Second week of SBF’s trial was a torrent of damning evidence, testimony for the former billionaire Second week of SBF’s trial was a torrent of damning evidence, testimony for the former billionaire
The prosecution have come out of the gate swinging since the first day of the trial and continued to put the pressure by calling star witness Caroline Ellison to the stand.
3 min read
Updated: Oct. 14, 2023 at 1:55 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The second week of Sam Bankman-Fried’s criminal trial has seen pivotal testimonies and intense courtroom drama.
The prosecution came out swinging and presented multiple witnesses who were once members of SBF’s inner circle at FTX, including former Alameda Research CEO Caroline Ellison and former FTX CTO Gary Wang.
Wang concluded his testimony at the start of the week, shedding light on a significant memo SBF sent out before FTX’s downfall. Meanwhile, Ellison’s testimony spanned multiple days and consisted of revelations that were both dry and dramatic for the courtroom.
BlockFi CEO Zac Prince took the stand on Oct. 13 to close out a tumultuous week.
Ellison’s damning revelations
The week commenced with the spotlight firmly on Ellison, who the court found out had a complicated personal and professional relationship with SBF. The crux of her testimony revolved around the claim that SBF had personally directed her to engage in the criminal activities that occurred at Alameda Research — namely, the misuse of billions of dollars worth of customer funds.
Ellison’s narrative became central midweek as she opened up about her rollercoaster relationship with SBF. Delving into the last days of FTX, she branded it as the “darkest period” of her life, confessing that she and SBF had illicitly funneled billions from FTX’s customer accounts to Alameda Research.
The confession was raw and revealing, as Ellison disclosed intimate aspects of her relationship with SBF. Despite the emotion during her admission, she remained resolute during cross-examinations.
Ellison painted a vivid picture of SBF’s rise and eventual fall — highlighting his fixation on his public image. Detailing SBF’s character, Ellison spoke of a man who was deeply conscious of his public reputation despite his seemingly disheveled appearance. She characterized him as a risk-taker, especially if the potential reward was monumental.
Meanwhile, SBF’s defense tried to challenge Ellison’s narrative during their extensive cross-examination. However, the lawyers could not elicit revelations that could significantly undermine her credibility or account.
The domino effect
As the week wrapped up, Prince took the stand and shared details of the close relationship BlockFi shared with Alameda and FTX before they went bankrupt.
Prince told the jury that when FTX went bankrupt, BlockFi had roughly $650 million in outstanding loans with Alameda and an additional $350 million held on the FTX exchange in various cryptocurrencies.
Prince said BlockFi based its business decisions on Alameda’s balance sheets, which seemed strong then. However, prosecutors claim that Alameda and FTX had been falsifying these documents to dupe investors and hide the massive hole in their balance sheets.
Prince claimed no knowledge or indication that the documents shown to BlockFi were fake balance sheets but admitted that he knew they were unaudited.
However, Mark Cohen, the lawyer leading SBF’s defense, attempted to pivot the blame back to BlockFi by suggesting that a lack of comprehensive due diligence, especially the decision to trust unaudited financial records, was the primary reason for its collapse.
What’s next?
As the trial progresses, it is anticipated that the forthcoming sessions will be marked by heightened intensity and significant revelations. T
The courtroom is awaiting testimonies from two pivotal figures associated with FTX — Nishad Singh, who previously held the position of Engineering Director, and Ramnik Arora, another individual of considerable importance within the company’s hierarchy.
The prosecuting team has set a tentative deadline of Oct. 26 to conclude their arguments and rest their case. Following this, the defense team will begin rebuttals, presenting counterarguments to challenge the prosecution’s assertions and calling on their witnesses.
The unfolding testimonies are anticipated to clarify the complex nexus of financial transactions and the intricate personal dynamics involved.
In other news…
From Trust to Disappointment: Anthony Scaramucci on Sam Bankman-Fried
Anthony Scaramucci, the founder of SkyBridge Capital, recently shed light on his once unwavering trust for SBF, the embattled founder of FTX.
Describing him as the “Mark Zuckerberg of crypto,” Scaramucci candidly shared his initial admiration for SBF’s vision for a next-generation financial exchange.
However, this trust was profoundly tested following allegations of fraud against SBF, with Scaramucci expressing deep regrets and disillusionment — especially in the days leading up to FTX’s dramatic collapse.
Leaked recording reveals stark misuse of FTX customer funds
A bombshell audio recording from an all-hands meeting at Alameda Research has been leaked, revealing deeply concerning financial activities.
Former Alameda deputy, Caroline Ellison, candidly discussed the misuse of billions of FTX customer funds for high-risk venture investments and to service Alameda’s own loans.
Ellison’s revelations painted a damning picture of ex-FTX CEO, Sam Bankman-Fried, suggesting he played a pivotal role in the high-risk financial dealings that led to FTX’s and Alameda’s eventual collapse.
BlockFi’s lending to Alameda: A tale of trust, ignorance, and financial repercussions
BlockFi CEO Zac Prince took the stand in SBF’s trial on Oct. 13 and testified about the intricate lending web between BlockFi and Alameda Research.
Prince detailed how BlockFi’s lending relationship with Alameda grew substantially over time, revealing significant loan amounts and industry events that influenced BlockFi’s decisions.
A recurring theme emerged throughout the testimony: BlockFi’s profound unawareness of FTX’s underhanded activities. This ignorance had major financial implications for BlockFi, highlighting the importance of transparency and due diligence in the volatile world of crypto finance.
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Author 
Assad Jafri
AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
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In this article
FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
Caroline Ellison is the former lead trader and former CEO at Alameda Research.
Zac’s experience includes leadership roles at multiple successful tech companies.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.