October 6, 2023 at 16:33 GMTModified date: October 6, 2023 at 16:33 GMT
October 6, 2023 at 16:33 GMT

The SBF FTX trial day four: What we’ve learned so far

More witnesses took a stand on the fourth day of SBF ongoing fraud trial. The first one to do so was the now-defunct crypto exchange’s co-founder, Gary Wang.

The SBF FTX trial day four: What we’ve learned so far

More witnesses took to the stand on the fourth day of Sam Bankman-Fried’s (SBF) ongoing fraud trial.

The first one to do so was the now-defunct crypto exchange’s co-founder, Gary Wang.

He was the fourth prosecution witness who first spoke on Thursday in New York’s Manhattan federal court, where he recounted his friendship with Bankman-Fried and then reiterated the special privileges for Alameda that SBF had. Wang then returned to testify on Friday morning.

In a question posed by prosecutor Nicolas Roos, Wang was asked whether he committed financial crimes while working at FTX, to which he said “Yes”. When asked about the main people he committed these crimes with, the witness answered “Sam Bankman-Fried, Nishad Singh and Caroline Ellison”.

According to court proceedings, the co-founder pleaded guilty to his role in the collapse of the exchange, testifying under a plea agreement.

Also known as plea bargaining, this usually involves the defendant pleading guilty to a lesser charge, or to only one of several charges. It also may involve a guilty plea as charged, with the prosecution recommending leniency in sentencing. However, it is up to the judge whether to follow the prosecution’s recommendation.

Thursday also witnessed testimony from Adam Yedidia, who is an ex-FTX developer and long-time associate of Bankman-Fried. It was his second time on the stand, testifying under an immunity order where he can’t be charged based upon his testimony as long as it was truthful.

Yedidia’s latest testimony helped in bolstering the prosecution’s argument that SBF was responsible for the collapse of the exchange and was at the centre of all the wrongdoings. “He was the CEO – so, sort of in charge of everything”, responded Yedidia to prosecutor Danielle Sassoon’s question on Bankman-Fried’s role at FTX.

After Yedidia, the prosecution brought Matt Huang to the stand. He is the co-founder of crypto investment fund Paradigm which also had a stake in FTX.

Huang’s comments on the stand included the ways in which prospective investors were allegedly misled by Bankman-Fried about the relationship between FTX and Alameda, where the latter was also a customer of the exchange. When FTX was pitching for investment Paradigm was “told that there was no preferential treatment for Alameda”, said Huang.

The prosecution then claimed that in reality Alameda was exempted from various protections designed to prevent customers from racking up large amounts of debt. This alleged that Bankman-Fried defrauded investors by failing to inform them of these arrangements, thereby increasing the risk of financial trouble at FTX.

As of writing, there is no word yet on when the other cooperating witnesses – FTX director of engineering Nishad Singh and Alameda Research CEO Caroline Ellison – will come to the court to testify.

Bankman-Fried, on the other hand, continued to plead not guilty to all of the alleged financial crimes. He faces seven counts, largely centring around wire fraud, securities fraud, and money laundering.

The highly-followed trial began on 3 October 2023 and is expected to go on for about five to six weeks. On the second day of the trial, SBF’s defence team portrayed the former CEO as an inexperienced founder but with good intentions as he “didn’t intend to defraud anyone” and acted only in “good faith”.

SBF would remain jailed throughout the trial as he had lost his bid for his temporary release to prepare for the same. The request was first made in August when Judge Kaplan revoked his bail on the grounds that he was tampering with witnesses.

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