The D3 record of the highlight of the SBF trial: blame-shifting, amnesia, and inconsistencies

4 months ago
This article is approximately 2844 words,and reading the entire article takes about 4 minutes
The results of this case will be available within the week, so stay tuned.

Compile - Odaily

Organize - jk

The D3 record of the highlight of the SBF trial: blame-shifting, amnesia, and inconsistencies

On Monday, October 30, local time in the United States, the SBF case entered the third day of testimony by SBF himself. Today is the real highlight. The prosecution lawyer will question SBF for about half a day after the defense. The questions are very sharp, involving various details about Caroline, FTX, Alameda, etc., and once asked SBF himself until he was speechless. ,Answered several dont knows like I did on the first day.Lets take a look at what todays trial testimony looks like.

Odaily adds the following summary:

During the court hearing in the SBF case, FTXs chief technology officer Gary Wang and former Alameda Research executive Caroline Ellison revealed internal misconduct by FTX and Alameda, including misappropriating FTX customer funds and submitting false financial statements at the direction of SBF accusations. It is alleged that SBF may have exploited its position to engage in opaque and irregular transactions.During the trial on the sixth day, star witness Caroline Ellison detailed how SBF operated FTX in several aspects including Alameda’s misappropriation of FTX customer funds, Alameda’s false financial statements, CZ’s Twitter response, etc. illegal. The second week of the trial,Nishad Singh, a close partner of SBF and chief of the engineering team, also began to testify. His testimony related more to the inside story of FTX, including scandals such as political donations and misappropriation of funds., involving celebrities such as Hillary Clinton and Leonardo DiCaprio.

existWhen questioned about SBF last week, SBF frequently answered “I don’t know” and “I don’t remember” on key questions., so that the judge even said helplessly, I think the witness has a very interesting way of answering questions. Later, the defense lawyer and SBF (that is, SBF and his own lawyer) had a dispute because the lawyer believed that SBF was not Certain questions need to be answered.The scene was chaotic for a time.On Friday, in the presence of the jury, he was questioned in a more friendly manner by defense lawyers, the SBFs own lawyers. However, today’s order is made by the intersection of defense and prosecution: many of the questions are very direct, pointing to the core process and disinformation of the FTX exchange collapse.

If there are readers who want to watch the most pointed questions directly, they can go directly to the prosecutor’s questioning in the second part below.

Odaily compiled the testimonies from today’s scene as follows:

Question by the defense (SBF side)

Background Information

Mark Cohen, Attorney at SBF: As CEO, do you prepare a list of priorities?

SBF: Yes.

SBF: I post these so my employees know what I’m doing.

Cohen: What is this?

SBF: Here is a priority list for late September to early October 2022.

Cohen:DX 5 

Judge Kaplan: Granted (in evidence).

Cohen: Im not going to review all 16 projects, just a few. First, data. what is that?

SBF: The FTX team is building a database so that non-developers can access it, including myself. We try to speed up transactions.

Cohen: How much time do you spend on these things each day?

SBF: About 12 hours. I manage the people working on these projects.

Cohen: How much revenue are these matters related to?

AUSA Danielle Sassoon: Objection, inappropriate manner.

Judge Kaplan: Support.

Cohen: How much will revenue increase through this?

SBF: From $1 billion to $2 billion per year.

Cohen: Does FTX try to manage risk?

SBF: Yes. If one customer goes negative, it can lead to an overall loss. So we have the risk engine.

“The problem is that Caroline didn’t hedge properly.”

Cohen: Do you have any discussions about hedging?

SBF: Yes, with Caroline Ellison and Sam Trabucco.

Cohen: Where was the discussion with Ms. Ellison?

SBF: In the study of Orchids apartment.

SBF: I organized this conversation. After Bitcoin dropped to $20,000. Alameda’s net worth is approximately $10 billion—

AUSA Sassoon: Objection!

Judge Kapan: Support. All of these will be deleted.

Cohen: What did she say?

SBF: She started crying.

SBF: She (Caroline) agreed, saying Alameda should hedge. She offered to resign.

Cohen: How do you respond?

SBF: I respond point by point. Regarding that last point, I said it was her decision. Regarding the rest, I say the focus should be on hedging.

SBF: In September, I asked her again about hedging. I asked her what the scale was. She gave me that number. I told her I was happy - but it should have been a bigger number, at least twice as much. She sent me some spreadsheets.

Cohen: Are there any others?

SBF: She agreed.

The whole process from Coindesk publishing article to bankruptcy in the eyes of SBF

Cohen: Let’s move on to November. Gx 1047, is the calendar for November 2022. What happened on the 11th?

SBF: FTX filed for bankruptcy.

Cohen: November 2nd, what happened?

