Unchained - Why These Lawyers Say It's Over for SBF--But His Only Hail Mary Is to Testify - Ep. 557

Episode Date: October 16, 2023

Samson Enzer, partner at Cahill Gordon & Reindel, and Greg Strong, partner at DLX Law, dissect the second week of the criminal trial of Sam Bankman-Fried. At this point, the prosecution’s star witness, former Alameda Research CEO Caroline Ellison, has testified, as well as another prominent insider, co-founder Gary Wang. Both Enzer and Strong believe that it’s already over for the defense, but agree that the only thing that could turn it around is testimony from SBF himself—but that runs the risk of the defendant significantly increasing his sentence.  Find out how they thought the more salacious details of Ellison’s testimony, concerning alleged bribes to Chinese government officials, would affect the jury, and why Enzer believes introducing that testimony may have been risky for the government.  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: Whether the prosecution gave the defense any fodder for its failed entrepreneur theory How SBF and Ellison’s romantic relationship could affect the jury’s deliberations The jury’s reaction to Ellison saying SBF’s belief was that “don’t lie, don’t steal” didn’t fit into his philosophy of utilitarianism  Why the defense didn’t object to the mention of alleged bribes to Chinese government officials the first time Why the defense attorney complained about photos shown of SBF and his hair How the jury might react to the testimony involving alleged Chinese government bribes, Thai prostitutes, and Saudi prince How Ellison crying in her testimony could affect the jury Why the defense didn’t ask Ellison about not hedging  Why the cross-examination of Gary Wang was limited in its success for the defense What caused a moment of tension between Zac Prince and the defense Why Greg and Sam think SBF shouldn’t testify, but believe it’s his only, very risky, chance  If convicted, how many years do they think SBF’s prison sentence will be? Thank you to our sponsors! Crypto.com LayerZero Popcorn Network Guests: Sam Enzer, partner at Cahill Gordon & Reindel. Previous appearances on Unchained:  SBF Trial: How Sam Bankman-Fried’s Lawyers Might Try and Win His Case SBF’s Lawyers Could Be Annoying the Judge. How Might That Impact the Trial? Greg Strong, partner at DLx Law Links Previous coverage by Unchained on the trial of Sam Bankman-Fried: How Heated Sidebars During the SBF Trial Could Impact the Jury’s Decision 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 Sam Bankman-Fried Trial: Here's Everything That Happened So Far 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’s Lawyers Could Be Annoying the Judge. How Might That Impact the Trial? 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 Go deeper into the trial:  Unchained: In the SBF Case, Elite Corruption Is What’s Really on Trial Cooperating Witnesses in the SBF Trial May Get Little to No Prison Time Learn more about your ad choices. Visit megaphone.fm/adchoices

I have a different take on this one. I think that the government did not need this testimony, that they have better points to make that are directly related to the crime. 404B evidence is very risky from an appellate perspective. The Court of Appeals wants to make sure if it gets a fair trial and that their jury is not prejudiced by evidence of things that are not charged. Now, look, I think that the evidence here is overwhelming. I don't think there's actually a risk of a... a reversal. But when you, part of trying a good case when you're the government or a defense,

but more especially when you're in the government, is to protect your advantage and not get ahead of your skis and take risks you don't need to take. Hi, everyone. Welcome to Unchained, your no-hife 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 at Forbes was the first mainstream media porter to cover cryptocurrency full-time. This is the October 16th, 2023 episode of Unchained. 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. Visit Layer Zero.com. learn more. DeFi just got way easier with VaultCraft. Popcorn's no-code DeFi 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. 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 second week in the criminal trial against Sam Binkman-Fried. Here to discuss are Sam Enzer, partner at Cahill-Gordon and Rindell, and Greg, partner at DLX Law. Welcome, Sam and Greg.

Thanks for having us, Laura. Yeah, thanks very much, Laura. So we've now had two weeks in the criminal trial for Sam Bingman-Fried. This week was a doozy because two of the government's biggest witnesses testified. I've seen people tweeting things like, for instance, that it's just over for Sam. But I was curious from the lawyer's perspective,

what do you think is the state of the trial at this point? I think that it is probably, it certainly is not going well for SPF. In particular, this week was the week of Carolyn Ellison, his former girlfriend, co-CEO and eventually CEO of Alameda research. Her testimony was devastating on several accounts, not just because of the information she, provided about various aspects of the fraud, but documentary corroboration, there was a lot of documentary corroboration of what she was saying, contemporaneous documents where, for example, she's noting concerns to SBF and he is remarking on the concerns, proving that he knew about them, and that those concerns were contrary to what was being told to the public, that is, to investors,

to lenders and to customers. So very, very bad. But it's always too soon to tell. There's more weeks to come. Anything can happen. And there's probably going to be a defense case. So I think, you know, it's as the judge tells the jury, keep an open mind.

Don't talk or deliberate until you've heard all the evidence. And Greg, what do you think? Yeah, I agree with a lot of the things that Sam just said. you know, I think it's definitely going to be an uphill climb for Sam Backman-Fried, given the evidence that has come in so far. And, you know, as Sam alluded to, I think, you know, one of the key evidentiary questions here is, you know, who was calling the shots in terms of the actions that Alameda was taken. And I think a lot of the documentary evidence that came in through Carolyn Ellison, you know, indicates that Sam Backman-Fried, you know, had knowledge of these

decisions and was influencing the way decisions were made. Yeah. Well, one thing I wanted to ask about was, honestly, at the very beginning of some of the direct examination of Caroline, I actually thought that perhaps the prosecution had opened the door to the defense's argument that Bankman Fried had just made mistakes as an entrepreneur. And the reason for that was there was a really, really long amount of time spent on this document that Caroline created in 2021. And it was based on a scenario that Sam had messaged her and she had copied it into the document.

It was called the 10th percentile scenario where crypto, stocks, financial markets are generally down. Their VC investments have gone to zero, all this stuff. She was supposed to analyze what would happen if FTX made an additional $3 billion in venture investments and this 10th percentile scenario happened. And it really just took so long that, um, There was a moment where I just thought, oh, like, are they opening the doorway to the notion that it's really just about judgment calls and they made the wrong one and it, you know, caused the business to go under. I mean, the one thing is, though, that when it concluded, they concluded it with the fact that one of the assumptions of the spreadsheet was that if they couldn't pay back their lenders, then they would use the FTCS customer funds.

And Sam, of course, still approved doing the additional venture funding. You know, they showed his tweet on Twitter where he announced it. He chose $2 billion rather than the three he was looking at. But I guess the main point I'm making is it just didn't seem as clear cut as the very simple argument from the week before, which was they took customer money without disclosing it. So I just wondered if you also agreed that that opened the door to this failed entrepreneur theory, although maybe the subsequent testimony really made that not an issue. I don't know.

