2.Defense Closing Argument

MR. COHEN: Ladies and gentlemen, I want to start by thanking you again for your service in this case. We saw that you took your duties as jurors seriously, and you listened very hard to the evidence as it came in. You've all done an excellent job listening to a case about many foreign terms, about crypto and jargon like margin and cross-margining and Bitcoin and so on, in what may have been an entirely new industry for you. And we're very grateful for you for giving us the time from your lives and your service on this jury and for keeping an open mind.

You know, there have been times during this past four weeks when I have wondered what case it is we're actually trying here. What do I mean by that? Time and again——and we just heard it this morning——the government has sought to turn Sam into some sort of villain, some sort of monster. They spent an extraordinary amount of time on this. It's both wrong and unfair, and I hope and believe that you have seen that it's simply not true, and, more importantly, it's not a basis on which to decide this case, which is about specific charges in an indictment and specific counts. The government's core case is premised on——it's based on a false premise, which their own witnesses have rejected, that from the very beginning, from jump, FTX was a fraudulent enterprise established by Sam and Gary, Caroline and Nishad, to intentionally steal customer funds from the very earliest days, and that the events of June through November of 2022 were simply a continuation of that fraud. And as we'll get into, that's not what the evidence showed here.

And that's why we submit that the government keeps portraying Sam as this villain. According to the government, everything Sam ever touched and said was fraudulent.

Can we pull up the slide.

So here we got evidence about Sam's hair, his clothes, testimony about his sex life, photos of him looking awkward next to celebrities, photos of him sleeping on a private jet; photos of him with big hair, photos of him with messy hair; photos of him holding a deck of playing cards. They started off, first sentence, second sentence of the opening statement, what were we talking about, charges in the indictment? No, we were talking about how he lived in a $30 million apartment and flew on private planes and met with Tom Brady and Bill Clinton.

And the list goes on. In opening, Mr. Rehn gave us a movie opening, where he pointed at Sam, "that man, that man." We just saw that again in summation, like you'd see in a movie. Every witness who had been his friend pointed to him from the stand, even though we stood up and stipulated, of course it's Sam. He's here. Why? Why? For the effect. Why does the government keep doing this? Is it because they want to make him into someone you'll dislike, someone you won't approve of and therefore you'll vote to convict him, rather than making the case about whether the facts do or do not satisfy their burden of proof? You know, Sam's appearance has nothing to do with how the FTX exchange worked or with Alameda's trading or asset values, and his appearance and his romantic relationships have nothing to do with whether he's guilty of the specific counts charged in the indictment.

MR. COHEN: And let us say this, just to get it out of the way. We'll agree that there was a time when Sam was probably the worst-dressed CEO in the world, and had the worst haircut. And we'll agree that the evidence in this case showed that Sam would talk to just about anyone——any TV reporter, any journalist, any blogger, you name it. And that made his life messy and made things messy as well, but that's not a crime. The reason we focused——the reason the government focused much of its case on Sam's appearance is that every movie needs a villain. And let's face it, an awkward high school math nerd doesn't look particularly villainous, so what did they do? They wrote him into this movie as a villain, a bad guy, directing others, who apparently had no free will of their own, to steal billions of dollars. They invited you to overlook the absence of proof that Sam actually committed any of the crimes charged in the indictment, and they relied on that evidence. Just as in a movie, the cooperating witnesses——and there were five of them, five cooperating witnesses, Gary, Caroline, Nishad, Can Sun, who had a non-prosecution agreement, and Adam Yedidia, who had immunity, in short, the only five people who had direct contact with Sam on the key facts alleged in the case——they went up to the stand and, on cue, over and over and over again, they said, "Sam told me to do it." Even as to simple things which we would normally think they would admit as of their own free will.

And that depiction of him made no sense in the real world, especially coming from these witnesses who were his closest friends, who knew him for years, who had gone to camp with him, to college, who had lived together with him, who'd worked with him for years, starting two businesses, who traveled with him and moved all over the world with him. That's a lot to do with someone you're now coming forward and saying is so terrible.

And what the government kept leaving out of its movie is the "why." Why did FTX develop the way it did? Why did Sam make the decisions he did? And what was he thinking at the time when he was CEO? And in doing so, in not focusing on the "why," they didn't fully address whether they carried their burden of showing that Sam acted with criminal intent.

And I'm going to go through the evidence that was presented at the trial, but before I do that, let me just give you a couple of quick examples on this point.

If you can put up the last slide.

The first slide. The first slide.

Okay. Look at the photo on the left. And the government exhibits, numbers are on the slide. This is the one they put up of him shuffling the deck of cards. Of course they never asked any of their witnesses what the significance of it was. They were just trying to imply that he's a gambler. One of the themes of the case is Sam takes too many risks. He takes more risks than the other witnesses. Well, we asked the "why" question, and it turns out that he'd been shuffling cards to control his natural fidgeting, and he was doing this for years. He didn't even play poker. And then today we heard on the government's summation, oh, and during his testimony he looked away. Really? What does that show?

The government asked its witnesses about the change to the code base. We'll talk about that in some detail in a moment. But they never ask why the changes were made at the time. But why? We did. And what you heard not just from Sam but from the government's witnesses, that the code changes were put in place as responses to specific events. And they were put in for valid business reasons, not to carry out some grand fraudulent scheme.

Another quick example. The government raised the fact with you that because FTX at first did not have its own bank accounts that Alameda received deposits. Alameda did and then this other account in North Dimension. And in its opening statement, the government told you that in and of itself was a crime, part of the crime. But then what did their witness say? It wasn't a crime. We understood why they had to do it. We didn't have bank accounts for FTX so it was fine to receive the funds in the account.

MR. COHEN: And because they don't focus on the "why," the government failed to mention in its summation that none of the witnesses at this trial testified that Sam told them or directed them to violate the law or said or did anything that showed he thought he was violating the law. Back in 2019, Sam didn't say to Gary, hey, we just created this successful company Alameda, I've got a great idea, let's set up FTX so we can use our secret company Alameda——wasn't secret——to steal customer money. No witness came forward and said that Sam told them to steal customer money or commit crimes.

Now in contrast, what we've been trying to present to you, and I'll discuss today, is more of a real-world perspective. And in the real world, unlike the movie world, things can get messy. We know that real life doesn't unfold like it does in the movies. In the real world, people misjudge things. They make mistakes. They hesitate. They don't plan for the unexpected. They make good and bad business decisions, and they make mistakes that later on they wish they could have fixed. And Sam explained what really happened and why things unfolded the way they did on his watch. They may not fit the government's movie of making Sam into a villain, but that's what this case comes down to——what was his intent at the time of the events in this case.

And this case breaks down roughly into two periods, two time periods. From 2019 to 2021, the events in this case, the evidence in this case don't show Sam acting with criminal intent. The evidence doesn't support that. In fact, none of the cooperating witnesses——not Gary, not Caroline, not Nishad, not the others——acted during this period like they thought they were doing anything wrong, like there was any business problem at all, let alone wrongdoing. They all were making millions of dollars. None of them left. None of them resigned. None of them notified the authorities or called attorneys, or confronted Sam about what they're now saying were improper practices. None of that. Because they didn't think they were doing anything wrong. Instead, up until June 2022, everyone thought they were operating one of the most successful crypto exchanges in the world, which they had built together over the past few years. They thought they'd come up with a better mousetrap for a crypto exchange and customers would be joining in the millions.

Now the government suggested during the evidence that all this growth into a company of this size and complexity was because Sam sent out a few fraudulent tweets and got customers to put their funds on the exchange.

Is that really what the evidence showed? Rather, the business grew because they all worked very hard together. The business grew because they had excellent products. And it was an excellent business that ultimately grew and had had hundreds of employees, licenses in many countries throughout the world, and had millions in daily revenue. We asked why these things happened the way they did during this period, and the government doesn't want to focus on that.

As for the next period, second period of the case, that's the period we all spent a lot of time on in this trial, from June to November of 2022. And here we would submit to you that what we have with the government is really a tale of two different cases. We all know by now that May and June of that year is when what's been called the "crypto winter" began. Very simply, if you were in crypto at that point in time, all you had to do was look out your window and you were going to see stress and crisis. Businesses failing, businesses going under.

MR. COHEN: And this was the same time that the fiat@ coding bug was discovered and became understood by FTX and Alameda's leadership, and we'll cover that in a bit. And it was also the first time that it started to become clear that Alameda might have been borrowing not only from the info@ account, the main account, the one that Sam observed and checked, but also from customer deposits via the fiat@ account. The government did not establish that Sam knew about these issues until the fall of 2022, because he didn't. In the period from June to November 2022 is when the government——when the government's witnesses we heard from had a different take on what was happening than Sam. In fact, they had a different take on what was happening from each other. Between Gary, Caroline, Nishad, and Sam, everyone had a different view of when they first understood the meaning, the impact of this fiat liability, and what their view was and whether Alameda could have the liabilities as they came due. Sam for his part looked at the situation in the fall of 2022 as a liquidity problem, not a solvency problem.

And just to take up quickly something Mr. Roos said at the end of his summation, this wasn't Sam saying, oh, don't worry, I just thought everything would work out okay. No. At the time, as events unfolded, Sam perceived this as a liquidity problem, whether Alameda could pay its liabilities as they came due, and as they were due, and as the period unfolded, in hindsight, he may not have been perfect. I don't think any of them were. He may have hesitated. He may have moved too slowly. But he always thought that Alameda had sufficient assets on the exchange and off the exchange to cover all of its liabilities.

Now the government made a big deal about that. Well, you're not supposed to consider assets off the exchange. You're only supposed to consider Alameda's assets on the exchange in thinking about whether it could meet its obligations. But then in the same way they also say Sam owned Alameda, Sam controlled Alameda, Sam knew what Alameda had. Well, if he owned Alameda, he knew what its assets were, both on and off the exchange, and he knew what could be brought to bear if necessary to pay liabilities. And he also knew that he owned FTX, or was the majority owner of FTX, and it had its own value and its own equity, its own worth that could be used, if necessary, if it came to it, as well as his own personal assets. And these were differences in opinion, differences in business judgment between Sam and the others about how to value Alameda's assets, what you could consider, what you couldn't consider, and how to act, how to act during the period, which now in this case——and that's why I opened with the comment I made——the government has tried to spin into a crime. But the question of whether Sam's business judgment was reasonable, even if it later turned out to be mistaken, is not a criminal one.

And there's something hanging over everything, ladies and gentlemen, something that Sam mentioned and some of the other witnesses weren't mentioned at all. FTX did not have a sufficiently built out risk management system, nor did it have a chief risk officer, someone to head up the risk management function. If it had a chief risk officer, wouldn't she have insisted on fixing the bug when Gary first spotted it, not in 2022 but at the end of 2021? If they'd had a chief risk officer, would it really have taken six more months for Caroline to notice that the bug had grown so large that it was having an $8 billion effect? If they'd had a chief risk officer, wouldn't she have insisted that the fiat liability issue be handled the minute FTX got its own bank accounts, so the funds didn't sit there and build up in value?

And Sam told you during his testimony that FTX sure should have had a better built out risk management department, and he's absolutely right. But again, systems of poor risk management is not a crime. Again, bad business judgments are not a crime.

