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What Happened During The Third Week of the Sam Bankman-Fried Trial

What Happened During The Third Week of the Sam Bankman-Fried Trial

2023-10-24 | 5m


- Nishad Singh, FTX Head of Engineering, corroborated instances of financial mismanagement, deliberate fraud, SBF’s controlling leadership, and political donations within SBF's financial empire.

- This week’s trial also featured the testimony of various expert witnesses that shed light on the intricate and hazardous financial web surrounding the FTX case.

In the third week of the high-stakes SBF trial, both the prosecution and the defense moved one step closer to wrapping up the case. While this week might have been comparatively less explosive than the preceding two, it was far from uneventful. Damning details continued to be revealed, casting a shadow over former FTX CEO Sam Bankman-Fried (SBF).

Singh Spills the Beans on SBF’s Shady Schemes

Among the key figures taking the stand this week were former FTX Head of Engineering, Nishad Singh, who testified about various aspects of the case. Singh, who had been a close associate of SBF, provided crucial insights into the inner workings of FTX and Alameda Research.

Nishad Singh's role as the head of engineering at FTX made him a key figure within the organization. He wasn't just any witness; he was deeply familiar with the company's operations and had been a close associate of SBF. Singh's testimony provided crucial insights into various facets of the case.

Financial Mismanagement

Singh testified about financial mismanagement within FTX and Alameda Research. He revealed that SBF had knowingly diverted billions of dollars in customer funds for extravagant spending and high-profile endorsement deals, which amounted to $1 billion. This testimony underscored the prosecution's claim that SBF was in control and had made decisions that led to the financial crisis.

Deliberate Fraud

Importantly, Singh added that all FTX and Alameda Research executives had knowingly defrauded customers and investors. This revelation underscored the prosecution's argument that the actions taken by SBF and his inner circle were deliberate and deceptive, contributing to the financial turmoil that unfolded.

Leadership Dynamics

Singh’s testimony provided additional confirmation of the leadership dynamics within FTX and Alameda Research, as previously described by Ellison and Wang. He affirmed that SBF had the "final say" in decision-making in both entities, even though other individuals, like Caroline Ellison and Sam Trabucco, were co-CEOs of Alameda Research. This insight reinforced the prosecution's argument that SBF was the driving force behind the alleged financial misconduct.

Political Donations

While the trial primarily focused on financial mismanagement, Singh's testimony briefly touched on political donations. Singh acknowledged that his name and bank account were used to make some political contributions, with the actual funds coming from Alameda loans. This aspect of his testimony was related to the prosecution's intention to target SBF for an alleged "illegal campaign finance scheme."

Expert Insights into FTX and Alameda’s Lies

During this week, several expert witnesses of different fields offered their unique perspectives and insights into the alleged financial misconduct.

Accounting Professor, Peter Easton

Peter Easton's testimony was particularly illuminating. As an accounting professor, he brought a scholarly and expert perspective to the courtroom. Easton had conducted extensive research, piecing together a conclusion that was damning for FTX and Alameda Research.

One of his key findings was that both FTX and Alameda had insufficient funds to fulfill the obligations they owed to FTX customers. Easton also pointed out that the bookkeeping practices within these organizations were, at best, haphazard. The revelation of FTX’s 47 bank accounts accepting customer deposits added weight to the allegations of financial irregularities. He pointed out that FTX's available cash had not been sufficient to cover its financial obligations since the beginning of 2021, more than a year and a half before the collapse. By June 2022, FTX only had $2.3 billion out of the $11.3 billion it owed to exchange customers.

FBI Forensic Accountants

Forensic accountants with the FBI were also critical witnesses who took the stand. Their expertise lay in tracing the flow of money, particularly in the context of political donations. They corroborated Peter Easton's findings, reinforcing the idea that FTX and Alameda were mismanaging FTX user funds and struggling to meet their financial commitments.

The analysis specifically highlighted that Alameda had funneled millions of USD through SBF and several people in his inner circle to make political campaign contributions.

Former FTX Attorney, Can Sun

Can Sun, a former attorney for FTX, revealed a pivotal moment in the case. He recounted an attempt in November 2022 to secure capital from Apollo Capital in a bid to address a $7 billion shortfall. However, this effort was fruitless, as Apollo Capital demanded a "legal justification" for the missing funds. Sun was unable to provide a satisfactory explanation for the discrepancy to investors. Later, after knowing for certain that Alameda had taken FTX’s customer funds, he resigned.

Concluding Thoughts

As the third week came to a close, the trial seemed to be gathering momentum. While this week may not have been as explosive as the preceding ones, it left a trail of evidence that could prove instrumental as the trial progresses and the defense prepares to present its case in the coming days. In the upcoming fourth week, all eyes are now on SBF's impending testimony. After three weeks of testimonies that appear to work against him, his upcoming appearance promises to be a pivotal moment in this high-stakes legal saga.

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