SBF: Coindesk article, they leaked an old balance sheet from Alameda Research.

Cohen: How did you react?

SBF: I reached out to Caroline to see if she wanted to respond. We decided to send out a tweet.

Cohen:GX 875 。

SBF: This is that tweet. November 6th.

Cohen (read tweet: We have $10 billion in assets not reflected there).

Cohen: Lets move on to November 6th. GX874.

SBF: This is from CZ.

Cohen: He wrote that we are liquidating FTT on the ledger, right?

SBF: Yes. Caroline and I discussed whether we should respond to a tweet. On November 6, customer withdrawals increased to $1 billion. I am anxious.

SBF: Im worried about a bank run.

Cohen: Whats that?

SBF: Let’s say you have a bank—

AUSA Sassoon: Objection.

Judge Kaplan: Support.

Cohen: How did you respond?

SBF: Caroline tweeted that we would be buying FTT for $22.

Cohen: What were the withdrawals that you observed on November 7th?

SBF: They have increased. On Nov. 7, net withdrawals were $4 billion, 100 times the average day. We may be facing a liquidity crisis.

Tweets posted by SBF (including a lot of false information about FTX security)

Cohen: Have you seen the GX 878 before?

SBF: Tweet about slow response to withdrawal requests. Gary told me at the time that Bitcoin withdrawal speeds had dropped to an hour, not seconds or minutes. We hit a roadblock. Gary is rewriting it.

Cohen: How about this (another twitter written by SBF): Wrong rumors and FTX everything is fine and assets are fine.

SBF: I think Binance is targeting us for working with regulators and paying people on Twitter—

AUSA Sassoon: Objection. There is no basis for this.

Judge Kaplan: Support. delete.

Cohen: You tweeted"Assets are normal". What do you mean?

SBF: My point of view is that there is no problem with this exchange and there is no problem with the assets.

Cohen: You said here that FTX will continue to process withdrawal requests...

SBF: FTX does not make any investments using client assets.

Cohen: What then?

SBF: Alameda asset collapse. Our margin is very small.

Cohen: What is the impact of hedging?

SBF: Very few. I deleted that Twitter Thread.

Cohen: You resigned on November 11th?

SBF: Yes.

Cohen: Did you ever talk to reporters?

SBF: Yes.

Cohen: Why did you do that?

SBF: I want to explain what I know.

Cohen: Did you talk to GMAs George Stephanopoulos?

SBF: Yes, I want to apologize.

Cohen: Have you spoken to the Bahamas Securities Commission?

SBF: Yes, my father was there.

Cohen: What then?

SBF: Gary and I were instructed to transfer assets. I help as much as I can.

Cohen: Thank you, Mr. Bankman-Fried. I have no more questions.

Prosecutors question

Prosecutor: You have such high authority that you can even tell Caroline what cryptocurrency to buy, but you are not the actual controller of Alameda?

AUSA Sassoon: Mr. Bankman-Fried, do you own 90% of Alameda?

SBF: Yes.

AUSA: Can you say that FTX and Alameda are affiliated companies?

Cohen, SBFs attorney: Objection, pro forma.

AUSA Sassoon: Are you a billionaire?

SBF: Yes.

AUSA Sassoon: You wouldn’t say you were not involved in the Alameda deal at all, would you?

SBF: It depends on what you mean by trading.

AUSA: Have you been receiving information about Alameda during 2022?

SBF: Yes.

AUSA: Youre not in quarantine, right?

SBF: That’s right.

AUSA Sassoon: Did you meet Caroline Ellison and Sam Trabucco?

SBF: Yes.

AUSA: You get to have a say in trading decisions, right?

SBF: Yes.

AUSA: Are you in a chat group called Vertex?

SBF: Yes.

AUSA Sassoon: You tell Caroline when to buy certain cryptocurrencies, right?

SBF: Im not sure what youre talking about.

AUSA: Show GX 1630 to witnesses. You, Ms. Ellison, and Sam Trabucco, January 25, 2022 - You referred to Alameda as we, correct?

SBF: Yes.

AUSA Sassoon:You place a trade order and Caroline responds, sounds good; you respond LOL.

SBF: Yes.

AUSA Sassoon: Did you tell her to trade Japanese government bonds?

SBF: Yes.

AUSA: She sent you the spreadsheet on the hedging, that was the transaction, right?

SBF: Yes.

AUSA Sassoon: You were arrested in December, right?

SBF: Yes.

AUSA: You were interviewed, right?

SBF: Yes.

AUSA: You know it’s important to tell the truth, right?

SBF: I try my best.

Prosecutor: You can keep saying you don’t remember, but your testimony is inconsistent

AUSA: We offer (Exhibit No.) GX 2508 and 2508 T.

