Sam Bankman-Fried’s testimony in cryptocurrency fraud case has been suspended

Below are highlights of testimony from several prosecution witnesses — including Mr. Bankman’s employee Freed and his girlfriend Carolyn Ellison — that were central to the case:

Adam Jedediah

The prosecution’s first witness was Adam Yedediah, a former FTX developer who was a close friend of Mr. Bankman-Fried and lived with him and other associates in the Bahamas.

Mr. Jedediah, who was not charged with any crimes and testified under immunity, said Mr. Bankman-Fried knew that FTX and Alameda Research, a sister cryptocurrency trading company, were on thin ice.

Mr. Yedidia described a conversation he had with Mr. Bankman-Fried on their tennis court the summer before the FTX crash, as the cryptocurrency market collapsed and Alameda lenders were demanding their money back. Mr. Yedidia said Mr. Bankman-Fried told him that FTX “was bulletproof last year, but we’re not bulletproof this year” and that it would take six months to three years to make the company “bulletproof again.”

Carolyn Ellison

Ms. Ellison, who ran the Alameda company and was a former girlfriend of Mr. Bankman-Fried, was the government’s star witness. She detailed the close relationship between Alameda and FTX, including several instances, she said, when Mr. Bankman-Fried directed or greenlighted the use of FTX clients’ deposits.

Ms. Ellison, who has pleaded guilty to fraud charges and is cooperating with prosecutors, said Mr. Bankman-Fried was eager to buy back FTX shares from Binance, a rival cryptocurrency exchange. She said she was apprehensive about the move, because she knew it would mean borrowing $1 billion of FTX clients’ money for the deal.

“That’s OK, I think this is really important, and we need to get it done,” Mr. Bankman-Fried told Ms. Ellison, according to her testimony.

Ms. Ellison also provided insight into Mr. Bankman-Fried’s mindset, detailing their relationship and his somewhat unorthodox view that rules about not lying and not stealing were less important than actions he saw as serving a greater good.

Gary Wang

Mr. Wang, an FTX co-founder who pleaded guilty in the case and agreed to cooperate with prosecutors, told the jury that Mr. Bankman-Fried ordered him to include features in the exchange that gave Alameda an advantage on the platform. “Ultimately, this was Sam’s decision,” he testified.

The soft-spoken programmer spent much of his time on the platform explaining the intricacies of FTX’s computer code, supporting plaintiffs’ view that Alameda was intentionally given special privileges on the platform so it could use FTX customers’ deposits as if it were a piggy bank.

Mr. Wang met Mr. Bankman-Fried at high school math camp, and they were classmates at MIT before founding FTX together in 2019.

Nishad Singh

Mr. Singh, a former FTX executive who also pleaded guilty, detailed Mr. Bankman-Fried’s lavish spending — including large real estate purchases and political donations — that was financed by FTX client deposits.

Mr. Singh said he gave other associates access to his bank accounts to make political donations in his name, including Mr. Bankman-Fried’s younger brother, Gabe, who ran the nonprofit group Pandemic Guard. At one point, when there was no credit transfer, Gabe Bankman-Fried sent an aide to the Bahamas “with a bunch of checks from my bank account,” Mr. Singh testified.

Prosecutors also showed an email exchange between Mr. Singh and Mr. Bankman-Fried’s mother, Barbara Freed, who was receiving $1 million from FTX for her nonprofit Mind the Gap. Ms. Freed, the Stanford law professor, suggested that Mr. Singh make the donation in his name “because we don’t want to create the impression that financing MTG is a family affair, as opposed to a collective effort by many people (including some mystery man Nishad Singh 🙂 “)

Maybe the sun

Mr. Sun, a former top lawyer at FTX, testified that Mr. Bankman-Fried pushed him to find a legal justification for the exchange’s repeated misuse of billions in client funds — even after Mr. Sun told his boss there was none.

At Mr. Bankman-Fried’s request, Mr. Sun said, he went through some theoretical options to justify borrowing and spending FTX clients’ money. But Mr. Sun, who testified after reaching an agreement that prosecutors would not pursue charges against him, said he told Mr. Bankman-Fried again that none of those options were supported by “the facts.” Mr. Bankman-Fried responded by saying “something like, ‘I see,'” Mr. Sun testified.

Prosecutors then played a clip of an interview Mr. Bankman-Fried gave on ABC’s “Good Morning America” ​​days before FTX filed for bankruptcy in November. In that interview, Mr. Bankman-Fried offered one of the theoretical options Mr. Sun had given him as an explanation for what happened to FTX clients’ funds.