A year ago, Assistant U.S. Attorney Thane Rehn portrayed Sam Bankman-Fried's life as one of luxury real estate, political donations, investments, and magazine covers built on lies during opening statements in the cryptocurrency trial. The accusation was that Bankman-Fried and the co-founders of Alameda Research and FTX had "lied to the world" to amass wealth and influence through lobbying in Washington, D.C.
Defense attorneys responded with a calm demeanor, portraying their client as an entrepreneur who made mistakes during a period of rapid growth. They emphasized that there was no theft involved in the case.
The trial in U.S. District Court for the Southern District of New York has witnessed four witnesses, including a French trader and an FTX investor. They highlighted the harm done to customers who trusted their funds with FTX after the exchange's collapse in 2022.
Bankman-Fried's defense team aimed to minimize the prosecution's arguments, emphasizing that the trader was a licensed professional in London and didn't base his decisions on celebrity endorsements. They argued that hiring celebrities like Tom Brady for FTX advertisements was legitimate.
One of the witnesses, Adam Yedidia, a former close friend of Bankman-Fried, revealed details about how FTX received fiat funds from clients through its Alameda subsidiary North Dimension. Each deposit by an FTX customer was considered a debt owed by Alameda to FTX, amounting to $8 billion at the time of the exchange's collapse.
Yedidia, who cooperated with the U.S. Department of Justice since 2022, also mentioned that he saw FTX surpass rivals like Binance and Coinbase until its November 2022 collapse.
Another witness, Matthew Huang, who invested $278 million in FTX, stated that he wasn't aware of the mingling of funds between FTX and Alameda or the privileges Alameda had on the exchange. Prosecutors presented evidence showing Alameda's special privileges on FTX, which included unlimited negative balances and a $65 billion credit line.
Gary Wang, former Alameda CEO, admitted his involvement in wire fraud, securities fraud, and commodities fraud, as well as his collaboration with Bankman-Fried and others in the conspiracy. He is considered a key witness in the case and is cooperating with prosecutors. Wang's testimony provided insights into how FTX and Alameda operated, revealing the increasing mixing of funds between the two entities over time.
Prosecutors also highlighted a 2021 MobileCoin vulnerability that Bankman-Fried allegedly tried to conceal. Wang revealed that the FTX insurance fund data had been manipulated, and discussions were held about the possibility of replacing Alameda with another market maker shortly before Alameda ceased operations in November 2022. Wang's testimony is expected to continue, along with that of former Alameda CEO Carolyn Ellison, in the coming weeks.
