Trial Of The Decade: TEH TLDR

Give me the throwback on that one?

The man behind FTX collapse is facing 7 criminal charges including fraud and money laundering.

If convicted, SBF could get a life sentence in prison and earn himself a spot with Ponzi and Madoff in the GSAT (Greatest Scammers of All Time) race.

Day 1

To be fair…

Day one was underwhelming.

No witnesses. No legal arguments. No “objection your honor!” yelled across the room. Day 1 was “picking the jury day.”
No fun at all. So let’s skip that.

Caroline Ellison’s Testimony

Ellison, 28, is the government’s highly anticipated star witness in the six-week trial of Bankman-Fried. She was the CEO of Alameda Research, the hedge fund that allegedly stole billions of dollars from FTX customers.
She entered a plea agreement to cooperate with the U.S. government and was SBF’s ex-girlfriend.

Teh TLDR:

• They borrowed billions of dollars and used FTT (aka FTX’s native token) as collateral. Alameda would use their boatload of magic internet money as collateral in exchange for billions of dollars of real money.
  Alameda would then use FTX customer deposits to pay back loans. In total, Caroline estimates they took $14B from FTX customers. (!!)
• She sent balance sheets at the direction of Sam that made Alameda’s balances look less risky to investors.
• A lot of this money went to loans made to members of Bankman-Fried’s inner circle, with funds going toward “investments and political donations.”
• According to Ellison, Bankman-Fried thought the political donation strategy was “highly effective,” offering “very high returns in terms of political influence” at a modest cost.
  We even got a “He told me he wanted to be the next United States President”. Yup, SBF told Ellison he had a 5% chance of becoming president one day.
• Ellison also spoke about the “essentially unlimited” line of credit Alameda had at FTX. Bankman-Fried “was the one who set up these systems,” she said.
• She admitted that Sam bribed Chinese officials with $100M to unfreeze their assets, purposely tried to scam Saudi investors in the final days of FTX, and intentionally tried to put their competition (Hello, CZ and Binance!) into the regulators’ bull’s eye.
• Caroline Ellison also admitted that she and SBF conspired to keep Bitcoin under $20k by selling customer BTC.
  That is some deep paper hands territory here, but why?

What Did Gary Wang Say?

The facts: Crypto exchange FTX used hidden Python code to misrepresent the value of its insurance fund (meant to prevent user losses during liquidation events), according to testimony from FTX co-founder Gary Wang.

The story: In a damning testimony, FTX’s former chief technology officer, Gary Wang, said that FTX’s so-called $100-million insurance fund in 2021 was fabricated and never contained any of the exchange’s FTX tokens (FTT) as claimed.

Instead, the figure shown to the public was calculated by multiplying the daily trading volume of the FTX token by a random number close to 7,500.
So, that’s how you create an insurance fund. With magic numbers. *Sigh*

SBF pleads his case

Yesterday was the moment we’d all been waiting for…

A live remake of what Eminem warned us about 20 years ago in Lose Yourself

“His palms are sweaty, knees weak, arms are heavy.”

It was time for SBF himself to take the stand. And the strategy he adopted is probably the most known defense in lawyer history: advice of counsel.

Or as Saul Goodman would say, “My lawyer at the time told me it was OK.”

That’s why most of the discussions focused on Dan Friedberg, FTX’s former lawyer.

Who created FTX’s terms of service? Dan.

Who signed the applications for their bank account? Dan.

Who told SBF which messages to auto-delete on Signal? Dan.

Dan was the hottest name in the arena that week.

It was either that or Sam repeating “I don’t recall” (104 times exactly) which is another version of pleading the fifth (aka protecting oneself against self-incrimination).

Even his own lawyer took a jab at him:

The defense also pushed the fact that Alameda (which led to the collapse) was not directly managed by SBF and other minor arguments that didn’t resonate with the audience according to Tiffany Fong during an interview with Coinbureau.

They also pictured the defendant as an entrepreneur who made “terrible mistakes” in good faith, denying accusations that he directed his inner circle to make political contributions (he was Biden’s second biggest donor) and venture investments and purchase luxury real estate with customer funds.

On the other side, we got a GOTCHA moment when the State Attorney said, “That’s fraud. It’s stealing, plain and simple. Before FTX, there was Alameda,” presenting one of the many charts the government used as evidence. He also added extensive evidence to the prosecution’s case, including testimony from officials and law enforcement agents trying to prove Sam’s entanglement.

And now the BIG reveal.
A jury of 12 has decided that SBF was…

GUILTY on all charges.

The sentence will be given on March 26th. Justice has been served, and the fallen “king of crypto”.
SBF had one shot, one opportunity to achieve a generational finance revolution, but he dropped the ball so hard that th3 whole crypto-industry is still feeling the shockwaves of it.
Sam has fucked around, and he is finding out the consequences of his actions.