Unchained

The courtroom was abuzz on Wednesday as financial and technical experts took the stand in the ongoing criminal trial against Sam Bankman-Fried. Accounting professor Peter Easton, a standout witness, presented a detailed analysis showing that Alameda had spent customer funds on VC investments, real estate, and political and charitable donations. Easton, who had previously worked on high-profile cases like Enron and Worldcom, said that by the end, the gap between what FTX owed to customers and what it had on hand was $8.8 billion.

The defense, led by attorney David Lisner, attempted to challenge Easton's methods. Lisner questioned the accounting of the fiat@ftx internal account, which tracks customer deposits. Easton admitted to lumping amounts owed to customers from FTX’s bank accounts with what was owed to customers from Alameda's bank accounts, giving the defense an opportunity to question his accuracy.

The day also saw other witnesses, including a former FTX lobbyist and a Google employee, both of whose relevance was questioned by Judge Kaplan. The judge criticized the prosecution for wasting time with witnesses who seemed to offer little to the case.

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On day 10 of the Sam Bankman-Fried trial, SBF’s defense team tried to discredit Nishad Singh, a key witness for the prosecution. Despite their efforts, Singh's testimony about FTX's financial mismanagement and Bankman-Fried's questionable ethics remained largely unchallenged. The defense's line of questioning focused on Singh's memory and inconsistencies in his statements, but prosecutors were quick to counter these points in their redirect.

FBI Agent Richard Busick presented an analysis of Bankman-Fried's phone locations, revealing his connections to influential political figures like former U.S. President Bill Clinton and New York City Mayor Eric Adams. 

Can this information impact the jury's perception of Bankman-Fried as the trial continues to unfold? 

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The third week of the criminal trial against Sam Bankman-Fried began Monday. Nishad Singh, one of three key witnesses for the prosecution, testified about the alleged misuse of customer funds and a toxic work environment at FTX, created by Sam Bankman-Fried. Singh's account echoed earlier testimony by former Alameda CEO Caroline Ellison and former FTX CTO Gary Wang and raised questions anew about the company's venture investments, excessive spending on sponsorships, and attempts to deceive regulators. Singh also described his growing concerns about Bankman-Fried's lavish spending, even as the company faced mounting financial difficulties. 

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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. 

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On the eighth day of the SBF trial, former BlockFi CEO Zac Prince took the stand, serving as a strong witness for the defense, while offering a detailed look into how Alameda Research's borrowing from FTX differed from traditional crypto lending, and the impact of FTX’s and Alameda’s collapse on BlockFi, which subsequently filed for bankruptcy.

The defense team tried to pin BlockFi’s loans to Alameda on BlockFi executives ignoring advice from its own credit team, but Prince twice corrected defense attorney Mark Cohen that, for the document in question, the executives did follow the advice of their credit team. The defense also tried to raise the notion that BlockFi would have declared bankruptcy no matter what had happened with FTX and Alameda, but Prince also held his ground that the collapse of SBF’s empire resulted in BlockFi’s own bankruptcy.

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The second week of Sam Bankman-Fried’s criminal trial is underway, bringing emotional testimony from SBF’s ex-girlfriend and former Alameda CEO Caroline Ellison, along with some surprising stories about alleged bribes to Chinese officials and discussion about reaching out to the Saudi Crown Prince for help. Ari Redbord, Global Head of Policy at TRM Labs, discusses why the question of who was actually in charge is so critical to the case, the defense’s strategy to discredit Caroline Ellison, and why sidebars in the courtroom can get so heated. 

Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform.

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Day seven of Sam Bankman-Fried’s criminal trial saw the defense team unable to discredit Caroline Ellison, despite multiple attempts. The defense's questions often seemed aimless, failing to draw any substantial conclusions. Ellison remained steadfast, revealing that SBF had plans to buy Telegram around the time Alameda "borrowed" $14 billion of FTX customer money.

Defense attorney Mark Cohen tried to portray Ellison as the one in charge of Alameda, but she clarified that SBF was the ultimate decision-maker. Ellison also disclosed that she had considered resigning from Alameda but was persuaded by SBF to stay, emphasizing his control over the firm.

The day continued with testimony from Christian Drappi, a former Alameda employee, who corroborated Ellison's account. Zac Prince, founder of the bankrupt crypto lending firm BlockFi, briefly took the stand, setting the stage for his testimony to continue the next day.

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Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and chop it up about the latest news. This week, the crew is joined by Gabriel Shapiro, general counsel at Delphi Labs, to talk about the key points in the criminal trial of Sam Bankman-Fried and his lackluster defense strategy so far. They also delve into Michael Lewis’ book and his depictions of SBF’s “lore and backstory,” and discuss how SBF’s “quirks of character” may have actually enticed investors.

Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform.

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Day 6 of the SBF trial was marked by emotional testimony from Caroline Ellison, who shed tears as she detailed the financial chaos within Alameda and FTX. She also recounted dramatic incidents such as an alleged bribe by Alameda to a Chinese government official, creating accounts using the IDs of Thai prostitutes, and an attempt to raise money by selling FTX shares to a Saudi prince.

Ellison discussed the financial turmoil that began with the crypto market crash and how it led to desperate actions, allegedly directed by SBF. She revealed the manipulation of balance sheets, the use of FTX customer funds for risky investments, and the ethical compromises made to keep Alameda afloat.

The day also delved into the secretive culture within Alameda and FTX, highlighting the use of disappearing messages on Signal for sensitive discussions, and what was really happening behind the scenes as FTX began to implode. 

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Caroline Ellison, former CEO of Alameda Research and SBF's ex-partner, took the stand to reveal the alleged financial mismanagement at Alameda and FTX, which she claimed was at Bankman-Fried’s direction. The cross examination of Gary Wang finally began to show how SBF’s lawyers plan to defend him, though Wang largely appeared to be a yes man who simply trusted and followed his friend and co-founder.

Ellison's revelations included Alameda's hidden trading of FTT to prop up its price, her warnings to SBF about Alameda’s inability to pay back its lenders if he put billions more into venture investments, and his views on risk and “expected value.” For instance, she claimed he said if, with a coin toss came up tails and would mean Earth’s destruction, he would toss the coin if there it was twice as likely that it would more than double prosperity on Earth. However, her testimony seemed designed to preemptively rebut the defense’s potential argument that Alameda needed to borrow customer funds because she had not hedged. 

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