Sam Bankman-Fried’s tweets have come again to hang-out him.
As clients raced to withdraw their cash from his embattled FTX cryptocurrency trade almost one yr in the past, Bankman-Fried tried to cease the run on the financial institution with a message to his greater than 1mn followers: “FTX is okay. Property are high quality.”
In testimony on Friday, FTX co-founder Gary Wang, one in all Bankman-Fried’s closest associates, mentioned the message was a lie: “No . . . FTX was not high quality,” he advised jurors. “Property weren’t high quality.”
Prosecutors have seized on this and different posts from the fallen billionaire’s prolific Twitter account as they attempt to persuade a New York jury that Bankman-Fried lied to the general public, his clients, lenders and traders, about secret dealings that permit his personal buying and selling agency, Alameda, raid billions in FTX buyer cash.
As Bankman-Fried’s trial bought beneath approach this week, prosecutors repeatedly confirmed the jury screenshots of his posts on Twitter, since renamed X, and contrasted the general public statements with insider testimony from Bankman-Fried’s closest associates.
Wang, who has pleaded responsible and is co-operating with the federal government, described how the evening earlier than he had helped Bankman-Fried to pin down precisely how a lot cash Alameda owed to FTX clients. “The trade was quick $8bn,” he mentioned.
Introduced with a second tweet, the place Bankman-Fried reassured clients that “FTX has sufficient to cowl all shopper holdings”, Wang once more mentioned that his pal had lied.
“FTX didn’t actually have sufficient property to cowl all shopper holdings,” Wang advised the jury.
The panel of 12 jurors and 6 alternates features a retired funding banker at Salomon Brothers, two Metro North practice conductors, and a skilled accountant who’s the workplace supervisor for her husband’s landscaping enterprise.
They must determine whether or not the pallid 31-year-old Bankman-Fried, sitting a couple of ft from them on the defence desk, is mostly a grasp legal, or only a spectacularly failed entrepreneur.
Bankman-Fried, who faces a lifetime in jail, has pleaded not responsible and maintains his innocence. His attorneys mentioned in opening arguments he had made errors within the rush to construct FTX right into a $40bn firm on the forefront of the crypto business, however that Bankman-Fried had acted in “good religion” with out the intent to defraud anybody.
The trial, which has turn out to be a take a look at case for efforts by the US authorities to stamp out the freewheeling offshore cryptocurrency business, will hinge on the private relationships and intimate conversations of a handful of Bankman-Fried’s oldest associates and closest enterprise associates.
The temper within the twenty sixth flooring courtroom in decrease Manhattan was tense as Wang — who first met Bankman-Fried at a highschool summer season programme for presented maths college students and lived with him in faculty at MIT — walked swiftly previous the defence desk to take his seat on the witness stand.
When the prosecutors requested him to establish Bankman-Fried within the courtroom, Wang strained out of his seat to see his former pal among the many sea of attorneys.
Bankman-Fried was emotionless all through the week’s testimony, tapping intensely on a laptop computer and avoiding eye contact with the witnesses. Wang might be cross-examined on Tuesday. Some of the awaited witnesses, Caroline Ellison, his one-time girlfriend and Alameda’s CEO, will take the stand early subsequent week, prosecutors mentioned.
“That’s completely devastating testimony,” mentioned Daniel Silva, a former federal prosecutor at legislation agency Buchalter. “The federal government has a compelling case . . . It is a nice story. It’s a film script in an indictment.”
Juxtaposing this testimony with Bankman-Fried’s tweets has turn out to be a strong instrument for the federal government. The jury noticed a tweet from July 2019 the place Bankman-Fried mentioned Alameda’s account on FTX was “identical to everybody else’s”.
However Wang testified that on the identical day, FTX had carried out modifications within the bowels of its pc code that gave Alameda limitless rights to borrow from FTX — one in all a number of distinctive privileges he helped hardwire into the trade.
The jury additionally heard from an FTX buyer, a London-based cocoa dealer, who mentioned Bankman-Fried’s assurance within the November tweets led him to go away his funds on the trade till it was too late.
Matt Huang, an investor at VC agency Paradigm, which put $278mn into FTX, testified that his agency had requested concerning the trade’s relationship with Alameda earlier than investing and was advised that Alameda obtained no particular therapy.
Prosecutors have additionally tried to determine that Bankman-Fried knew about and orchestrated Alameda’s secret entry to buyer cash for years earlier than the trade collapsed.
Wang testified to conversations about Alameda’s borrowing way back to 2019. He described how the crash in crypto costs in spring 2022 prompted a number of third-party crypto lenders to demand compensation of loans from Alameda.
He walked the jury by way of a spreadsheet the place he had calculated Alameda’s money owed to FTX in June 2022 at $11bn, and described a gathering on the trade’s Bahamas workplace the place Bankman-Fried requested concerning the calculations earlier than instructing Ellison to repay the third-party loans.
“The cash finally got here from FTX clients,” Wang mentioned. “We mentioned publicly that we’d not use buyer funds like this.”
Requested who he meant by “we”, Wang mentioned merely: “Sam”.