MR. COHEN: We'll walk through the November sequence for you in detail later on. And let me just——before I turn to the next part of what I have to say, let me just ask, why are we covering this? We don't have a burden. We don't have a burden to offer any proof. We could simply just try to respond to the government's case. The reason we're doing this, the reason we're showing you what we believe really happened, is to show you there's an alternative way to think about it, fully supported by the proof, and that negates the government's burden. It means the government has not carried its burden of proof.

Now for the next parts of my summation, I'm going to talk about a few things just to orient you. First, I'm going to talk a little bit about the legal standards you are to consider; then I'm going to go through for you our view of the chronology of what really happened during these key periods; then I'll make some points about the government's case; and finally, I'll have some concluding remarks.

Now let me start with the legal standard. Now I should say——and I agree with Mr. Roos on this——the only person whose word controls on the legal standards is Judge Kaplan. He will give you the legal instructions. And you, of course, are bound to do what he says in applying the law. But we anticipate that he will give you some of the following instructions, and I want to go through them for you.

If we could bring up slide 3, please.

You've heard about good faith a lot in this case. At the top you can see good faith is a complete defense to all the charges in the case. The government bears the burden of establishing a lack of good faith. And we expect you will hear that because an essential element of the crime charged is intent to defraud, it follows that good faith on the part of a defendant is a complete defense to the charge of wire fraud. Good faith is an honest belief by the defendant that his conduct was not wrongfully intended. Moreover, a defendant has no burden to establish a defense of good faith; it remains the government's burden to prove fraudulent intent and the consequent lack of good faith beyond a reasonable doubt.

Good faith, as I mentioned, is a complete defense to all the charges in this case. Now what does that mean?

If we could go to the next slide.

Here are some things that we submit do not establish, do not establish a lack of good faith. If the defendant made mistakes; if he made bad business decisions; didn't have a risk management department or a fully built out one; if he delayed or hesitated; if there were coding and accounting errors; if he had an honest belief that statements were truthful; or if he didn't know what fellow executives didn't share with him or other witnesses were inconsistent. None of those establish a lack of good faith, we submit.

If we could move to the next slide.

And all this discussion of good faith is of a piece with the following: In a criminal case, the government bears a heavy burden, which never shifts to the defense. To convict Sam of any count, the government, you must find beyond a reasonable doubt, including that Sam did not act in good faith and he acted knowingly and wilfully, and your verdict must be unanimous.

And the Court will instruct you on what it means to act knowingly and wilfully, and you should follow the Court's instruction.

So this burden of proof is very heavy, and is very high. And that's why the government gets to speak twice. Mr. Roos spoke this morning, I'm going to speak, and then the government gets to speak again. And your first reaction might have been, why do they get to speak twice? Well, that's why, because they have the burden of proof. It never shifts to the defense. We were not required to do anything. We didn't have to question a single witness or offer any evidence. And again, as part of the government's burden, you must be unanimous in order to find Sam guilty of any count.

MR. COHEN: As you consider the evidence in your deliberations, we ask you to think very carefully about the burden of proof and good faith, and I'll come back to these in the summation.

Another point I want to cover with you which I mentioned in opening four weeks ago is that the government can't present its case by arguing about facts in hindsight. The focus must always be on what Sam's intent was at the time, as events are unfolding.

That's particularly relevant here, where we all now know there has been a bankruptcy. We all know what happened on November 11. There is a famous quote from a book which two characters are discussing bankruptcy. One had gone into bankruptcy. One asked the other: How did you go bankrupt? And he responds: Gradually. Then suddenly.

That's what happened here. Remember that, in the summer of 2022, Sam didn't know that November 11 would be their last day, that both companies would file for bankruptcy then. Rather, during this period he believed in good faith he was dealing with a liquidity issue at Alameda, and that if he could convert assets to cash and pay back its obligations to FTX and its customers, he could address it. In good faith he didn't believe the issue was one of insolvency but of liquidity.

And what he didn't know, had no reason to know, was that there wasn't going to be a near future, that with the continuing market crash and other events going on outside the window, by earlier November there would be a run on the exchange and a crash that ended in bankruptcy. So please keep this in mind when you consider what Sam did in the summer of 2022, when you consider what his intent was.

And also the test of whether Sam acted in good faith is not whether people suffered losses and looking back wished they never got involved with FTX or Alameda. For sure, today any customer, any investor, any lender would say that, and we understand that. We understand why they would be upset they suffered losses. Sam acknowledged that, and he acknowledged a lot of people suffered losses and got hurt, and he felt terrible about it.

But that's not the test. The test of intention is not whether, looking back, Sam was a good manager, whether FTX took too much risk, whether it did or didn't hedge enough, whether they didn't have a fully built-out risk management function, or whether he didn't act quickly enough. That's not for a criminal case. The test is whether the government has carried its heavy burden of proving beyond a reasonable doubt that Sam acted with criminal intent and not in good faith, and it has not.

Another thing I want to cover before we turn to the chronology is Sam's own testimony. Very important. Now, Sam testified before you in this case. And as a defendant in a criminal case he had the right not to testify under our Constitution, but he came forward to testify because he wanted to tell you what happened. And I submit, it's hard to think of a more stressful situation for a person than that.

And the government, we submit, was unfair today in how they described it when they described his testimony. If Sam gave a long answer to a question, they said it was too long. Therefore, you shouldn't rely on it. If he gave a short answer to a question, they said it was too short and you shouldn't rely on it. If he gave an answer and he tried to explain it, they said he's being evasive. Under that standard there was apparently nothing he could say that would satisfy the government's view of him and would make them not regard it as proper.

It was a dynamic -- and I am going to talk about that in a moment -- that was set up by the government, and you heard it again today in summation. It's sort of a heads, I win; tails, I lose dynamic in. No matter how Sam answered these questions, we are now being told it was not credible.

MR. COHEN: What really happened? Sam testified, he did his best to tell you what had happened and what he remembered. And unlikely some of the government's witnesses, he was far from polished. Remember, all the yups and the yeahs he gave in response to questions. Remember the times when he had to stop and close his eyes to think about the questions before he answered. But he was himself. He was Sam. He told you when he didn't remember things, when he didn't remember saying things or doing things, even though he had sat here during the trial, and he knew that other witnesses had claimed he did them. If he was just trying to spin a new -- a lie, as the government said, why would he do that? He didn't. If he remembered something, he told you. If he didn't remember, he told you as well.

And he also told you, by the way, that he couldn't remember every single word he had said to every journalist or reporter he had spoken to or everything in any written submission to Congress, and we would submit it would be unfair to require anyone to know that.

So when you consider his testimony, as part of your deliberations, we ask that you consider it overall, as a whole, and we submit that he did his best to remember and speak to you, he set out his memory as accurately as he could, and he told you what happened and, critically, what he believed in good faith at the time.

Now, let me talk a little bit more about this dynamic we have heard from the government, this sort of heads, I win; tails, you lose dynamic. They spent a lot of time during the case and today portraying Sam as a villain, as a criminal mastermind. We heard today that, in addition to all the other adjectives, he was apparently evil, arrogant, so forth. But then when he did something that perhaps a criminal mastermind wouldn't do, we heard, well, that doesn't matter, it's still wrongful. It's a different kind of lie, different kind of fraud.

An example. Sam testified before Congress three times and submitted written testimony. Well, if he is the criminal mastermind the government says he is, why in the world would he go before Congress and subject himself to public questioning when he doesn't have to, when he could be asked just about anything by members of Congress, if the whole idea was that he was running a secret scheme using Alameda to defraud customers. The answer, he wouldn't.

Yet the government goes on about this and says, well, no, no. On this one that's not what we mean. We mean he is going before congress because -- not because he is trying to hide things from them, because he's so clever, he is spinning a tale where he is going to go an all of congress and tell a series of lies to Congress that will match what he is saying internally. Does that make any sense?

We heard a similar refrain from the government about journalists. If the idea here was that Alameda -- FTX and Alameda were part of a secret scheme, why in the world would you go out and speak on Good Morning America, in front of millions of people, when you have one of the toughest questioners in the country questioning you and you are there without an attorney, without an entourage, and you don't even know the questions beforehand. You wouldn't.

Another example of this heads, I win; tails, you lose approach to the evidence. We heard a lot in this case from the government about what I would call risk analysis, and the basic theme was Sam took too much risk. And I guess that by itself is a crime. So whenever Sam was contrasted with Gary or Nishad or Caroline or someone else, we were told, look at the risks, look at the risks the other witnesses pointed out, and Sam didn't agree with them. Sam decided to do something or not to do something. He took too much risk. Therefore, he committed a crime. And we saw that just in today's summation, when Mr. Roos talked about an event at the end of 2021, when Sam was considering whether to make a venture investment, an additional venture investment, and he asked Caroline to do an analysis of this, and he asked her to make certain assumptions. That's called the 10 percentile scenario document we looked at.

Now, given how the government has approached this case, we can be sure if Sam hadn't asked Caroline to do that, we would be hearing today, look how reckless he is. He considers a new investment of $3 billion and doesn't do any analysis, doesn't ask anyone to do any analysis.

MR. COHEN: Now he asks her to do an analysis, and he also asks her to make very specific assumptions, pretty close to a doomsday scenario, and on those assumptions she recommends don't do it. He considers it, decides that we are not in doomsday and decides to do it. Who is right? Who is wrong? It doesn't matter. They each had business judgments of whether to take that risk at the time, but Sam is not agreeing with Caroline, happened to be Caroline in that case, but it doesn't mean he was acting with criminal intent. It meant they had a difference in business judgment.

One last example of this heads, I win; tails, you lose formulation. We heard about September 2022, and I'll get to that in the chronology. And you will recall one of the events in September 2022 is that Sam sent a message to Gary and Nishad about whether to continue with Alameda in business, and it's the memo that's entitled: We Came, We Saw, We Researched. And you heard Sam testify that he was putting it out there to start a conversation about whether they should close Alameda. And there is a lot of back and forth between Gary, Nishad, and Sam, and later Caroline is added to the conversation, where there is a different channel with her on it, and they ultimately decide not to close Alameda. If Sam is a criminal mastermind and Alameda is the key to the fraud to stealing customer money, why would he be the one proposing to close it in the first place? Why would he be the one starting this conversation? Answer: He wouldn't. Because that's not what he was doing.

So with some of those thoughts in mind about how to think about the evidence and how to think about what happened, let me now turn to the first period we have identified, the period from 2019 to 2021.

One thing I thought was just absolutely striking in the government's summation today is not one word was mentioned about the business that was built here, the business of Alameda, the business of FTX. To hear the government tell it, four people got together, decided to steal money using Alameda as a vehicle, and went on and created these businesses, but that's not what the evidence showed here. The evidence showed that they were legitimate, valid, innovative businesses, and they were legitimate, valid, innovative businesses in a new and changing world, the crypto world.

You heard from Sam that he joined the crypto world because it was new and growing rapidly and it offered an opportunity for a math nerd like him. And you heard from him that because it was new, it was a place where someone who didn't have extensive business experience could start, and you heard how Alameda started.

Maybe we could put up the next slide.

There is a whole story here of the building of a legitimate business that the government never touched on, and it's relevant because it goes to what Sam's intent was at the time, and it's relevant because it shows how he thought later about things like the code base, which we will talk about.

