The prosecutor read out the closing statement of SBF's trial, pointing out that SBF was greedy, addicted to lying, cheated customers and stole funds, and asked for justice.
Source: BitMEX Research
Editor: Karen, Foresight News
The SBF "Trial of the Century" entered the closing argument phase, with both parties presenting closing arguments to the jury before the jury deliberated and reached a verdict.
The prosecution's closing arguments portrayed SBF as greedy, cheating, lying and stealing, and that the missing $5 billion was used to invest, repay loans, pay expenses, purchase property and make political donations. Meanwhile, the defense responded that the characterization was unfair and inaccurate, and that SBF's failure was driven by its business decisions. Jurors will begin deliberations in the coming days.
This article will focus on the prosecutors’ closing arguments. Assistant U.S. Attorney Nicolas Roos explains the details. Foresight News compiled and edited the article.
About a year ago, people from all over the world who had assets deposited with FTX began withdrawing their funds, and the amount of withdrawals surged every day, from millions of dollars to hundreds of millions of dollars and billions of dollars. As bankruptcy proceedings were opened and FTX collapsed, a series of questions followed: where did the money go? What happened? Who should be held responsible?
Who is responsible? Samuel Bankman-Fried (SBF), of course.
What happened? SBF spent clients’ assets and lied to them.
Where did the money go? The funds were used to invest, repay loans, pay expenses, purchase property and make political donations.
Based on lies and false promises, the defendant built a pyramid of deception, leaving behind a mess.
What facts are already “set in stone”
Let's start with some simple facts that are not currently controversial.
First, there is no serious dispute that FTX customers had billions of dollars invested in FTX, and that the exchange, at least at the time of its collapse, stated that it held billions of dollars in customer deposits.
Second, customers believe that their deposits belong to them and only to them. This is also not seriously disputed. FTX states in its terms of service that assets are the property of its customers and not FTX. FTX platform policies show that customer assets (whether fiat or crypto) are segregated, customer funds do not represent the property of FTX, and customer assets are held in trust. Whether it is customers, investors, lenders or employees, they all believe that customer deposits belong to the customers and cannot be taken, used or borrowed.
Third, there is no serious dispute that $5 billion is missing.
Fourth, there is no serious dispute about the whereabouts of the missing funds. Professor Easton tracked down the money. Professor Easton tracked down the missing billions of dollars to pay for investments, stock buybacks, real estate purchases, donations, transaction fees, and loan repayments.
The clear, undisputed evidence shows that the defendants were responsible for these massive investments, stock buybacks, real estate purchases, political donations. This is not about anti-liquidation and automatic deleveraging, computer code and so-called Korean accounts, hedging, and some technical terms. This is about deception, about lies, about stealing, and about greed.
What is the core dispute in this case?
What is the dispute in this case? One of the disputes is whether the defendant knew about it.
Still, I think the evidence that the defendant knew he was spending client money is undisputed. The central issue in this case is whether the defendant knew that the misappropriation of funds was illegal. That is the central issue. The answer is clear. He took the money. He knew it was wrong. He did it anyway.
Because he thought he was smarter and better and could figure out a way out of it and work his way out of it. Today, he sits here and you've been through this. You've seen over and over again in SBF's own words and actions that he knew what he was doing was wrong.
The defendant is guilty and we have overwhelming evidence.
Let me start with the fact that the defendant showed up in this case, he didn't have to testify in this trial, but he did. Did you notice how his testimony on Friday went very smoothly, like it was well rehearsed? He defined 50 terms on direct examination on Friday, with an amazingly good memory, but said "I don't remember" over 140 times on cross examination, often failing to remember any details about his company or anything he had said publicly. He lied and deflected about everything, big or small.
Nicolas Roos also cited the testimony of SBF's ex-girlfriend, former Alameda co-CEO Caroline Ellison, FTX co-founder Gary Wang, former FTX engineering director Nishad Singh, and former FTX employee Adam Yedidia, arguing that SBF's behavior was enough to be considered fraud. Recommended reading: "Testifying in Court, Sam, Alameda and FTX in the Eyes of SBF's Ex-Girlfriend".
