Sam Bankman-Fried’s tweets came back to haunt him.
Nearly a year ago, as customers rushed to withdraw funds from the troubled FTX cryptocurrency exchange, Bankman-Fried tried to prevent a bank run with a message to his more than 1 million followers: “FTX is fine. The assets are OK. .”
One of Bankman-Fried’s closest friends, FTX co-founder Gary Wang, said in testimony on Friday that the news was a lie: “No…” . FTX is not good,” he told jurors. “The assets are not good.”
Prosecutors seized on this and other posts on the fallen billionaire’s prolific Twitter account in an attempt to convince a New York jury that Bankman-Fried lied to the public about secret dealings, his Clients, lenders and investors lied about the transactions, which led to his own trading firm, Alameda, raiding billions of FTX client funds.
As Bankman-Fried’s trial began this week, prosecutors showed the jury again and again screenshots of his posts on Twitter (since renamed X) and public statements about his relationship with Bankman — contrasted with internal testimony from Fried’s closest associates.
Wang, who has pleaded guilty and is cooperating with the government, described how the night before he helped Bankman-Fried determine how much Alameda owed FTX customers. “The exchanges are $8 billion short,” he said.
In a second tweet, Bankman-Fried assured clients that “FTX has sufficient funds to cover all clients’ holdings,” with Wang once again saying his friend had lied.
“FTX did not actually have sufficient assets to cover all of the assets held by its customers,” Wang told the jury.
The jury is composed of 12 jurors and six alternates, including a retired investment banker from Salomon Brothers, two Metro North train conductors and a trained An accountant by trade, she is the office manager for her husband’s landscaping business.
They must decide whether the pale 31-year-old Bankman-Fried, who sits a few feet away from them at the defense table, is a criminal mastermind or just a spectacularly failed entrepreneur.
Bankman-Fried, who faces life in prison, has pleaded not guilty and maintains his innocence. His lawyers said in opening statements that he made mistakes in his rush to build FTX into a $40 billion company at the forefront of the cryptocurrency industry, but that Bankman-Fried acted in “good faith” and had no intention of deceiving anyone.
The trial, which has become a test case for the U.S. government’s efforts to crack down on the freewheeling offshore cryptocurrency industry, will hinge on the personal relationships and intimate conversations of several of Bankman-Fried’s old friends and closest business associates.
The atmosphere in the 26th-floor courtroom in Lower Manhattan was tense because Wang first met Bankman-Fried at a summer program for high school math geniuses and lived with him at MIT, and he quickly Walk past the defense table and take your seat. On the witness stand.
When prosecutors asked him in court to identify Bankman-Fried, Wang stood up from his seat and saw his former friend among the sea of lawyers.
Throughout the week of testimony, Bankman-Fried showed no emotion, tapping away at his laptop and avoiding eye contact with witnesses. Wang will be cross-examined on Tuesday. One of the most anticipated witnesses, his ex-girlfriend and Alameda executive Caroline Ellison, will testify early next week, prosecutors said.
“This is absolutely devastating testimony,” said Daniel Silva, a former federal prosecutor at the Buchardt law firm. “The government has a compelling case. . . . It’s a great story. It’s the stuff of a movie script in the indictment.”
Juxtaposing this testimony with Bankman-Fried’s tweets has become a powerful tool for the government. The jury was shown a July 2019 tweet in which Bankman-Fried said Alameda’s account on FTX was “just like anyone else’s.”
But Wang testified that on the same day, FTX made an internal change to its computer code that gave Alameda unlimited rights to borrow from FTX — one of several unique privileges he helped hardwire into the exchange.
The jury also heard from an FTX client, a London cocoa trader, who said Bankman-Fried’s assurances in a November tweet led him to keep his funds on the exchange until it was too late.
Matt Huang, an investor in venture capital firm Paradigm, which invested $278 million in FTX, testified that his firm inquired about the exchange’s relationship with Alameda before investing and was told that Alameda received no special treatment.
Prosecutors are also trying to prove that Bankman-Fried knew about and orchestrated Alameda’s secret access to customer funds years before the exchange collapsed.
Wang testified as early as 2019 about conversations involving Alameda’s borrowing money. He described how a collapse in cryptocurrency prices in the spring of 2022 prompted multiple third-party cryptocurrency lenders to demand repayment from Alameda.
He presented the jury with a spreadsheet that calculated Alameda’s debt to FTX at $11 billion in June 2022 and described a meeting at the exchange’s Bahamas offices, Bankman-Free said. De asked about the calculations before instructing Ellison to repay the third-party loan.
“The money ultimately comes from FTX customers,” Wang said. “We have stated publicly that we will not use client funds in this way.”
When asked who “we” were, Wang said simply: “Sam.”
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