Day 12 - October 19, 2023
Can Sun testified about FTX's customer-asset representations, Alameda's special account treatment, a $7 billion withdrawal shortfall, and his search for legal explanations. Third Point investor Robert Boroujerdi described the firm's understanding of FTX and Alameda, its investment decision, and the loss of its $60 million investment.
Full day summary
1. Can Sun — Direct/Cross/Redirect
Can Sun completed direct, cross, and redirect examination on Day 12, addressing FTX's customer-asset representations, Alameda's special treatment, executive loans, the $7 billion shortfall, and his nonprosecution agreement.
Direct869 lines
Can Sun — Direct Can Sun Danielle R. Sassoon
2 sidebars inside this proceeding
- Scope of FTX Terms ExhibitCounsel discussed whether FTX's terms of service could be used beyond their effect on readers and how the provisions could be examined before the jury.
- Dispute Over Government Exhibit 514The parties disputed whether Government Exhibit 514 concerning FTX Digital Markets policies could be used outside its truth and whether its differing entity context would confuse or prejudice the jury.
Highlights
Can Sun — Direct“Never approved anything like that, and I would never have done it either.”— Can SunSun expressly denied approving any lending of FTX customer money to Alameda.Can Sun — DirectrulingThe court received the May 2022 terms of service only for the limited purpose stated by the government, deferred the defense's request for another basis until cross, and said the document's legal import was likely a question of law for the court rather than the jury.Can Sun — Directtestimony highlightSun testified that he was shocked when he learned in August or September 2022 that Alameda was exempt from auto-liquidation, sought removal of the exemption, and understood that the proposed replacement and disclosures had not been implemented before FTX collapsed.Can Sun — Directtestimony highlightSun testified that a November 7 spreadsheet showed FTX was $7 billion short of satisfying customer withdrawals and listed money Alameda could return; he said the responses to his questions were absent or vague and that his suspicion of misappropriation grew.Can Sun — Direct“I was shocked because it showed that FTX was short $7 billion to satisfy customer withdrawals, and there was a separate tab in that spreadsheet that showed the amounts of money that Alameda could return to FTX to satisfy customer withdrawals.”— Can SunSun described the financial information that changed his understanding during the November 7 capital-raising effort.Can Sun — DirectconfrontationSun testified that Bankman-Fried asked him for legal justifications for the missing funds, that Sun found none supported by the facts, and that Bankman-Fried reacted without surprise when Sun explained the three theoretical arguments.Can Sun — CrossimpeachmentThe defense introduced Sun's nonprosecution agreement and questioned the incentive it created. Sun repeatedly stated that truthful testimony would protect him from prosecution.
2. Robert Boroujerdi — Direct/Cross
Day 12 continued with Robert Boroujerdi's testimony about Third Point's FTX investment, followed by cross-examination concerning financial statements and transaction partners.
Highlights
Robert Boroujerdi — Directtestimony highlightBoroujerdi said investors were told that FTX and Alameda operated independently and that he understood Alameda was not exempt from FTX's risk engine. He testified that Third Point would not have invested had it known of an exemption.Robert Boroujerdi — Direct“There should be no preferential treatment on an exchange. That would undermine the integrity of the exchange, upset clients, and hurt the business model and thus the value, in our view, of the asset over time.”— Robert BoroujerdiBoroujerdi explained why an Alameda exemption from FTX's risk engine would have mattered to Third Point's investment decision.Robert Boroujerdi — Directtestimony highlightBoroujerdi testified that he was never told Alameda could withdraw customer funds and, after the court overruled an objection, said Third Point would not have invested had it been told that.