Over the past three weeks, former employees and friends of Sam Bankman-Fried have testified that he orchestrated a scheme to misuse billions of dollars in customer funds from his cryptocurrency exchange FTX, which collapsed last year.
The witnesses painted a picture of Mr Bankman-Fried, 31, as a controlling boss who directed them to commit fraud. They said the FTX founder had known for months that the exchange had no way to return at least $8 billion in customer funds used to buy lavish real estate, invest in other crypto companies, make campaign contributions and repay lenders for a trade company that Mr. Bankman-Fried also controlled.
Here are highlights of testimony from several prosecution witnesses – including Mr. Bankman-Fried’s associate and friend, Caroline Ellison, who were central to the case:
Adam Yedidia
The prosecution’s first witness was Adam Yedidia, a former FTX developer who was a close friend of Mr. Bankman-Fried and lived with him and other associates in the Bahamas.
Mr. Yedidia, who was not charged with any crimes and testified under immunity, said Mr. Bankman-Fried knew that FTX and Alameda Research, a sister crypto trading firm, were on thin ice.
Mr. Yedidia described a conversation he had with Mr. Bankman-Fried on their paddle tennis court the summer before FTX collapsed, when the crypto market collapsed and Alameda’s lenders demanded their money back. Mr Yedidia said Mr Bankman-Fried told him that FTX was “bulletproof last year, but we are not bulletproof this year” and that it would take six months to three years to make the company “bulletproof again”.
Caroline Ellison
Ms. Ellison, who ran Alameda and was Mr. Bankman-Fried’s former girlfriend, was the government’s star witness. She detailed the close relationship between Alameda and FTX, including several instances in which, she said, Mr. Bankman-Fried ordered or greenlit the use of FTX’s customer deposits.
Ms. Ellison, who has pleaded guilty to fraud charges and is cooperating with prosecutors, said that Mr. Bankman-Fried was eager to buy back FTX shares from Binance, a rival crypto exchange. She was worried about the move, she said, because she knew it would mean having to borrow $1 billion in FTX customer funds for the transaction.
“That’s fine, I think that’s really important, we have to get it done,” Bankman-Fried told Ms. Ellison, according to her statement.
Ms. Ellison also provided insight into Mr. Bankman-Fried’s mindset, describing their relationship in detail as well as his somewhat unconventional view that rules about not lying and not stealing were of lesser importance than actions that he believed served a greater good served.
Gary Wang
Mr. Wang, a co-founder of FTX who has pleaded guilty in the case and agreed to cooperate with prosecutors, told the jury that Mr. Bankman-Fried instructed him to include features in the exchange that gave Alameda an advantage provided to the platform. “In the end, it was Sam’s decision,” he testified.
The soft-spoken programmer spent much of his time on the stand explaining the intricacies of FTX’s computer code, supporting prosecutors’ case that Alameda was intentionally given special privileges on the platform so it could use FTX customer deposits like a piggy bank .
Mr. Wang met Mr. Bankman-Fried in high school math camp and they were classmates at the Massachusetts Institute of Technology before co-founding FTX in 2019.
Nishad Singh
Mr. Singh, a former FTX executive who has also pleaded guilty, detailed Mr. Bankman-Fried’s lavish spending – including large real estate purchases and political donations – which were funded by FTX customer deposits.
Mr. Singh said he gave other employees access to his bank accounts to make political donations under his name, including Mr. Bankman-Fried’s younger brother Gabe, who ran the nonprofit group Guarding Against Pandemics. At one point, when a loan transfer didn’t go through, Gabe Bankman-Fried sent one of his assistants to the Bahamas “with a bunch of checks from my bank account,” Mr. Singh testified.
Prosecutors also showed an email exchange between Mr. Singh and Mr. Bankman-Fried’s mother, Barbara Fried, who received $1 million from FTX for her nonprofit organization, Mind the Gap. Ms. Fried, a Stanford law professor, suggested Mr. Singh make the donation under his name “because we don’t want to give the impression that funding MTG is a family affair rather than a joint effort by many people (including…). some mysterious guy Nishad Singh :)).”
Can Sun
Mr. Sun, a former top lawyer for FTX, testified that Mr. Bankman-Fried pushed him to find legal justification for the exchange’s repeated misuse of billions of dollars in customer funds — even after Mr. Sun told his boss that that there are none.
At Mr. Bankman-Fried’s urging, Mr. Sun said, he ran through some theoretical options to justify taking in and spending FTX customer funds. But Mr. Sun, who testified after reaching an agreement that prosecutors would not file charges against him, said he told Mr. Bankman-Fried again that none of those options were supported “by the facts.” Mr. Bankman-Fried responded by saying “something like ‘Got it,'” Mr. Sun testified.
Prosecutors then played an excerpt from an interview Mr. Bankman-Fried gave to ABC’s “Good Morning America” days before FTX filed for bankruptcy in November. In this interview, Mr. Bankman-Fried offered one of the theoretical options given to him by Mr. Sun as an explanation for what happened to FTX’s customer funds.