Of Sam Bankman-Fried’s alleged co-conspirators, Nishad Singh gave the most emotionally compelling testimony. And on cross-examination, he additionally proved to be probably the most unreliable.
Yesterday, Singh condemned Bankman-Fried for persevering with to make enterprise investments regardless of understanding the cash got here from buyer funds, even calling the actions taken at FTX “evil.” Immediately, the protection identified that Singh took out a mortgage from FTX with a view to purchase a $3.7 million home on Orcas Island in Washington after Singh says he came upon in regards to the misuse of buyer funds.
Protection lawyer Mark Cohen started within the grand authorized custom of roasting the witness
I’ve written twice about my frustrations with Bankman-Fried’s defense, which has usually seemed meandering and confused. Immediately, they lastly managed to place some factors on the board.
Thus far, the prosecution’s witnesses have been credible — Caroline Ellison, the previous CEO of Alameda, particularly. The protection has been grinding away, making an attempt to make it sound like Bankman-Fried’s alleged co-conspirators are simply making an attempt to avoid wasting their very own skins at Bankman-Fried’s expense. (All three have pleaded responsible to assorted crimes, made cooperation agreements, and await sentencing.) Positive, on some stage, the suggestion that Singh could have been embezzling is worse for Bankman-Fried — Singh wasn’t a cash man, and somebody needed to approve it. Nevertheless it’s the very best the protection has achieved thus far to undermine a witness’s credibility.
Protection lawyer Mark Cohen started within the grand authorized custom of roasting the witness. A few of the roasts have been to be anticipated: Why was Singh opining on whether or not spending $1 billion on sponsorships was extreme, when Singh was head of engineering, a division is decidedly not advertising and marketing?
Then Cohen landed a reasonably good dig on the Bahamas penthouse. Billionaires and millionaires (on paper, not less than) residing collectively as roommates is objectively humorous; considered one of mentioned roommates being cross-examined solemnly on whether or not or not he thought it was “actually costly” to dwell in a $30 million condominium is even funnier.
Singh mentioned he didn’t know what was regular for billionaires and that he “felt confused about it.”
“However not confused sufficient to maneuver out,” Cohen mentioned.
The protection doesn’t appear clear on the notion of chronological storytelling
After that, Cohen misplaced some steam. The prosecution has a powerful narrative, even managing to deliver witness testimony to emotional crescendos. The protection, against this, doesn’t appear clear on the notion of chronological storytelling. Immediately we skipped round between September 2022, June 2022, November or December 2021, October 2022, and August 2020. As a result of I assume you additionally dwell in a unidirectional timeline, I’m going to provide my abstract out of the order through which it was offered. I’m additionally going to disregard the locations the place Cohen swung and missed as a result of I’m truthfully sick of writing in regards to the struggle-bus facets of the protection.
In July 2019, Singh wrote the code for “allow_negative,” on the route of Gary Wang, co-founder and chief know-how officer of FTX, who, like Singh, has pleaded responsible to a handful of crimes. On the time, Singh mentioned he understood the purpose of the code was to permit FTX to maneuver FTT, in addition to to modernize a number of the accounting-related capabilities.
Wang had testified that the perform of that code was to let Alameda Analysis, which was co-owned by Wang and Bankman-Fried, withdraw cash, even when its account didn’t have any.
In August 2020, FTX had its first occasion the place not one of the market-makers, together with Alameda Analysis, may help in liquidating an account. (Alameda couldn’t step in as a result of it had run out of collateral.) So what occurred subsequent was auto deleveraging, which is a special threat administration system that sticks some merchants with the loss. This sort of factor tends to make clients sad.
I’m a bit of confused about why we’re spending a lot time with the bug
I’m now going to provide you some backstory that the jury didn’t get on this testimony. We’ve heard earlier than — from Wang and from Ellison — a couple of $65 billion line of credit score prolonged to Alameda. Nobody else on the platform had entry to this sum of money, which was primarily limitless. However right here, for the primary time, we’ve a believable, non-criminal clarification for why Alameda received an enormous line of credit score: to keep away from sticking different clients with losses by way of auto deleveraging. (Alameda would all the time take the hit as a substitute, and it could all the time have sufficient collateral to take action.) Singh didn’t keep in mind whether or not Alameda’s line of credit score had been elevated right now, but when the timeframes do line up, that’s the least damning clarification for the road of credit score I’ve heard but.
