the evidence a certain way. Well, if they don't trust you, if they think you're a rule breaker, that could undermine the credibility you need to make those points in closing. But it's a long trial, and they may be able to repair it. But yeah, there's a lot that happens in the courtroom. Like Brian said, you're in that courtroom, and the jury sees everything, right? The way that the jury box is set up, they have the best view of everything.

They're watching everything. How do the defense lawyers treat their colleagues? Are they chatting with the defense, with, with Bankman Freed? What are they wearing? Did they change their clothing? Do they appear sloppy? All of this is being observed. It's all being taken in.

It's all part of the fabric. They really will get to know these people by the end of it. And the objections getting sustained is not helpful. I had this case where we got an acquittal. and I remember a year later I ran into one of the jurors and she told me it was like a movie theater so random and she's like that was the best experience she loved it she's like I love the and we thought she hated our client

where we thought this one was been a good client in a New York minute but you know ultimately and again I think part of it was we tried to make an enjoyable experience for the jurors defense alert we wanted to one be likable but also in her retain them and have this report. Even you can't talk to them directly. And I think you saw the judge instructed them about, you know, do you see a defense lawyer or a prosecutor? You always have to say hi,

you can't do things like that. But to Sam's point, they're watching you all the time. They see how you interact with your quality care. There's times when they get bored and they're looking around and be like, oh, Blank is having coffee again? How many cups of coffee does that prosecute your drink a day? Like, random things happen in their minds, right?

And so, you know, when you're there as a lawyer in the trial with a prosecutor, defense lawyer, you've got to think that, This jury, you have to be like a narcissist. Everyone's paying attention to me. I got to keep it. Who will I got to be likable? I'm going to put my hand around my client sometimes to show them this is a real person and those real emotions.

You do things like that. There's an element of theater to all this that shouldn't be lost on anybody when you're participating in it. Earlier, Sam, before we started recording, you said that you felt that Judge Kaplan was sustaining some objections from prosecution, meaning against the defense that you would have let go through. So why is that? What did you see there?

Yeah, I think on these questions about background facts, I think it is very important for the defense to have an opportunity in their own words to get testimony that may take the sting out of the atmosphere. Even innocuous questions that are just a pallet cleanser from what could have been just a devastating direct, I think you should give the defense some leeway to do. that and not cut them off at the knees. It is not that harmful to the government or to anyone in the courtroom to just give them a little leeway on these questions. I don't think any of the objections I've seen sustained fall in the category of reversible error. And we just out of curious,

are you talking about the repetitive questions or are you talking? Oh, okay. Repetitive questions or questions on basic background, background that was covered in the direct. You went to, you know, you went to MIT, you met at math camp, these things, you know, I just don't see how that prejudices the government. If the defense was eliciting testimony that shouldn't be allowed in a courtroom and could improperly influence the jury, sure, sustain that objection. These objections are being sustained largely to move the trial along. But I think that it's unnecessary to be that strict, given the rule. that go into criminal process.

They don't have discovery. They don't, not really. I mean, they have some discovery, but not really. They get the, they don't get a transcript of what the witnesses are going to say. They don't get to interview them or depose them ahead of time. I think that it would be better for the appellate record for a fair trial to just let them have it. Let them, let them do that stuff. Okay.

So, but I actually feel like it's like it tends to be other questions that actually get the objections. Like he keeps saying stop repeating questions, but it's a little bit different because the ones that were there objections from the prosecution, those get sustained. Like there was one set I remember where I think it was Adamia Didia. The defense kind of was trying to ask questions like what was in Sam's mind in various ways and get Adam to say like Sam, you know, was trying to do this or felt that or whatever. And then those kept getting objected to and sustained. So would you agree that those were correctly called? I think that's appropriate to sustain because the witness can't speculate about somebody else's mind. However, I can tell you somebody who taught me had to ask those questions properly was Judge Kaplan.

And I think he could say, listen, I'm sustaining this because no speculation. But why don't we? And he could, he has asked questions when he, when the government wasn't eliciting something the way that he thought could be clearer, he would dive in and ask questions and then remove himself. And I think he could here show the defense lawyer. All right, sir, do you know whether Sam had a belief about X? Yes or no. Why do you believe it?

What do you believe? Like evidence. Not brought it. Don't give us your opinion. Do you have an instance in mind when Sam said XYZ or something like that? Okay. All right, so we talked a little bit before about how Adamia Didia has immunity, how, actually, we didn't go into detail on this, but Gary Wang has what's called cooperation because he's pleaded guilty. And at the very end, they discussed like what that actually means. And they said that he is testifying here in cooperation in hopes of basically serving no prison time and that the prosecution at the end will write a letter or, or, I think they can write a letter called a K-5 to the judge about his sentencing.

And then they went into detail about how his understanding is that the prosecutors do not promise to make any recommendation about the sentencing. But just, I think it's just a letter kind of describing his behavior or something like that. So, and if I got any of that wrong, please correct me. But, you know, what is your take on what his testimony? And I granted, I know it's not finished yet, but on how. that could affect obviously his sentencing, but frankly, for any of the others, Caroline Ellison and Ashot Singh, who have also pleaded guilty. Yeah, that's a practice in the subject.