Judge Kaplan: Received.

Audio playback: (SBF says)I intentionally did not participate due to concerns about conflicts of interest.

AUSA Sassoon: Thats your voice, right?

SBF: Sounds like me.

AUSA: Have you spoken to the Financial Times?

SBF: I don’t remember.

AUSA: GX 2503. Mr. Bankman-Fried, did you see this article from December 4, 2022?

SBF: I see it.

AUSA Sassoon: (Read) FTX’s founder insists he has quarantined himself. Did you see it?

SBF: I see it.(Contradictory to the previous statement that he was not quarantined)

AUSA: Was this before you knew you were being sued?

SBF: Yes.

AUSA: Do you think your information has been automatically deleted?

SBF: Some of them.

AUSA Sasoon: Look at this, you had no idea that Caroline Ellison would be cooperating with the government, right?

SBF: Yes.

AUSA: Were you not aware that the government had a search warrant for your Google account?

SBF: I have my doubts.

AUSA Sassoon: You saved a copy of Caroline Ellisons plea petition to your Google Drive, correct?

SBF: Yes. (Contradictory to the previous claim of not knowing)

AUSA: Have you looked at the files on Caroline’s Google Drive?

SBF: Yes.

Prosecutor: You have always claimed that FTX is safe, here is the evidence

AUSA Sassoon: Would you agree that you know how to tell a good story?

SBF: It depends on what criteria you use.

AUSA: You raised money through pitches dozens of times, right?

SBF: Yes.

AUSA: Did you mention the liquidation agreement?

SBF: Yes.

AUSA Sassoon: Did you make any recommendations to Congress?

SBF: I testified.

AUSA: You flew to DC on a private jet?

SBF: Yes.

AUSA: Are you familiar with the phrase “crypto Twitter”?

SBF: Yes.

AUSA: This includes customers?

SBF: Yes.

AUSA Sassoon: Do you play well with the media?

SBF: Certainly, compared to what I expected.

AUSA: FTX received $15 billion from customers, not including Alameda?

SBF: That sounds possible.

AUSA: What do you tell the public about how FTX will operate?

SBF: Yes.

AUSA Sassoon: Do you want customers to think FTX is safe?

SBF: That would be great.

AUSA: For them to trust you and give you their money?

SBF: Yes.

AUSA: Have you ever claimed that FTX is safe?

SBF: I don’t remember, but I might have (repeatedly).

AUSA Sassoon: You were on the FTX podcast and said

[Recording plays] SBF: All things considered, it worked pretty well.

AUSA: Is that you?

SBF: Yes.

AUSA: Do you promote FTX as safer than other exchanges?

SBF: FTX US, yes.

AUSA Sassoon: You describe FTX as safe?

SBF: Im not sure what youre referring to.

Judge Kaplan: Mr. Bankman-Fried, thats not what she was referring to, but thats what you remember.

AUSA: You said you always allow withdrawals?

SBF: Yes.

AUSA Sassoon: In October 2022, you said that the core of cryptocurrency is owning your own assets?

SBF: I don’t remember.

AUSA: You know the $8 billion debt?

SBF: Yes.

AUSA Sassoon: In October [2022], you publicly stated that customers are more important than anything else?

SBF: I probably have.

AUSA: Do you want FTX customers to trust you?

SBF: That would be ideal, yes.

Prosecutor: You testified before Congress, but behind your back you scolded regulators

AUSA Sassoon: The key principles that you told Congress, you reviewed, right?

SBF: Yes.

AUSA: Were you involved in drafting it?

SBF: I don’t remember being involved in drafting it.

AUSA: You submitted it under oath?

SBF: Yes.

AUSA Sassoon: Will you read this?

SBF (in a dramatic voice) Were offering this today.

AUSA: The next item says, appropriate disclosures.

SBF: Yes.

AUSA: Theres also a press release, right?

SBF: Yes.

AUSA: Did you say on Twitter that your support for regulation hinges on protecting customers?

SBF: I don’t remember.

AUSA: But privately you say, F**k regulators, right?

SBF: I said it once.

AUSA: You said it was PR.

SBF: I said something similar.

AUSA Sassoon: You call people on crypto Twitter “stupid assholes”?

SBF: Some of them, yes.

AUSA: Don’t you think regulation will help you gain market share from Binance?

SBF: That would be a plus. But there are downsides.

Prosecution: Reading what you yourself once said, you said that Alameda was no different from anyone elses account, but that only Alameda could borrow unlimitedly and would not be liquidated.

AUSA Sassoon: You can’t deposit $10 and withdraw $1 billion, right?

SBF: It depends on the environment.

AUSA: Do you claim that the risk engine has custody of the collateral?

SBF: Yes.

