Danielle Sassoon, a lawyer for the Justice Department, began Thursday’s court session authoritatively.
Sam Bankman-Fried, the former CEO of FTX now on trial for fraud, told customers that their funds were safe on his now-bankrupt crypto exchange, yet, Sassoon told the jury, he secretly took their crypto and cash to spend on sponsorships, venture investments, and Bahamas real estate.
“That is not a reasonable business decision,” Sassoon proclaimed. “That is fraud.”
Over approximately one hour, she rebutted detail after detail of the defense’s closing statement. (Because the government bears the burden of proving a defendant’s guilt beyond a reasonable doubt, it gets the opportunity to rebut the defense’s closing arguments.)
Her final rebuttal marked the end of court proceedings before the jury leaves to deliberate later this afternoon. It also highlighted the pieces of evidence, the prosecution argues, that Bankman-Fried simply could not “word salad” his way out of. Here are three government exhibits, according to Sassoon, that were particularly damning for the former crypto mogul.
‘Alameda’s giant line of credit’
Sam Bankman-Fried’s defense to allegations that he stole customer funds is one of “good faith,” or that he didn’t knowingly engage in fraud. During his testimony, he repeatedly laid the blame at the feet of Caroline Ellison, Gary Wang, and Nishad Singh, the three co-conspirators who testified against the former FTX CEO.
Part of Bankman-Fried’s defense relies on the argument that he didn’t know Alameda Research, his crypto hedge fund, was siphoning money off of FTX. However, a spreadsheet that he prepared in September 2022—per metadata collected from Google—shows that he did know about how much money Alameda had taken from FTX.
The left-hand side of the document details the lines of credit on FTX available to all customers, or how much money they can borrow from the exchange. Alameda’s was $65 billion, billions and billions more than the second largest, which was $150 million. And on the right-hand side, Bankman-Fried calculated how much money Alameda owed FTX: $5 billion—an understatement, according to the prosecutors.
Alameda’s back doors into FTX were the keys to how Bankman-Fried stole customer funds, the Justice Department argued throughout the trial. “The defendant plainly knew that, because of Alameda’s giant line of credit, it was able to—and did—borrow billions,” Nicolas Roos, another prosecutor, said in the government’s closing statement, before Sassoon’s rebuttal. “Those billions came from FTX customers.”
Forensic finance
The government didn’t just bolster its case with Bankman-Fried’s spreadsheets. It also hired a professor from the University of Notre Dame, Peter Easton, to go through and analyze FTX’s finances after the crypto exchange declared bankruptcy.
The fruits of his forensic financial analysis cast doubt on Bankman-Fried’s defense, argued the prosecutors. Easton found, for example, that Alameda’s balances on FTX were continuously negative from January 2021 up until FTX’s collapse. (These were specifically for accounts that were allowed, according to a check mark in the exchange’s database, to go below zero.)
While the defense provided its own accounting of Alameda’s borrowing on the exchange, Sassoon, in Thursday’s rebuttal, said to “disregard that chart,” which was prepared by a hired expert for Bankman-Fried who, she said, simply pinged a database rather than doing a thorough forensic analysis of FTX’s finances as Easton had.
‘FTX is fine. Assets are fine’
In November 2022, customer withdrawals from FTX accelerated until the crypto exchange ran out of cash and had to declare bankruptcy.
To stem the eventually overwhelming tide of customer withdrawals, Bankman-Fried posted what he called a “confident Tweet thread” on Nov. 7. “A competitor is trying to go after us with false rumors,” he wrote, in reference to Binance’s CEO, Changpeng Zhao. “FTX is fine. Assets are fine.”
The former CEO deleted the thread on Nov. 8, but prosecutors have repeatedly pointed to the posts as evidence of his repeated lies to the public. “FTX was not fine,” Gary Wang, the former CTO of FTX, testified. “Assets were not fine.”
During the defense’s closing statement, Mark Cohen, a lawyer for Bankman-Fried, said the since-deleted thread was the “government’s favorite piece of evidence.” He argued that his client’s decision to delete his posts was evidence of good faith. “If all he’s doing this week is wheeling and dealing like a fraudster, why would he do that?” Cohen asked the jury. “Why wouldn’t he put up an even more outrageous tweet?”
Sassoon, during her rebuttal, wasn’t buying Cohen’s argument. “Give me a break,” she said. She argued that the tweet alone is evidence that Bankman-Fried was deliberately lying to the public when he knew very well that FTX was not fine.
“Don’t fall for it,” Sassoon told the jury about Bankman-Fried’s version of FTX’s collapse. “You know better.”
