FTX co-founder Wang discusses plea deal, knowledge of financial concepts at SBF trial

October 10, 2023 Coin Telegraph

On the final day of his testimony, FTX co-founder Wang discussed talking to the feds and his interpretation of the “FTX is fine” tweet.

Day six of the trial of Sam Bankman-Fried saw the conclusion of former FTX chief technology officer Gary Wang’s testimony and the beginning of former Alameda Research CEO Caroline Ellison’s. Wang testified about his plea deal, among other things.

According to Inner City Press on X (formerly Twitter), Assistant United States Attorney Nicolas Roos asked Wang, “At your first meeting with the government, did you admit to committing crimes with the defendant?” Wang replied that he did.

“What were you told to do?” Roos asked.

“To tell the truth or not get a 5K letter, or worse,” Wang replied.

“5K letter” refers to a motion filed by the government under Section 5K1.1 of the U.S. Sentencing Guidelines, which is the policy statement on “substantial assistance to authorities.” It allows the government to make “the appropriate reduction” to a sentence considering various forms of cooperation.

U.S. Attorney for the Southern District of New York Damian Williams announced on Dec. 21, 2022, that charges were filed against Wang and Ellison “in connection with their roles in the fraud that contributed to FTX’s collapse.” The two had pleaded guilty to the charges and were cooperating with the government’s investigation.

Roos noted that Wang pleaded guilty to four charges, including conspiracy charges. “With who” did he conspire, Roos asked. “With Sam, [former FTX engineering director] Nishad [Singh] and Caroline,” Wang said.

Live tweeting of Ellison testimony will resume at 2 pm, here. Inner CIty Press is covering the case https://t.co/jsd2LKKf7U & https://t.co/cGS6liUb3n and fillings: https://t.co/Sm5clS6qXb Watch this feed - at 2 pm and beyond...
— Inner City Press (@innercitypress) October 10, 2023

According to another account of the trial, Wang said he met with government officials 18 times. The first two meetings were with agents of the Justice Department, the Federal Bureau of Investigation, the Securities and Exchange Commission and the Consumer Financial Protection Bureau, and he told them that Bankman-Fried’s Nov. 7 tweet, “FTX is fine. Assets are fine,” was true.

Wang testified that later he said that the tweet was true but misleading. It was not possible to liquidate the exchange’s FTT tokens, as a sale of that magnitude would cause the token’s price to fall, he said.

Earlier, Bankman-Fried’s defense attorney had asked Wang, “Do you know the difference between solvency and liquidity?” Wang responded that he did.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Sam Bankman-Fried FTX fraud trial continues: What to expect in the second week

October 9, 2023 Coin Telegraph

Coin Telegraph

In the second week of his fraud trial, SBF will face testimonies against him from witnesses, including former partner and CEO of Alameda Research Caroline Ellison.

The second week of the Sam “SBF” Bankman-Fried FTX fraud trial will commence its hearings again on Monday, Oct. 9, with one of the main focal points anticipated to be testimony from Caroline Ellison.

Ellison, the former romantic partner of SBF’s and CEO of FTX-tied Alameda Research, is set to testify this upcoming week, possibly as soon as Tuesday. She was a part of Bankman-Fried’s inner circle and is expected to know details regarding the movement of customer funds between the two companies.

In her testimony, she is expected to highlight a November 2022 meeting with employees of Alameda when she admitted to using customer funds to repay creditors, which was given the green light by Bankman-Fried.

In December 2022, Ellison and former FTX executive Gary Wang both pleaded guilty for their respective roles in the alleged fraud that led up to the collapse of FTX.

Wang testified in the FTX fraud trial on Oct. 5, saying that, with the help of SBF: “We allowed Alameda to withdraw unlimited funds.”

He added that Bankman-Fried did all the work on the front end — media, lobbying and investor relations — while Wang did the coding. “In the end, it was Sam’s decision to make [regarding any disagreements].”

Bankman-Fried has been charged with seven counts of conspiracy and fraud related to the fall of FTX, to all of which he has pleaded not guilty. Judge Lewis Kaplan is overseeing the case.

The first week of the trial, which began on Oct. 3, focused on the disappearance of $8 billion of FTX customer funds. In addition to testimony from Wang, the first week saw both the prosecution and the defense state their arguments, as well as testimony from Adam Yedidia on Oct. 5.

Yedidia is named as a close friend of Bankman-Fried and was also a developer at FTX.