You heard from Sam that he worked at a company called Jane Street, which I think is undisputed in this case was a highly regarded trading firm. He left Jane Street and he basically wanted to create in Alameda a Jane Street for crypto, a crypto trading company, and he set out to do that.

And, by the way, one of the ideas he got from working at Jane Street was that you could fund this company by taking third-party loans because that's what he had seen at Jane Street.

So throughout most of the period in question, this period and later period, Alameda at any given time had 8, 9, 10, $12 billion of third-party loans from companies like Genesis and BlockFi. It had capital that it could use later on to make expenditures.

And then you heard how, in 2018, Sam and Gary started to build what would become FTX. The focus was to build a futures exchange. That's why they named it FTX, which, unsurprisingly, was short for futures exchange.

And Sam and Gary saw that the crypto industry didn't have any sufficiently good exchanges for trading futures on margin. Here is Sam's testimony of why he started the business. This is not someone setting out to create a fraud. This is Sam. We thought we might be able to build the best product on the market in exchange that would combine the elements that we thought were best for traditional financial products with the elements we thought were best for the crypto ecosystem, that it could move the ecosystem forward.

MR. COHEN: So this was not two guys, Sam and Gary, setting out to commit a fraud. They saw a legitimate, important financial opportunity, and they went for it.

Building FTX was an enormous undertaking. They worked all the time, and they had to build the exchange from scratch. They had no off-the-shelf solution to use, and they were productive and they were innovative.

Other exchanges required customers to have separate accounts for each of their cryptocurrencies. FTX came up with a way to allow customers to hold all their digital assets in one account and buy and sell them seamlessly.

FTX introduced cross margining, which we heard a lot about, which essentially meant that customers could trade at the same time across different currencies. If you owned Bitcoin and you owned Ethereum, you could trade at the same time. This was another major innovation.

Let's focus now on margin, margin trading. Understanding how margin trading worked on FTX is a key, we submit, to understanding what Sam did and, critically, what he thought at the time. FTX permitted customers to trade futures, it is called a futures exchange, and buy and borrow crypto on margin.

What did this mean? This meant that the way margin trading worked at FTX, customers would borrow other assets posted to the exchange. These were on the exchange -- these were assets on the exchange posted by other customers. There was no other place for them to come from. That means that every customer trading on margin is using and relying on assets posted to the exchange by other customers. It wasn't that there was just one limited pool that FTX had and that would limit margin trading. Customers were always borrowing essentially from each other.

And at FTX, the way it was set up, margin customers could use the funds they borrowed from the exchange for any purpose. At the time no one thought this was a problem because the customers who borrowed funds on margin had to post collateral to support their borrowing. And if a customer's position lost money, which means risk of going down, the collateral could be used to liquidate their position before it went under water.

There is nothing wrongful about margin trading. There is nothing wrongful about saying that in margin trading at times one customer is borrowing from another customer. That's how it works.

And you recall we had testimony from Dr. Pimbley, who did an analysis of the data, and he concluded that 80 percent of the assets on FTX were margined assets used in futures trading. 80 percent are in this margin trading where customers are always borrowing other customers' assets.

We can take that down.

Now, as FTX developed, Alameda did play some legitimate business roles. Nothing wrong with that. I mentioned that in our opening statement and the evidence supported that.

To bring it full circle, if we can have the next slide, Alameda had three legitimate business relationships with FTX. It was a customer on the exchange, which it was permitted to be. It was a market maker, and that was critical because when FTX began, it was a new exchange. It didn't have any other market makers. If it couldn't provide liquidity to its customers, it wouldn't have grown at all. So Alameda stepped in and performed that role. As well, Alameda served as a payment agent. We have heard this in the evidence many times already, that at the beginning FTX couldn't open its open bank accounts and that funds were received in the Alameda account and the North Dimension account or the North Dimension account, and the government's own witnesses told you there was nothing wrong with setting that up.

If we could look at the next slide.

Here is what a customer saw. If you want to open an account with FTX, you are going to have to wire funds to Silvergate Bank, to an account for the benefit of North Dimension. There is nothing secret here. Customers were told what was going on.

These roles that Alameda played in the early days, in particular, were very important for FTX to get started and launched as a business. Over time, as FTX became more successful, other market makers came in. So by the end, by 2022, it was handling less than 5 percent of the market maker volume. But in the beginning, when you needed liquidity and when you needed customers, because without customers you wouldn't have a business, this was an important role that Alameda played, and there was nothing wrong with hat.

MR. COHEN: Putting this all together, Sam and Gary and the others created in just a few years a very successful crypto exchange. Remember that Sam told you that he thought, when he started FTX, his chance of succeeding was no better than 20 percent. Yet, against all these odds, in just a few years they built two highly successful innovative companies worth billions.

Let's go back to the slide about the time period. Let's talk about FTX's growth and Alameda's growth because what happened in this first period, particularly towards the end of 2021, is critical to understanding what was in Sam's mind as he went into 2022, and in particular as we went into the crypto winter in May and June of 2022.

Gary Wang testified that FTX in this period handled $15 billion in trades and 3 million in revenue per day and that the exchange had 6 million accounts. That's Mr. Wang's testimony at transcript 553.

And you learned that from the attorney, Can Sun, that FTX was licensed in jurisdictions all over the world. That's transcript at 1974.

And Zac Prince, the CEO of BlockFi, the lender BlockFi who we will get to in a moment, he told you that of all the exchanges that have been founded in this period, FTX, among the hundreds, was one of the few that mattered.

Along the way FTX created and launched its own exchange token called FTT. We heard a lot about FTT in this case. And the government has suggested and argued that FTT was somehow a fake token, not a real asset, not real collateral.

That's not what the evidence showed. The evidence showed that, by the end of 2021, FTT had grown in value. It was worth 30, 40, $50 per token and it had its own market cap of about $10 billion. That's at transcript 2372.

The government wants to portray FTT as fraudulent, but that's not what happened. It was traded on multiple exchanges, not just on FTX. Other exchanges having nothing to do with FTX traded it. It was accepted as collateral by sophisticated third-party lenders, just like BlockFi. And Mr. Prince told you in his testimony that FTT was one of the top cryptocurrencies that he would accept as collateral for loans.

All this happened quickly, and FTX grew enormously. You learned that, in the last investment round in 2021, and early 2022, FTX International was valued at $32 billion and FTX US was valued at $8 billion. And if you look -- bring the timeline back up -- go back, again.

If you look at, starting in the middle of the page, on July 2021, there is a series of fundraising rounds. There is a series B round in July, then the B1 round, and then the C round. What is that? That's outside investors investing in FTX because they believed in the business, investing billions of dollars as a valuation of 32 billion for FTX International.

Just to complete that, you heard from Ms. Ellison in her testimony that even though she has certainly many negative things to say about Sam, and we will get to that, and many negative things to say about what happened, particularly in the June to November time period, she told you that as of July -- year end July 2021, Alameda financials were not misleading. So based on building the business, nonmisleading financials, it did these three fund raisings at this high valuation.

You also learned toward the end of this period that Alameda was also -- had also grown and was successful and it was worth tens of billions of dollars in net-asset value.

And this means that as we came to the end of 2021, it was Sam's view that, given this high valuation of both companies, that Alameda could easily cover any of the expenses or liabilities that it was reasonably likely to incur, either through its own value, its own revenue and profits, or its third-party loans.

And he also came into the year with the view that FTX was highly valuable, and he could sell its equity, if he needed to, to generate liquidity, and he personally also had a high value, was by that point a millionaire, billionaire, and he could put his personal wealth to use to resolve any issues on the exchange if necessary. That's what he believed as we came into the year.

Your Honor, I'm at the 45-minute mark.

MR. COHEN: Thank you, your Honor.

Ladies and gentlemen, when we broke I was just about to talk about the spending, some of the spending that was done by FTX and Alameda. And, again, this is another example, we submit, of the government trying to show you the movie of Sam the villain. But the business expenses that were incurred and paid for were entirely normal for a company of FTX's size and complexity and its business model, as well as Alameda, and this is perhaps best encapsulated by the evidence we all reviewed together about sponsorships.

This is a really good example of the government trying to prove its case by hindsight. You recall Sam told you about a sponsorship that FTX did of the arena in Miami, the FTX Arena. The government in its presentation said, aha, this is a perfect example of what we are seeing, ladies and gentlemen. FTX bought that with customer funds.

But, in fact, Sam testified, and the evidence about the world going into 2021 was that FTX had a multibillion dollar valuation, it had a billion dollars a year in revenue, and certainly had more than enough assets and revenues and profits to pay for such expenses.

So the government said, aha, this is a great example of using the fiat@ funds improperly. Of course the evidence in the case was clear that not Sam, not any of the others knew about the fiat@ issues until mid 2022. Then the government says, well, it doesn't matter. This is yet another example of Sam being reckless in his spending or spending too much, and that's what Nishad testified to when the government went through this with him.

You saw that when they went through the actual facts and the evidence of what went on, the government had Nishad tell you that the total deal for all sponsorships was 1.13 billion for one year. That's transcript at 1334, on Government Exhibit 343 at row 72.

But it turns out that wasn't true. FTX never paid that amount. The sponsorship wasn't for one year. It was for 19 years, as shown on the chart. The government -- and FTX was going to pay Miami, the arena, over a period of 19 years, and in the first year for the naming rights it was going to pay about 19 million or 14 million. Now, certainly that's a lot of money. We are not saying it's not. But relative to the size of FTX and relative to the size of its marketing expense, it was a reasonable investment, and Sam told you that FTX spent about 10 to 20 percent of its revenue on marketing, which is less than he believed their competitors spent. This was no different than having a field in New York being called Citi Field or suites at Yankee Stadium called Delta Suites. There was no evidence of a crime.

We also heard a lot about the properties in the Bahamas that were purchased. But the real issue is, again, the why. Why did Sam purchase these properties? Why did FTX purchase them? Sam was clear on this in his testimony. The Bahamas real estate was corporate housing for FTX employees. It had to convince skilled professionals to uproot their lives and move their family and friends to the Bahamas to work for FTX.

He saw these properties as a valid business expense for FTX. It's one thing to look for a resort in the Bahamas for a week or weekend, finding long-term housing that appeals to workers who could otherwise be at Google or Facebook is quite another, and no one in FTX thought the company's investment in the real estate was a problem at the time. No one refused to live in the company-owned housing despite their protests after the fact.

In fact, you heard from Can Sun about this. We will talk about him later as well. Remember, the government referred to him. He came on to be the general counsel of FTX. Now, we will talk about it later. His testimony was, shall we say, sculpted. Very careful. This was someone who had a Ph.D. from Princeton, law degree from Yale, who had worked for one of the leading law firms in the world, was admitted in New York, was the general counsel of FTX but told you he wasn't even sure if that was the senior legal position there.

And later we will see he was very, very careful in what he told us about what he thought happened with Sam in later events. He even said he was coming just to tell us what happened and didn't bother to mention that he had received a nonprosecution agreement which he had signed two days before he testified.

MR. COHEN: Even someone who was as careful as Can Sun admitted that he received a $2.3 million loan. What was the purpose? It was part of a management incentive program to incentivize employees to move to the Bahamas. Did he take the loan? Sure, he did. He didn't think there was anything wrong with it. It was a valid corporate expense.

