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Thousands of pages of evidence, ranging from internal documents to audio recordings, will be presented and fought over in the next six weeks as U.S. prosecutors try to prove that the former FTX founder knowingly defrauded customers and business partners.
Arguably the most damning evidence – or lack thereof – could come from the recollections and personal opinions of Bankman-Fried’s former colleagues, friends and housemates.
Caroline Ellison, Nishad Singh and Gary Wang were close friends and roommates of Bankman-Fried as much as they were colleagues. Ellison was emotionally invested with the FTX founder and troubled by the former couple’s on-and-off relationship, which according to a diary entry from her, slowly fizzled out in February 2022.
Prosecutors also say they intend to call up FTX customers and investors, including non-U.S. customers, over the course of the trial.
On another note, do you remember when FTX suddenly announced it was hacked and lost some $600 million worth of crypto? This was the same day it filed for bankruptcy last November. A decent portion of those funds sat in a wallet for a few months – and then started moving this weekend. Around 15,000 ether (worth around $26 million at Sunday night’s prices) moved out of a wallet through various routers and privacy tools between Friday night and Sunday morning.
We never got an explanation for what, exactly, happened and how the exploit was carried out. I imagine federal investigators are probably closely tracking this episode, however.
On a logistics note, Judge Lewis Kaplan ruled in favor of the DOJ’s motion to prevent Bankman-Fried from getting into the weeds on what his lawyers may or may not have said about FTX’s operations in his opening statement. However, Bankman-Fried’s defense team can still raise the “advice-of-counsel” defense later on, with notice to the court and DOJ.
In court filings, the defense said the argument would be that FTX’s in-house and external lawyers were part of decisions to use auto-deleting messaging platforms, set up legal entities in the U.S., loan funds to FTX and Alameda executives and other aspects of the FTX/Alameda relationship.
Reminder: We’re at the courthouse bright and early tomorrow. Voir dire starts at 9:30 a.m. ET.
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