Cointelegraph reporters are on the ground in New York for the trial of former FTX CEO Sam “SBF” Bankman-Fried. As the saga unfolds, check here for the latest updates.

Magazine: SBF trial underway, Mashinsky trial set, Binance’s market share shrinks: Hodler’s Digest, Oct. 1–7

Alameda Tapped Billions of Dollars in FTX User Funds As Early as 2019, Says Co-Founder Gary Wang: Report

October 8, 2023 The Daily Hodl

DOJ Seeks To Seize Two Luxury Jets Allegedly Owned by Sam Bankman-Fried As FTX Trial Enters Third Day

October 5, 2023 The Daily Hodl

FTX deposits went to account controlled by Alameda for months, Yedidia testifies

October 5, 2023 Coin Telegraph

Coin Telegraph

Yedidia was involved in writing a buggy program to automate FTX customer deposits and withdrawals and was concerned by the size of the Alameda Research liability on the FTX books.

Adam Yedidia, Sam Bankman-Fried’s college roommate and an early employee of FTX, continued his testimony on Oct. 5, the second day of former FTX CEO Bankman-Fried’s trial in New York. Yedidia was testifying for the prosecution with immunity.

Under examination by Assistant U.S. Attorney Danielle Sassoon, Yedidia told the court that he started as a trader for Alameda Research and then worked for FTX as a software developer from January 2021 through November 2022, when he resigned. In the Bahamas, Yedidia was one of the “people of the house” — the ten people who shared a large apartment in the luxury Albany Resort. He reported to former FTX engineering director Nishad Singh and “informally” to FTX co-founder Gary Wang and Bankman-Fried.

Yedidia said that, as he understood it, when Alameda Research traded on FTX, the ultimate beneficiaries of the profits were Bankman-Fried and Wang.

Yedidia said he was involved in writing the coder to automate customer deposits and withdrawals from FTX. Bankman-Fried was also “very involved” in the project. Yedidia initially thought customer deposits were going to an FTX bank account, but he learned that FTX was having trouble opening a bank account and deposits went to an account in the name of North Dimension Inc., which was controlled by Alameda Research.

Yedidia said customers were instructed to send deposit funds to the North Dimension account, and they did not know it was controlled by Alameda, as far as he knew. He said either Singh or FTX head of settlements Ray Salame told him about the arrangement.

“Sometime in late 2021,” FTX succeeded in opening a bank account and customers had the option to send funds to “FTX Digital Markets,” Yedidia said. He said he was aware that some customer deposits continued to go to the Alameda Research-controlled account after that.

Deposits were also tracked in an internal FTX database in an account called “Fiat at FTX.com,” which contained information, and not money. The sum of customer deposits should equal the amount of liability in “Fiat at FTX.com,” Yedidia explained.

Yedidia learned in late 2021 that the automation code he had helped develop had a bug. Because of the bug, customer withdrawals lowered the liability recorded in “Fiat at FTX.com,” as was correct, but it did not decrease the liability of Alameda Research to FTX, as it should have.

“Gary [Wang] or Nishad [Singh]” told Yedidia about the bug, he said, and he spoke to Bankman-Fried about it. The bug exaggerated the Alameda Research liability by $500 million after about six months, and it was not fixed for another six months, or until “around June 2022.” Yedidia later specified that he fixed the bug in mid-June 2022.

Yedidia said Bankman-Fried instructed him to fix the bug after Bankman-Fried, former Alameda Research CEO Caroline Ellison, Wang and Singh held a meeting on a “full accounting of the two companies” — FTX and Alameda Research.

At the time Yedidia fixed the bug, the Alameda Research liability reflected in the “Fiat at FTX.com” account was recorded as $16 billion, he said. After the fix, the Alameda Research liability was reduced to $8 billion. That figure was visible to others in the company.

Adam Yedidia, SBF snitch deleted his X account. @adamyedidi10070

Homie you have to take this L for the rest of your life to the grave. You lived with the man, went to college with the man and you can't even wait for his guilt to be established before you turn on him. Smdh
— Martin Shkreli (e/acc) (@wagieeacc) October 4, 2023

Yedidia expressed concern about the large remaining liability to Bankman-Fried, who gave him reassurance, saying the company was “bulletproof last year,” and would be “bulletproof” again within six months to three years. Yedidia took “bulletproof” to mean being in sound financial health, he said.

