Opening statements began on Wednesday, and then we started hearing from a handful of initial witnesses, including FTX cofounder Gary Wang and Paradigm investor Matt Huang. 

First, here’s what the government and defense are saying.

Prosecution: SBF was “on the top of the world,” rubbing elbows with everyone from Tom Brady to Larry David. The problem was that “all of that, all of it, was built on lies,” the government laid out in their opening statement, as my colleague Ben Weiss wrote. As Weiss reported, the government is emphasizing how Bankman-Fried allegedly stole customer funds to facilitate his jet-setting lifestyle, donate millions to political candidates, and finance risky bets. The key to the scheme? Crypto hedge fund Alameda Research, which gave him “secret access” to customer funds. The government is arguing that SBF told employees to conceal money and forge financial documents—”the defendant lied to the world.”

Defense: If you ask SBF’s attorney, he didn’t defraud anyone. Bankman-Fried was simply a nerdy startup founder, and his businesses were successful companies, not shams. Alameda acted legally as an FTX customer, payment processor, and market maker for customers looking to buy and sell cryptocurrencies, Weiss wrote. The defense is trying to make a case that SBF gave up his personal wealth to make customers whole when it all collapsed.

After opening arguments, we saw some notable witnesses take the stand, including Adam Yedidia, an MIT grad who was close with SBF in college, then became a trader at Alameda and later a developer at FTX. “I was concerned that I had unwittingly written code that contributed to a crime,” Yedidia testified. Here’s more, as my colleague Leo Schwartz wrote:

Under direct examination by Department of Justice prosecutor Danielle Sassoon, Yedidia described a fateful meeting he had with Bankman-Fried in the middle of a game of padel tennis at their Albany home in June 2022, just a few months before FTX collapsed.

“Are things okay?” Yedidia recalls asking Bankman-Fried.

“We were bulletproof last year,” Bankman-Fried replied, according to Yedidia. “We’re not bulletproof this year.” Bankman-Fried then told Yedidia it could take six months to three years to rectify that.

We also heard from cofounder Gary Wang, who last year accepted a plea deal with the government. Wang admitted on Thursday he had committed fraud, then detailed the extent of the alleged crimes that took place at the crypto exchange. Here’s more, as my colleague Schwartz wrote:

While Bankman-Fried initially intended for Alameda’s borrowing to come from trading revenue generated by FTX, Wang said the trading firm dipped into FTX customer coffers by late 2019 or early 2020, with trading revenue no longer able to cover Alameda’s losses. That debt reached billions of dollars by mid-2022. Wang stated that customer funds went to everything from trading losses to venture investments and real estate purchases.

According to Wang, FTX’s inner circle of Bankman-Fried, Wang, Singh, and Alameda CEO Caroline Ellison were aware of the grave problem facing the two entities by summer 2022. They completed an audit of Alameda, revealing that it owed billions of dollars to FTX.

Everything came to a head in September 2022, following a Bloomberg article that detailed the unusual relationship between FTX and Alameda. In a Signal chat with Wang and Singh, Bankman-Fried argued that they should consider closing Alameda, mostly because its close relationship with FTX could generate bad press.

“It might be time for Alameda Research to shut down,” Bankman-Fried wrote, arguing that they should explore transferring its market-making role to another trading firm, Modulo. He had invested hundreds of millions of dollars into Modulo—and dated one of its founders—but it still did not have the same intertwined relationship as Alameda. He told Singh and Wang that Modulo had better “leadership and culture” than Alameda, which was run by another former girlfriend, Ellison.

Testifying on Friday, Wang said that he calculated how much Alameda owed to customers due to its special privileges: $14 billion. He realized Alameda couldn’t shut down, because it didn’t have the liquid assets to shut down.

Wang testified that Bankman-Fried continued to lie to the public, saying that Bankman-Fried tweeted from the official FTX account on Nov. 7 that stablecoin withdrawals were paused because banks were closed. In reality, the reason for the pause was that FTX had run out of stablecoins to pay back customers. In a separate tweet from his own account—since deleted—Bankman-Fried wrote that FTX and its assets were fine. Roos asked whether that was true, and Wang said it wasn’t.

“FTX was not fine,” he said. “And assets were not fine.”

Also testifying last week was a venture capitalist, Paradigm cofounder Matt Huang, who said on the stand that Paradigm had invested approximately $278 million in the U.S. and international crypto exchange businesses, and has since written down the full investment to zero.

Huang went into the due diligence he and his team underwent before investing in the crypto change—his conversations with Bankman-Fried, another employee, Ramnik Arora, and general counsel Dan Friedberg.

“It was sort of unusual to see a new crypto exchange grow market share so quickly,” Huang said on the stand. “We were also focused on some of the risks we were thinking about around governance and the lack of a formal board, as well as risks from the entanglement between FTX and Alameda.” Huang testified that Paradigm was concerned that FTX had no board of directors, and that SBF relayed to them that he was “resistant” to having investors on it.

“He told us that he didn’t think investors had that much to add,” Huang said.

Interestingly, Judge Lewis A. Kaplan isn’t allowing Bankman-Fried’s lawyers to make the argument that any of FTX’s venture investors, including Huang, were negligent or “gullible” by investing in FTX. In an earlier ruling, the judge said “such evidence is not relevant to the claims at issue at trial” and that any value SBF’s attorneys would make on these grounds would be “outweighed substantially by the risk of unfair prejudice and jury confusion.”

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- Glydways, a South San Francisco-based on-demand robotaxi developer, raised $56 million in Series B funding. New Science Ventures led the round and was joined by The ACS Group, Gates Frontier, and Khosla Ventures.

- Machina Labs, a Los Angeles, Calif.-based company building software and robotics for metal manufacturing, raised $32 million in Series B funding from NVentures and Innovation Endeavors.

- Vibrant Planet, a Truckee, Calif.-based platform designed to decarbonize land management and analyze wildfire risk, raised $15 million in Series A funding. The Ecosystem Integrity Fund led the round and was joined by Microsoft’s Climate Innovation Fund, Citi Ventures, Day One Ventures, SIG Climate, Globivest, Coefficient LP, and others.

- Atalan Tech, a Boston, Mass.-based platform designed to predict when health care workers will burn out, raised $2.5 million in seed funding. Excelerate Health Ventures and OCA Ventures led the round and were joined by others.

PRIVATE EQUITY

- Abu Dhabi Investment Authority acquired a minority stake in Reliance Retail Ventures, a Mumbai-based private equity firm that invests in supermarkets and convenience stores, for $597 million.

- Evergreen Services Group, backed by Alpine Investors, acquired Allied Solutions Group, a Sarasota, Fla.-based software and consulting service provider for construction and real estate businesses. Financial terms were not disclosed.

- Gigster, backed by Ionic Partners, agreed to acquire CodersRank, a Hajdu-Bihar, Hungary-based communication and networking platform for coders. Financial terms were not disclosed. 

- Vestar Capital Partners acquired a majority stake in Tech24, a Greenville, S.C.-based manufacturer and repairer of commercial refrigeration, cooking, beverage, and HVAC equipment. Financial terms were not disclosed. 

PEOPLE

- Lobby VC, a Palo Alto, Calif.-based venture capital firm, hired Collin Wallace as general partner. Formerly, he was with J.P. Morgan.