Bankman-Fried was expressionless as Rehn spoke,but briefly looked at the jury as the government lawyer emphasised “billions” of fraud,before turning back to stare at his laptop. The former crypto executive’s parents,a pair of Stanford University law professors,sat in the gallery behind their son.
When it was their turn,Bankman-Fried’s lawyers blamed Alameda for the ultimate shortfall of customer funds. Mark Cohen,Bankman-Fried’s lawyer,said that in the months leading up to FTX’s bankruptcy filing in November,he became concerned about dramatic fluctuations in crypto prices and urged Ellison to hedge their exposure to further losses,but she didn’t do it.
“Sam acted in good faith and took reasonable business measures,” Cohen said,adding that he “believed they had assets to weather the storm.”
Cohen said that the “rise and fall” of FTX,mirrored the wider crypto industry,which was battered by fast changing market conditions in 2022.
“The case in many ways is about crypto from 2017 to 2022,” Cohen said. “You will learn that crypto is not for everyone,” and added that “it’s not a crime to run a company that ends up going through a storm.”
Cohen said the turmoil in the industry was magnified when the head of Binance,a major competitor,put out a tweet that attacked FTX,which triggered a run on the company’s deposits.
“In the face of the liquidity crisis,Sam didn’t run away and attempted to stabilise the company and repay customers,” Cohen said.
Bankman-Fried is accused of taking customer funds from FTX and using it to engage in speculative trading through Alameda. Cohen said their client had “reasonably believed” that loans sought by Alameda were permitted and backed by collateral.
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In addition to Ellison,other FTX executives are expected to testify against their former boss. Gary Wang,former FTX chief technology officer and Nishad Singh,FTX’s former engineering director,are also expected to take the stand as cooperating witnesses after pleading guilty to fraud charges.
Rehn emphasised that evidence of Bankman-Fried’s misleading statements could be found in the company’s terms of service as well as old tweets ensuring customers that their money was safeguarded.
Rehn said that FTX told customers that the money belonged to them,not the company. “FTX’s advertising slogan was about how customers could trust it,” he said.
He made reference to a Bankman-Fried’s tweet - “FTX has a long history of safeguarding assets and that remains true today.”
“Statements about FTX keeping customer money safe were lies,” Rehn said.
Bloomberg
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