Sam Bankman-Fried’s cryptocurrency fraud trial moved forward Thursday, with Gary Wang, co-founder of his failed exchange, appearing as a government witness in Manhattan federal court Appear in court.
His testimony comes as the highly anticipated trial enters its third day. Bankman-Fried faces seven fraud and conspiracy charges stemming from the collapse of cryptocurrency exchange FTX and its associated hedge fund Alameda Research.
Prosecutor Nicolas Roos asked Wang pointedly whether he had committed financial crimes while working at FTX.
“Yes,” Wang said. He later said the crimes included commodities fraud and wire fraud.
“Who were the main people you were working with to commit these crimes?”
“Sam Bankman-Fried, Nishad Singh and Caroline Ellison,” Wang said.
“Mr. Wang, did you see those people who committed crimes with you in court today?”
Wang craned his neck and looked around, seemingly unable to see the people in the court. After a while, he said, “Yes.”
“Who did you see?”
“Sam Bankman-Freed.”
Wang previously acknowledged his role in FTX’s downfall. He was testifying under a plea agreement, according to court testimony.
Earlier Thursday, Adam Yedidiah, one of Bankman-Fried’s former allies, took the stand. Yedidiya was the second witness to testify, and he did so under an immunity order, meaning he could not be charged based on his testimony as long as it was true.
Yedidia testified about how the FTX founder took charge of business operations, rebutting defense claims that the disgraced cryptocurrency wizard was just a troubled “math nerd.”
“He was the CEO, so, to some extent, responsible for everything,” Yedidiya said in response to prosecutor Danielle Sassoon’s question about Bankman-Fried’s role at FTX.
Yedidia also provided insight into Bankman-Fried’s relationship with Caroline Ellison. Carolyn Ellison was Bankman-Fried’s girlfriend and director of the Alameda Research Center, who later became a government witness.
“Sometime in early 2019, the defendant told me that he and Caroline had sex and asked if dating was a good idea,” Jedidiah said in response to Sassoon’s question about what Bankman-Fried told him about E. Leeson said when asked about the matter.
“I said no.”
“How did he react to that?” Sassoon said.
“He said he thought I would say that,” Jedidiya said.
For much of the morning, Bankman-Fried had been shaking his right leg, giving off a feeling of pent-up nervousness. At one point, Bankman-Fried drank water from a bottle so hard that the plastic bottle made a crackling sound.
When Bankman-Fried entered the courtroom around 9:20 a.m., he nodded to members of his legal team and parents who were sitting in the gallery. His parents, both Stanford law professors, took turns writing notes on yellow legal pads.
Earlier on Thursday, Yeddia explained that he was a friend of Bankman-Fried’s from the Massachusetts Institute of Technology (MIT) and worked at FTX.
“We are close friends,” Yedidiya said Wednesday. He said they sometimes lived together and worked together, which was included in FTX to some extent.
Sassoon used Yedidia’s close relationship with Bankman-Fried to explore the lavish lifestyle of FTX’s inner circle and allege how it hid a house of cards. She asked Yedidia about their infamous $35 million apartment in Albany, a tony neighborhood in the Bahamas.
Yedidia describes it as a “luxury resort” on the west side of New Providence. Sassoon showed jurors a photo of the apartment that showed a large living space with gleaming marble floors and a long-legged black piano.
She also showed jurors a series of exchanges in a messaging group called “People of the House.” Yedidia said the rent appears to be very high considering the apartment is worth millions of dollars.
Bankman-Fried addressed the cost of rent. “Haha, I’ve been mentally assuming that the total rent collected would be zero dollars…” he wrote, because Alameda was paying the rent.
Yedidia said he last saw Bankman-Fried in November 2022 and has not spoken to him since. He described how he learned of FTX’s financial woes and the dramatic turn of events that led to him leaving his old friend.
Yedidia was tasked with fixing a bug in the company’s software that left Alameda owing FTX customers $16 billion in 2022. He fixed the error, only to discover that Alameda owed FTX $8 billion in customer funds.
He initially expressed support for Bankman-Fried, but quickly changed his position.
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The week FTX declared bankruptcy, “I got a call from another developer at the company,” Yeddia said, explaining his departure. “I heard that Alameda Research has used FTX client profits to repay creditors.”
“What did you do after you found out?” Sassoon asked.
“I resigned,” Jedidiya said.
Yedidiya was asked why he was testifying with an immunity order.
“I’m concerned that, as a developer of FTX, I may have inadvertently written code that resulted in a crime,” he said.
During cross-examination, Bankman-Fried’s attorney, Christian Everdell, tried to dissuade anyone from thinking his client was an amateur seeking ill-gotten gains. Everdell asked Yedidia about Bankman-Fried’s spending habits.
“He didn’t buy anything, like a fancy watch, did he?”
“As far as I know, no.”
“He didn’t buy an expensive sports car?”
“No.”
“He didn’t buy a yacht?”
“As far as I know, he didn’t buy himself a yacht.”
Everdale also asked Yedidia about Bankman-Fried’s sartorial style.
“I didn’t see him wearing fancy clothes,” Jedidiya testified. “He usually wears a T-shirt and shorts.”
He also tried to downplay their luxurious home in the Bahamas, where there are 10 people in a penthouse.
“Is this basically dorm life?” Everdell asked.
“It’s similar to dorm life in some ways, but different in other ways.”
Prosecutors also recalled Yedidia’s decision to leave FTX despite his professed loyalty to Bankman-Fried. Why did his opinion change?
“Well, FTX defrauded all of its customers,” he said.
Prosecutor Thane Rehn described Bankman-Fried as an unrepentant huckster who pocketed FTX client funds for his own purposes and raised them as the cryptocurrency’s volatility hit him again and again. Vibrant Alameda.
“A year ago, Sam Bankman-Fried seemed to be on top of the world. He ran a huge company called FTX. He lived in a $30 million mansion in the Bahamas. apartment. He flew around the world on private jets. He socialized with celebrities like Tom Brady and politicians like Bill Clinton,” Lane said in his opening remarks.
“But it all, all of it, was built on lies. Behind the scenes, Sam Bankman-Fried was not who he seemed. He used his company, FTX, to commit massive fraud. “
Bankman-Fried has pleaded not guilty. During the opening remarks of his defense, Bankman-Fried’s attorneys painted him as a “nerd” who was trying to do the right thing but was overwhelmed by a rapidly growing company.
“Sam did not deceive anyone. Sam had no intention of deceiving anyone. Sam acted in good faith,” defense attorney Mark Cohen said. “There was no theft.”