And you heard a lot about the penthouse apartment that Sam lived in with nine other people, including Gary and Nishad and for a time Caroline. You will recall during the questioning when a witness would refer to the apartment, the government would interrupt them and say: You mean the $30 million apartment. The apartment. You mean the $30 million apartment. Until the witness would get it and say, as I meant, the $30 million apartment. What was that all about? To make you think, who is this guy, living in a $30 million apartment. What kind of nerve does he have. Make you dislike him more. But, again, given that FTX at the time was a multibillion dollar company and that Sam and the others wanted to live together and work together, and they were the senior leadership of the company, it was a valid business expense.

And you heard I asked Nishad about it, and I pointed out that the ten people living in the apartment at the time were either millionaires or billionaires and asked him if he thought that was an acceptable expenditure on a relative basis. He told you, well, I can't say how a billionaire is supposed to live, which is frankly not an answer.

You heard today about the private plane. Same idea. Sam flew in private planes. Sam told you why he did that. He thought it was a valid business expense, given the size of the company and his need to get to places like Washington, D.C., where were weren't that many flights available on a given day; again, a valid business expense for a company of the size and complexity of FTX.

You heard a lot about venture investments and loans that were made by Alameda to Sam or Gary and Nishad to fund the venture investments. But, again, Sam told you he believed that Alameda, based upon its capital base, its third-party loans, its profits and so on, had the basis to make those loans and in fact they were -- if we go to the next slide -- they were documented by promissory notes.

Let's talk about another thing that counsel mentioned this morning that sort of sets the backdrop as we come into the period in May of 2022, the terms of service. You saw -- if we could pull it up -- a terms of service that was dated May 13, 2022 and issued by FTX.

Now, the government's case, when it comes to the fiat@ account, depends on FTX not being allowed to borrow assets from FTX customer fiat deposits. That's what it depends on. Because if they could do that, that part of their case falls away.

So what did we get here over four weeks? Witness after witness comes before you, and conveniently none of them happen to read the terms of service. The government didn't want to focus you on that. Why? Again, the only witness who said he had read the terms of service was Can Sun, the general counsel who had helped to draft it. Even though he was very careful in what he told you, he admitted that nowhere do the terms of service contain language that prevents FTX from loaning customer fiat deposits to Alameda or anyone else.

Just a quick point on the venture capital investments. Not only could Alameda have funded those from the capital base it had from third-party loans, you heard the government's own witness, Professor Easton, testify that, in 2021, Alameda had borrowed $15 billion from third-party lenders, again confirming this point that there were more than ample funds to make the venture investments.

Given what the world looked like to Sam and the others, as they moved from 2021 into 2022, why would he think that money owed to customers was ever at significant risk when the assets he had access to were so much greater than the debts that needed to be paid out? He didn't, and he wouldn't.

A few more key points for this period before we move on. We have heard a lot of testimony about the difference between the info@ account on FTX and the fiat@ account.

We could pull up that slide.

MR. COHEN: I just want to briefly spend some time on this, ladies and gentlemen, because it affects how we think about what happened later on. Two different accounts, often in the government's presentation they get mushed together, but they are actually distinct and the distinction is important. If you look to the right-hand side, info@ Alameda was the trading account that Alameda had on the FTX exchange where it was trading for its own account. If you look at the visibility on the admin user dashboard at the bottom, when Sam was the CEO of FTX, no longer running Alameda, he would use that admin dashboard, as others would, to check accounts of all customers, including Alameda, and what he could see was what was in the info@ Alameda account, the trading account. On the left-hand side is the FTX -- fiat@FTX.com account. That was very different. It was a tracking account. It was supposed to track FTX customer deposits and withdrawals of fiat or dollar, currency, so forth, via Alameda bank accounts, and it wasn't visible from the admin user dashboard.

When Sam would check, and he told you this, the info@ account at the end of 2021 going into 2022, what did he see? He saw that Alameda had borrows, loans, of 2 billion because Alameda did trade on futures, which allows for margin, and some of the subaccounts were margin accounts. But that those borrows were covered by many more assets than $2 billion. No reason for him to think there was a problem.

And, in addition, toward the end of 2021 and frankly going into 2022, all the way to November, at no point was there a time when a customer wanted to withdraw funds from the exchange where he or she could not. Gary told you that no customer waited longer than a day for a withdrawal prior to November 2022, that all withdrawal requests were honored. That's Gary's testimony at page 504. Again, this gave Sam no reason to think anything wrong was happening in Alameda's accounts or how they were being tracked in FTX's systems or that customers were not being able to receive withdrawals if they wanted to.

Now let's turn to a topic that counsel spent a lot of time on today, a lot of time, and during this trial. That's the codes and the code base. The government's theory is, these codes were secret and that Sam, in perhaps one of his most villainous acts, secretly directed Gary and Nishad to put these codes in place. I think the government's word was so that he could create a back door to steal customer money. That's what we were told over and over and over again.

But the evidence was different. The evidence was the opposite. We found out that the codes were not secret, that in fact anyone who had access to the FTX code base could see them.

So if you look at this slide, this we went over with Nishad, and it says: Coding features were visible to anyone with access to the code base.

If you look at the bottom, here is what's called a code commit that Nishad wrote that says to other developers who looked at this: Be careful not to liquidate PMM, which we learned was primary market maker, which at the time was Alameda, clean up messages.

We asked Nishad about this. We asked about visibility in the first place. And here was the exchange. Based on your experience as head of engineering at FTX, did you have an understanding of who might access the code commits we were just looking at? They were available to the whole company in Slack, if nothing else. There were Slack logs of all the messages.

We submit this is the opposite of secret. If these coding rights were actually intended to serve as tools to steal, it makes no sense that the group of people in a company with hundreds of employees would have access to them. It makes no sense. The whole idea of a conspiracy is that you are trying to keep things secret so you won't be detected. There was nothing about this code base and the commits that were kept secret.

Let's talk for a moment about the allow-negative function that counsel spent a lot of time on. The government claims that it was set up as another way to siphon funds, but, again, that is not the evidence in the case. You heard from both Gary and Nishad, and the quotes are up here, that they were set up originally, Allow Negative, for a few other bookkeeping accounts on FTX, said Gary, and for accounting oriented accounts to go negative, said Nishad. Again, this wasn't set up to be some back door to abuse anything.

We can take that down.

MR. COHEN: You heard a lot today and during the trial about the line of credit. What you heard was that the government kept saying one of the reasons we know Sam was a fraudster is, he directed Gary and Nishad to put up the line of credit to 65 billion. Look at that. That's bigger than anyone else in the company. That's way bigger than anyone else. But they never asked the why question. They never went into the fact that in fact, in practice, only about 3 billion of the line of credit was used, not 65 billion, and that it had been raised because of the fact that when Alameda was the main market maker, it had to put out many, many open orders during the day, and in order to be able to put those orders out, it needed more collateral.

So the letter of credit was used to take its place, and, in response to that, Gary raised the limit several times until, finally, he decided to raise it to a level where it wouldn't be hit again, just move the parameters out. That's his testimony at 397 and Nishad's testimony at 1554. This was all done in response to specific issues, to business issues, and done to help customers, not to hurt them.

In a related vain, let's talk about this complicated word, auto-deleveraging event. You heard both Sam and Nishad testify about this. What was it all about?

When liquidations were happening on FTX, Alameda and other large traders would step in as backstop liquidity providers to close out the insolvent accounts and prevent further harm to the exchange or customers. An auto deleveraging event happened when FTX ran out of backstop liquidity capacity. In other words, first, they went to the collateral in the customer account. If that didn't work, the risk engine went to the backstop liquidity provider. And if that didn't work, we had an auto-deleveraging event where the engine would start to pull in collateral from any customer's account who had authorized margin trading. And FTX wanted to avoid that because customer A didn't want to have his or her funds used to cover losses from customer B if it could be avoided.

Sam told you about an event that happened in 2020 where due to the servers being overworked, it ran -- it was running behind, and there was a threat not just of the backstop liquidity providers being liquidated but Alameda itself being liquidated, and they concluded this would be really bad for its role as a market maker. It would hurt customers, so they put in a provision to delay that liquidation.

MR. COHEN: Again, not out of some intent to steal, not out of some nefarious intent.

And before we take that down, I just put up Government Exhibit 1617, which is before you, just to show the letter of credit actual usage in the pre-October 2022 period.

So that takes us to the end of this first period of 2019 to 2021.

And I also want to point out something else as we came to the end of this period.

Sam's good faith, as I mentioned, is a defense to all the charges against him. And no witness who testified about this period has testified that Sam ever told them that he'd set up FTX to steal funds or allowed anyone to install secret code-based features to steal funds, or told them that he was using this as a way to steal funds from the exchange. The testimony counsel pointed to earlier today from Caroline was simply about the ability to borrow on the exchange; it wasn't some secret code base to steal from customers.

So now let's move to the second period.

Put up the next slide, please.

Okay. I'm going to talk about the fiat bug, which we all spent a lot of time on this case, but again, first let me set the stage. In May and June of 2022, if you look outside your window, if you're in the crypto world, you see a storm. Companies are going out of business. There's stress everywhere. Bitcoin, the leading indicator and the hallmark, it has dropped by 70 percent. And it's against this backdrop that the sequence around the bug plays out. And what happened as a result of this is that a group of people began to realize that there was a fiat@ bug and there was a fiat@ liability, which I'll talk about in a moment.

So again, what happens? Well, we learned from the evidence that in July, the year before, a bug had been introduced inadvertently into the system. And the effect of the bug was it caused an error that caused the fiat@ accounting entry to appear as if it was 8 billion larger than it was. The upshot of this was it looked like Alameda owed FTX $8 billion more than it really did. So that's right here, what was going on.

And in fact, later in 2021, Gary, Nishad, and Adam Yedidia complained about the bug, and at the time, it was only causing a $500 million impact. Now to most of us that's a lot of money, but at the time, you heard the testimony from Nishad that Gary was relaxed, not stressed about this. This was apparently on everyone's list of something that needed to be attended to and hadn't yet been attended to. And so it doesn't go——it doesn't get corrected or fixed.

Six months go forward and now in June 2022, the stage is set when Caroline comes to the FTX office where Sam, Gary, and Nishad are working, and she tells Sam she thinks Alameda might be insolvent, and that it also will need to repay its lenders. And I want you to stop and really think about this, because it's a very important moment for an issue we submit hangs over the whole case. And think about what it means for not having a fully built out risk management system. The CEO of Alameda wasn't aware that there was a bug in the system for six months after it had already been discovered, and she woke up one day and believed that her company, which previously had a NAV of 8 to 10 billion, was now bankrupt, overnight. How could that happen? Not through Caroline's fault, not through Sam's fault, not through anyone's fault. It resulted from FTX lacking a fully built out accounting risk management system. Ask yourself, if they had had a full-time chief risk officer, would that person have let it happen? And what's even more remarkable about this is but for the seemingly accidental discovery of the bug in June, we don't know when Alameda or Sam or the others would eventually have appreciated the scope of the fiat@ liability, or taken steps to address the underlying causes.

So coming back to this, to the time line, when Sam heard that Alameda might be bankrupt and needed to repay lenders, he said——and he testified to this to you——that didn't sound right to him. And he asked Caroline, How confident are you in this, that Alameda is insolvent? And she responded, up front, Not very confident.

