by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, Oct 4 – For US v Bankman-Fried, after more than a day of jury selection, late morning on October 4 the twelve and six alternate were selected. Inner City Press live tweeted the voir dire here list of 12 on Substack here and all 18 on Patreon here- then the prosecution's opening, thread:
SBF's lawyer Mark Cohen: Sam didn't defraud anyone. He acted in good faith. There was no theft. Sam believed that loans to Alameda were permitted. They were open and known within both companies. Sam did not steal from anyone. I want to give you a context
SBF's Cohen: Crypto was not for everyone. It could go up or down. Companies could rise and fall very quickly. They'd have you think he's a cartoon villain. Sam worked hard. He was a math nerd who didn't drink or party. He worked for a traditional firm on Wall St
SBF's Cohen: Alameda was a crypto hedge fund. It had 30 employees. It was successful. It earned billions in profits. The loans were the lenders' business. Then FTX, an exchange, like the NYSE. FTX tried to be innovative. It offered many currencies. Margin loans.
SBF's Cohen: Working at a start up is like building a plane while flying it. They had to deal with hacking threats. As FTX grew, it had 300 employees. No CEO could be everywhere. FTX didn't have a risk officer, an issue when the storm hit. SBF's Cohen: FTX sought to raise funds from investors. Nothing wrong with that. FTX had huge potential. Sure it had business relationships with Alameda. These were reasonable. Alameda had an account on FTX. Nothing wrong with that.
SBF's Cohen: Alameda took big margin loans from FTX. Nothing wrong with that. Alameda was a market maker. Nothing wrong with that. FTX at first didn't have a bank account to accept dollars, which in the crypto world are called fiat. So they used an Alameda account SBF's Cohen: They were told, wire the funds to Silvergate Bank in the name of Alameda. At FTX, it was the fiat entry. It was like PayPal or a credit card. But without risk management it was not reconciled. Sam thought it could be lent out. It was reasonable
SBF's Cohen: Given Sam's good faith belief, how could there be a theft? There wasn't. It was not some grand fraudulent scheme. In 2021 he gave up his role as CEO of Alameda. He gave the job to Caroline Ellison and another, then only to her. He stayed involved
SBF's Cohen: But was if the prices went down? Sam spoke to Ms. Ellison and urged her to put on a hedge. She didn't do so. In 2022, from May to November they flew into the perfect storm. Market shocks - Bitcoin dropped by 70%. Many firms failed. Alameda was hurt SBF's Cohen: Alameda paid the lenders back - so how are they victims of fraud? He didn't create false documents. Remember the fiat account? It now had $8 to $10 billion in it. Sam reasonably believed that Alameda had stopped taking deposits meant for FTX.
SBF's Cohen: Things were tight. Ms. Ellison had not put on the hedges. But Sam believed the companies were good. He spoke to outside investors. The CEO of Binance put out a tweet attacking Alameda. This triggered a run on the bank at FTX.
SBF's Cohen: Suddenly billion in withdrawals. Sam didn't run. The plane was going into the very eye of the storm. Consider his state of mind. Their case is a hindsight case. It's not a crime to declare bankruptcy. The US points to business practices...
SBF's Cohen: You've heard about the apartments in the Bahamas. Because that's what a bad guy does. They were bought by FTX, to attract the best and brightest. As to TV ads and celebrities, these are taking out of context. It's not a crime to try to get Tom Brady
SBF's Cohen: We heard multiple times, my hand wasn't keeping up, about special privileges. Mr Wang & Mr Singh put it in code, for Alameda to be a market maker. The terms of service didn't apply to fiat accounts and the margin loans. Sure he used Slack and Signal
SBF's Cohen: This case turns on 3 witnesses: Ms Ellision, Mr Wang and Mr Singh. Each has pleaded guilty. Took them a while to get to that. Now, here in the real world, they have to testify in favor of the government.
SBF's Cohen: At the end, we'll ask you to find Sam not guilty. Thank you.
more on Substack here
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