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Tuesday, November 28, 2023

How is it nonetheless getting worse for Sam Bankman-Fried?

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Within the break after Caroline Ellison stepped down from the stand, Barbara Fried engaged protection lawyer Christian Everdell in an animated dialog. Fried, the defendant’s mom, was gesticulating, and clearly had a robust opinion about one thing. Everdell walked off, and Mark Cohen talked to her for a bit after that.

Fried appeared pissed off, and I couldn’t blame her. The protection completely biffed the cross-examination of Ellison and, to make issues worse, was unable to maintain a recording of an all-hands assembly the place Ellison confessed to taking buyer funds from being performed for the jury. Is that this actually one of the best the protection can do?

Earlier than this case, I had been instructed that Everdell and Cohen had been “workman-like,” which I took to imply that they had been unshowy however competent. I now imagine that remark was an insult. I’ve been ready for a juicy cross-examination, as I dwell for chaos and drama. I’m starting to assume I’m not going to get one.

In Cohen’s disorganized cross-examination, he principally bored the jury

Ellison had given, in her direct testimony, pretty damning proof tying FTX CEO Sam Bankman-Fried to the conspiracy to take FTX buyer funds. There have been faux stability sheets, one in all which was despatched to crypto lender Genesis. After a Genesis consultant acquired the stability sheet, he texted Ellison to inform her he’d spoken to Bankman-Fried — strongly suggesting that Bankman-Fried was conscious of the contents of the faux stability sheet. Not nice!

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However a variety of testimony relied on Ellison recounting conversations she’d had in particular person, or on auto-deleting textual content messaging platforms. This gave the protection a chance to attempt to make her sound unreliable. In spite of everything, she had an incentive to flip on Bankman-Fried: the potential of leniency in her sentencing. Given her fun tweets about speed, the truth that she was Bankman-Fried’s ex-girlfriend, and that she’d apparently written a bunch of stuff down, I used to be anticipating fireworks. For the primary time on this trial, perhaps the protection had a gap.

As a substitute, I bought a tragic trombone. In Cohen’s disorganized cross-examination, he principally bored the jury. At one level, two totally different jurors gave the impression to be asleep.

Halfway via the morning I started questioning if there was a mercy rule for cross-examinations. Prosecutor Danielle Sassoon had run an effective direct examination, creating an easy-to-follow narrative. Against this, Cohen gave the impression to be bumbling round, taking over one matter solely to abruptly pivot. Certain, we’re nonetheless within the prosecution’s case, however Cohen had all evening to organize his strains of questioning. 

Apparently, Alameda had an issue with retaining accountants

We established that Bankman-Fried had a a lot bigger urge for food for danger than Ellison. I assumed maybe it may be constructing to one thing, however this line of questioning was rapidly dropped. We established that Bankman-Fried and Ellison reacted in a different way to emphasize, and that additionally they had totally different approaches to media: specifically, that Ellison averted it whereas Bankman-Fried sought it out. Okay?

We found that there was one accountant at Alameda in 2021, and two extra junior accountants had been employed in 2022. Apparently, Alameda had an issue with retaining accountants, which didn’t shock me a lot; CEOs typically don’t do the stability sheets for his or her firms. I used to be prepared to listen to this pursued additional — however then it, too, was dropped.

I feel the protection was additionally making an attempt to counsel that the federal government had coerced Ellison’s testimony, by suggesting that she had pleaded responsible to a cost of defrauding buyers that she couldn’t have been concerned in. In spite of everything, she didn’t put together supplies for them. Sadly, she did say that she had conversations with buyers as a part of their due diligence — and, after all, Alameda was taking up losses from FTX to maintain FTX’s stability sheet pristine. This line of questioning felt like a waste of time.

There have been slightly a variety of sidebars through the cross-examination, to the purpose that when one occurred, a number of jurors seemed entertained. There have been a number of yesterday, too, together with one during which the prosecution complained that Bankman-Fried was visibly scoffing at Ellison’s solutions, in response to the court docket transcript. (I did observe him often shaking his head, and generally quivering at factors throughout her testimony, however didn’t have a view of his face.)