What are your thoughts? You know, I think the failed entrepreneur theory is an interesting one, and, you know, maybe that opened the door a little bit to that theory. But I think really some of the evidence that sort of links the decision making across FTX and Alameda in these conversations that were taking place between Sam Bankman Fried and Caroline Ellison really sort of bolstered the prosecution's case here about who was calling the shots. And so I think when we look at that specific sort of, line of questioning in the context of all of the questioning that happened after that, you know, I think it's become a lot more clear when you sort of step back and look at it in its totality. Yeah, I think that, you know, sort of two comments, like on the 10th percentile document, I think that it is powerful evidence for the government of knowledge and is not about the failed entrepreneur because, and I think this will be contextualized in closing. I can't comment so much on whether the government took too long to explain it or could have done

better job of explaining it, but I am sure they will weaponize it in closing. And I think really the significance of it is even before the House of Cards started to collapse in the middle of 2022, there was an appreciation that there was at least a 10% chance that a scenario could occur where they would basically be insolvent. And it would be exacerbated if they did the $3 billion loans. And they still did the $3 billion loans at Sam's direction. So what does that show you? One, even before the House of Cards collapses, there was a very significant risk, 10%,

one of the 10 roll of the dice, right? 10% risk that it all goes belly up. And that's no. Two, he still does the risky investments. And in any event, it's kind of a red herring to think about is this. consistent with judgment or not because this is not a case about whether mistakes were made in how they manage risk. It's a case about what they told investors, lenders, and customers. You can't say to people, this is safe. We have sound risk management and then make decisions like

this. That's the issue. And if they hadn't made those statements, this would be a different story. But the other thing is the door is always open to the failed entrepreneur in a fraud case. Given the fact that intent is in play, that door is always open. And I think that the defense missed opportunities to exploit that. So for example, one of the witnesses who testified this week was the CEO of BlockFi. Now, BlockFi went bankrupt, right? If I was cross-examining him, the first questions out of my lips would be, sir, your company went bankrupt, right? And you did not commit a fraud, right? And the government has never accused you of a

fraud. And there's nothing inherently illegal about running a business and failing, right? And Chapter 11 does not in some way condemn a company as being illegal. We all recognize that when you invest, sometimes businesses fail. There's risk in investment, right? I mean, they could have done that very effectively and they just didn't. Oh, okay. Okay. Yeah. I mean, well, what? We'll talk more about that later because that was later in the week, but I do have some questions about that. One thing I did want to note about the scenarios was Caroline did say about the 10th percentile scenario. She said, oh, 10th percentile scenarios happen all the time in trading. So she made it very clear that even though 10th percentile might seem on the small end, she was like, no, no, this is a very regular occurrence.

So you're right. And then for one of the scenarios, she said, oh, yeah, if we make the $3 billion investment, then 100% we're not going to be able to pay the letters back. The other thing I wanted to bring up was, you know, it didn't enter into testimony a ton, but there were regular references to their personal relationship. And some of what Caroline said were things like the whole time we were dating, he was also my boss at work. And I wondered how you thought the details, of their romantic relationship will affect the jury's decision-making. So I think that this is an area, you know, I don't know the jurors personally, but I think when you're doing jury deselection or talking about a trial, you often have to rely on stereotypes to make judgments in trial strategy. And I think this is something where you're probably going to see a breakdown along traditional gender lines. This is a female-dominated jury.

And so I think the, and by the way, I don't think it was a coincidence that they had one of the female, one of the lead female prosecutor, Danielle Sassoon, asking the questions of Carolyn Ellison to highlight this dynamic. But I think basically what they're what their, what their, the picture they're painting is this power dynamic that Caroline didn't feel like an equal. She's younger. He's her boss. And in that situation. even though she may have on her own in different circumstances made different decisions, there was this subtle coercion going on that sort of gets her to do whatever he says, even when it's really pushing her into straight up fraud, like doctoring balance sheets

that they're going to send to lenders. And she talks about these different ways that he influenced her thinking. So, for example, one thing that really struck me was this is at page 807 of the direct. She described, I'll just read it, she's describing, you know, question, in the course of working with the defendant, did he talk to you about the ethics of lying and stealing? Answer, yeah. He said that he was a utilitarian and he believed that the ways that people tried to justify rules like don't lie and don't steal within utilitarianism didn't work. And he thought that the only moral rule that mattered was doing whatever would maximize utility. so essentially trying to create the greatest good for the greatest number of people or beams.

Question. What did he say about how lying or stealing would fit into that? Answer. He said he didn't think rules like don't lie or don't steal fit into that framework. Question. How, if at all, did the defendant's expressed attitude about lying and stealing affect you? Answer, I think it made me more willing to do things like and steal over time. time. When I started working at Alameda, I don't think I would have believed if you told me that a few years later, I'd be sending false balance sheets to our lenders or taking customer money. But over time, it was something that I became more comfortable with when I was working there. And you also have this dynamic too. It makes me think of these cults like the Davidian branch. They're all living together. I mean, so they're like in this stress hot box, billion.

of dollars, debt mounting. The two of them are in this on and off relationship. There's a power dynamic. They're together all the time. Sometimes we heard Sam has a temper. We heard about some instances where he would berate people below him. There was a situation with testimony about somebody blocking it paying a bribe to get money released. And he yelled at them.

And so you put all of that together and you sort of get this picture that you can see how she might have been pushed to do these things. On the other hand, I think the male perspective, you know, and I can just speak for myself, when I read the testimony, you know, it seems like a lot of what she's saying is corroborated. And so it's hard to just ignore, hard not to credit what she's saying about the core testimony. But it is hard to swallow sometimes. She really abdicates herself of a lot of the responsibility and puts a lot of it on Sam. And I think the male perspective may be more like, well, you're an adult.

You work there for years. You made $20 million in one year. Like, why didn't you quit? But I think overall, you know, the government did an effective job of exploiting this. And it's not going to go well for Sam, I think. Yeah. But I mean, the fact that she already pleaded guilty to, I guess it was, I think, seven or eight counts. Isn't that, like, the fact that she already said, like, I know I did these things.

I claim responsibility. Even when taking into that account, do you think the male perspective would still be, hey, like, you know, you are not taking responsibility? Well, why not, you know, conspiracy is we. It's not you. It's not I. It's we. So why not say we did this together?

He told me to do this, but I, you know, I went along. There was a repeated just, and I'm not saying she's not telling the truth. I mean, I have no reason to doubt what she's saying. I'm just saying I think that I think that that testimony could be exploited by the defense to say, look, if somebody lies about one thing, then you have a reason to question whether any of what they say is true. Now, I want you to really ask yourself, is all of it, Sam's fault? Every single thing, the hedging, the this, the that, all of it, every single thing, she didn't make any decision. as CEO, none? She's just a puppet.

