Day 17 - October 31, 2023
Bankman-Fried completed cross-examination and redirect testimony concerning customer deposits, Alameda borrowing, liquidity, and risk controls. The defense rested, the court denied the renewed acquittal motion, and the parties completed a charge conference.
Full day summary
1. Samuel Bankman-Fried — Cross/Redirect (Part 5)
Day 17 concludes Samuel Bankman-Fried's testimony with prosecution cross-examination followed by defense redirect; the prosecution declined recross, and the court excused him.
Highlights
Samuel Bankman-Fried — CrossadmissionBankman-Fried acknowledged knowing by September or October 2022 that customer fiat deposits had been used for Alameda investments and that he did not disclose that use to FTX customers at that time.Samuel Bankman-Fried — CrossimpeachmentChats from November 6 and 7 were used to contrast FTX's public assurance that it could cover all customer holdings with Bankman-Fried's private assessment of limited liquidity and an approximately $8 billion potential liquidity gap.Samuel Bankman-Fried — Cross“I don't know that "hole" is the word that I would use, but liquidity gap, a potential liquidity gap, yes.”— Samuel Bankman-FriedBankman-Fried accepted the existence of a potential multibillion-dollar liquidity gap while disputing the prosecution's characterization of it as a hole.Samuel Bankman-Fried — RedirectadmissionAddressing the MobileCoin episode, Bankman-Fried acknowledged overriding standard risk procedures, failing to block transfers between FTX accounts, and being wrong about the customer; he said the position was passed to Alameda as a backstop liquidity provider and that his ownership meant he would bear most of any loss.Samuel Bankman-Fried — Redirect“In doing so, I overrode FTX's standard risk procedures there and personally took responsible [sic] for that account.”— Samuel Bankman-FriedBankman-Fried expressly accepted personal responsibility for departing from FTX's ordinary risk controls during the MobileCoin episode.Samuel Bankman-Fried — Redirect ResumedadmissionExplaining his post-bankruptcy notes, Bankman-Fried linked Alameda's ultimate net liability to the roughly $8 billion fiat@ balance and acknowledged that oversight of the payment-agent relationship had been very poor.Samuel Bankman-Fried — Redirect Resumed“and I think, in retrospect, our oversight of that was very poor.”— Samuel Bankman-FriedHe acknowledged deficient oversight of the fiat@ account and payment-agent relationship.
2. Defense Rests, Rebuttal Discussion, and Acquittal Motion
The defense rested on Day 17, the government presented no rebuttal case, and the court told the jury that the evidence was complete before denying the renewed acquittal motion and scheduling closing arguments.
Highlights
Defense Rests, Rebuttal Discussion, and Acquittal Motionjury eventThe government presented no rebuttal evidence, and the court told the jury that the presentation of evidence had concluded.Defense Rests, Rebuttal Discussion, and Acquittal MotionrulingThe defense renewed its motion for a judgment of acquittal, and the court denied it.
3. Charge Conference
Day 17 focused on the final jury instructions, including wire fraud, intent, contract disclaimers, conscious avoidance, campaign-finance evidence, and the requirement of a false statement to establish misappropriation.
Highlights
Charge ConferencerulingAfter extended argument over the territorial reach of the commodities-fraud object, the court adopted language requiring that the fraudulent conduct constituting the object of the conspiracy would not have been predominantly foreign and moved separate effects-on-commerce language.Charge ConferencerulingThe court overruled the defense objection to a conscious-avoidance instruction after the government cited Bankman-Fried's testimony and Nishad Singh's testimony as a factual basis.Charge ConferencerulingThe court reconvened after identifying an apparent conflict between the government's October 25 letter and its conference position. Citing the prior position and the late stage of the proceedings, the court ruled that the misappropriation instruction would require proof of a false statement.Charge Conference“But the charge is I think making clear that the government has to prove a false statement in order to prove misappropriation.”— Lewis A. KaplanThe court stated the final instructional consequence of the supplemental dispute over the government's earlier position.