It's different in every district, but I think, you know, that letter is not been written for a long time after this trial. You know, when Gary gets sent it from the lead up and they'll submit it, and that's a letter though they write there. They don't recommend a particular sentence, but the unspoken institutional prerogative in the Southern District is that if someone cooperates and they get this letter, most often they don't get prison time. Oh, wow. So there is a strong chance that Gary won't get any prison time or he'll get very little. This is an extraordinary case with a $10 billion loss amount or whatever it is. So I think this is something that, you know, we'll expect to happen.

when he gets sentenced, he will get sentenced. He has pleaded guilty. He has to get sentenced. That's going to happen. And they'll write a letter. And it will discuss not only his cooperation at trial, but his prior cooperation. And the judge has seen and heard this. So, you know, this letter to the extent it's going to say something. They'll say, as Your Honor remembers, he got up and testified for two days and blah, blah, blah, blah. And the jury found him credible, blah, blah, blah, for this reason. Okay. And would you also say that Caroline Ellison and a shot singer are also likely to get no prison time? Because I remember that Caroline pleaded guilty to more charges. You know, it's hard to ridic. I don't know Kaplan's particular sentencing of cooperators. So some of this will be particular to him and maybe Samrose. But the general practice, and again, I'm speaking in generalities here, is that a cooperator against one of these letters is not likely to get prison time. or very well. I think Brian's right, but to be specific, is the category of white collar crime. In the world of white collar crime, in the world of violent crime or other things that may be different.

But in white collar crime, Brian is right that a 5K letter with judges like Kaplan, they understand that in order for the government to make cases, the cooperators have to get a payoff. And so if they do their part and the government backs them up at sentencing, he needs to give them a significant reward. Now, will he give them no time? Will he give them a light? You know, will he give them a year? That is hard to know. And I do think that for Kaplan in particular, and most judges in that district, they will look at, you know,

well, what order did you come in and cooperate? Were you the first? Or did you come in when, like, the government already had what it needed? How helpful was your cooperation? Was it really important? or was it just, you know, duplicative, unnecessary? All of this goes into the mix. All right. So then one last thing is that, you know, at this point in time, it does look like it's going pretty poorly for the defense. And there's been a lot of speculation on Twitter.

Let's just assume because of how it's going so far that the defense does not win. What do you think will happen at that point? They're going to appeal to the sentence. They're going to appeal the conviction. I mean, I think that's not even an open question. I mean, when people are convicted, almost always there's an appeal. Not always, but almost always there's an appeal. And what would the strategy be at that point?

Because, yeah. It's too early to tell. I mean, we don't know how the rest of the trials when you shake out and what the issues that they might think there are to appeal. But typically, you try to find a few issues that you think are the most viable on appeal. You don't try to appeal every single. issue because, you know, the kitchen sink technique does not usually work at the circuit court level, which is who the appeal gets heard by. So it's much too early to tell what's going to happen.

And trials are dynamic things. You know, things go in different directions than both the defense and the prosecutors and even the judge expected trial. It's a living, greeting thing all as a trial. And so it's just too early to know. But at the time we get near the end of this, there might be a few issues that we've all spotted or the defense has spotted and made a big deal about. Like they might ask for, they might submit briefing during this about an issue or they might ask for certain things, you know, before the jury arrives, it will learn about and see what they are focused on. It's important to remember also that it's not just what happens in the courtroom. There are evidentiary rulings about what the defense was not allowed to do during the trial that got

briefed before we ever got to the courtroom, right? And those could be issues that the defense says, look, we didn't get a fair trial. The judge would not let us say X, Y, Z in opening. And we weren't allowed to argue it during the trial. And we need a new trial. Right. Like about, you're not allowed to use these arguments. You know, all their proposed witnesses were dismissed for not being relevant or whatever it was.

Yeah, like I would say, I think you'd probably agree, Brian, that from what we've seen in the courtroom so far, You know, as far as like once the tape started, nothing has happened that I would call reversible error. But there could be some issues in terms of what happened in the pretrial briefing. Okay. All right. Well, you guys, this has been just a really great discussion. I'm so glad that I was able to get your perspective on what happened. Where can people learn more about each of you and your work?

You know, you can go to our website and thank you for including me and letting me talk about this, Laura. it's always nice to talk to you and it's always nice to talk with Sam too. I really enjoy hearing his respect on these things as well. Yes, thank you, Laura, for having us. You can learn more about me at cahill.com. And, you know, my bio is up there. You can see about my practice. I thank you for having me and I always love spending time with Brian.

My very first crypto case, Brian was my adversary. I was a prosecutor. He was the defense lawyer. It was the first case in the history of the Southern District of New York where we charge securities fraud based on an initial coin offering of cryptocurrency. So Brian was part of my induction into the world of crypto. Which case was that? United States versus Sorab Sharma and Robert Farcus. It's a centric tech case. It got a bunch of attention. Okay. Oh, cool. Nice. Yeah, I remember Nathaniel Popper

wrote about it for The New York Times. All right. Well, it has been a pleasure having you both on Unchained. Yeah, great to chat. Thank you. Stay tuned to Unchained for Unparalleled cover of the Sam Bankman-Freed criminal trial. I'm going to the courtroom every day, and my team and I will be delivering firsthand observations and in-depth analysis of this pitiful case with daily podcasts, videos, and written updates.

Visit UnchainedCripto.com, all our social platforms, and our newsletter to check out all our coverage. Thanks so much for joining us today to learn more about Sam and Brian and the ongoing criminal trial of Sam Vickman-Fried. Check out the show notes for this episode.

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