Is that really what you believe? Okay. Sam just laid out a number of, you know, very important considerations. And I think, you know, this sort of idea that, you know, conspiracy is we and maybe, you know, greater acceptance of responsibility for the role that she played, you know, maybe would have been warranted. But I think if you're looking at the situation, you know, independent. of the relationship that they had, that would be one thing.

And I think your original question, Laura, was, you know, how do the references to the relationship between Samback and Frieda and Caroline Ellison play into this? And I think, you know, when you have that sort of a situation layered on top of an already stressful situation, you know, judgment, you know, certainly is probably clouded by that relationship. And really, I think, you know, by potentially the use of that relationship, you know, by potentially the use of that relationship to influence her actions on behalf of Sam Beck and Freed.

And so I think that's something that, you know, the jury may relate to. Yeah. And actually, Sam, when you said that they could have questioned her like, well, you know, conspiracy means we, then I think that would admit, that would, you know, require them to admit that Sam Pinkfin Free was not suggesting they should ask that. Right. Not suggesting they should ask that. Okay.

I think that's more what I was mimicking is a dialogue you could imagine in the jury room. Right. Okay. Yeah. One other thing, though, is just this, I mean, when I heard it in the courtroom, you know, don't lie and don't steal, don't fit into his moral framework. I just remember thinking, oh, my God. Like, and the other thing is apparently this came out of his upbringing as far as I understand.

Like, I guess his parents' philosophy is what he has built into his. own personal philosophy. So I just thought, I wonder how they felt in the courtroom, maybe hearing words that they had raised him to live by, like being thrown back in their face at a moment when, you know, he's potentially facing decades in prison. So, um, but also I really wondered, I can't imagine that going over very well with the jury. You know, we talked about the types of professions that they have. And even, even for, um, and the investment. which that's one of the more higher paying professions amongst the jury. Did you think that that would be something where any of them could relate to that? I think that was straight up evidence of

willfulness. It is rare to have proof that direct of not just intent, but willfulness, a willful recognition of the rules and a willingness to disregard them because it doesn't fit his framework. That's just terrible for him in closing. The government's going to use it. And the defense left it completely unchallenged, right? I mean, they could have on cross, they could have said, look, Ms. Allison, you kept notes in a journal, right? You didn't write anything about this in your notes, did you? You kept these daily to-do lists. There's nothing in your to-do lists about them. There's no email about this. There's no Slack message about this. You're saying this conversation happened. There's no recording of it. All we have for this is your

word, right? And at least put some pressure on her credibility, right? But they didn't. They just let it be. Yeah. Okay. So we're going to now talk about the other really big bombshell. I mean, there were so many that day in particular, but this one, to my mind, was the one that had a lot. It created a lot of movement to the sidebar and back and a lot of, you know, strike that from the record. And it was the moment where Danielle says soon, the prosecutor asked Caroline if there were moments when she remembered discussing potential criminal activity. And Caroline said, yeah, when Alameda paid what I believe was a large bribe to Chinese government officials. And not going to lie, in the overflow room. So then immediately, the prosecutor said, let's break that down a bit.

And in the overroom, everybody laughed because it was like such a draw-dropping moment. And then the prosecutor was like, oh, hold on, hold on, you know. And so anyway, Alison explained that Alameda had done it because about a billion dollars of their trading money had been frozen in their accounts on OKX and FOB, because there was some money laundering investigation into somebody who I think had been a previous counterparty to Alameda. And so then at that point, Sassou and Sagan, how Alameda got that money in Frozen and Enlisten answered by bribing Chinese government officials. And then right then, defense attorney Mark Cohen moved to strike the testimony. And I wonder, did he mess up by not objecting the first time? Because even the judge said something like, you know, you didn't have a timely objection or something like that.

So what happened there? That's a good question. And certainly that was sort of some bombshell testimony. I don't know if the defense was prepared for that answer, to be honest. So, you know, I think it was shocking. And on the second go around, defense got the objection in. But that's a little bit of a difficult one to read, I would say. Wait, meaning that you think that the defense lawyer didn't know about this and so hadn't been on the lookout for it?

Or what do you mean? maybe just wasn't expecting the response at that particular moment to be so explicit. I mean, one thing to note is the defense does not meet with, we've gone over this a few times, but it's worth reiterating. The government can spend a lot of time with the witnesses. The defense may not ever have an opportunity to talk to them before trial. The only thing, the only window the defense has into what a witness is going to say is twofold. one, the government when they meet with witnesses before trial takes notes, and they provide those notes to the defense very shortly before trial, and you may have heard references to this in the transcript during the trial, they call it 3,500 material. And that's because there's a statute called Title 18 U.S. Code section 3,500 that requires the government to turn over these witness statements right before.

actually technically, you don't have to turn it over until after the direct testimony of the witness, but in practice, the government provides it shortly before trial. And so basically the defense lawyer is getting this stuff. They don't know necessarily what in the notes is going to come out during the trial. There's a lot of information during an investigation where the prosecutors and investigators are trying to understand the facts that may never become elicited during the trial. So it is possible they didn't expect it, or it's possible that they were just tired from all the midnight filings and didn't pick it up. And there's a rule in trial law. Once the horse is out of the

barn, the horse is out of the barn. Oh, okay. So since he didn't get to strike it that first instance, although it is true that potentially Judge Kaplan would have still allowed it under the rules that he allowed it, which was, you know, this is not related to any of the charges in this case. So, you know, none of what happened here should reflect on the defendant. It should form a basis for their close relationship or should be considered, you know, for the closest of their relationship and her subsequent actions. Yes, the other thing they brought up, the prosecutor brought up in relation to this. I thought, frankly, was hilarious, which was that Caroline had written notes.

So I'm blanking on what the header of this list was, but one of the line items was negative 150 million for the thing. The thing referred to this alleged bribe to Chinese government officials. By the way, ARI Redboard came on the show on Friday, and he said he felt that even if Sam isn't on trial for that, it will still cast him in a bad light. I don't know if you have any other further commentary on that. I would say, so there's two things that are worth talking about. One is the rule of evidence at issue.