MR. COHEN: So what did they do next? They bring in Gary, who's the chief technology officer at FTX, Nishad, who's the number two technology person, and then other developers, Adam Yedidia, Andrea Lincoln, and other developers, to get into the issue and figure out what happened. And again, if what's really going on here is that this "inner circle" is running a conspiracy, the last thing they would do when this bug came to the fore is bring in all these other developers to look at it.

After about an hour, or after about two or three hours of work, the team led by Gary determines that the $8 billion liability isn't real and there was a bug in the system. And everyone's relieved. You thought that Alameda was insolvent and now you find out it's back to being worth 8 to 10 billion in NAV.

And this led to the other issue we talked about, repayment of the loans. Now when Caroline first——Sam told you that when Caroline first came to him about concern about insolvency, she raised another valid concern, can we repay our lenders, should we repay our lenders? And Sam told you that once he understood that the bug was fixed and believed that the NAV was back to 8 to 10 billion, which, again, was consistent with what he saw on the info@ account, that it was——he was fine with repaying the lenders. And that payment was made.

Now there is a problem with some of the testimony about that payment, and it has to do with how it was done and the scale. And you should consider that when you evaluate the whole sequence. Caroline testified to you that what happened was, Alameda "would have to take the money from our line of credit to pay the lenders." And that's at transcript page 763. And I asked her, Well, if that's true, if the lenders were being repaid off the line of credit, wouldn't the amount of the line of credit go up? She said, Yes, it would. And I said, How much did it go up by? Oh, 5 to 10 billion.

But when you look at the actual data that was pulled by Dr. Pimbley——and that's Defendant's Exhibit 617——you see that in fact the line of credit did not go up during the period when the loans were being repaid. In fact, it went down for much of the period. It repaid some of its line of credit, Alameda repaid some of its line of credit usage but not on the order of the 5 to 10 billion that Caroline claims. She was just mistaken in that.

And during that same sequence, we heard a lot from the government——we heard about it today——about a spreadsheet of seven alternative balance sheets that Caroline prepared. And we heard, this is one of the most nefarious things Sam did. He directed Caroline to prepare multiple spreadsheets to send to the lenders, and the idea was, let's pick the one that's going to be the most misleading and send it to the lenders. But again, we submit that the evidence didn't support this interpretation. Sam told you he reviewed the spreadsheet. The government made a big deal today about, oh, the metadata showed that he didn't. He said he did, but he only remembered reviewing one of the——one of the balance sheets. And that's actually consistent with Caroline's testimony, where she said at page 1070 of the transcript that she only discussed some of them with him. And if you think about it, Sam believed——we had gone from thinking Alameda was oh, my god insolvent to being worth 8 to 10 billion. He certainly was now okay repaying the lenders. He received the balance sheet that he looked at, which looked like the ones he had seen many times before from Caroline, and given all the other things he was doing, working 12 to 22 hours a day, dealing with 60,000 emails in his inbox, being a member of hundreds of Signal groups, it seemed reasonable to rely on the spreadsheet he had been given by Caroline.

And two other things about this. Ask yourself, if you're a fraudster, why would you repay the lenders? Why don't you just keep the money and run? That's a billion dollars, even on the reduced scale. You wouldn't. If you were a fraudster, why would you repay the lenders and give them a false balance sheet? It doesn't make any sense.

MR. COHEN: And there's a third layer that's really important, perhaps the most important layer for this sequence, that, in fairness to Caroline, she couldn't know about. Sam was having separate discussions with the leadership of all the lenders, BlockFi, Zac Prince, Genesis, Voyager. At the same time as these loans were being repaid, they were reaching out to Sam in a separate discussion. Their other employees were talking to Caroline about the loans at issue, but these CEOs were reaching out to Sam about the following: Hey, we're in the crypto winter too, hey, we're having problems, you think FTX could loan us some money? You think FTX could invest some money in us to help us get through? And in fact, you heard that FTX wound up making a loan, and with the possibility of an investment, to BlockFi. You heard that both from Sam and from Zac Prince, the CEO. And ask yourself, if you were making a loan to a company that you're going to maybe buy eventually, why in the world would you spend time sending it a false balance sheet? You wouldn't.

So coming back to the aftermath of the bug, once the bug is discovered, what do Sam and the others do? Well, we submit they sort of act sensibly, and Sam does as well. First thing he says is, you know, we got to fix this. We got to make sure we don't have another situation where we're off by $8 billion in our account. So he asked the team that ends up being led by Nishad and Adam Yedidia to fix the bug. And they do. It takes a few weeks.

What's the other thing he does? Well, if you'd call up slide 26.

He says, it's not just the bug, we really need to fix our accounting, because we can't have this where we're off by so much, and whether you——this is now looking at it from FTX's point of view. We can't have a customer like Alameda, large customer, where the accounting is so far off. And he went over with you his live issues for September 27, and his list of priorities, which we looked at earlier this week. Each of these priorities——there's this list of 16. Each of them involves or collectively they involve billions of dollars. And what does he call out as something that's really important? Let's get the accounting right on FTX. And he had asked Andrea Lincoln, one of the developers, to work on that, with an ETA of October 15th. So that's something else that you would expect a CEO to do, to want to do. Let's get the accounting in shape.

And coming out of that sequence, Sam told you that for the first time he learns that separate and apart from the bug, okay——take that 8 billion, get it off the table, separate and apart from that——he learns through this sequence, through discussions, that there's another liability that Alameda owes, that's in the neighborhood of 8 to 10 billion.

And again, not just Sam, but no one testified that they knew about this liability, which we've come to learn was related to the fiat@ account, before June 2022. In fact, Caroline told you that during her time as CEO of Alameda, before that, she had been seeing what she called otherwise confusing decreases in Alameda's assets from the bug. She didn't quite know what was going on with this liability. And Sam told you he certainly didn't know in and around this time in June that there was this big liability, 8 to 10 billion. The government makes it sound like he's fighting with the others about knowing this. He wasn't. But what he didn't put together until September or October, which is, by the way, when Nishad put it together, that Alameda had this additional 8 billion, $10 billion liability and it was associated with the fiat@ account.

MR. COHEN: And as Sam is piecing things together and thinking about it, what does he think? He thinks——and the government was critical of this, but frankly, we think this is how many CEOs would think——he thinks, well, it is what it is. We don't have the situation. We had a messed up accounting system. We had a messed up risk management system. And now we have a very big liability that we didn't know about that we have to address. And he spends——and he thinks about it as a liquidity issue. Does Alameda have assets on the exchange or off the exchange to take care of it over time? Are there assets at FTX, can he use his equity, can he use other assets. And we would expect that's a reasonable way for him to look at it as the CEO at the time. And this isn't what Mr. Roos said. This isn't saying, oh, things will work out all right at the end. This is how he's thinking about it at the time, and it's a reasonable way.

And let's turn now to September. This is another point where the government says, oh, there's this "aha" moment about Sam proposing shutting down Alameda, and I talked about that earlier in my summation, where Sam sends the memo "We Came, We Saw, We Researched," where he proposes shutting it down. And as I mentioned before——I won't belabor it here——if he really thought Alameda was the key to his fraud, if this was the engine to keep stealing money from customers, the last thing he would do would be to propose shutting it down. And there's a discussion between Caroline, Gary, Nishad, and Sam where they decide not to shut it down and they move forward. And we think, and we submit, that what the evidence showed is that each of them came to different realizations at different points in time. Caroline told you she came to her realizations about the impact of the fiat liability in June and July. Nishad told you he came to that realization in September. Gary was somewhere in between. Sam told you around September and October. Does that make any of them right or wrong, for not being consistent with each other? No. That's how they looked at it from a business point of view, from a business judgment point of view, of people trying to figure out what had happened, what this liability was, how do we deal with it, how do we get our arms around it.

Which brings us now to November 2022. And when we talk about November 2022——and there's been a lot of testimony and evidence about this in this case——I want to break it into two categories: what happened; and what were Sam's statements during November? And we're talking about those 11 days, November 1 to November 11. And I told you in opening——and I think I was borne out by this——that a lot happened in those 11 days. Things were literally changing moment by moment. And that affects what Sam thinks moment to moment, that affects how he reacts moment to moment, and we submit as he reacts moment to moment, his state of mind is somebody who's acting in good faith and doing the best he can under what are very, very difficult circumstances.

So the sequence begins on November 2nd, when an article is leaked by CoinDesk, which is a leading crypto publication, that leaks——an article appears that leaks Alameda's balance sheet. Now the article has the effect of causing some of FTX customers to start withdrawing assets from the exchange, which ultimately, toward the end of the week, sets off what Sam called a run on the exchange. In his view, the run was all the customers on the exchange or almost all of them suddenly want to be taken off the exchange. And what's his reaction when it comes out, when the article comes out? Well, they talk about how to address it. A tweet is put up to address it, and things move forward.

MR. COHEN: What happens then? On November 6th, there's a tweet from CZ, the CEO of Binance we all heard so much about. And he tweets that he planned to sell his substantial FTT holdings because the balance sheet that had been leaked had showed that Alameda owned a lot of FTT. And this has a more dramatic effect. Because now this is a disclosure not about how the market is going in general, how the crypto market is declining in general; this is a disclosure that affects FTT specifically and therefore affects Alameda, which owns a lot of FTT. And now you heard right after that tweet on November 6th, Gary testified that withdrawals skyrocketed. That's at page 568 of Gary's testimony and 567. He told you that prior to November 6th, a typical withdrawal volume for FTX was 5 to 10 million an hour, but on November 6, FTX starts getting withdrawal requests of over a hundred million dollars an hour, which amounts to over a billion dollars in the first day, which is——I think Sam also told you.

Now this is becoming an unprecedented situation. So in this crazy situation, with the storm going on outside in the general market but now a specific storm about FTT and about Alameda and the value going down, we submit Sam acts appropriately, as best he can. What did Caroline say about what Sam did? She said that Sam "said to liquidate Alameda's positions and send the money to FTX." That's at page 893. And that is a sensible thing for a CEO to do during that period. Sam also continues with efforts to raise capital because he's thinking, I still have this liquidity issue, Alameda's NAV is positive but things are getting tight, and I'm going to need to raise capital. And in the course of raising, seeking to raise capital, Sam reached out to a number of lenders——excuse me——investors, and he asked others on the team to reach out to a number of investors. And one of those lenders——excuse me——investors that they reached out to was a company called Apollo, which is a leading investment firm in New York, and you heard a lot about that.

Now this is where we bring Can Sun back into the picture. Sam had reached out to Apollo, investments were handled by——investor relations, you heard, were handled by Sam and a fellow named Ramnik Arora, who is there in the Bahamas also working on this, and Can told you that he learned that Sam had sent a balance sheet to Alameda——to Apollo, and the balance sheet he sent reflected the fiat@ liability. It's the opposite of seeking to deceive Apollo. He sent them the balance sheet that was now updated to show the effect of the fiat@ liability. Even Can admitted that. And then there was a conversation that Sam was going to have with Apollo where they'd asked questions about how could things have happened from a legal and compliance perception, and Can does research and he goes over it with Sam, and the net of it is, based on what we found so far as regards the fiat@ liability, we don't have an explanation from a legal or compliance point of view. And Sam, in his style, says, Yup, okay, that means I can't tell that to Apollo. And he doesn't. And he's on the call with Apollo right after speaking with Can, and Can is not on the call.

