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Judge Scolds Both Sides, Calls Witness a Joke, Here Is the SBF Trial Recap for Week Three
- The Sam Bankman-Fried trial continues in its third week.
- More revealing details came to light about the misappropriation of funds at FTX.
- Judge Kaplan was not amused with the lawyers on both sides and had to issue some stern words.
- The trial is now paused until Thursday, October 26.
The trial of Sam Bankman-Fried in New York City continues. Each day reveals more details about the misuse of FTX’s customer funds and the internal responses from FTX executives. Here is a summary of what happened this week.
Oct. 16, 2023 (Monday):
Nishad Singh, former FTX engineering director, testified that FTX used misappropriated customer funds for political donations in the names of employees.
Singh detailed his close personal history with the defendant, Bankman-Fried, including their high school connection.
He revealed that Bankman-Fried invested US $700 million ($1.1 billion) in venture capital firm K5 Global, using funds alleged to be stolen from FTX customers, drawn by the celebrity connections the investment could bring.
Oct. 17, 2023 (Tuesday):
Singh described the significant misuse of FTX’s customer funds, saying “The scale of wrongdoing was enormous.”
He considered resigning in late 2022 after learning about the misuse of billions of dollars but did not quit. The defence highlighted inconsistencies in Singh’s statements, especially around his personal use of FTX funds to buy a luxury home.
Oct. 18, 2023 (Wednesday):
An accounting professor from the University of Notre Dame described how FTX customer funds were moved to Alameda Research and used for various expenses.
Former FTX lobbyist Eliora Katz’s testimony about the company’s customer safeguards was deemed redundant by U.S. District Judge Lewis Kaplan, calling it “a waste of time.”
But it got worse when Cory Gaddis, a records custodian from Google, testified about metadata in a Google Sheets document linked to SBF’s account. During cross-examination, Gaddis confessed to the defence attorney, Christian Everdell, that he wasn’t an expert in metadata.
Judge Kaplan had enough and called the witness a “joke” after he had left.
And Kaplan had more scorching comments to make, saying “We have 18 people devoting time here to this case, and it’s really a crime. Obviously, it’s a serious case. Obviously, there are all kinds of important things to be determined. But lawyers are supposed to do a little better than this. I am talking to both sides.”
The jury was not in the room during that interaction.
Oct. 19, 2023 (Thursday):
Former FTX general counsel, Can Sun, testified against the misuse of customer funds, emphasising that such actions were never approved.
A video clip from Bankman-Fried’s Dec. 1, 2022 interview on “Good Morning America” was played, wherein he speaks about the use of customer funds.
Robert Boroujerdi from ‘Third Point’ shared that if they knew about the potential misuse of funds, they wouldn’t have invested in Alameda.
The trial is paused until Oct. 26, with the defence’s presentation set to begin in the afternoon. It is still unclear if Bankman-Fried will testify.
In Summary:
Researcher and Investor Eric Wall summed up the trial and commented:
“There was never even an attempt to run this business honestly, it’s all just laughable, shocking and sad how bad it was. Even going in with low expectations, the whole trial has been one shocking reveal after another in just how blatant and arrogant of a fraud it was.”
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