And the rule is Rule 404B. And so the concept is Rule 404A says that you cannot introduce evidence of a defendant's prior bad acts, convictions, crimes, to show action and conformity therewith. In other words, you can't tar up somebody and say they're a criminal, so therefore they must have done this crime. However, there's an exception, Rule 404B. You can introduce evidence of other undercurrent. charged that act if they are relevant for some other purpose. So the government will often find

a different plausible purpose to introduce all manner of activities that are illicit. And here the proffered reason was it shows the relationship of trust between Ellison and the defendant. The fact that he would openly discuss with her bribing a Chinese official demonstrates that he would have had the trust in her necessary to have her futs with balance sheets or participate in a fraud scheme. That's the theory of. The other aspect of the rules that was in play and the reason for the initial objection was actually, I don't think 404B was just a simpler issue. The way she expressed it, I believe it related to a Chinese bribe. She was speculative. And you're not allowed to speculate in your testimony. You have to talk about things based upon

personal knowledge. You especially can't speculate when you're talking about accusing somebody of participating in a crime, right? And so I think the nature of the initial objection was, this is speculation. And then in the sidebar, no, no, no, no, there's a basis. Let me lay the foundation. I see. Okay. Something that was so fascinating to me in that sidebar is that the defense attorney objected to the fact that the prosecution had shown a photo of Sam Binkman-Fried holding a pack of cards. It was, I remember seeing these ads like in the New Yorker and I don't know. I'm not like a TV person or whatever. So maybe they were seen like much more widely than a weirdo like me where I wouldn't ever see what normal people see. But I remember thinking, wait, why is he

going on and on about the fact that? Because the prosecutor did not ask about the fact that he was holding a pack of cards. What's your take on on that? So I, that exchange, the way that started is at the sidebar, the prosecutor Sassoon says, Judge, Bankman Freed is like shaking his head and sneering and doing things to intimidate the witness and, you know, tell him to stop. And the defense lawyer, Mr. Cohen, gets forclympped and gets upset, you know, what the hell is this? like, you know, this is a trial. He's here at the trial. Like, you're going to muzzle him.

And we haven't seen anything like that. And by the way, the government's doing bad stuff too. And here's some of the stuff they're doing. They're showing. And the point he's getting at is that these are prejudicial photos. Okay. Sam with a playing card or with the hair makes him look evil, nefarious. Somebody, a rule breaker.

I think that's what he was getting at, even though he didn't express it. you know, perhaps as clearly as he could have. But I think the gist of what he was getting at is that they are displaying these prejudicial photos. And the fact that they're not asking about it in his mind illustrates the prejudice of it. That, you know, it's not even connected to the evidence. They're just leaving it up there to sort of condition the jury and make them look down upon him. A similar issue happens a lot in trials where very often there's a mugshot of the defendant. When they get arrested, there's a shot of them.

And it's not a flattering photo usually, you know, other than Donald Trump, most of us don't get a good mugshot. And so the mugshot's usually very unfavorable. The defense lawyers don't want the jury to see their client in that light. So I think that was sort of the back and forth on that. Okay. I mean, I think it's weird that he's protesting at the photos of the hair because that was what Sam's hair just looked like for, so like why, I don't know.

It's just, I don't know. Anyway, okay. I just wanted to read that little bit that the prosecutor said about Sam's behavior because I thought it was interesting because she raised, you know, that it could relate to the fact that they used to have this romantic relationship. She said, Your Honor, given where I'm standing, I've noticed several times since the lunch break that in response to things the witness has said, the defendant has laughed, visibly shaken his head, and scoffed.

And obviously, I'm not communicating with the witness, but it's possible it's having a visible effect on her. especially given the history of this relationship, the prior attempts to intimidate her, the power dynamic, the romantic relationship. And I would ask that the defense counsel tell him to control his visible reaction to her testimony.

So, yeah, clearly she felt a little bit protective of how Sam was responding to Caroline's testimony. All right, so we're going to take a break to hear from the sponsors who make the show possible. But when we come back, we will have a big discussion on some of the other witnesses as well.

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Link in the description. Back to my conversation with Sam and Greg. So I just wanted to kind of put a wrap on some of the testimony regarding Caroline. I just wondered also your opinion. Because to my mind, that section, the bribes to the Chinese government officials, Thai prostitutes, and then also trying to raise money from a Saudi prince. It all happened in somewhat quick succession in a short period. And I just wondered how you thought that all went over with the jury. Yeah. I mean, I think it went over well with the jury. I think it's very important evidence of just

sort of grasping at straws, so to speak. And by well, you mean for the prosecution? Yes. Right. Yes. well for the government. I think it just shows not only, again, the interactions between Sam and Caroline, but also sort of the fact that some of these discussions were taking place and some of these alternatives were being considered legitimately, you know, just shows the mindset that they were in and the stress that they were under. So I think it was all sort of combined to be effective evidence for the government. I have a different take on this one. I think that the government did not need this testimony, that they have better points to make that are directly related to the crime.

404B evidence is very risky from an appellate perspective. The Court of Appeals wants to make sure if it gets a fair trial and that their jury is not prejudiced by evidence of things that are not charged. Now, look, I think that the evidence here is overwhelming. I don't think there's actually a risk. of a reversal. But when you, part of trying a good case when you're the government or a defense, but more especially when you're the government, is to protect your advantage and not get ahead of your skis and take risks you don't need to take. And I think here is an example of where they went after something that they didn't need that is a little bit problematic in two respects. One, the speculative nature of it. You know, Caroline was not totally confident about what the money was for, number one.

So there's a bit of speculation. And number two, it's really, really prejudicial to say that he bribed a foreign official, especially when it's speculative. So I guarantee that, you know, if there is a conviction here, this is going to be an appellate issue that the defense raises. So, Sam, when you're thinking about like how you protect a. record. What about, you know, Judge Kaplan's sort of limitation on what the jury could consider that for? That'll be the government argument, right? The government will say we, the jury got a limiting instruction. The defense will say, give me a break, right? Like that instruction's gobbledygook.

Nobody remembers the instruction. What they remember is bribe. Who could follow that instruction, especially the way it was delivered. Look, I do think that this, at least as far as the record is right now, I still think the government would get an affirmance that the conviction would stand if they get in a conviction. But like, why go into this? You don't need it, right? I mean, they have Ellison saying, we needed to give balance sheets to our lenders. I did seven scenarios that were misleading. Sam in writing picked the one that was the most misleading.

And then I sent it. And I felt like I was lying and felt bad about it at the time. That's devastating testimony. Why do you need to get into this stuff? Hmm. Interesting. Okay. The way it was portrayed is another indication of how they were trying to keep a secret. But one other thing I, because I didn't do for this, this for listeners, I forgot to mention the Thai prostitutes thing was that in order, one way they had tried to unfreeze the money in those accounts was to create accounts, other accounts on the exchange using the identities of Thai prostitutes and have Alameda lose a lot of money to those accounts. And then, withdraw that way and that didn't work. Anyway, okay, the other thing I really wanted to ask about was the fact that Caroline did cry in her testimony.

Here's what she was saying at that moment. She said, what had happened was that she had told Sam in a text message that she actually was in the best mood she had been in for a long time once it started to leak out that, you know, there was something amiss at FTX and Alameda, like shortly before it all came crashing down. When prosecutor Sassoon asked why it was that she had made this statement, she said, to be clear, that was overall the worst week of my life. I had a lot of mood swings during that week and a lot of different feelings.

