Sam Bankman-Fried Lied About ‘Big Things, Little Things,’ Prosecutor Says

(Bloomberg) -- Sam Bankman-Fried “lied about big things and he lied about little things” during his time on the witness stand, a prosecutor said during closing statements Wednesday, capping a historic month-long trial over the collapse of the FTX crypto exchange.

Assistant US Attorney Nicolas Roos contrasted Bankman-Fried's “perfect memory” under questioning by his own lawyer with his inability to remember even simple details once cross-examination began.

“He came up with a tale that was conveniently put together to exclude himself from the fraud” at his FTX crypto exchange, Assistant US Attorney Nicolas Roos told jurors Wednesday morning. “Over three days he took the stand and he lied.”

“It was uncomfortable to watch.”

Much of the case revolves around the relationship between companies Bankman-Fried founded, FTX and its sister hedge fund, Alameda Research. Both entities went bankrupt in November 2022, allegedly exposing a multi-billion dollar theft of funds at one of the world's largest cryptocurrency exchanges. 

Bankman-Fried made the risky decision to testify to counter incriminating testimony by Caroline Ellison, his former girlfriend and the chief executive officer of Alameda, plus two other members of his inner circle. He faces decades in prison if convicted.

Roos told the jurors that about $10 billion in customer funds “went missing” before FTX and Alameda filed for bankruptcy. Bankman-Fried set up a secret system that allowed Alameda to take billions “out the back door” of FTX and into the hedge fund, using the money for speculative investments, political donations, and the purchase of luxury real estate.

FTX co-founder Gary Wang, who was also the company's former chief technology officer, testified that Bankman-Fried directed him to create a program that allowed Alameda to tap a $65 billion line of credit from FTX customer funds, Roos told jurors. 

Ellison, Wang and former FTX head of engineering Nishad Singh all pleaded guilty to crimes and testified against Bankman-Fried in hopes of leniency when they're sentenced.

US prosecutor Danielle Sassoon subjected Bankman-Fried to a relentless cross examination, over two days ending Tuesday morning, during which he was frequently vague and evasive. Bankman-Fried responded to scores of her questions that he could not recall or was unsure.

In his closing, Roos walked jurors through a series of turning points, where Bankman-Fried had the choice to “come clean” and face consequences, or “double down” and spend more customer money. Each time, Roos told the jury, Bankman-Fried knowingly chose to spend money that wasn't his to spend.

These included when Bankman-Fried decided to buy FTX stock back from rival exchange Binance in 2021, when he knew that Alameda was already borrowing customer money from FTX, Roos said. The second was his decision in fall 2021 to push forward with a plan to spend $3 billion in investments, despite the risk to Alameda. 

Another turning point came in June 2022 when Alameda repaid $6.5 billion to its lenders using $4.5 billion taken from FTX customers' accounts, Roos said.

“It was Sam's decision,” Ellison testified, Roos reminded the jury.

Roos showed jurors the seven alternate balance sheets Ellison testified she prepared for Bankman-Fried to choose from in that month to present to lenders. Bankman-Fried chose Alt. 7, which hid almost $10 billion in borrowing from FTX customer money and $4.5 billion in related-party loans, Roos told the jurors.

Before the lunch break, Roos showed jurors Bankman-Fried's false attempt to reassure customers in November 2022 when, with FTX under increasing pressure from a high volume of withdrawal demands he tweeted: “FTX is fine. Assets are fine.” His former FTX colleagues testified that he knew that was untrue.

Super Selfish

Roos told jurors that Bankman-Fried made a confession to Singh, as FTX fell apart in November 2022, in a chat on the messaging app Signal. Singh wrote “this is wildly selfish of me, but they may need to know that it wasnt a ton of people orchestrating it,” referring to the fraud, Roos said.

Bankman-Fried replied, “fwiw I don't think that's super” selfish, “I think that's probably correct.”

Bankman-Fried's team will begin their closing argument Wednesday afternoon. The jury could begin deliberating as soon as Thursday.

(Adds additional comments from closing argument)

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