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Sam Bankman Fried, the onetime cryptocurrency mogul, constructed his FTX crypto alternate right into a “pyramid of deceit” resting on a “basis of lies and false guarantees,” a federal prosecutor mentioned in closing arguments on Wednesday on the legal fraud trial.
Over greater than two hours in a Manhattan courtroom within the morning, Nicolas Roos, the prosecutor, used scathing language to color Mr. Bankman-Fried as a liar and fraudster. The FTX founder, Mr. Roos mentioned, was pushed by greed and was accountable for the collapse of the alternate a yr in the past, which left prospects unable to get better their deposits. And Mr. Bankman-Fried, who had testified through the trial in his personal protection, had repeatedly dissembled and dodged questions, Mr. Roos mentioned.
Mr. Bankman-Fried “lied about huge issues and small issues,” the prosecutor mentioned, mentioning that the defendant mentioned he “couldn’t recall” greater than 140 occasions in response to questions on cross-examination. “It was uncomfortable to listen to,” Mr. Roos mentioned.
The prosecutor’s closing assertion got here after 15 days of testimony in Mr. Bankman-Fried’s trial, which is without doubt one of the most high-profile monetary crime circumstances in years. The result of the case will probably be seen as a referendum not solely on the fast rise and fall of Mr. Bankman-Fried’s enterprise empire, which at its peak was valued at $32 billion, but in addition on the risky crypto business, which solely two years in the past was driving excessive earlier than melting down final yr.
The spectacular implosion of FTX final November set off a series response that led to the collapse of different crypto corporations. Mr. Bankman-Fried’s arrest and subsequent prices additionally set off regulatory crackdowns throughout the crypto universe.
On the coronary heart of Mr. Bankman-Fried’s case is whether or not he dedicated fraud and handled FTX as his private piggy financial institution. Prosecutors contend that he stole as a lot as $10 billion from FTX’s prospects to pay for investments in different crypto corporations, purchase lavish real-estate within the Bahamas, the place the alternate was headquartered, and to prop up a crypto buying and selling agency he additionally based, Alameda Analysis.
The 31-year-old has pleaded not responsible to seven counts of fraud, conspiracy and cash laundering. If convicted, he might face what quantities to a life sentence.
The protection is predicted to ship its closing assertion on Wednesday afternoon, after which the prosecution may have a quick rebuttal presentation.
Carl Tobias, a professor on the College of Richmond Faculty of Regulation, mentioned the prosecution offered a robust case and made a smart move in “framing this matter as a garden-variety fraud case, somewhat than a extra advanced cryptocurrency case.”
Mr. Bankman-Fried’s trial, which started on Oct. 4, has featured loads of damaging testimony. Prosecutors referred to as 16 witnesses, together with three former high lieutenants to Mr. Bankman-Fried, every of whom had pleaded responsible to fraud and conspiracy prices and agreed to testify in opposition to their former boss. The protection, for its half, referred to as simply three witnesses, certainly one of whom was Mr. Bankman-Fried.
On the trial, the prosecution’s three star witnesses — Caroline Ellison, Nishad Singh and Gary Wang, who all labored with Mr. Bankman-Fried — testified that the FTX founder knew for a lot of months that his spending spree was unsustainable and improperly fueled by FTX buyer cash that had been transferred to Alameda. Additionally they mentioned Mr. Bankman-Fried knew Alameda couldn’t pay again the billions that it had misappropriated from FTX, with Alameda’s debt to FTX hid from prospects and buyers.
In response, Mr. Bankman-Fried and his legal professionals argued that he was unaware till only a few weeks earlier than FTX collapsed that billions in buyer cash had been misused. Mr. Bankman-Fried testified that he believed Alameda’s spending got here from company cash, not buyer cash. Any errors that have been made, Mr. Bankman-Fried mentioned, have been made in good religion and never supposed to defraud anybody.
FTX was purported to “transfer the ecosystem ahead,” he testified at one level. “It turned out the alternative of that.”
Beneath cross-examination for almost seven hours over two days, Mr. Bankman-Fried was requested repeatedly about his many public statements about FTX and the way these ran counter to what unfolded behind the scenes on the alternate. Mr. Bankman-Fried usually hemmed and hawed in response to questions on his public claims that FTX was one of many most secure crypto exchanges within the enterprise.
He was additionally unable to clarify how FTX buyer cash might have been funneled to Alameda to pay for constructing out his crypto empire with out him understanding about it. At occasions, he successfully mentioned that his former workers who testified in opposition to him weren’t telling the reality.
On Wednesday, Mr. Roos went over the highlights of the testimony from the prosecution witnesses, together with their statements that Alameda had particular privileges with FTX, similar to a $65 billion line of credit score that permitted the buying and selling agency to borrow billions from FTX prospects. Mr. Bankman-Fried stored these particular privileges secret, Mr. Roos mentioned, “as a result of he knew they have been improper.”
“The way in which you recognize he knew it was as a result of he arrange a public system for everybody and a secret system for Alameda,” Mr. Roos mentioned.
The prosecutor additionally went over the inconsistencies in Mr. Bankman-Fried’s testimony with the testimony of his former workers. He displayed charts with headings like “The defendant’s lies to the general public” and “The defendant knew the key line of credit score.” And he identified situations the place Mr. Bankman-Fried appeared to intentionally use FTX buyer deposits, together with to purchase again FTX fairness from Binance, a competing crypto alternate.
The jury of 9 girls and three males is predicted to start deliberating as quickly as Thursday after Decide Lewis A. Kaplan of U.S. District Court docket instructs them on the related regulation.
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