But one of the feelings I had was an overwhelming feeling of relief. Because as I said, this had been something that I had been dreading for so long for the past several months. Honestly, as she started speaking, I also started tearing up, actually. Because, you know, she had been talking about sort of the stress over multiple months. And she said, it's something that I had been in my mind every day worrying about what would happen when the truth finally came out. And I felt a sense of relief that I didn't have to lie anymore, that I can start taking responsibility and being honest about what I had done, even though I obviously felt indescribably bad about all the people that were harmed and the people that lost their money, the employees that lost their jobs, people that trusted us that we had betrayed. And not only did she cry, I saw that afterwards she grabbed a tissue and dabbed at her eyes. And I wondered, you know, I don't know normally, you know, how frequently crying happens in a trial, but I wondered what you thought of that display of emotion, how that would go over with the jury.

I think that it, this is why you have live testimony so that you can evaluate the demeanor of a witness. This is why you don't write out your testimony and submit it in paper and read it, which does happen in some types of cases. And there are civil cases where testimony is written. Here, they have the human witness, sit down in the jury box, in a setting where the jury can see their every moment so that they can evaluate their demeanor as they testify and determine whether how it bears on credibility. Here, clearly, this has all the hallmarks of truth, right? I think it's hard for most people to fake an emotion like that. What she's telling you is corroborated by contemporaneous communications. There are other facts that. come out, including a little bit after this, about the November 8 meeting that was recorded where you see that sense of relief in her. It just lines up with her testimony that this was known for a long time. There was a lot of pressure, and this was a release. It's literally such a release. It's so stressful that when she's just thinking about it again, she can't help but feel the emotion of it. And the jury's going to remember that, right? That really will stick to the

their ribs. So it's very powerful and very damning for Sandbankton Fried. I wanted to add that the jurors are paying close attention to everything that is going on, and they're constantly, unconsciously or not making credibility assessments of the people that are talking to them throughout the trial. And I think when you see a display of emotion that comes across so genuinely like that one did, it just really probably assists in their evaluation of the credibility of Caroline's testimony. And I think it probably bolstered that credibility and is going to lead to the jurors giving it greater weight. And I think, you know, one of the things that we talked about earlier was this idea that Sam had this utilitarian and outlook and, you know,

didn't factor into that outlook or that framework, no, lying or being truthful. And I don't think that, like, value set is something that is going to resonate with jurors at all. So I think when they're sort of assessing, like, how they feel about the participants in all of this, they're not going to be able to understand or relate to the values ascribed to Sandbach and freed in this utilitarian framework. But when they see Carolyn, who I, I think sort of, you know, was taken in by that a little bit and influenced by it. But at the end of the day, took responsibility and showed, you know, really significant emotion and remorse when she was testifying.

I think they're going to identify with that. You know, a couple other points on that, the identifying part, the fact that you put yourself in her shoes, it gets you 90% of the way to crediting what she's saying, right? The other thing is you see this. So Greg made a great point, right? the contrast between the emotion and the guilt of participating in the scheme that Ellison felt as compared to the utilitarian approach that SBF had, right? And then there's other aspects of that that come through.

It's subtle, but Ellison said that in her relationship with SPF, the thing she was upset about in part was that he didn't seem to care about the relationship. In other words, you get this impression that he's like cold. all he cares about is his ambition. He might, there's a 1% chance or a 10% chance he'll be the president of the United States. You know, that paints a very, him in a negative light, both for purposes of the trial. And then thinking ahead, given where this seems to be going, if there's going to be a conviction, this is all stuff that the judge is sitting through and is going to know when it comes to sentencing.

And this is a big part of why when you defend people in criminal matters, as I do, and when you're counseling clients of whether they should go to trial, if it's inevitable that they're going to lose a trial, it's a bad idea because the judge is going to sit through days or weeks of testimony about how bad they are. Whereas if you plead guilty,

the amount of information the judge is exposed to about the person and the crime is dramatically minimized, which positions you better for sentence. Interesting. Well, I did also, now because before the show, Sam, you hinted that you had changed your mind a little bit on the defense. Because last week for Gary Wong, you know, I was in the courtroom and felt like the defense, at least for the first day of his testimony, they were, or maybe it was the first day and a half,

that they were not very effective. That changed on Tuesday. But I wondered how effective do you think the defense was in its cross-examination of Caroline Ellison? I read over the transcript multiple times. It's hard for me to find anything in there of value for the defense. I don't know what's going on. A lot of what they're doing on the defense cross is just repeating aspects of the direct. Now, sometimes when you're really, really losing, just talking about stuff that's not the worst parts of the testimony can at least disrupt the government's flow, which may be what's going on. I have to think, though, you see, I'm at a disadvantage because I don't have the discovery in the case.

I have not been given the government's discovery. I don't have the witness statements, the 3,500 material. So I'm in a gap in terms of was there stuff, is there food they're leaving on the table on a cross? But I expect there is. I think there is. One fertile thing that you will almost always see, they met with Ellison like 20 times, right? the likelihood that she said something inconsistent about various topics in 20 meetings is very high. And you did not see a lot of, okay, you said this on this occasion. You said it this way on a different occasion. You said it this way on a third occasion to cast doubt on her memory, right? We just didn't see that.

They didn't do that. I gave an example earlier. There's testimony she's giving that's uncorroborated, like this utilitarian conversation. You did not see them pin down. There's no recording. There's no email. There's no Slack message. There's nothing corroborating this.

It's just you. So it's hard for me. They're getting crushed. Now, why is that? I don't know. It could be that they just don't have much to go with. And it's possible. But I don't think we're seeing an effective cross here or effective defense strategy yet.

And when you say that they don't have much to go on, it's simply because that old adage about, the facts not being on their side. That's what I mean, yes. But it did seem like some of the arguments that you were talking about, those would be ones where even if the facts aren't your site, you could make them and they're not doing that. Correct. And also, you know, I have seen with every cooperator, you can always make the argument that they have a strong incentive to lie just because of the way that the cooperation agreement

works, right? They committed crimes. They've got exposure. They've got to point the finger at Sam to get a break, right? And I don't even think that they've executed that well, right? I think a lot of people, I've heard this from multiple people that they kind of like don't even understand what the defense is getting at with those questions. They're not executing. Yeah. Yeah, I mean, that's the feeling of watching it in the courtroom. But I didn't, you know, taking your point last week about somehow you just try to get certain things on the record that you can use in your closing. I thought maybe that's what they're doing, but I couldn't figure out where it was going. One thing that surprised me is that when they had cross-examined Gary Wong, they had him recall a signal chat where Sam was upset that Caroline hadn't hedged.

