Sam Bankman Fried, a onetime cryptocurrency mogul, built his FTX crypto exchange on a “pyramid of deception” and “a foundation of lies and false promises,” a federal prosecutor said in closing statements in a criminal fraud trial on Wednesday.
For more than two hours in a morning Manhattan courtroom, prosecutor Nicholas Ross used sharp language to characterize Mr. Bankman-Fried as a liar and a fraud. FTX’s founder, Mr Ross said, was driven by greed and was responsible for the exchange’s collapse a year ago, leaving customers unable to get their deposits back. And Mr. Bankman-Freed, who testified in his own defense during the trial, repeatedly disagreed and avoided questions, Mr. Roose said.
Mr. Bankman-Fried “lied about big things and little things,” the prosecutor said, pointing out that the defendant said he “couldn’t remember” more than 140 times in response to cross-examination questions. “It was uncomfortable to hear,” Mr. Ross said.
The prosecutor’s closing statements came after 15 days of testimony in Mr. Bankman-Fried’s trial, one of the most high-profile financial crime cases in years. The outcome of the case will be seen as a referendum not only on the rapid rise and fall of Mr Bankman-Fried’s business empire, which was valued at $32 billion at its peak, but also on the volatile crypto industry, which is only two years old. Was. Ego was at a high level before melting last year.
The spectacular implosion of FTX last November set off a chain reaction that led to the collapse of other crypto firms. Mr. Bankman-Freed’s arrest and subsequent charges also triggered regulatory action in the crypto world.
At the heart of Mr. Bankman-Fried’s case is whether he committed fraud and treated FTX as his personal piggy bank. Prosecutors argue that he also set up Alameda to pay off investments in other crypto firms, to buy lavish real estate in the Bahamas, where the exchange was headquartered, and to establish a crypto trading firm, FTX. Stole more than $10 billion from U.S. customers. Research.
The 31-year-old has pleaded not guilty to seven counts of fraud, conspiracy and money laundering. If found guilty, he could be sentenced to life imprisonment.
The defense is expected to deliver its closing statements Wednesday afternoon, followed by a brief rebuttal presentation by the prosecution.
Carl Tobias, a professor at the University of Richmond School of Law, said the prosecution presented a strong case and “made a smart decision in framing this case as a garden-variety fraud case rather than a more complex cryptocurrency case.”
Mr Bankman-Fried’s trial, which began on October 4, has featured much damaging testimony. Prosecutors called 16 witnesses, including three of Mr. Bankman-Fried’s former top lieutenants, each of whom pleaded guilty to fraud and conspiracy charges and agreed to testify against their former boss. The defence, for its part, called only three witnesses, one of whom was Mr Bankman-Fried.
At the trial, the prosecution’s three star witnesses – Caroline Ellison, Nishad Singh and Gary Wang, who all worked with Mr. Bankman-Fried – testified that the FTX founder had known for several months that his spending spree was unsustainable. And was improperly promoted by the FTX client. The money that was transferred to Alameda. He also said that Mr. Bankman-Fried knew that Alameda could not repay the billions embezzled from FTX, concealing Alameda’s debt to FTX from customers and investors.
In response, Mr. Bankman-Fried and his lawyers argued that FTX was not aware that billions of customers’ money had been misappropriated until weeks before its collapse. Mr. Bankman-Fried testified that he believed Alameda’s expenses came from corporate money, not client money. Mr Bankman-Fried said any mistakes were made in good faith and were not intended to deceive anyone.
FTX was supposed to “move the ecosystem forward,” he testified at one point. “It turned out to be the opposite.”
Under cross-examination for nearly seven hours over two days, Mr. Bankman-Fried was asked repeatedly about many of his public statements about FTX and how they contrasted with what unfolded behind the scenes at the exchange. Mr. Bankman-Fried often drew criticism in response to questions about his public claims that FTX was one of the most secure crypto exchanges in the business.
He was also unable to explain how FTX clients’ money could have been given to Alameda to pay for the building of his crypto empire without him knowing about it. At times, he effectively said that his former employees who testified against him were not telling the truth.
On Wednesday, Mr. Ross discussed highlights of testimony from prosecution witnesses, including their statements that Alameda had special privileges with FTX, such as a $65 billion line of credit that gave the trading firm access to FTX clients. Was allowed to borrow billions from. Mr. Bankman-Fried kept those special privileges secret, Mr. Ross said, “because he knew they were wrong.”
“The way you know he knew it is because he set up a public system for everyone and a secret system for Alameda,” Mr. Ross said.
The prosecutor also examined inconsistencies in Mr. Bankman-Fried’s testimony and the testimony of his former employees. They displayed charts with headlines such as “Defendant lied to the public” and “Defendant knew secret line of credit.” And he pointed to instances where Mr. Bankman-Fried appeared to knowingly use FTX customer deposits, including to buy back FTX equity from Binance, a competing crypto exchange.
The jury of nine women and three men is expected to begin deliberations as soon as Thursday after being instructed on the relevant law by U.S. District Court Judge Lewis A. Kaplan.