It doesn’t undo the truth that Bankman-Fried repeatedly assured the general public that Alameda had no special privileges on FTX — which looks as if an apparent lie — however it does make the road of credit score sound much less dangerous. That’s not nothing!
In November or December 2021, Singh grew to become conscious of a bug in Alameda’s system that overstated how a lot Alameda owed FTX. Primarily, the bug didn’t appropriately observe account withdrawals, making the quantity Alameda owed FTX look larger than it was. Singh mentioned that Adam Yedidia — another witness — appeared apprehensive about it however Wang was relaxed as a result of “the route of the bug was protected.” If it had under-estimated how a lot Alameda owed FTX, that may have been a much bigger trigger for concern.
By June 2022, the bug had created an $8 billion discrepancy between how a lot Alameda really owed FTX, and the way a lot the inner accounting mentioned Alameda owed FTX. Yedidia testified earlier that was when he seen Alameda owed FTX an terrible lot of cash, and have become involved about it. However Singh mentioned that he wasn’t involved on the time, since he assumed Alameda had the belongings to repay FTX.
Sadly, there have been no photographs, particulars on sq. footage or variety of bedrooms, so I needed to look that up afterward
I’m a bit of confused about why we’re spending a lot time with the bug. In Yedidia’s case, it explains what he knew and why he knew it. For everybody else? The one factor I can consider is that I’m to imagine that the bug was so huge that nobody knew how a lot cash Alameda really owed, besides that it was a decrease quantity, and thus Alameda spent cash it didn’t have. However that appears fairly weak — particularly since Singh testified about mendacity to auditors yesterday and final week, Ellison testified to making up seven fake balance sheets to send to lenders.
Singh claimed he wasn’t conscious that Alameda Analysis was utilizing FTX buyer funds till September 2022, however the protection received me to doubt that. In any case, Yedidia put collectively sufficient to get nervous about what Alameda was doing from dealing with the programming on the bug alone, and he wasn’t even doing something shady like transferring cash from Alameda’s account to the “Korean friend” account. (I nonetheless don’t know what the deal is with the username “seoyuncharles88” and I’m beginning to get sort of pissed that nobody is explaining it.)
Singh testified that by September, he knew the cash wasn’t there. And that was when Cohen introduced up the Orcas Island home, which Singh purchased in October 2022. (Sadly, there have been no photographs, particulars on sq. footage or variety of bedrooms, so I needed to look that up afterward: six bedrooms, a lap pool, and a hot tub.) He’d borrowed $3.7 million from the FTX change, regardless of his testimony yesterday about making an attempt to decelerate what he considered as FTX’s frivolous spending. I assume he didn’t see his personal spending as frivolous.
The testimony wasn’t as spectacular as on Singh’s direct yesterday — we didn’t get any extra cinematic retellings of conversations — and Cohen’s tendency to leap round in time made the narrative rather less than clear. However the Orcas Island home undercut Singh’s ethical authority, making him look inconsistent. Even when the jurors don’t observe the timeline or get a number of the different nuances, that’s fairly straightforward to understand.
“They weren’t actually loans.”
The prosecution, on redirect, did handle to make the purpose that FTX was primarily a rats’ nest of scams, however Singh nonetheless appeared much less dependable than he had in his preliminary testimony. Nonetheless, in discussing Singh’s loans, one thing curious got here out: Singh apparently felt morally obligated to repay the cash he’d borrowed from FTX, however not legally obligated. That’s as a result of there was no paperwork related to a lot of them — he simply discovered massive sums transferred to his checking account. They have been loans “in a unfastened sense,” Singh mentioned. “They weren’t actually loans.”
Truthfully… that sort of appears like basic embezzlement. And to me, it made Singh’s sweeping ethical statements about “heinously prison” acts at FTX ring hole. Singh was for certain the very best storyteller of the alleged co-conspirators, however by the point he stepped down from the stand, I questioned how a lot of the story was self-serving.
On the break, I noticed Joe Bankman, the defendant’s father, speaking with protection counsel. He regarded completely satisfied, and who may blame him. I believe I wasn’t the one one who thought the protection lastly managed to point out up.