What else happens during that week? Well, on November 9th, there's an all hands meeting that we heard so much about that Caroline has for Alameda.

And if we could call up slide 29.

And let me set the stage for this, ladies and gentlemen. This was a regularly scheduled meeting. Sam is not going to attend. It's for Alameda people only. And you saw this exhibit in evidence that Caroline reaches out to Sam and others about how to approach the meeting. And she says:

"Thinking about what to tell people at Alameda all hands."

"Right now I'm thinking a vibe of 'Alameda is probably going to wind down, if you don't want to stay or want to take some time off no pressure, if you do want to help with stuff like making sure our lenders get repaid it's super appreciated'"

"Does that seem right?"

And Sam says, over here, "and maybe something about there being a future of some sort for those who are excited but that you can't know for sure what it is."

MR. COHEN: Well, how did the government present this to you? They presented it in two ways. Sort of, again, the "heads I win, tails you lose" way. First they said, Aha, you see, this meeting was really Caroline confessing that they'd all been committing crimes for the last few years, three, four years. But if you read the setup to this meeting that Sam's involved in, he's not at the meeting, this is not written by someone who's planning to confess.

The second alternative, government says, well, if you don't like that one, here's another one. This is part of a coverup. It's a way to get people to keep working without telling them anything about what's happening. It's about a vibe. We submit this doesn't support that interpretation either. And in fact, after the meeting, Caroline reaches back out to the same group and she said she "thought it had gone well." And that's the tape you listened to. Neither excerpt is consistent with someone who is covering anything up, who's doing anything at the direction of Sam.

Just to complete that week, Sam is reaching out wherever he can to raise capital. No question they need capital. Alameda is very tight. Sam still believes until the very end of the week that it has a liquidity issue, not a solvency issue, although by the end of the week, that comes.

So he even reaches back out to Binance, FTX's bitterest rival, his own personal rival, and he says, hey, you have capital, will you do a deal with us, and Binance signs a letter of intent with them. And there's negotiations over a frenetic day about, hey, maybe we can sell FTX to Binance. And just to drill down on what that would mean, that would mean selling the equity that Sam owned in FTX to Binance so that funds could come in to pay expenses, to pay lenders, investors, and customers. So Sam is, as he always was, willing to give up everything he had in order to take in the capital if he could and save the situation. So that's what happens during that week.

Now let me come to the second part I want to talk to you about the week, which is, what did Sam say during the November crisis? Now the government, again, because in their movie Sam's a villain, or mega villain, says that all week he's just sort of wheeling and dealing, he's lying to his employees, he's lying to the outside world, he's doing anything he can to hold on to the company and keep people from making withdrawals, even though they've had billions of dollars of withdrawals, all of which had been paid. And then when we look at the actual evidence from that period, we submit it doesn't support what the government says.

If we could pull up slide 30.

This was the November 6th tweet regarding the leaked balance sheet. And there was testimony——and you saw an earlier draft of it. This was something that Caroline worked on with Sam and others. We ought to put out a tweet to respond to the CoinDesk story. We ought to tell the market what we think happened.

And the tweet makes three points. First, at the top, Caroline says——and certainly Sam is on board with this——"A few notes on the balance sheet info that has been circulating recently," meaning the leaked balance sheet. "That specific balance sheet is for a subset of our corporate entities, we have greater than 10 billion of assets that aren't reflected there." And is that accurate? It certainly is. If you look at the corporate entities, which include Alameda's assets on and off the exchange, FTX's equity and other assets, it's an accurate statement.

What does Caroline next say? "The balance sheet breaks out a few of our biggest long positions." Long is where you've bought something. "We obviously have hedges that aren't listed." Is that accurate? It certainly is. You heard a lot of testimony, not just from Sam but from Caroline and others, about there was a sequence going through the year of putting on hedges, talking about putting them on, and for the first part of the year no hedges were put on, but finally, by this period, at the end of November——in the middle of November, hedges had been put on. Now they don't work as well as they should have. By the way, that's not anyone's fault. We're not faulting Caroline, we're not faulting Sam. The hedges they finally put on were to the general market, if the general market was down. The problem they had was the move was about FTT and Alameda's specific assets so the hedges don't really work as well as they could. But that statement is accurate.

MR. COHEN: "Given the tightening in the crypto credit space this year we've returned most of our loans by now." And they had. They had paid back the lenders. So that statement on November 6th by Caroline, or Caroline working with Sam, doesn't advance the government's case. It doesn't move the needle at all.

And let's look at the next slide, 32.

This is right after CZ makes——go back. Go back to the other one. This is right after CZ makes the offer to buy——sell his FTT at $22. Caroline writes——and she said she consulted with Sam and others on that, and that's right——"CZ, if you're looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you today at $22" per token. That's an accurate statement. $22 was a fair market price. It was the six-month low. You heard that that from Sam. Sam believed that they had the wherewithal to buy the tokens if they needed to.

Now I think there was some concern by Sam and Caroline that maybe CZ wasn't really selling, he was just doing this to hurt FTT——FTX. Maybe he was, maybe he wasn't, but this statement in response was accurate.

If we could go to the next one.

And I'm going to go out on a limb here. I think this is the government's favorite piece of evidence. I don't think there's a witness they haven't showed this to more than one time. And they used it again and again in their opening——excuse me——in their summation. But let's talk about what really happens here. This is November 7th in the morning. Sam tweets, "A competitor is trying to go after us with false rumors." He believes that. That's CZ, Binance. Sam believes they are going after us with false rumors. And then he says, "FTX is fine. Assets are fine." And he told you why he felt he could write that. And it's the same thing we've been discussing. As of the morning of November 7th, from a liquidity point of view, Sam believed that Alameda had assets on and off the exchange that could address the liquidity issue and that FTX also had assets that could address the issue.

And here's the critical companion to this, the part that the government didn't ask any of its witnesses, even though they showed this slide to all of them. By the next day, by November 8th, the price of FTT——remember, that's what's causing the specific run, FTT is plummeting. Because of all the things that are happening, the price of FTT has dropped, Sam told you, to all the way down to close to zero, $5 a token. What does that mean? It means assets are not fine. So what does he do? He takes the tweet down. And this was corroborated by the stipulation we read to you showing that in fact on November 8th, this tweet was taken down. So again, if all he's doing this week is wheeling and dealing like a fraudster, why would he do that? Why wouldn't he put up an even more outrageous tweet? He wouldn't, because he's reacting in realtime as events are unfolding, and once he sees that because of what's happened to FTT, I can't say this anymore, he takes it down.

The other thing that happens during that week is——if we can call up the next slide

——is the following: And let me just set the stage for this. We've had a lot of testimony from all the witnesses. Maybe this is the second favorite topic, after the last slide, about deletion, and auto-deletion, and the government said, Aha, you know how we know Sam's a fraudster? You know how we know he's nefarious? Is because on a few occasions, he deleted Signal messages 'cause he was trying to hide evidence. And what Sam told you was in fact, FTX, like a lot of companies, had a data retention policy, or data protection policy, and his understanding of it was it created three categories. One were messages you had to preserve, things that you might show to regulators, for example; the second category is things you had to destroy, things like people's Social Security information, personal data; and the third category was sort of everything else, which, as Sam understood it, allowed the person who was dealing with the chat to set the delete or not as they saw fit. And even with all that——and so over time, Sam and others would delete certain messages.

MR. COHEN: And even with all that, here we are in November, the week of November 11th, the worst week in the history of the company, and what does Sam do in the three chats called out? The first one is Hashtag Organization. Its participants are him, Nishad, Gary, and Caroline. He turns off auto-deletion, on November 9th. The next one are messages just between him and Caroline. On November 10th, he turns it off. And again, him and Gary, he turns it off. We submit this is the opposite of someone who was running a fraudulent scheme would do.

Your Honor, we may have hit a natural breaking point.

MR. COHEN: Thank you, your Honor.

Again, thank you, everybody, for staying. We really appreciate it. This obviously could not be more important to me and my client. Thank you.

When we broke, I was just finishing talking about the period that ended in November 2022. There is one last piece I wanted to cover quickly that goes into December.

The government, in its summation, talked about Sam's talking to journalists in November and December, and the government's theory apparently was this is yet another example of Sam the criminal mastermind.

And we submit that when you think of it with your real-world experience, their theory makes no sense. He decided to speak with something like 50 journalists in November and December. He did that even though he had no access to his records, not even to his email, and even though, as with Good Morning America, he didn't know what he would be asked. And the notion that he was somehow going to navigate 50 interviews as part of an elaborate coverup just doesn't make any sense, and we submit you shouldn't put any weight on it.

The last piece from this period is the testimony you heard that the government elicited from Gary Wang about the Bahamas in the period right after November 11. And the testimony and certainly the implication from the government is that not only was Sam running this criminal enterprise for three years, not only was he along the way lying to Congress, not only was he, I guess, lying to the media to create a coverup, in his last vengeful act he was also trying to curry favor with the government of the Bahamas so that he could keep control of FTX, even after the bankruptcy. That's the theory.

The evidence, of course, came nowhere close to showing that. In fact, it showed quite the opposite.

I just want to focus on two pieces for you, ladies and gentlemen, quickly. First was GX-248, which we looked at yesterday, both -- two days ago, both on Sam's direct and -- his cross-examination and his redirect, and that document is a series of emails between Ryan Pinder, who was the Attorney General of the Bahamas, and Sam and others getting into what had happened with FTX, what was going to happen going forward.

And the government, in its examination of Sam, read only one part of the same paragraph, and they suggested that in that paragraph what Sam was doing was opening up withdrawals from FTX only for customers who were based in the Bahamas as a way to get favor with the Bahamian government. They left out the very next sentence. You can see it here, the bottom paragraph, in which we brought up with Sam in which he goes on to say: It is your call whether you want us to do this, but we are more than happy to and would consider it, at the very least, of our duty to the country, and we could open it up immediately if you reply saying you want us to.

What's happening there? When you live in a country and the Attorney General reaches out to you, you better return the call. You better respond to the email. And Sam believed, and he shows he is unclear, that, in part, this might be what the government of the Bahamas wanted him to do. If they wanted him to do it, he was going to do it.

We can take that down.

The second piece that they elicited from Gary, and the government claimed this again showed nefarious conduct, involved Sam's interview with the SCB, which was the securities commission of the Bahamas, and the decision after that to transfer certain assets to the SCB. Again, that was portrayed to us as, you know, yet again Sam currying favor with the Bahamas or somehow trying to control the process. But, again, that's not what the record showed.

Remember our first witness on defense was Ms. Krystal Rolle, the very distinguished Bahamas attorney who flew all the way here to testify for you. She told you she is now a King's Counsel. She used to be a Queen's Counsel. There is 40 of them in the Bahamas. She is one of the most distinguished attorneys in the Bahamas, and she told you, there was no fooling around. Sam was ordered to go to this meeting at the SCB. He went there with her. They met with the SCB and its leadership. They also met with something called the joint provisional liquidators. And then they went from that meeting to FTX offices and, under an order, transferred the funds. Nothing nefarious about that.

