The initial stages of Sam Bankman-Fried’s trial have unveiled the key arguments that will play out in the courtroom between the United States Department of Justice (DOJ) and the former CEO of FTX in the weeks to come. After a morning dedicated to selecting the jury, both sides delivered their opening statements to the 12-member jury. The DOJ began with a strong stance against Bankman-Fried in its initial statement, portraying the FTX founder as an individual who deliberately misled investors to enrich himself and expand his cryptocurrency empire.
DOJ Alleges Deception
According to the DOJ’s perspective, Bankman-Fried deceived FTX customers and investors, utilizing Alameda as a crucial partner in a scheme to “misappropriate customers’ funds.” This phrase featured prominently in the opening statements. As the trial preview suggests, the DOJ will focus its arguments on accusations that Bankman-Fried misled customers, investors, and lenders regarding the safety of their funds while using Alameda to misappropriate their money and influence Washington politicians.
Conversely, the defense contended that Bankman-Fried is a young entrepreneur who made business decisions that ultimately did not succeed. They disputed the existence of covert transactions between Alameda and FTX or any clandestine method used to embezzle customer funds. The defense’s prior arguments contend that all transactions were legitimate or made in good faith by Bankman-Fried during the cryptocurrency market’s downturn and FTX’s subsequent collapse in November 2022.
The defense also highlighted Binance’s role in the bank run that led to FTX’s downfall. Testimonies are scheduled to continue throughout the day. According to the defense, Bankman-Fried believed that FTX was permitted to lend funds to Alameda as part of their business relationship, and there was no concealed pathway for transactions between the two companies.
Witnesses Testify in Bankman-Fried’s Trial
Prosecutors have indicated that Caroline Ellison, Gary Wang, and Nishad Singh will provide the jury with insider insights into Bankman-Fried’s role in FTX’s operations and alleged offenses. However, the defense raised doubts about their credibility, citing their cooperation agreements with the government, which require them to testify against Bankman-Fried. The defense also downplayed accusations regarding the nature of the relationship between FTX and Alameda, asserting that FTX margin traders were well aware of the associated transaction risks.
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The defense concluded with the statement, “There was no theft. It’s not a crime to be the CEO of a company that files for bankruptcy.” During the latter part of the first trial day, the jury heard from two witnesses: Mark Julliard, a French trader and former FTX client, and Adam Yedidia, a friend of Sam Bankman-Fried and former employee at Alameda Research and FTX. Julliard testified that he had four Bitcoins held at FTX when the exchange collapsed, with a value of nearly $100,000. He acknowledged that FTX’s marketing efforts, along with the support of notable venture capital firms, had given him confidence in using the exchange for cryptocurrency trading. He assumed that these venture capital firms had conducted thorough due diligence on FTX and its leadership.