Nicolas Roos stated in part:
The defendants directed a system whereby Alameda could borrow unlimited amounts of funds without any restrictions, without collateral, without any restrictions on withdrawals, and without any chance of liquidation. The defendants established another system whereby Alameda could directly receive fiat deposits from customers and could use the money without any restrictions.
Alameda previously told CNBC that it was no longer operating Alameda to eliminate conflicts of interest and that Alameda was a neutral presence in market infrastructure. But these were all lies. Privately, the defendants knew that Alameda had various privileges and functions on FTX. It was not completely independent, it was not a neutral market infrastructure, it had a $65 billion credit line, it could make unlimited withdrawals, borrow, and was not liquidated. And the defendants knew this at the same time as they made public statements.
SBF made the same mistake over and over again at 6 decision points
At six decision moments in 2021 and 2022, the defendant faced the choice of "confessing" or "making the same mistake again and again, digging a hole and betting". Each time, he had indisputable knowledge of the financial situation of FTX and Alameda, and each time, he embarked on the path of crime.
The first moment of decision was the use of customer funds to buy back shares from Binance in 2021. Two years later, according to the defendant, FTX and Binance were competitors, and the defendant hated that competitors owned part of FTX, so in 2021, the defendant wanted to take it back, but did not have enough assets. But the defendant kept telling Caroline Ellison that it was very important for him to buy back Binance shares. To pay for the $2 billion in stock buybacks, they used $1 billion of their own and then used $1 billion of FTX’s customer funds. This was from the “Allow Negative” and $65 billion credit line from the Alameda master account.
The second moment of decision was in the fall of 2021, at the end of 2021, they were at negative 2.7 billion in assets, with 8 billion in assets and 9 billion in loans. He was already able to see at the end of 2021 that Alameda had more loans than assets.
The third moment of decision was in June 2022, when the defendant’s roommates told Caroline Ellison about Alameda’s $10 billion negative balance and how he told Alameda’s lenders, spending billions of dollars in the process. During this process, the defendant understood the financial situation and knew they were in a serious loss, but decided to use more customer funds.
The next moment was in June 2022 when the defendants worked with Caroline Ellison to send false balance sheets to Alameda’s lenders.
In September 2022, the defendants knew that Alameda was borrowing billions of dollars from FTX customers. An internal balance sheet on September 1 showed that Alameda was borrowing $13.7 billion from FTX. The defendants knew this.
November 2022 was SBF’s last chance to make a decision, but he told more lies, including posting false tweets, trying to hold onto clients’ assets.
Prosecutors ask for justice
The defendants were charged with seven counts, which basically fall into four categories: fraud against FTX customers, fraud against FTX investors, fraud against Alameda lenders; and conspiracy to launder money.
There are three counts related to the FTX customer fraud, including wire fraud against customers, conspiracy to commit wire fraud against customers, and the essence of counts one and two is that there was a scheme to deceive FTX customers into depositing money by forging false information and then misappropriating, embezzling or stealing, and the defendants knowingly participated in this fraud and used interstate wire transfers.
Count Two involves the same type of conduct, but it is a conspiracy charge, the essence of which is that the defendant agreed with at least one other person to commit wire fraud.
Count six is conspiracy to commit commodities fraud. This is also a conspiracy charge. The key point is that the defendant knowingly and intentionally participated in a scheme involving fraudulent or manipulative means with respect to the sale of commodities or swaps.
Nicolas Roos concluded, "We have discussed the false pretenses that the defendant created by showing customer balances while not actually having the money, discussed the trusting relationships that the defendant created, discussed how the defendant orchestrated the scheme by making the customers believe they could trust him, discussed how the defendant stole and misappropriated the funds, and discussed in detail the overwhelming evidence that the defendant knew what he was doing was wrong, knew what was happening to the customers' funds, and had the intent to defraud. We have examined all of the evidence that he committed these frauds against his customers, and that the wire fraud is also satisfied."
The substance of Counts Three and Four is that defendant planned and conspired to make material misrepresentations to Alameda's lenders and that he knowingly and willfully participated in them. On these counts, the evidence is plain and overwhelming.
Nicolas Roos noted that the defendants were habitual liars, stole from customers, lenders, and investors, and committed wire fraud, securities fraud, commodities fraud, and money laundering, and asked the judge to do justice and reach a guilty verdict that was consistent with the evidence, the law, and the facts.