MR. COHEN: Let me turn to the next part of my presentation. And just to orient you, I am now going to make -- talk a bit about the government's case and then just make some concluding remarks. Again, thank you for bearing with me.

Let me talk about the government's case. I want to talk about three things: Their cooperating witnesses, the specific counts relating to customers, lenders, and investors, and how to think about the testimony of Professor Easton and Agent Owens who you heard from.

Let me talk about their cooperating witnesses. It's really, really interesting because in a three-and-a-half-hour summation the government didn't mention their cooperation agreements at all. They didn't mention at all that they might have some incentive to testify in a certain way or not.

Let me talk about how to think about them. Now, we expect the Court will give you an instruction on how to weigh evidence and, as always, it's Judge Kaplan's word that controls. But we ask that as you deliberate you keep in mind a few things when you think of what the cooperating witnesses said, and here I'm talking about Gary, Nishad, and Caroline, who had cooperation agreements, and I'm also talking about Adam Yedidia, who had an immunity agreement, and Can Sun, the attorney who had a nonprosecution agreement. Let me suggest a way to think about those witnesses and their testimony as you deliberate.

First, of course, is what matters is Sam's state of mind. Counting up the number of people who did or didn't testify against him doesn't matter. What matters is what Sam believed in good faith at the time. As we mentioned when we started in an opening, we didn't have to present any evidence at all, so the number of witnesses presented by each side doesn't matter.

Second, if you examine their testimony carefully, as we know you will, you will see that when you view it against your real-world experience, you cannot rely on it to carry the government's burden of proof as to Sam. Think about the three main cooperating witnesses, what they said about when they realized there was a problem with Alameda borrowing FTX's assets. You heard different answers from them. They were even inconsistent among themselves. Gary claimed he became aware of the issue as far as back as 2019 or 2020, when he happened to be sitting next to Sam at Alameda, and overheard an Alameda trader mentioning Alameda having a negative account balance at FTX. By the way, what did he do about it at the time? Nothing.

Nishad, on the other hand, claimed he never knew about the size of Alameda's borrows and the possible impact of the fiat@ liability until June of 2022, and he didn't think there was a problem with what was happening until September. Now, Nishad worked right alongside Gary for years, and you heard the government tell you how Nishad and Gary were the engines behind setting up the secret codes and the code base, yet they gave you conflicting accounts of what happened there.

Then there was Caroline, who fell somewhere in between. She testified she was aware of Alameda borrowing its funds using its line of credit sometime in 2020, but, again, didn't do anything about it, but she didn't consider there to be a problem until June 2022, when we had the bug sequence that we talked to you about.

The three of them are working side by side with each other and with Sam, their friend, for the entire time, but they claim they learned this information at different times and in different ways and that they did essentially nothing about it until November 2022. It doesn't make sense if you thought at the time -- if you thought for years you were doing something wrong that you wouldn't take action.

Another thing to consider when you think about the number of witnesses, and if we can put up the next slide.

MR. COHEN: A lot of the witnesses weren't actually additive witnesses. They were just repeating things they had heard from some other witness. You will recall you heard testimony from Caroline about the all-hands meeting in which she said there was the fiat liability and that was causing the problem. You then heard from Adam Yedidia that he resigned when he heard about what happened at the all-hands meeting, not that he was there, not that he even spoke to someone that was there, but he spoke to Leila Clark, who spoke to someone who was there and, based on that, he resigned. Think about that for a moment. Adam was a developer. Adam could access the code. Adam could work on the bug fix. And he tells you that he based everything he was doing, he based his conclusion that Sam had done wrong on something he heard from someone who heard from someone who had been at the meeting. That doesn't make sense.

Same thing with Christian Drappi, the individual with whom the recording was played with. He was also a developer like Adam. He could have verified or not verified what he was being told, but he just acted on it.

Nishad told you, at the bottom of the chart, that he based his conclusion on what was happening with the liability on a conversation with Caroline in September and then Can told you he based it on Nishad.

There is a lot of telephone going on here and the point is it's not four, five, six witnesses giving you firsthand knowledge. It's four or five witnesses just repeating what they have heard down the chain.

You can take that down.

Turning back to the three cooperating witnesses, Gary, Caroline, and Nishad, a few things you should consider when you evaluate their testimony, which you should do very carefully.

Let's put up the next slide.

You will recall there was testimony about their compensation. Going into November 2022, these were extremely wealthy people who had made significant salary, significant cash bonuses, and certainly, based on the equity value, were each billionaires. You should keep that in mind as you consider their testimony.

Let's go through now what each of them did.

If you can pull up the next slide. Actually, take that down for a moment.

Again, Gary tells you that he first heard of a problem in 2019 in the trader conversation, but he didn't do anything about it, that between 2019 and 2022, he becomes a billionaire. And certainly had he thought there was anything wrong going on, he could have cashed out, he could have resigned, he could have left, he could have contacted an attorney and notified the authorities. He doesn't do any of that.

Same thing with Caroline. She goes through the same sequence. She tells you she first learns of the problem in June 2022, but even after that she doesn't resign, she doesn't leave the company, she doesn't hire any advisers. Why? Because they don't think they are doing anything wrong.

Then there is Nishad. He testified that they were doing wrong in September, and he had, shall we say, an interesting view about what was right and wrong at that time. He said what was wrong in September was, quote, spending dollars. Spending anything after September was necessarily digging the customer deficit hole deeper. That's Nishad at page 416. But did he really believe that? Just like the others, he didn't resign, he didn't leave, he didn't seek an attorney.

And, more than that, remember Nishad admitted on cross-examination that, in October, he borrowed $3.7 million off the FTX exchange to buy a house for himself and his friends. If he actually thought what they were doing was wrong, would he have bought a house with funds borrowed from the exchange?

Now, if you can put up the next slide.

This just returns to a theme we talked about in opening, the cooperating witnesses then and now. Again, it just summarizes the points that I have just made.

Think about it. Five of the seven counts that Sam is charged with are from being part of a conspiracy, presumably with one or more of these people. In light of what we have just discussed, how could he have been in a conspiracy with any of them?

We can take that down.

Now let's talk about what happens with the three of them during that very, very fateful week of November or ten days or 11 days, November 11, 1 to 11. No question, we can all agree, this is a very chaotic time. This is a very stressful time. The companies are on the verge, by the end, of going bankrupt, and they do go bankrupt.

MR. COHEN: And what happens? As that week unfolds, what the cooperating witnesses do, as FTX's situation become more and more desperate, as regulators pop up in the Bahamas and elsewhere, as there is chaos at the door, something subtle happens. Blame is shifted to Sam. They are doing what they need to do to get out from under.

How do we know that? We know that from their own testimony, both on direct and cross-examination. Remember the all-hands call we just talked about. At a certain point in the call, and this is the part the government played for you, Caroline is asked what happened and who made the decisions. Now, to hear the government tell it in summation, certainly Caroline made the decisions. She was part of it. But how does she respond to this group of people who, by definition, are not in the conspiracy? Quote: Sam, I guess.

And you recall we saw a Signal conversation with Nishad and Sam on November 6 which the government played for you today where Nishad told Sam, one thing that would seriously help me is if I didn't have any debts. And to erase his debts, on November 6, Nishad proposes a fake transaction that's going to be backdated that would net out his loans.

And a fair reading of this tweet -- and the testimony is at 1459 through 1461 -- fair reading of this tweet is as things are unfolding and things are getting tighter and tighter and tighter, Nishad to starting to something focus on himself, how to get out from under. Sam told you -- and it was not just Sam; others testified to this -- he regarded Nishad as suicidal during this period.

So he responds, sure, we can probably do that, but he told you on his testimony, he's not planning to do a backdated transaction with Nishad. He is just agreeing because he doesn't want his friend to do anything drastic. What his friend is doing is focusing on himself.

Two days later, on November 8, Sam -- Nishad sends a chat to Sam which the government actually showed you today, I was surprised, that says, quote, this is wildly selfish of me, but they may need to know that it wasn't a ton of people orchestrating it. The government suggests that the it is the crime here, but a fair reading is the it is problem, the mess, the disaster going on.

To put this in context, Nishad sends this same chat, and within a few days he goes from buying a $3.7 million home for himself with funds off of the FTX exchange to sending this kind of chat.

What about Gary? Gary goes from the meeting with the regulators at the SCB in the Bahamas, where he certainly knows things are up, the wind is up to his lawyers from the U.S. coming to get him in the Bahamas and going back to the U.S.

The point here is not that Gary, Nishad, and Caroline are bad people. We haven't said that at all during this case. We actually have empathy for the situation they found themselves in and what they felt they needed to do. But they were under pressure to get out from under, and that meant pointing at Sam.

Sam, of course, never tried to do those things. Remember that these witnesses ultimately entered into cooperation agreements with the government.

We can pull up the next slide.

They entered into a cooperation agreement, and they agreed to plead guilty to the various charges that expose them to serious, serious jail time. And they were asked about that both on direct and on cross-examination. And at first we got sort of a boilerplate answer, I'm just here to testify. I am just here to tell the truth. I have no expectation about the sentence I might get. I am just here to tell what happened.

But then Gary slipped, and that's at page 477, and he said: You know, ideally, I don't want any jail time. That's what this was about. And they are not going to get it. They are not going to get the kind of cooperation agreement they want, the kind of sentence reduction motion by saying, you know, at the time we really didn't think anything was wrong. They are not going to get it by saying, you know, we all made business decisions, we made mistakes, we did some dumb things, and they turned out wrong. They are not going to get it that way. And they are not going to get it by saying, you know, Sam was our friend. He was a good guy. We built businesses together. He worked really hard, and at the end he was trying to save FTX and customers. So they did what they had to do.

MR. COHEN: And in that regard think about this. Caroline was up front with you in her direct and cross that she had really nothing to do with investors. Her business as CEO of Alameda was to work with outside lenders and to run the company and, yet, she pleaded guilty to one of the counts, committing fraud with respect to investors.

Nishad told you in his direct and cross that he didn't feel he had done anything wrong with respect to making political donations, and he originally thought that the donations were properly characterized. But he pleaded guilty to a campaign finance charge among the counts he pleaded to.

Again, we don't fault them. They did what they had to do under the circumstances, but it means you should consider their testimony overall very carefully. Someone who will plead guilty to something they are unsure of or didn't even think they did is someone whose testimony you should think about very carefully.

As for Adam Yedidia, he received an immunity agreement, even though he told you he didn't think he did anything wrong. It seems inconsistent.

And Can Sun, the attorney, told you he received a nonprosecution agreement two days before he testified.

Now, let me move on and talk about some of the specific counts in the indictment and customers, lenders, and investors.

Just to go back to where I started, Sam's good faith is a defense to all the counts in the indictment. If you find he acted in good faith, you must find him not guilty on all seven counts. But there are also specific defenses and specific problems with some of the individual charges in the indictment as well, and I want to point them out to you now.

If we could call up the next slide.

This is Count One, wire fraud on customers. Again, these are not controlling. What controls as to the elements is what Judge Kaplan will tell you. But as to the customer counts, we ask that you consider the evidence on that. And when you do, we ask that you think about the fact that the government called two customers, and we submit that their testimony did not carry the day.