AUSA: Is this how you market FTX?

SBF: Sometimes.

AUSA Sassoon: You testified that FTXs risk model would work well in the United States?

SBF: Some aspects of it.

AUSA Sassoon: Were you interviewed by Andrew Ross Sorkin of the New York Times? What about borrowing facilities?

SBF: I don’t remember exactly what I said.

AUSA: Read this. Look up at me after reading.

SBF: Okay.

AUSA: Customers can have negative balances, right?

SBF: Yes.

AUSA Sassoon: But a typical client cant hold an overall negative account balance for how many days before they get liquidated?

SBF: In most cases.

AUSA: For a typical client, what they can borrow corresponds to the collateral, right?

SBF: And lines of credit.

AUSA Sassoon: Do you remember making sure Alameda followed the same rules?

SBF: Im not sure what youre referring to.

AUSA: You said, “Their accounts are just like everyone else’s.”

SBF: I did say that.

AUSA Sassoon: This is an email from March 2022, right?

SBF: Yes.

AUSA: It doesnt mention pre-manipulation of market behavior?

SBF: Not mentioned directly.

AUSA Sassoon: Didn’t you claim in 2022 that Alameda was a completely separate entity?

SBF: More or less.

AUSA: You call FTX a neutral market infrastructure?

SBF: I don’t remember saying that. I might have said that.

Prosecutor: You made a lot of decisions and owned 90% of the stock. Are you saying that you became a director of Alameda by mistake?

AUSA: Do you deny that Alameda has some accounts with the Negative Balance Allowed flag?

SBF: No.

AUSA: Do you deny that Alameda can withdraw billions without risking liquidation?

SBF: Thats probably true.

AUSA: You dont deny it.

SBF: No, I dont deny it.

AUSA Sassoon: Was it you who decided to buy Binance’s share of FTX for $2 billion?

SBX: Yes.

AUSA: Do you think investing in Genesis Digital Assets, a cryptocurrency mining company, is worthwhile?

SBX: Yes, if its properly hedged.

AUSA Sassoon: You bought Storybook Brawl for about $20 million?

SBF: Yes.

AUSA: Did you buy the CEO of The Block an apartment in the Bahamas?

SBF: I don’t remember…

AUSA: Did you remember financing it?

Cohen: Already asked and answered!

AUSA Sassoon: Did you direct the investment in Modulo Capital?

SBF: Yeah, I think thats actually true.

AUSA: Did you direct the investment in K 5?

SBF: I indicated an investment, but not necessarily this one.

AUSA: Was it your decision to invest in Robinhood?

SBF: Yes.

AUSA Sassoon: Are you the only member of the Board of Directors of Alameda Research Limited?

SBF: It makes me feel like one of them. But thats not my intention.

Judge Kaplan: You own 90% of the stock. Is your position that you became a director by mistake?

SBF: No.

Prosecutor: You knew there would be risks in repaying the loan, but you still let Caroline do it; and, we have metadata and found that you lied and said you had not seen the financial statements.

AUSA Sassoon: Did you have Caroline pay the lender while Alameda paid off its debt?

SBF: Yes.

AUSA: Are you aware that doing so puts the FTX exchange at risk?

SBF: No, I dont know. At the time I didnt think that was very likely.

AUSA Sassoon: Are you aware of the risks?

SBF: Theres always a risk.

AUSA: Taking money out of FTX and paying it back to the lender is not margin trading, right?

SBF: Im not sure I agree.

AUSA: Do you understand that there is a risk of “holes”? (i.e. risk exposure)

SBF: There may be holes.

AUSA Sassoon: Did you know Alameda cant pay?

SBF: I kind of knew that at that time. I dont remember the exact order.

AUSA: Okay, lets look at the spreadsheet. Which one do you see?

SBF: Alt 7. Not the main one.

AUSA Sassoon: Do you remember getting 8 tabs from Caroline?

SBF: Im not sure.

AUSA: Multiple tabs?

SBF: Probably.

AUSA: Are you aware that the prosecution has Google metadata showing that you accessed these eight alternative spreadsheets?

Cohen: Objection!

Judge: No.

AUSA Sassoon: We can undo that. You went on to mentor other ventures and travel to the Middle East to try to raise money, right?

SBF: Other things besides that.

AUSA: Are you considering closing Alameda and replacing it with Modulo?

SBF: That’s what I mean.

The trial of this case is about to end within the week, and Odaily will continue to follow the reports for you.

This article is translated from linkIf reprinted, please indicate the source.

ODAILY reminds readers to establish correct monetary and investment concepts, rationally view blockchain, and effectively improve risk awareness; We can actively report and report any illegal or criminal clues discovered to relevant departments.

Recommended Reading
Editor’s Picks