SBF Trial Day 3 – Former FTX CTO claims SBF granted Alameda Research ‘special privileges’ during witness testimony
Day three of the SBF trial entailed further witness testimony from people closely involved with SBF and FTX.
The third day of the trial against Sam Bankman-Fried (SBF) unveiled deeper insights into the company’s financial operations and its founder’s personal habits.
In the morning session, testimony from Adam Yedidia, a college acquaintance of Bankman-Fried and a former Alameda and FTX staff member, provided a glimpse into the backend operations of FTX.
Yedidia delved into his work automating customer deposits and withdrawals, revealing a glitch that inflated FTX’s [email protected] account by a whopping $8 billion.
The prosecution shifted the court’s attention to the stark contrast between FTX’s original Hong Kong offices, which were extremely simple compared to the opulent offices and paddle tennis court in the Bahamas. Emphasizing signs of opulence, the prosecution also put forward images of SBF’s penthouse.
The defense countered the opulence argument by claiming that the penthouse was a shared living arrangement, while the offices were a sign of the crypto market’s success during that period. They added that SBF did not own a yacht and drove a Toyota Corolla, arguing that he led a simple life and the prosecution’s claims of opulence were unfounded.
An anecdote about SBF’s preference for sleeping on a bean bag chair in Hong Kong, which occasionally turned into naps in the Bahamas, provided a lighter moment in the proceedings.
The afternoon session was marked by Matt Huang’s testimony, co-founder of Paradigm, a significant investor in FTX. Huang’s testimony highlighted his concerns about FTX’s lack of a traditional governance structure and potential favorable conditions for Alameda Research.
Gary Wang, FTX’s Chief Technology Officer, admitted to financial misconduct during his tenure at FTX during his testimony. He further discussed specific privileges allegedly granted to Alameda Research on SBF’s instruction.
Judge Lewis Kaplan didn’t shy away from intervening, reproaching the defense on several occasions for repetitive lines of questioning, especially during Yedidia’s cross-examination.
Off the stand, the day was peppered with mentions of a book, “Number Go Up” by Zeke Faux, which narrates SBF’s descent in the crypto industry.
The trial, drawing national attention, is set to continue with Wang’s testimony and indications from the prosecution that subsequent witnesses will include industry heavyweights like BlockFi CEO Zac Prince and Elan Dekel from Pinecone.
In other news…
Federal prosecutors have targeted two private jets, a Bombardier Global 5000 and an Embraer Legacy, linked to cryptocurrency executive Sam Bankman-Fried.
The aircraft, worth a combined $70 million, might be confiscated due to its connection to alleged illicit activities by Bankman-Fried. The crypto executive, who is currently on trial, has denied all charges against him.
US-based employees of FTX reportedly discovered a secret backdoor in the exchange’s system that allowed Alameda Research to access customer funds.
This revelation has raised concerns and skepticism, especially with Alameda’s former CEO, Caroline Ellison, and other executives acknowledging the use of these funds.
Creditors of the now-bankrupt FTX are optimistic as Google considers a $2B investment in AI firm Anthropic. Previously, FTX and Alameda Research had invested a combined $500M in Anthropic.
If this new investment comes to fruition, it could significantly raise the value of FTX’s stake, aiding in compensating the exchange’s defunct users.
The individual responsible for exploiting FTX has converted another $25M of stolen Ethereum to Bitcoin. The conversion was executed via THORChain Router, with the exploiter now having converted a total of $100M since the hack in January 2023.
These moves have coincided with the commencement of FTX founder Sam Bankman-Fried’s trial, sparking speculation that an insider may have been involved in the hack.