First, you heard from Mr. Julliard, the French person who lives in London who was the very first witness called in the case. Now, he told you he was a commodities trader, sophisticated commodities trader who traded in cocoa. And he admitted on the stand that he agreed to but never reviewed FTX's terms of service, and instead he initially claimed that the reason he put assets on FTX was because of the advertisements FTX had put up. He remembered the one involving Gisele. He didn't remember her last name. And he thought based on these ads there must be good financials behind the company.

Does that testimony make sense to you, is that someone who is a cocoa commodities trader would actually act in the real world? It isn't. And I don't think you can give his testimony any weight in considering the counts against customers.

The other customer we heard from was Mr. Morad. He testified that he was very familiar with crypto, that he had accounts on many, many exchanges, and he had traded on many of them. Of course, like all the witnesses, except Can Sun, he never read the terms of service, and he claimed to make his investment decisions based on Sam's tweets. Does that make sense to you? Again, we don't think that moves the needle at all, so we suggest that that lack of evidence means that there is an additional problem with respect to Count One and Count Two. Count One is wire fraud on customers and Count Two is conspiracy to commit wire fraud on customers.

Now let's turn to Count Three and Four, which are the conspiracy to commit wire fraud claims against lenders, if we can go to the next slide.

Now, you heard testimony from Caroline about interaction with lenders, and I am not going to redo that. You heard our view on why that doesn't carry the day as to proving Sam acted with criminal intent.

And the only lender the government called was Zac Prince, the CEO of BlockFi, and we submit that his testimony also doesn't move the needle on the lender counts. He told you, I went over with him that BlockFi had done a credit memo on whether to make a loan to Alameda. And in that credit memo his credit team had received everything they asked for, and they were fully aware of all the factors they thought were material or important to them.

MR. COHEN: For example, one issue we have talked about in this case a lot was that one of Alameda's main sources of collateral was FTT, the token that FTX had backed. And sure enough Mr. Prince told you, yeah, his team knew that. We analyzed the FTT. We insisted that because FTT was illiquid, we would be overcollateralized in FTT. There was nothing misleading to him when they made the loans, loans that were then paid back in full. As I mentioned before, Mr. Prince also then had -- during the crisis he had conversations directly with Sam in which he was asking Sam if FTX would invest or loan money to BlockFi, which did happen.

One last piece on the lenders, and this actually applies to the investors and the customers. Because the directive doesn't the really move the needle, the government does the following. They ask the investors and lenders some variant of the following question. If I told you that Sam had stolen customer assets, would that have been important for you to know? Who is going to say no to that? But that's what was happening in real time. That is the conclusion the government has reached after bringing its case. That's not a fair analysis of materiality.

Speaking of the investors, the government called two investors: Matt Huang, who was from a company called Paradigm; and I am going to mispronounce this, but Mr. Robert Boroujerdi, who was from Third Point.

And here are some important points about the investor count, which is Count Five related to securities fraud. They each made their investments by January of 2022. Remember the chart we showed you about all the different offerings. So they made their investments before the events of May -- June through November 2022, before Sam did all the horrible things that the government says he did. If they made their investments before that, how could his later conduct have been material to them? It couldn't have been. Again, they ask the default question. If I told you that to prove my case, would that be important to you? OK. That's not proof.

On the investors as well, we had the piece where we talked about the call with Apollo at the end of November or the first week of November. A few facts there to emphasize. They don't show support for the investor count. This we received from Can Sun.

First of all, Can admitted that in reaching out to Apollo, Sam sent them the balance sheet that contained the fiat@ liability, so nothing was kept from them. And then Sam spoke with Can. Can went over the discussion with you in which he said you can't use the borrow lending order book as a way of explaining what had happened. Sam said yup. And Can said they refused looking into what margin assets in general might have covered that. They never got to it. But, more importantly, Sam did have the call with Apollo and didn't say any of those things.

And when you think about that sequence, think about this. Apollo ended up not investing and, more to the point, the government didn't bring Apollo before you to testify that Sam had said anything different.

They also didn't bring before you Ramnik Arora, who was deeply involved in all the investment decisions. The government may say, well, the defense could have brought them in too if they wanted you to hear from them, but, you know, we don't have a burden. We don't have to call any witnesses. So consider that.

Because their proof doesn't get them there on the investor counts, remember none of the cooperating witnesses, Gary, Nishad, or Caroline, had anything to do with investors, because they didn't call Ramnik or anyone else because the two individual investors I mentioned don't get them there.

We had these elaborate convoluted stories about the Ecoserum sequence and the MobileCoin sequence. What is that all about? It trying to back into some convoluted way to say that Sam somehow did something with Nishad that would have misled investors.

And we submit the story on Ecoserum is convoluted and inconsistent, and Sam told you, look, I didn't tell Nishad to backdate anything with regard to ECO Serum. The fact that he signed an agreement that others prepared for him doesn't move the needle.

And on MobileCoin, which is, again, another effort to backdoor into some sort of proof of the investor count, Sam told you, yeah, there was a loss on FTX and I felt, I Sam, felt I had mishandled it. So I moved it to Alameda where I would personally take most of the loss. That seems like trying to help investors, not hurt them.

MR. COHEN: Let me briefly talk about the money laundering count. Quickly, let me go to Count Six. Excuse me.

Count Six. Count Six is the conspiracy to commit commodities fraud count and that's basically the Count Five securities fraud count repackaged as a commodities fraud count. To the extent, for the reasons I have just said, the securities fraud count fails, this one must fail as well.

Let me turn finally, to the money laundering count, which is the last count. I want to talk about the two types of money laundering that the government has alleged here and how the proof that you actually receive doesn't support it. The first one is called concealment money laundering. That's where someone is making -- has illicit sources of funds and seeks to conceal them.

When you think about the government's theory here, it makes no sense. They say that the way Sam and others were seeking to conceal assets they have taken from Alameda was by making political donations with them. Think about that. Why would someone conspire to steal funds and then try to conceal them by making political donations, which are some of the most regulated publicized and scrutinized forms of spending there is? Why would they go through the further trouble of hiring political consultants and give them access to the internal workings of FTX in a chat called Donation Processing, which is what happened here, if the entire purpose was to secretly launder money? The government's theory doesn't make any sense.

The same goes for its second theory, money laundering above a monetary threshold. The theory essentially is, the way the government has presented it, that basically any transaction involving Alameda funds that may have been connected to FTX customer funds, however they come up with the connection, is per se money laundering, and you will hear the instruction, but we submit that that theory goes too far and should be rejected.

Last in this section let me talk briefly about Professor Easton and Agent Owens, who the government presented.

Now, the government spent a lot of time with Professor Easton, and we saw chart after chart after chart after chart, and you are invited at the end of the government's summation to look at those charts again. They really give you a suggested way to think of Professor Easton's testimony.

At a very high level, if you find that Sam acted in good faith and in good faith believed that he could spend or FTX or Alameda could spend the funds it did when it did, then really Professor Easton is beside the point. All he did was trace outflow of funds.

The question is not what the flows were: Did it go to account 1, account 2, account 3, or ABC? The question is why? Why was Sam doing it and what did he believe he was doing? On that basis alone, you need not -- you're welcome to, but you need not go through all of these charts. Because if you find, as we submit you should, that Sam acted in good faith, Professor Easton is besides the point. He is just simply taking the government's theory, assuming it's true, which, of course, is what is up to you to determine, and then tracing out those funds.

We also think, and again you may not need to get to it at this level, that there were some things in his testimony that were not reliable. He said he knew the importance of net-asset valuation, but yet when he did his analysis, his flow of funds, he didn't look at that when it came to Alameda. He didn't look at Alameda's assets that were held off the exchange or FTX or other assets.

He also told you in some of his analysis -- by the way, that's at transcript 1802 and 1804. He also told you in some parts of his analysis that he concluded transfers must have come from customer funds because they were, quote, in the immediate vicinity of customer funds. That's at 1750. That doesn't sound very scientific to me and not something to rely on.

Finally, you heard from Agent Owens of the FBI, who did a flow-of-funds analysis relating to political donations. Again, the easiest way to think about her is from a high-level point of view.

If you conclude, as we submit you should, that Sam acted in good faith, including in making political donations, then she traced out the funds, whether they went to account A or B or C, is beside the point.

MR. COHEN: Like Professor Easton, if you want to get into the specifics, some of her analysis was not reliable. She told you she used the last in, first out LIFO method, but then we showed her a major expenditure that she had to admit on the stand actually didn't follow that method, so a reason to be skeptical there.

That brings me to my concluding remarks finally. We want to thank you again for sitting with us through this trial. You have done a great job keeping an open mind and listening carefully and intently, and we thank you for giving up the time in your personal lives to hear this case. It is important to us.

Now, after I speak, tomorrow the government gets to speak again. It's called a rebuttal summation. As I mentioned, they get to do that because they get two because they have the burden of proof and it never shifts.

But, even so, the defense can still be heard. What do I mean by that? You can speak for us. When you hear something in the government's rebuttal, and as you evaluate it later in the jury room, please consider they are making points that we might make, asking questions we would ask.

For example, if the government says, well, once the fiat liability was discovered, Sam should not have come to a different view about Alameda's liquidity and Gary, Caroline and, Nishad. Please ask, why not? Wasn't this in the end a difference in business judgment? If the government says in rebuttal, well, please disregard what the defense told you about how to think about the cooperating witnesses and their agreements, about all the real-world pressures on them, about the shift in what they said between then and now, please ask, why should we do that? Shouldn't we be very skeptical of their testimony and not accept it due to those concerns and so on?

As you listen to the rebuttal summation and as you go into the jury room we ask you, please, to think about the questions we would ask and consider them as you go through the evidence.

Because in the end we submit that Sam did his best to start and operate two companies that became multibillion dollar businesses in a new industry. Some decisions and judgments turned out very well. FTX wound up with 6 million users, managed billions and billions of dollars of trade. Some decisions turned out poorly, especially without hedges. Holding long-term assets against short-term liabilities was a decision that turned out poorly. It led to FTX and Alameda's liquidity gap and ultimately to the bankruptcy filings. As I have said many times now, business decisions made in good faith are not grounds to convict.

We submit that when Sam testified before you, he told you the truth, the messy truth, that in the real world miscommunications happen, mistakes happen, delays happen. And the borrowing happening in the case of Alameda here, in the case of Alameda depositing or withdrawing hundreds of millions of dollars a day, in a process that swept in customer fiat assets, there were mistakes, there were failures of corporate controls in risk management, and there was bad judgment. That does not constitute a crime.

This has been an extraordinary journey. In Sam's life he has gone through more than most do in a lifetime. One day he's a college student. Then he's in an apartment with his close friends starting a crypto company. They are working around the clock, moving all over the world. The company is becoming amazingly innovative and successful, worth billions. Then there is a market crash and then this.

And here we are, finally before you, in your hands, the jury, so I'll speak last for Sam, for my client. Consider the evidence in light of your real-world experience. We submit you will find that Sam acted in good faith throughout, that he made the best business decisions he could at every stage. He didn't want to hurt anyone, far from it. He didn't want to defraud anyone and he didn't. He didn't intend to defraud anyone.

So, with respect, the greatest of respect, we ask that when you deliberate, you find him not guilty on all counts.

Thank you.