And I thought they were going to use that in their cross-examination of Caroline and say, like, you know, this is your fault. You were told to hedge and you didn't. So why do you think they didn't brace that? Like, why did they only raise it with Gary, but then not with Caroline? I don't understand that. I think one thing that maybe came into the calculus there was they didn't want to give her an opportunity to explain it. They had it on the record to the first witness, and if they confronted her with it and she had a good explanation as to why she didn't take that action, then the point that they made through Wong would be less effective. Oh, I see.

Okay. I think that they also, I remember Ellison testified. She described a meeting with Sam where Sam blamed her for not hedging and she cried. And she explained that it was, you know, did she, could she have done a little better here and there? Yes. But ultimately, all of the decisions that led to where they were were Sam's. So she didn't feel it was fair for him to sort of get mad at her that way. So it's possible that that influenced the defense and not wanting to go there.

But it's also like, what does that have to do with the price of tea in China? Because whether you head or not, this is not about whether they hedge or not. This is not a trial about whether or not they had a proper investment strategy. The charge is lying, right? You can't say you have your solvent when you're not. You can't say you have the assets to cover customer withdrawals when you don't. And whether you hedged or not, the hedging is almost like, yeah, we wouldn't have been caught if you had hedged better.

And that's how I would explain it if I was the government enclosing. What they're basically saying is if she had hedged better, no one would have figured out that we'd been lying and taking the money out the back door and loaning it out. And you've seen this a few times with the defense cross. One of the other crosses they did was they took. So in November, there's a tweet that Sam Bankman-Fried has. I think they did this with Gary on cross, where he's like, you know, we have enough assets. and then they try to draw this distinction between liquidity and solvency. And it's basically two cute by a half, right?

Because even if there is some hyper-technical explanation of that tweet that could be read as consistent with a version of the truth, there's no question it's misleading. And when that's your rebuttal to the tweet, you're just highlighting for the jury how bad it is. They lose trust in you. They're like, really? Okay, so I guess you'll mislead me too. right? If this is sort of how you look at language, I've got to be pretty careful with what you're telling me. I think that's just not a smart strategy to do that. And I think that's probably an example of what you call a difficult client. I think there are signs here that SBF is a difficult client as telling his lawyers, and you need to argue this, this is what I was doing. You know, this is what this meant. This is why it was okay. And I've been there and I'm sure Greg has been there. But, you know, sometimes the best thing the lawyer can do is get their client to not hurt themselves.

Sometimes it's better to be silent than make a terrible argument. Oh, wow. And do you feel like you're reading that in between the lines here? Yeah. I get the impression SBF is difficult because of what happened with bail. You know, in the lead up to the trial, he violated the conditions. He gets detained, even though he's been detained in Judge, Judge, Kaplan's not somebody to rethink a decision. The defense keeps applying to get him to revisit and let him out on bail.

I think that has to be coming from the client. And so I get the impression and then, you know, Sassoon's description of sort of SBF acting out in trial, right, you get this picture that he's difficult. And he was the boss of a multi-billion dollar company, or at least a company that purported at billions. So like you can see, and it's not going well. And he's not, and I, and I, there was some stuff on the transcript about how he doesn't have his ADHD meds. So you put all this together, the stress of a trial. I think he's pushing them to make some of these points that I think will ultimately hurt him. Oh, wow.

Okay. That's, yeah. I mean, it makes a lot of sense. So Gary Wong was the other big hitting witness, but we're well into the show. I guess we'll just raise a few points with this one. I did feel that finally on Tuesday, it seemed like the defense started to make headway. I do feel that the prosecution was able to rebut a lot of it, but I wondered, you know, if you had any thoughts on what the defense was able to do finally for once, and if that might

help them in the long run. Look, I don't think that they made anything close to the level of headway you would need to overcome this case. but I do think they made a couple points that you'll see them exploit in closing. So one point, and this is at page 541 to 42 of the cross of Gary, was that in 2019, when Alameda had a negative balance on some of the internal documents, it was okay as long, it wouldn't be negative if you included the value of Alameda's FTT holdings on the FTCX exchange.

So basically to break that down, you know, I think the argument they're going for here is that this wasn't stealing. What happens in a loan is the lender provides money and the borrower provides collateral, an asset that is valuable that the lender can cash in if they need to secure themselves. And I think where they're going is they're getting the building blocks

together to say, look, there was collateral for the money, the $8 billion or whatever that Alameda had. It was collateralized. FTT was a real token. It had a market price. It was very valuable at significant points in time. And so therefore, number one, this wasn't stealing. And number two, there's a basis to think. There's reasonable doubt about whether Sam would have had a reason to think that these loans were kosher.

another thing that they went into, and this is at page 544 to 45 of the cross, the defense made some headway on this concept of preferential treatment. So one of the government arguments is that there was, that SPF committed fraud in leading customers and others to believe that Alameda was treated the same as other customers when in fact they had preferential treatment. And what they did was they pointed out that these statements, the government, the government is casting a certain way, we're talking about a very specific thing. They were talking about whether or not Alameda was in a position to frontrun other clients, and they weren't. And so they're

saying, look, the government is misleading you, the jury about the meaning of the statements that they are challenging, right? They are trying to make a fraud where there was none. They did some stuff on the cross about Ellison not hedging. And I think we just talked about that. It's, it's, I don't like this line of argument because I think that it opens the defense up to the government just saying, okay, she didn't hedge. You don't, you can't lie about it though. Can't say you have assets, you know, the hedging really is just boils down to, okay, if she had hedged better, it would have taken longer to get caught. Well, I think the point about the loans being collateralized and maybe that, you know, setting up an argument that, you know, there was no

fraud here that this was a lending transaction. You know, it sort of dovetails with some of the questioning that they did of Zach Prince yesterday on cross, where they were asking about, you know, FTT being a top 10, you know, cryptocurrency and, you know, the level of collateralization of some of the loans that BlockFi made that were collateralized by FTT. So, so it's a it may be that that's where they're trying to go with all of that. At the end of the day, one thing that I think the government did very effectively yesterday was to get into the balance sheets that were provided to BlockFi and to note how the balance sheets stated assets, liabilities, and retained earnings

and then asking questions about, well, if the loans were understated by half, how would that have affected your decisions about whether or not Latin. And so I think when we're talking about accounts that relate to, um, relate to fraud and connection with the lenders, even if they are able to make an argument that FTT was, you know, real collateral at least at one point in time, I still think the fact that the Alameda books didn't really have these loans payable to FTCs for all the customer assets that were used, um, is going to be, is going to be fatal, uh, to, to, to Sam back and free on those, those counts. Yeah, one other thing that I really felt from Gary Wong's testimony, even though

the defense made some inroads, my takeaway largely was that Gary Wang was a yes man to Sam. I mean, he allowed $200 million in loans to be given from Alameda in his name. He had no clue what they were about. He was like, I think one was about Leder X. He did not know. And he was like, I signed because Sam told me to sign. I mean, I was just like, I mean, granted, And maybe it's just because obviously like normal people like us, peons, are not used to dealing with such large amounts of money. But, you know, it was just sort of like brain exploding emoji. Like what the hell? And then this whole thing about the-

Well, Laura, can I jump in there? Because one thing that was really interesting was that that was even mind-blowing to the judge. Well, I think chimed in and said, like, you signed for $200 million worth of loans and you didn't know what they were for. And he was like, you all. Yeah. Because Judge Kaplan is the one who made those questions. And then there was another moment where the defense had said, you were ordered by the Securities Commission of the Bahamas to go meet with them.

