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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 stated 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 stated, was pushed by greed and was answerable for the collapse of the alternate a 12 months in the past, which left clients 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 stated.
Mr. Bankman-Fried “lied about huge issues and small issues,” the prosecutor stated, mentioning that the defendant stated he “couldn’t recall” greater than 140 instances in response to questions on cross-examination. “It was uncomfortable to listen to,” Mr. Roos stated.
The prosecutor’s closing assertion got here after 15 days of testimony in Mr. Bankman-Fried’s trial, which is among the most high-profile monetary crime circumstances in years. The end result of the case can be seen as a referendum not solely on the speedy rise and fall of Mr. Bankman-Fried’s enterprise empire, which at its peak was valued at $32 billion, but additionally on the risky crypto trade, which solely two years in the past was driving excessive earlier than melting down final 12 months.
The spectacular implosion of FTX final November set off a sequence response that led to the collapse of different crypto companies. Mr. Bankman-Fried’s arrest and subsequent costs 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 clients to pay for investments in different crypto companies, 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 could have a quick rebuttal presentation.
Carl Tobias, a professor on the College of Richmond College of Legislation, stated the prosecution offered a powerful case and made a good move in “framing this matter as a garden-variety fraud case, moderately 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 prime lieutenants to Mr. Bankman-Fried, every of whom had pleaded responsible to fraud and conspiracy costs and agreed to testify in opposition to their former boss. The protection, for its half, referred to as simply three witnesses, considered 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. In addition they stated 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 clients and traders.
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 had been made, Mr. Bankman-Fried stated, had been made in good religion and never meant to defraud anybody.
FTX was alleged to “transfer the ecosystem ahead,” he testified at one level. “It turned out the other of that.”
Underneath 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 elucidate 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 instances, he successfully stated 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, reminiscent of a $65 billion line of credit score that permitted the buying and selling agency to borrow billions from FTX clients. Mr. Bankman-Fried saved these particular privileges secret, Mr. Roos stated, “as a result of he knew they had been mistaken.”
“The best way you realize he knew it was as a result of he arrange a public system for everybody and a secret system for Alameda,” Mr. Roos stated.
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 Courtroom instructs them on the related regulation.
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