Shocking Allegations Emerge in FTX Founder SBF’s Trial• October 7, 2023 4:29 pm • Comments
In the ongoing trial of Sam Bankman-Fried (SBF), co-founder of the crypto exchange FTX, prosecutors have alleged that his crypto empire was “built on lies.” In the opening statement to the jury in Manhattan federal court, US Attorney Thane Rehn portrayed SBF as a greedy businessman who stole billions from customers, describing his empire as a “house of cards.”
The US government has accused SBF of using FTX to steal billions of dollars from customers to fund his own lifestyle and political campaigns. He faces multiple counts of fraud and conspiracy.
The trial comes in the aftermath of a significant crash in SBF’s crypto empire last year, resulting in substantial losses for FTX customers who had entrusted their investments to the platform.
Prosecutors assert that SBF “stole billions of dollars from thousands of people” and used various means to manipulate customers and conceal his actions.
SBF and FTX took user money promising to custody it for them. To put it in a digital vault.
They then freely used and spent that money, building backdoors that would allow them to do so without limits.
That is not a mistake. pic.twitter.com/JeKKSZg9lr
— Austen (@Austen) October 7, 2023
Sam Bankman-Fried’s crypto empire, FTX, saw a shockingly massive crash last year, losing billions for its customers who trusted the company with investments.
“This man,” Rehn said, pointing to SBF, “stole billions of dollars from thousands of people.” The prosecutors also allege that Bankman-Fried used people to steal and manipulate customers and hide his tracks.
Bankman-Fried’s lawyer, Mark Cohen, would counter the prosecution’s arguments.“ Sam didn’t defraud anyone,” he told jurors. Cohen argues that his client acted in good faith throughout the rise and fall of his startup.
The defense also makes the point that SBF and his fellow entrepreneurs were “building the plane as they were flying it.”
In response, SBF’s lawyer, Mark Cohen, argued that his client had acted in good faith throughout the growth and subsequent fall of his startup. Cohen emphasized that SBF and his team were “building the plane as they were flying it.”
One pivotal moment in the trial involved testimony from a former FTX developer, Adam Yedidia, who revealed that he resigned from FTX after discovering that its sister company, Alameda Research, had used FTX customer deposits to repay its creditors.
Yedidia’s testimony shed light on a software bug that significantly impacted the financial landscape of both FTX and Alameda.
This bug, stemming from FTX’s unconventional handling of customer deposits, led to an overstatement of the debt that Alameda owed to FTX customers by a staggering $8 billion.
From yesterday's exhibits in US v. Sam Bankman-Fried:
The prosecution shows that the "insurance fund" that FTX bragged about was fake, and just calculated by multiplying daily trading volume by a random number around 7500 pic.twitter.com/EDiVPOHODP
— Molly White (@molly0xFFF) October 7, 2023
One of the important moments in Yedidia’s testimony was his revelation of a software bug that had a profound impact on the financial landscape of both FTX and Alameda.
This bug, resulting from the unorthodox way FTX handled customer deposits, led to an overstatement of the debt Alameda owed to FTX customers by a staggering $8 billion.
The root of this financial entanglement lay in the early days of FTX when customers deposited fiat currency by wiring money directly to Alameda rather than FTX. This unusual arrangement created complexities in tracking debts owed to customers.
Prosecutors honed in on a critical conversation between Yedidia and Bankman-Fried that took place on a tennis court. Yedidia had just rectified the accounting bug in mid-June.
The bug had falsely indicated that Alameda owed FTX customers a staggering $16 billion. In the process, he stumbled upon the revelation that there was still an $8 billion debt lingering.
The bug had its origins in the early days of FTX when customers directly deposited fiat currency into Alameda, rather than FTX. This arrangement created complexities in tracking debts to customers.
Prosecutors focused on a critical conversation between Yedidia and SBF that took place on a tennis court. In mid-June, Yedidia had rectified the accounting bug, which falsely indicated that Alameda owed FTX customers $16 billion.
He discovered an $8 billion debt that remained. This bug fix coincided with SBF’s meeting with former FTX and Alameda executives, who are expected to testify in the trial.
This revelation adds complexity to the trial and raises questions about the financial practices within SBF’s ecosystem. The trial continues with both sides presenting their cases.
JUST IN: Witness in Sam Bankman-Fried's trial says he resigned from FTX after finding out Alameda Research used stolen customer funds to repay loans.
— Watcher.Guru (@WatcherGuru) October 5, 2023
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