Latest update — Former FTX CEO Sam Bankman-Fried trial [Day 13]

Cointelegraph reporters are on the ground in New York for the trial of former FTX CEO Sam “SBF” Bankman-Fried. As the saga unfolds, check below for the latest updates.

Oct. 26: Prosecutors rest their case

Attendees of Sam Bankman-Fried’s trial on Oct. 26 had a disappointing morning as attorneys from both sides kept an endless cycle of repeated questions, sidebars and objections, prompting District Court Judge Kaplan to interrupt witness testimony and urge attorneys to move forward.

Prosecutors rested their case early this morning after FBI agent Mark Troiano briefly testified as the last government witness. In his analysis, more than 300 Signal groups with Bankman-Fried were examined. Most of these groups had enabled the autodeleted feature, which deletes messages after a specified period.

Following a short break, the defense called as a witness Bahamas attorney Krystal Rolle, who represented Bankman-Fried and FTX in November 2022. Rolle said that she was part of a group that met with the Securities Commission of the Bahamas on Nov. 12 related to the collapse of FTX.

Although her testimony did not offer much new information, she shared with the jury that FTX transferred all digital assets held in its custody to the Bahamas regulator the same day a court order was issued.

Joseph Pimbley, a financial consultant with a Ph.D. in physics, was the second witness presented by the defense. His work on the case included an analysis of FTX’s code and database.

According to Pimbley’s findings, in November last year, FTX had over $5.8 billion in assets from accounts with spot margin, lending or futures trading enabled. The amount does not include balances of FTX entities or Alameda Research. During the cross-examination, prosecutors pointed out that the FTX database did not accurately reflect its bank accounts at that time.

Oct. 19: Former FTX legal counsel presents spreadsheet used to track $2.1 billion in loans to SBF, other execs

FTX’s former general counsel Can Sun was unaware of the exchange’s commingling of funds with Alameda Research, he told jurors on Oct. 19 as part of his testimony in Sam Bankman-Fried’s criminal trial.

Sun said he learned about Alameda’s exemption from the liquidation engine system from other employees in August 2022. Normally, the system would liquidate loss-making trades, but Alameda reportedly bypassed the mechanism due to its exception.

Upon learning about the problem, Sun allegedly worked on a plan to fix the issue. The plan would include a delay-liquidation mechanism to replace the non-exemption on Alameda’s account. According to the plan, the delayed mechanism would later be applied to other market makers on FTX, which also sought to notify customers and regulators about the issue. According to San, the plan was stalled by other FTX departments and was never implemented.

Furthermore, Sun acknowledged that he relied on Bankman-Fried’s statements about segregating customer funds to develop the company’s terms of service and answer regulators’ inquiries. FTX’s terms of services said that “none of the Digital Assets in your account are the property of, or shall or may be loaned to, FTX Trading” — in opposition to what was apparently happening between the sister companies. The same terms would apply to fiat assets, Sun noted in his testimony.

Additionally, the former FTX attorney disclosed a spreadsheet he used to trace loans made by Alameda to Bankman-Fried, Gary Wang, Ryan Salame and Nishad Singh. According to the spreadsheet, Alameda loaned them $2.1 billion across 35 loans.

These loans were used to fund other venture investments by FTX. While this process wasn’t the most transparent way of carrying out investments, it was a legal option at the time, Sun said. 

According to prosecutors, the spreadsheet did not include millions of dollars transferred to Salame and Bankman-Fried. Sun said he was unaware of the additional transactions.

Sun traveled from Japan to testify in court as part of his non-prosecution agreement with the Department of Justice.

The trial of Bankman-Fried will resume on Oct. 26. The prosecution expects to rest its case on that date. The defense counsel has not yet confirmed whether a case will be brought.

Oct. 18: “Lawyers should do better than this” — Judge Kaplan

District Judge Lewis Kaplan ran out of patience during Sam Bankman-Fried’s trial on Oct. 18, calling out on lawyers representing both parties in the criminal court case. The judge’s comments came after a witness fleeing Texas for the trial testified for roughly 15 minutes.

Cory Gaddis, a policy specialist at Google, spent over three hours flying only to confirm that Google’s metadata indicates Caroline Ellison and Bankman-Fried owned a fabricated balance sheet of Alameda Research. According to Ellison’s testimony from last week, she developed seven alternative spreadsheets to mislead Alameda’s lenders about its financial health in 2022.

In cross-examination,…