Prosecutors in the criminal case against Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, have provided the most detailed account to date of the evidence they plan to use to convict him at trial in October.
In a 70-page court filing, the prosecutors said they would draw on testimony from some of Mr Bankman-Fried’s closest advisers, as well as an expert witness and other employees of FTX and Alameda Research, a crypto hedge fund he also founded.
The prosecutors also said they planned to use notes that Caroline Ellison, one of Mr Bankman-Fried’s top lieutenants, took after conversations with him, including a memo titled “Things Sam Is Freaking Out About”. And they said they would introduce a recording of a meeting in which Ms Ellison told Alameda employees that she had worked with Mr Bankman-Fried to siphon funds from FTX customers’ accounts.
Challenging times ahead for Irish Stock Exchange as big companies look to the US
Mr Bankman-Fried, a onetime crypto mogul who built FTX into one of the world’s largest virtual currency exchanges, was arrested in December and charged with orchestrating a sweeping scheme to use customer deposits to finance property purchases, charitable giving and donations to politicians. Ms Ellison and two other top FTX executives, Gary Wang and Nishad Singh, have pleaded guilty to participating in the effort and agreed to co-operate with prosecutors.
Mr Bankman-Fried faces seven charges of wire fraud, securities fraud, commodities fraud and money laundering. He has pleaded not guilty and is scheduled to go on trial on October 2nd. Last week, he was sent to jail after the judge overseeing the case revoked his bail over allegations that he was trying to intimidate witnesses.
A spokesperson for Mr Bankman-Fried declined to comment. A lawyer for Ms Ellison did not respond to a request for comment.
The prosecutors’ filing this week argued that the evidence they gathered should be legally admissible at Mr Bankman-Fried’s trial. The evidence includes financial records, spreadsheets, Google documents and private communications, according to the filing.
Mr Bankman-Fried’s lawyers submitted their own memo, claiming that prosecutors had “repeatedly failed” to meet the deadlines for turning over evidence to the defence. Just three days ago, the filing said, prosecutors produced nearly 750,000 pages of Slack messages from Mr Wang’s laptop. They said the government should not be allowed to use evidence produced to the defence after July 1st, and that other material, including evidence related to Mr Bankman-Fried’s resignation from FTX, should also be left out of the trial.
“The defence does not have unlimited resources and must spend the limited time left before trial preparing its defence rather than reviewing eleventh-hour productions,” the filing said.
Over months of investigation, prosecutors have amassed millions of pages of evidence as they have prepared for Mr Bankman-Fried’s trial, one of the largest troves ever collected in a white-collar securities fraud case brought by the federal authorities in Manhattan.
The government’s court filing on Monday offered the first detailed look at the evidence and the witnesses that prosecutors plan to introduce at trial. The government plans to cite spreadsheets maintained by Ms Ellison, Mr Singh and Mr Wang that “kept track of illicit money flows between Alameda and FTX”, the filing said, and to discuss the FTX advertisements that appeared on TV.
Prosecutors also plan to cite Mr Bankman-Fried’s political giving as evidence for the fraud charges. The filing cited a text message that a high-ranking FTX executive, Ryan Salame, sent to a family member in November 2021, describing Mr Bankman-Fried’s plans to use political donations to promote cryptocurrencies in Washington.
Under investigation
The purpose of the donations was to “weed out anti crypto dems for pro crypto dems and anti crypto repubs for pro crypto repubs,” Mr Salame wrote in the message. He added that Mr Bankman-Fried would “route money through me to weed out that republican side”.
Mr Salame has been under investigation for months, culminating in a raid of his home in April, though he has not been charged with any crimes. The filing said he was “unavailable as a witness” because his lawyer had invoked his Fifth Amendment right not to offer self-incriminating information.
A lawyer for Mr Salame did not respond to a request for comment.
But Ms Ellison, Mr Singh and Mr Wang are all expected to testify, the filing said. The prosecutors said they would also call other former FTX and Alameda employees, including someone who “regularly consulted with the defendant about FTX’s fundraising efforts”.
The testimony from Ms Ellison in particular is likely to be crucial to the prosecution’s case. In addition to running Alameda, she was in an on-and-off romantic relationship with Mr Bankman-Fried.
The filing provides a transcript of a meeting that Ms Ellison held with Alameda employees in November 2022, as FTX and Alameda were collapsing amid a run on deposits. According to the transcript, an employee asked Ms Ellison who had made the decision to draw on customer funds.
“Um ... Sam, I guess,” she replied. — This article originally appeared in the New York Times.