At one level, Ellison appeared to even be toying with Cohen

As we had been approaching lunch, a number of jurors seemed irritated, and Cohen seemed clueless. He requested Ellison to outline what “purchase on the best way down” meant, as if it had been a time period of artwork. (It means what you assume it means, to buy an asset that’s dropping worth.) This appeared to puzzle her. At different occasions, Cohen appeared to overlook what she had testified to, citing issues she hadn’t mentioned. I don’t know if this was an try to lure her in a lie or simply poor preparation, however much like FTX employee Adam Yedidia earlier than her, Ellison was fastidious about ensuring a query was clear and her reply was exact.

At one level, Ellison appeared to even be toying with Cohen. She’d testified on direct about Luna, a cryptocurrency token. It had a sister token, Terra, that was a paired algorithmic stablecoin. (In case you don’t perceive what which means, it doesn’t matter, as a result of they had been each nonsense.) Cohen requested her about Terra/Luna and she or he identified she’d solely spoken about Luna, leaving him to fumble about the best way to clarify the connection between the 2 tokens. She stored a straight face on the stand whereas I chuckled from the press seats.

Throughout the opening assertion, Cohen had blamed Ellison for not taking out a hedge on a number of the dangers Alameda was buying and selling. We heard extra about this hedge in cross-examination, and pals, it was silly. Overlook evaluating the commerce itself (hedging being long crypto by selling Nasdaq futures). Was she imagined to have taken extra buyer funds to placed on the hedge? Was that the protection, that she didn’t take sufficient of them? Was it that she ought to have taken them sooner? What the fuck?

When Sassoon bought up for a fast redirect, she demolished any factors Cohen had tried to make. However I didn’t actually respect her cleverness till after Ellison left the stand, and the jurors left the room. She’d managed to set a neat little lure for Cohen.

Within the recording, Ellison did certainly confess to stealing buyer funds with Bankman-Fried’s approval

On the direct examination, close to the tip, Sassoon requested about an Alameda all-hands assembly, with out citing many specifics. Throughout the cross, Cohen requested Ellison what matters had been coated within the assembly, whereas avoiding particulars. That opened the door for Sasson on redirect to work in that Ellison had confessed to stealing billions of FTX prospects’ cash, at Bankman-Fried’s course.

There had been an open query of whether or not jurors would hear the tapes of Ellison’s remarks. The testimony arrange an argument for the prosecution to herald these tapes. The choose dominated in favor of the jury listening to the recordings and we briefly recessed.

That was when Bankman-Fried’s mom approached the protection attorneys.

The late afternoon was brief and snappy. Christian Drappi, a former Alameda software program engineer who seemed like a good-looking funeral director in a black go well with and tie, testified briefly to arrange the tape. When Changpeng Zhao, the CEO of Binance, introduced on Twitter that he supposed to amass FTX, Ellison confessed the theft of buyer funds to him and some different workers, Drappi mentioned. The all-hands came about the next day, and was secretly recorded by an worker who’d joined Alameda three days earlier than. 

Within the recording, Ellison did certainly confess to stealing buyer funds with Bankman-Fried’s approval. Drappi mentioned he resigned lower than 24 hours after the assembly. The recording was later despatched to Drappi, who despatched it to the federal government. Joseph Bankman, the defendant’s father and a senior advisor to FTX’s philanthropic arm, wasn’t within the room for the recording. Barbara Fried seemed sad, rubbing her left temple as if she had an amazing headache.

And in a small miracle of pacing, the federal government bought Zac Prince, the founder and former CEO of crypto lender BlockFi, on the stand simply lengthy sufficient accountable FTX’s chapter for BlockFi’s subsequent chapter earlier than we broke for the day.

I’ve been requested by some folks why the reporting popping out of the trial appears so skewed towards the prosecution. There’s a solution for this: the prosecution has put collectively a robust, complete indictment of Bankman-Fried’s habits at FTX and Alameda. The protection, to this point, has managed to do nearly nothing in response. I don’t know if Cohen and Everdell have unhealthy details, a foul consumer, or are merely untalented themselves (or some mixture of all three?). However I do know that I haven’t but seen any good purpose to doubt the very convincing story I’m listening to from the prosecution.

We’re nonetheless within the prosecution’s case. We’ll hear from the protection quickly. However nothing they’ve mentioned to this point offers me confidence that Bankman-Fried is getting out of this.

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