Yedidia mentioned in his testimony that the “People of the House” used the Signal messaging app to communicate. He used Signal to deliver documentation of the customer deposit and withdrawal automation bug fix to Bankman-Fried. The app was set to automatically delete messages after a certain time, Yedidia said.

Yedidia said Bankman-Fried explained that preserving messages was “all downside.” “If regulators found something they didn’t like in the messages, that would be bad for the company,” Yedidia said, summarizing Bankman-Fried’s words. “He didn’t use exactly those words, but that was the substance of what he said,” Yedidia explained.

Magazine: Can you trust crypto exchanges after the collapse of FTX?

Sam Bankman-Fried’s jets are subject to forfeiture, says prosecution

October 5, 2023 Coin Telegraph

Coin Telegraph

The U.S. Department of Justice says the two jets purchased by Bankman-Fried via FTX are now property that is subject to forfeiture due to charges brought against SBF.

Sam Bankman-Fried’s (SBF) two multi-million dollar luxury jets are now subject to forfeiture, according to a filing from the United States Department of Justice (DOJ) on Oct. 4.

The document says that the possibility of forfeiture comes as a result of the “offenses described in Counts One through Four and Seven of Indictment 22 Cr. 673 (LAK)” which were brought against SBF.

The jets listed included a Bombardier Global and an Embraer Legacy aircraft. These two aircraft are currently at the heart of an ownership debacle between the government, SBF's former cryptocurrency exchange FTX and the aviation companies operating the jets Island Air Capital (IAC), according to documents filed on Sept. 21 with the Delaware Bankruptcy Court.

In the arguments the government has said both aircraft are subject to forfeiture due to being purchased with fraudulent funds, while FTX says the loans used to purchase the jets were not documented.

In December 2022, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against SBF, FTX and Alameda Research accusing the latter parties of being in violation of the Commodity Exchange Act. Accusations against SBF from the CFTC included “used FTX customer funds for a variety of personal expenditures” - one of which was the private jets.

This filing comes as Bankman-Fried currently sits on trial for criminal and fraud charges related to the fall of FTX in November 2022. SBF has pleaded not guilty to all charges and is being heard by Judge Lewis Kaplan.

The trial began on Oct. 3 with a selection of the jury and opening arguments from both the prosecution and the defense were heard the following day on Oct. 4.

The DOJ’s opening stance portrayed Bankman-Fried as deliberately deceiving customers and investors to get rich and expand his operations, while the defense argued for SBF as simply a young entrepreneur whose business plans “didn’t work out.”

The trial continues its proceedings on Oct.5. Cointelegraph is on the ground in New York with the latest updates on the trial. Follow live updates here.

Magazine: US gov’t messed up my $250K Bitcoin price prediction: Tim Draper, Hall of Flame

Prosecutors Oppose Sam Bankman-Fried’s Bid To Use US Regulatory Framework To Fight Charges As Trial Enters Day 2

October 4, 2023 The Daily Hodl

5 highlights of Sam Bankman-Fried’s first day of trial

October 4, 2023 Coin Telegraph

Coin Telegraph

Potential jurors shared their mostly negative interactions with crypto investing, while a slim-figured former FTX CEO sat flanked by attorneys, noticeably void of his signature curly locks.

The high-profile trial of former FTX CEO Sam “SBF” Bankman-Fried kicked off on Oct. 3 with plenty of activity both inside and outside of the cramped Manhattan courtroom.

Journalists, crypto influencers and other gawkers reportedly gathered in a media overflow room to take notes on the day’s events. Here are some of the most colorful observations about the day.

Noticeably leaner, signature haircut gone

The defendant, Bankman-Fried, appeared noticeably leaner, according to multiple reports.

Flanked by five defense lawyers, he was dressed in a navy suit that seemed bigger on him in previous appearances, and his signature unkempt curly locks were subbed for a shorter hairstyle.

Some of the first court sketches of SBF's new haircut by Jane Rosenberg for Reuters: pic.twitter.com/n0FqW71PWD
— Luc Cohen (@cohenluc) October 3, 2023

Unchained Crypto’s Laura Shin noted that Bankman-Fried was noticeably “less jittery than normal.”

“I did not see him shake his leg at all,” she said in an Oct. 3 podcast.

The only time he spoke was to say “yes” to the judge and occasionally look at the jurors. Other times, he conferred with his lawyers or was seen typing and scrolling on his air-gapped laptop.

