SBF Trial, Day 11: How Alameda Got FTX Into a $9 Billion Hole

Unchained

Laura Shin

News, Tech News, Business News

4.6 • 1.3K Ratings

🗓️ 19 October 2023

⏱️ 11 minutes

🔗️ Recording | iTunes | RSS

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Summary

The courtroom was abuzz on Wednesday as financial and technical experts took the stand in the ongoing criminal trial against Sam Bankman-Fried. Accounting professor Peter Easton, a standout witness, presented a detailed analysis showing that Alameda had spent customer funds on VC investments, real estate, and political and charitable donations. Easton, who had previously worked on high-profile cases like Enron and Worldcom, said that by the end, the gap between what FTX owed to customers and what it had on hand was $8.8 billion. The defense, led by attorney David Lisner, attempted to challenge Easton's methods. Lisner questioned the accounting of the fiat@ftx internal account, which tracks customer deposits. Easton admitted to lumping amounts owed to customers from FTX’s bank accounts with what was owed to customers from Alameda's bank accounts, giving the defense an opportunity to question his accuracy. The day also saw other witnesses, including a former FTX lobbyist and a Google employee, both of whose relevance was questioned by Judge Kaplan. The judge criticized the prosecution for wasting time with witnesses who seemed to offer little to the case. Catch up on Unchained’s previous coverage: SBF Trial, Day 1: Possible Witnesses Include FTX Insiders, Big Names in Crypto, and SBF’s Family SBF Trial, Day 2: DOJ Says Sam Bankman-Fried ‘Lied’ While Defense Claims His Actions Were ‘Reasonable’ SBF Trial, Day 3: Why a True Believer in FTX Flipped Once He Learned One Fact SBF Trial, Day 4: SBF’s Lawyers Annoy Judge Kaplan, While Wang Reveals Alameda’s Special Privileges SBF Trial, Day 5: SBF's Defense Finally Found Its Legs, But Can It Counter Caroline Ellison? SBF Trial, Day 6: Caroline Ellison Recalls 'The Worst Week of My Life' SBF Trial, Day 7: In SBF Trial, Did the Defense Lose Its Opportunity With the Star Witness? SBF Trial, Day 8: Former BlockFi CEO Adds Credibility to Fraud Charges SBF Trial, Day 9: Nishad Singh Describes Former FTX CEO as a Bully and Big Spender SBF Trial, Day 10: Defense Struggles to Discredit Nishad Singh's Testimony Did Sam Bankman-Fried Have Intent to Defraud FTX Investors? Why These Lawyers Say It's Over for SBF-But His Only Hail Mary Is to Testify Here’s How Sam Bankman-Fried’s High-Stakes Trial Could Play Out SBF Trial: How Sam Bankman-Fried’s Lawyers Might Try and Win His Case The High-Stakes Trial of Sam Bankman-Fried Begins: What to Expect Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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1:34.0	Thanks for tuning in today, 11 of the unchained recap of the SVF trial. On Wednesday, the criminal trial against Sam Pinkman Freed featured financial and technical expert testimony, a considerable portion of which was mundane.
1:46.0	One standout witness relate his analysis of how much money FTX owed to its customers against how much it actually had over time.
1:54.0	However, there were two witnesses whose purpose was unclear, prompting the judge to rebuke the prosecutors.
2:01.0	Although the testimony was less dramatic than earlier this week when the prosecution's final star witness, former FTX head engineer Nishon Singh, detailed its growing balance sheet problems and Bankman Freed's harsh management style,
2:14.0	the clear and easy to follow financial flows analysis yet again presented a strong case for the prosecution.
2:21.0	In the dry and technical terms of bank accounts and blockchain technology, but accompanied by clear diagrams, flow charts, pie charts and graphs,
2:29.0	Notre Dame accounting professor Peter Easton, dissected Alameda's bank statements FTX's database, cryptocurrency blockchains like Ethereum and Bitcoin and third party bank statements.
2:40.0	His presentation illustrated how FTX had mismanaged customer funds so severely that according to his analysis, at the time of its collapse, the gap between what it had and what it owed customers was about $9 billion.
2:54.0	Easton testified, quote, the amount of customer deposits held in Alameda research and FTX.com accounts was way less than what was owed to customers on FTX.
3:04.0	What happened to that money? Well, Alameda research used it for their own expenditures.
3:09.0	Similarly, the amount of FTX hot and cold crypto wallets was far less. The amount owed in those wallets was far less than the amount that was owed to FTX customers.
3:18.0	And again, Alameda research used customer crypto funds to pay for the expenditures.
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