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SBF on trial: A 'math nerd' in over his head, or was his empire 'built on lies'?

Former FTX CEO Sam Bankman-Fried arrives for a bail hearing at Manhattan Federal Court on August 11, 2023 in New York City.
Michael M. Santiago
Getty Images
Former FTX CEO Sam Bankman-Fried arrives for a bail hearing at Manhattan Federal Court on August 11, 2023 in New York City.

The trial of disgraced crypto mogul Sam Bankman-Fried kicked off in earnest Wednesday with lawyers from both sides delivering their opening statements.

"He had wealth. He had power. He had influence," said Thane Rehn, an assistant U.S. attorney for the Southern District of New York. "But all of that — all of that — was built on lies."

Rehn charted the rise and equally dramatic fall of Bankman-Fried's crypto empire, which include the cryptocurrency exchange FTX and a crypto-focused hedge fund, called Alameda Research.

"A year ago, it looked like Sam Bankman-Fried was sitting on top of the world," Rehn said, nodding to Bankman-Fried's lavish lifestyle.

High-flying lifestyle in a $30 million Bahamas apartment

Bankman-Fried lived in a $30 million apartment in The Bahamas, and he traveled all over the world on private planes. Rehn noted Bankman-Fried hung out with actors, athletes, and politicians.

Rehn detailed how Bankman-Fried took money from FTX customers "to make himself even richer." He bought property for family, friends, and himself, and he made speculative investments.

Bankman-Fried's crypto company was like a huge piggy bank, the prosecution alleges. At any time, Bankman-Fried could — and did — use money from FTX customers.

Bankman-Fried, who has been jailed for more than a month, appeared to pay close attention. He took notes on a laptop he is permitted to use during the trial.

A "math nerd" from MIT

His lead attorney, Mark Cohen, pushed back on that narrative which suggested that Bankman-Fried is a villain. He said FTX in its infancy was growing at an unimaginable pace, "like building a plane as you're flying it."

"Sam didn't defraud anyone," he said. "Sam did not steal from anyone. He did not intend to steal from anyone."

Cohen criticized the government for displaying a photograph to the jury of Bankman-Fried in what was his trademark look before he was sent to jail in August: shorts and a t-shirt, with unkempt hair.

Cohen sugested Bankman-Fried was actually "a math nerd" who went to MIT. He was someone, he added, "who didn't drink or party."

Cooperating witness was former girlfriend

After Bankman-Fried was arrested in December, prosecutors filed criminal charges against four members of his inner circle, including Caroline Ellison, who was Bankman-Fried's girlfriend at the time and CEO of Alameda Research.

Rehn told the jury they will hear directly from that quartet of cooperating witnesses, including Ellison.

Cohen encouraged jurors to be skeptical of their testimony, noting they had pleaded guilty and are likely to receive lighter sentences as a result of their cooperation.

In an attempt to preempt that argument, Rehn urged jurors to "scrutinize their testimony carefully." But, he told them, they will offer first-hand insights into the multibillion-dollar fraud the government alleges Bankman-Fried perpetrated with their help.

Witnesses testify: Customer who lost $100,000

Among the first witnesses called on to testify was a commodities trader from London, Marc-Antoine Juilliard. He said that, when the exchange began to fall apart, he was assured by tweets from Bankman-Fried, but soon after he was unable to withdraw his bitcoin and lost a total of $100,000.

Julliard said before he bought crypto for the first time in 2021, he did a lot of research into FTX. He saw ads, including one with Gisele Bündchen, and noted the company was sponsoring Formula One racing and that "major firms seemed to be involved" in backing FTX. All this made him comfortable. "They don't commit hundreds of millions of dollars without doing due diligence," he said of the venture capital firms that invested in FTX.

The second witness was Bankman-Fried's college roommate and longtime friend Adam Yedidia, who has been offered immunity. He worked for Alameda for two months when he was finishing a Ph.D., then was hired by Bankman-Fried as a software developer for FTX.

At the beginning of his testimony, Yedidia was asked if he could identify SBF in the courtroom. He stood up. "I see him," he said, pointing at the defendant and said he considered him a close friend. He noted that Bankman-Fried was wearing a gray suit and purple tie (SBF, who almost always appeared in public with a mane of messy curly hair and baggy shorts, got a haircut before the trial, and wore a suit on the first two days of the trial.)

Yedidia was presented with a binder of evidence — photos of the lavish penthouse apartment in the Bahamas where he lived with Bankman-Fried and seven other FTX employees. "I believe Alameda purchased the apartment at Sam's direction," he said.

He resigned in 2022, as FTX began to implode. When the prosecutor asked him why, he said: "I learned Alameda has used FTX customer deposits to pay back creditors."

"I was concerned that as a developer at FTX I may have unwittingly written code that contributed to the commission of a crime," he added.

Yedidia himself was wearing a suit. His top button was undone. His jet-black hair was a mess.

The trial continues on Thursday, and it is expected to last six weeks.

Copyright 2023 NPR. To see more, visit https://www.npr.org.

David Gura
Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.