MY SBF HAIRCUT SKETCH VS COURT GUY pic.twitter.com/rNC4MC2xRK
— Tiffany Fong (@TiffanyFong_) October 3, 2023

SBF has spent the past seven weeks or so locked up at Brooklyn’s Metropolitan Detention Center. When his lawyers unsuccessfully argued for his release, they claimed that he was subsisting on “bread and water” and lacking vegan meal options.

Crypto influencer Tiffany Fong said, “He kind of looks more criminal now.”

Journalists, influencers and skeptics come to “crypto prom”

The first day of the trial was described as feeling like “the first day of school,” according to some journalists in attendance.

“I’ve never seen the courthouse like this,” remarked an unnamed member of the press, according to The Slate.

“While waiting to access the media overflow room, I spotted practically anyone and everyone who’s had something to say about decentralized currency over the last few years,” said The Slates’ Nitish Pahwa.

He described it as a “crypto prom” crammed with a hodgepodge of paid media participants, crypto influencers, obsessives, skeptics, and more.

i am standing outside of SDNY for SBF’s trial pic.twitter.com/WDGd8kVqdQ
— Tiffany Fong (@TiffanyFong_) October 3, 2023

Cointelegraph reporter Ana Paula Pereira is also in attendance and will give daily updates on the most significant developments throughout the trial.

Jurors get whittled down and some share sad crypto stories

Judge Lewis B. Kaplan told the burgeoning crowd of potential jurors “You are to do no research. You are not to read press coverage,” however, he lightened up when it came to questioning the crowd, reported Cointelegraph.

Potential jurors were asked if they had prior knowledge about FTX and Alameda, with one saying they learned about it from The Joe Rogan Experience podcast, according to a partial transcript from Inner City Press.

One juror said they worked with a company that invested in (and lost money on) FTX and Alameda. Another potential juror said:

“I invested in crypto. I lost money.”

One juror shared he wasn’t sure if he could be unbiased with crypto: “I've felt negatively about it since I learned about it.” He was later dismissed from the pool of potential jurors.

Another juror even asked the judge whether a death sentence could be imposed for Bankman-Fried, to which the judge answered:

“We'll get to it in a minute or two and my answer will have to suffice. Anyone unwilling to accept that punishment is up to the court? No one.”

At the end of the session, Judge Kaplan said “We now have a sufficient group of qualified jurors, 50.” He added that 18 will be selected in total comprising 12 jurors and 6 alternates.

He added that on the next day (Oct. 4) a microphone will be passed around for each juror to speak for a minute. “Then the lawyers will confer and the final selection will be made,” he concluded.

Witnesses for the prosecution

An assistant U.S. attorney read out a list of potential witnesses for the prosecution. This included some expected names such as former company executives like Caroline Ellison, Gary Wang, Nishad Singh, Ryne Miller, Constance Wang, family members Joe Bankman and Barbara Fried and even Anthony Scaramucci.

Several institutions were also listed including Jane Street Capital, Sequoia Capital, BlockFi, Genesis, the Ontario Teachers’ Pension Plan, Binance, Nexo, Guarding Against Pandemics (the nonprofit of SBF’s brother), and Voyager Digital.

Six-week trial expected

Judge Kaplan said that the trial was expected to take about six weeks, but he also noted that could be over in a much shorter time.

However, by the end of the day, he had not succeeded in finalizing the jury. Kaplan predicted that this would be completed by the morning of Oct. 4, after which both sides are expected to give opening arguments totaling around 90 minutes.

We decided to illustrate the lead-up to @SBF_FTX's trial. Here’s Bankman-Fried's life in the slammer. From mirror monologues to peanut butter banquets, the fall is real. pic.twitter.com/v73IA6d5l2
— Cointelegraph (@Cointelegraph) October 3, 2023

Magazine: Can you trust crypto exchanges after the collapse of FTX?

Latest update — Former FTX CEO Sam Bankman-Fried trial [Day 1]

October 3, 2023 Coin Telegraph

Coin Telegraph

The former FTX CEO faces seven counts of conspiracy and fraud. A New York court will decide his fate.

Cointelegraph reporters are on the ground in New York for the trial of former FTX CEO Sam Bankman-Fried. As the saga unfolds, check below for the latest updates.

Oct. 3: SBF trial begins

The trial of Sam Bankman-Fried began on Oct. 3 with jury selection. Bankman-Fried is charged with seven counts of conspiracy and fraud in connection with the collapse of FTX, the cryptocurrency exchange he co-founded. He has pleaded not guilty to all charges. The case is being heard by Judge Lewis Kaplan, who has presided over a long list of other high-profile cases, including ones involving detainees at Guantanamo Bay, the Gambino crime family, Prince Andrew and Donald Trump.