And the letters said that if you didn't go, you would be held in contempt or whatever. And then the prosecution went back and said, hey, the meeting was at 2 p.m. And they pulled up the copy of his email. The email to you did not get sent until 3.26 p.m. you received it after the meeting was already underway. And he was like, yeah. And so, I mean, he just was along for the ride or something. Like, he just kind of was the tag along for Sam.

So anyway, that was one of the things that really struck me. But I think, you know, two other things on his testimony. One is that example with the notes, the defense put those notes in on cross. I cannot understand what they were trying to do there. Wait, I'm sorry, the notes? The promissory notes, the lines. These promissory notes for a bunch of money. I cannot understand what point they were making.

Maybe they're going to say something within closing. It's possible, but I think it really backfired. And another example of a backfire situation for the defense was this back and forth with Gary about the tweet. So Sam Bankman-Fried in November has a tweet where he says there's enough assets and the defense. They're trying to explain like dance on the head of a pin about the difference between liquidity and solvency.

And he's asked, you know, do you know the difference between liquidity and solvency? And he says, well, I do now. I didn't then, but I do now. You know, not good for the defense. We all laughed in the overflow room, by the way, upon that answer. And then they keep going for it, keep trying to justify this tweet, right? Keep asking questions about it. And ultimately, what Gary says is it was true but misleading.

That's his testimony. Yeah. Misleading is fraud. Yeah. And the other thing was he was asked, and the defense used this unfortunate phrasing, what triggered this bank run? Was it CZ's tweet or the linked balance sheet? So the bank run got stricken, but he still somehow asked the question.

Or he said, was it CZ's tweet that caused the, you know, whatever, the bank run, which that language got stricken? And Gary responded, I don't know if it was CZ's tweet or the leaked balance sheet. Right. Again, which goes to, yeah, the core issue. Right. In other words, I don't know if it was our competitor or the fact that our balance, and by the way, the balance sheet that got leaked was a fraudulent balance sheet. that was a falsified balance sheet. That was one of the, that was lipstick on the pig, okay?

That wasn't even the true balance sheet that got leaked. And so quite clearly. But on the other side of it, one thing that I do think the defense could do is Gary repeatedly talks too fast, right? Well, we all know the saying about fast talkers, right? Can't believe a word they're saying. So I think that's something the defense could do. Yeah, although I would say he speaks in. spurts. So he'll kind of have a pause and then like all of a sudden a bunch of words will come out

really fast. And there's a pause. And then the next bunch of words comes out really fast. So it's more, I don't know, it's hard to say. It's different from like how we would define fast talker. Anyway, so let's move to Zach Prince before we quickly, because I know we're coming up on time. I do want to get to important questions about by not finance, SBF. Just quickly, why don't we talk about Zach Prince? Like, what do you feel that he was able to do either for the prosecution or the defense? I thought he came across as a very credible witness. I thought that he sort of stood his ground on cross when it was appropriate. And it showed me that he had a lot of confidence in his understanding of, you know, what was at issue here. I thought that he also did a really good job of

explaining, you know, certain like terms of art to the jury. And I feel like both sides were relying on him to say, well, what do you mean when you say, you know, margin and what do you mean, you know, by collateralized? And I feel like maybe even in just a subtle way that his ability to provide pretty clear explanations of those things that maybe, you know, the typical person listening wouldn't have a complete grasp of sort of bolstered his credibility as a witness. So I think he did, I think he did a very good job overall. all. Yeah, I mean, the one thing is that I actually felt when he explained the difference between

a crypto lending platform and exchange, you know, that got Harry for the defense. They tried to push on his knowledge of it and everything. But I mean, you know, just the fact that in the direct examination they were able to get across, he spoke publicly everywhere about the fact that they were taking the money and lending it out, contrasted that obviously with the secrecy happening over at FTX, I felt that made him really strong for the prosecution. Yeah, I think the core of his testimony, the primary function of it, was he's a victim, right? One of the charges is defrauding lenders. And so the core of the testimony, the main and primary purpose he was called is to explain

that he got balance sheets that were misleading, i.e., that were fraudulent, that he would have cared, it would have mattered to him in making lending decisions to know the truth. And the prosecutor, I think it was Nick Rose who was asking him questions, gave him hypothetical questions, right? If you knew the liabilities were this, would that have been important to you? That's classic testimony to establish the materiality, the importance of a false representation. But yes, he also had this secondary benefit for the prosecution, which was to explain how things are done the right way, right? That was sort of the contrast that the government was painting. This is how you do a lending operation the correct way. And that is different in stark contrast from secretly lending money to

your affiliate. I think they were a victim in multiple ways here. So I agree the core of his testimony was about, you know, the lending and the fraud related to that. But they also had $350 million in assets on the FTX exchange, right? So they were a customer of the exchange. And some of those questions about how an exchange should run or how he would expect an exchange to be run, his answer was, well, they're not supposed to be utilizing customer assets to pledge them or re-hypothecate them or lend them out. And that's the expectation of the customers of the exchange.

So I think he was hitting two important points for the government. Yeah, yeah. It BlockFi was both a lender and a customer. of the exchange, a lender to Alameda and a customer of the exchange. And one other thing, too, was in his answers, he was talking about this pretty bureaucratic process for approving the loans and like doing all this stuff on his platform. And it was just in such stark contrast to the sort of really chaotic way of decision making that we've heard, you know, was occurring at FTCS and Alameda. So I also thought that he was effective for the prosecution. One other moment I had to ask about

There was this moment where the defense walked him through one of the loans that I guess Alameda had reposed and they were evaluating it. At this point in time, I think it was the summer of 2021, was the date of the document. And later they made more loans. And so what happened was there was this moment where the defense pointed out the fact that his own credit team had pointed out all these risks and said, we don't recommend that you make this loan. And then the defense said, but you continue to make loans.

And he said, to be clear, this document is for a loan that we didn't end up making. You know, we agreed with the credit team. We did not make this loan. And then he said, but you, the defense said, but you continue to make loans. And he said, I already told you, we didn't make this one. And it was like a kind of testing moment in the courtroom. I mean, it was still decorous, but, you know, like the fact that he said, already told you, that's like, you know, in a courtroom, that's kind of your sign of tension.