Bankman-Fried was ordered to be jailed on Aug. 11 after Kaplan found that his sharing of former Alameda Research CEO Caroline Ellison’s personal papers amounted to witness intimidation. Alameda Research was a trading house also founded by Bankman-Fried. Previously, he had been under house arrest in his parents’ home in Stanford, California, on a $250 million bond.

December: SBF arrested

Bankman-Fried was arrested in the United States on his arrival from the Bahamas on Dec. 21, 2022. He had been arrested in the Bahamas on Dec. 12 after the U.S. government formally notified that country of charges the U.S. was filing against him. He declared his intention to fight extradition from the Caribbean nation but changed his mind after a week in Bahaman jail and consented to extradition.

Meanwhile, FTX co-founder Gary Wang and Alameda Research CEO (and reportedly sometime SBF girlfriend) Ellison agreed to plead guilty in the burgeoning case.

November: FTX collapses

Bankman-Fried’s troubles began when reports emerged on Nov. 2 that Alameda Research had a large holding of FTT, the FTX utility token. That revelation led to questions about the relationship between the two entities. On Nov. 6, Changpeng Zhao, CEO of rival exchange Binance, announced that his exchange would liquidate its FTT holdings, which were estimated to be worth $2.1 billion. Zhao turned down an offer tweeted by Ellison to buy Binance’s FTT.

A run began on FTX. Bankman-Fried gave reassurances on Twitter (now X) that the exchange’s “assets are fine” and accused "a competitor" of spreading rumors. By Nov. 8, the price of FTT had fallen from $22 to $15.40.

It’s only been one week since SBF’s notorious “FTX is fine. Assets are fine.” pic.twitter.com/zKoILqquHF
— Robert Smith (@BondHack) November 14, 2022

Also on Nov. 8, Bankman-Fried announced on Twitter that he had come to an agreement with Zhang “on a strategic transaction.” He wrote, “Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1.”

On Nov. 9, Zhang announced that Binance would not pursue the acquisition of FTX after due diligence and more reports of mishandled funds. The price of Bitcoin (BTC) plummeted to $15,600. The FTX and Alameda Research websites went dark for a few hours. When the FTX website came back, it bore a warning against making deposits and was unable to process withdrawals.

On Nov. 10, Bankman-Fried posted a 22-part Twitter thread that began with “I’m sorry.” It was the first of a long string of public statements he made about the exchange’s fall. The following day, the entire staff of Alameda Research quit, and FTX, FTX US and Alameda Research filed for bankruptcy in the United States. Bankman-Fried resigned as FTX CEO and was replaced by John J. Ray III. Ray was best known for his role in the Enron bankruptcy.

SBF and FTX before the fall

At the beginning of 2022, FTX had a $32 billion valuation and was thought to be in enviable financial condition. Bankman-Fried was seen as a respected business leader by much of the crypto community and the world at large. He was photographed with political leaders and spoke in Congressional hearings.

Maxine Waters is chairing the investigation into FTX https://t.co/oFMctH4rRh pic.twitter.com/Ox6O5w4nOl
— Jordan Schachtel @ dossier.today (@JordanSchachtel) November 17, 2022

He had gained a reputation as a philanthropist, pursuing a philosophy popular among academics known as effective altruism. Part of his implementation of that philosophy was political activism in the form of financial support for candidates.

As the crypto winter set in, Bankman-Fried spoke of FTX and Alameda Research’s “responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion.” The companies made a bid for Voyager Digital that was rebuffed.

FTX made a deal with Visa to introduce its own debit card in 40 countries.

Bankman-Fried, Ellison and other alumni of Jane Street Capital founded Alameda Research in 2017. Bankman-Fried went on to found FTX with Wang in 2019. Zhao was an early investor in the exchange.

This is a developing story, and further information will be added as it becomes available.

Sam Bankman-Fried’s Lawyers Push To Block FTX Investors and Insiders From Testifying As Jury Selection Starts

October 3, 2023 The Daily Hodl

Trial

Noticeably leaner, signature haircut gone

Journalists, influencers and skeptics come to “crypto prom”

Jurors get whittled down and some share sad crypto stories

Witnesses for the prosecution

Six-week trial expected

Oct. 3: SBF trial begins

December: SBF arrested

November: FTX collapses

SBF and FTX before the fall

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