So I wondered, I honestly thought that the defense was like sneakily trying to get something past the jury. I could be wrong. It could just be they had the documents mixed up and they didn't know that they hadn't used, hadn't made this loan. I don't know. What do you think happened there? I think that's a mistake by the defense lawyer.

I don't think the defense lawyer would have tried to make that point. with this document if they had appreciated that that particular loan didn't go through. I mean, that's getting, that's getting punched in the face by a witness, which happens, you know. And that's, so when I said earlier that he stood his ground, I was thinking specifically of that part of the testimony. And one of the things that they got out of him was the importance of the diligence that they conducted in terms of setting like the terms of the loan and how much collateral was going

to be needed and all these other variables that went into their evaluation of the borrower. And so to come back and say, well, we didn't make that loan because it didn't have, you know, a high enough over collateralization level and then say, yeah, we did make future loans, but they were under very different terms and they took into account our view at the time of, like, what the risk was. Okay. All right. Let's move on to just discussing whether or not SPF should testify.

if you were Sam's defense lawyer, what would you advise him to do? My advice would be don't. And what I would say to him is, we're going to lose. We're not winning this trial. We have to think about sentencing. If you testify, you are going to add decades to your sentence. You're not going to change the outcome. And the judge will find, in addition to being guilty, that you not only didn't accept responsibility, but that you tried to commit perjury.

And this is a judge who will really slam you for that. It's a mistake. Now, I do think his only shot of an acquittal is to testify. The evidence is too overwhelming as far as I can tell. And the only way to rebut the inference and the crosses have just not done enough to punch holes in the government's case. The only way to give the jury a competing theory would be for him to testify. But I think even if he testified, there's just too much going against him. There's too much headwind. And so, I would say don't do it. Yeah, I would agree with that. I think it's going to be complicated by the fact that I strongly believe that he will want to testify. And ultimately, it's his call. So he has to take the advice of his lawyers. But just stepping back, like my experience with people who, you know, have been able to accomplish wide-scale financial fraud is that they do it because they can be very convincing.

and if they are very convincing to a lot of people over a long period of time, they sort of believe that they have this ability to convince people whenever they want to. And I think that's sort of going to play into this question of whether or not he will testify. And that's why I think he will want to testify, because I think he will believe that he can convince people that he was, you know, maybe not as involved as is being portrayed in the government's case right now. But I think it would be a mistake. So I agree with Sam.

And so if that were to happen, what would you expect the prosecution to do or bring up during their cross-examination? Like I wondered, can they just bring up any of the media interviews he gave ever since they collapsed? If they're inconsistent, yeah. They can take emails. They can take signal messages. They can take telegram messages. They can take documents like these documents where he has comment bubbles. You know.

Yeah, like on the word documents that, yeah, comments. You know, you have, you have documents that are basically like, hey, Sam, we're committing fraud. And he writes comment. Yep. You know, I'm paraphrasing. Yeah. Yeah. He's got on the record testimony at congressional hearings.

There's a lot of tape and transcript of people with precise statements that the government can use to control what he says, right? I mean, he just can't change the fact that he said X, Y, or Z before. and that makes it dangerous to testify. One thing that the normal dynamic in a criminal trial, so I mentioned before 3,500, the government has to provide the witness statements of their witnesses from the prep before trial. And the defense has a corollary obligation.

Under Rule 26 of the federal rules of criminal procedure, if they meet with witnesses, they have to provide the notes of their meetings with the witnesses before trial, except the defendant. Okay, so, normally, in a normal criminal trial with a normal defendant who has made no statements, the government will have nothing other than what they've collected from their investigation

to use to control the witness, the defendant. Right. Here, though, this guy has talked a lot, and that is a problem for him. Oh, wow. So it's like normally they wouldn't have much to prepare with, but the government probably has had now almost a year to prepare a potential cross-examination. Oh, dear. Okay. Well, I wondered, so we've talked about how it's really not going well for the defense. Obviously, things could change, but, you know, the star witnesses have come out. There's not really been a real

defense or their credibility hasn't really been undercut. So I wondered what you thought would happen at sentencing. I don't know. Can you give like a, like, a, like, like a ballpark of what you think Judge Kaplan will do? North of 20 years. I think that Sam will get north of 20 years in prison. And would you say north of 30? It's possible. It's harder to know.

You know, the thing that cuts against more is his youth. That's a long time. And also there's information we don't have yet. Like one of the factors that the judge will consider are statements from victims. We've heard some testimony from victims, but, you know, if thousands of victims write notes to the judge, as happened in the Madoff case, that has an impact. If they don't, could go the other way. You know, like, there's data we don't have, but I definitely think for deterrence purposes and the importance of the case nationally, the impact it's had on the economy and the crypto economy, it's hard for me to see. him getting less than 20 years.

Greg, what do you think? Yeah, I mean, I agree with Sam on these points for all the reasons that he just sort of walked through. Okay, and do you want to give a more specific number? North of 20 years leaves like a lot of room there. I think the government still has a week left in their case.

The defense will have an opportunity to put on a case. It's hard to sort of speculate about you know, what's going to happen at sentencing because we don't have a conviction yet. We don't know what other evidence is going to come in. I think as we sit here now, we all think that it's likely that there will be convictions here. But it's tough to ballpark with a lot of unknown information at the moment. Okay. What would you give him, Laura, if you were sentencing him? Oh, I have no idea because I have never, I'm not a legal person. But the reason why I was asking is because since Madoff got 150, I was like, well, between 20 and 150, there's a lot of room. So that's why I was asking for a more

specific range. Okay, well, this has been a fabulous discussion. Thank you both so much for your insights. Where can people learn more about you and your work? Well, as you said in the intro, I'm a partner at DLX law. Our website is dLXlaw.com. People may be familiar with my partner, Lewis Cohen, who is on Twitter. You've been on the show. Yeah. At New York Crypto. lawyer. And he's much more out there on social media than I am, but I'm giving it a shot. So I look forward to tweeting about this and getting engaged in the conversation. Thanks for having us, Laura. I'm a partner at K Hill and I'm the head of our cryptocurrency and fintech practice. And if you want to see stuff about my practice, you can go to khill.com and look me up.

Great. Well, it's been a pleasure having you both on Unchained. Thank you. Thank you. Thanks so much for joining us today to learn more about Sam and Greg and the criminal trial against Sam Bickman-Fried. Check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Kevin Fuchs, Matt Pilcher, Juan Arvanovich, Megan Gavis, Shoshank, and Margaret Curia. Thanks for listening. Unchained is now a part of the Coin Desk Podcast Network.

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