1.Government Closing Argument

MR. ROOS: Thank you, your Honor.

Almost a year ago, thousands of from people from all over the world who had deposited money with FTX started withdrawing their funds. With each day the withdrawals grew. Millions of dollars turned into hundreds of millions of dollars, which turned into billions of dollars. Thousands of people were trying to withdraw their investments, their savings, their nest eggs for the future, but their withdrawals weren't being processed. Money wasn't being returned. And as those customer withdraw requests froze, they were overcome with anxiety. With each additional click of the withdrawal button, their dread turned to despair. Their money was gone. FTX was bankrupt. Billions of dollars from thousands of people gone.

As the dust settled and bankruptcy proceedings began, and FTX ceased to exist, a series of questions emerged. Where did the money go? What happened? Who is responsible? Now that you have seen all the evidence and heard all the testimony, you know the answers to those questions.

Who was responsible? This man, Samuel Bankman-Fried. What happened? He spent his customers' money and he lied to them about it. Where did the money go? The money went to pay for investments, to repay loans, to cover expenses, to purchase property, and to make political donations. This was a pyramid of deceit built by the defendant on a foundation of lies and false promises, all to get money, and eventually it collapsed, leaving countless victims in its wake. That's what happened. That's where the money went. The defendant is responsible.

I am going to ask you to think about these questions this morning and throughout the rest of your time, including into your deliberations. Where did the money go? What happened? Who is responsible? We have been at this together for a little while now, for over a month, and you have heard from a lot of witnesses, and you have seen a lot of documents and spreadsheets on your screen, and you've been playing close attention. We have seen that. This is our opportunity to walk you through all the evidence. I am not going to go through every document. You have seen a lot of it. But it's our opportunity to talk with you about how it all fits together.

Let's start with a few straightforward facts that aren't in serious dispute at this point. The first is that there is no serious dispute that thousands of customers from all over the world put billions of dollars on FTX and that the exchange at least said it was holding billions of dollars of customer deposits when it collapsed.

Second, there is no serious dispute that customers believed that their deposits were theirs, for them alone to use. And you remember five weeks ago now the first witness in the case, Mark-Antoine Julliard, who flew here from London, he told you that having his money used or borrowed by someone else -- and these were his words -- was not something he signed up for.

And it wasn't just customers. The defendant's public statements, FTX's ads, FTX's policy documents and its terms of service all said the same thing. And advertisements like the ones we saw with Tom Brady or Larry David. FTX said it was the safest and easiest way to buy cryptocurrency. And in its terms of service FTX said that assets are the property of its customers and do not belong to FTX. In its policies FTX said that customer assets, both fiat and cryptocurrency, are segregated, that customer funds do not represent the property of FTX, and that customer assets are held in trust.

Employees and investors all testified that they believed the customer deposits belonged to the customers, that they could not be taken or used or borrowed, and you heard about the reaction of employees when they learned that FTX customer deposits were being used. Adam Yedidia quit within a half hour. Can Sun resigned. So did Christian Drappi. The defendant's partners in crime said the same thing. Caroline Ellison, Nishad Singh, Gary Wang, their understanding was that customer funds were not allowed to be used by FTX or Alameda or anyone else. They believed it was wrong and illegal. It didn't matter if it was a customer, an investor, a lender, an employee, or a coconspirator. It was a universal view from the witnesses you heard. Customer funds belong to customers and could not be used.

MR. ROOS: Third, there is no serious dispute that around $10 billion went missing. The evidence you saw, and we will talk about it again, shows that there was a huge difference between what FTX's system said they were supposed to have for customers and what FTX actually had for customers. Billions of dollars missing in cryptocurrency, billions of dollars missing from bank accounts, and there is no serious dispute about that.

Fourth, there is no serious dispute about where the missing money went. Professor Easton traced the money. The missing billions went to pay for investments, stock-share buybacks, real estate purchases, donations, trading expenses, and loan repayments. The clear uncontradicted evidence shows that the defendant was responsible for these giant investments, for stock repurchases, for real estate purchases, for political donations.

Over the last month you have heard evidence about Bitcoins and Blockchains, auto-liquidation and auto-deleveraging, computer code, and so-called Korean accounts, about a lot of other concepts. Here is the thing. This is not about complicated issues of cryptocurrency. It's not about hedging. It's not about technical jargon. It's about deception, it's about lies, it's about stealing, it's about greed.

What is the dispute in this case? One of the disputes is whether the defendant knew. That's what they have said. The evidence that the defendant knew that he was spending FTX customer money, though, I submit, is beyond dispute.

The core dispute in this case is whether the defendant knew taking the money was wrong. That's the core question. And the answer is clear. He took the money. He knew it was wrong. He did it anyway. Because he thought he was smarter and better and he that he could figure his way out of it, he could walk his way out of it and talk his way out of it, and today, with you, that ends. You have sat through this trial. You have seen the evidence. And, very simply, when you apply your common sense and look at the evidence, you see the defendant schemed and lied to get money, which he spent, and now it's gone.

You see over and over and over again he and his company were telling customers their money would be protected, and they were using it at the same time for whatever the defendant wanted to use it for. And you see over and over again from his own statements, from his own conduct that he knew what he was doing was wrong. There is overwhelming guilt, overwhelming evidence of the defendant's guilt.

Before we dive into the evidence, let me say something about the fact that the defendant took the stand in this case. He didn't have to testify in this trial. He has a right not to do that, and he doesn't have a burden to put on any evidence. The burden is on the government, and we embrace that burden.

But the defendant did take the stand, and he told a story, and he lied to you. Did you notice how on Friday his testimony was smooth, like it had been rehearsed a bunch of times? He testified for hours about things that don't really matter for the case, like what the Epsilon Beta House at MIT was like, or background about Jane Street or the layout of Alameda's first office in an Airbnb, or the reasons they moved to Hong Kong and then left Hong Kong again, or why he picked the Miami Arena as the one to brand. This was the CEO, who was able to define on Friday 50 terms on direct examination and had a perfect memory.

But let's talk about how the defendant's testimony looked on cross-examination. He was a different person. Suddenly on cross-examination he couldn't remember a single detail about his company or what he said publicly. It was uncomfortable to hear. He never said he couldn't recall during his direct examination, but it happened over 140 times during his cross-examination. He had to be asked and reasked. He looked away. He lied about big things, and he lied about little things. He asked for terms to be defined that he used freely on direct examination a day earlier. He approached every question like up was down and down was up, and you saw how he listened to the testimony in this case. He came up with a tale that was conveniently put together in a story that excluded him from the fraud.

MR. ROOS: The story the defendant told you was that he didn't know what was going on and didn't think what he was doing was wrong, and that was a lie. Over three days he took the stand and he lied. Because to believe the defendant's story, you would have to ignore all the evidence you saw at this trial. You would have to ignore the testimony of the defendant's partners in crime, his deputies, Caroline Ellison, Nishad Singh, Gary Wang. You would have to ignore the documents, the secret spreadsheets, the flow of money. You would have to ignore the financial records. You would have to ignore the defendant's own statements. You'd have to ignore his lies, lies that he told before FTX's bankruptcy and afterward. You would have to believe that the defendant, who graduated from MIT, who ran two billion-dollar companies and who was testifying before Congress, was actually clueless, and he had no idea what was happening at his own company, and he had no idea what he was doing was wrong.

But you sat through this trial and you know none of that is true. You don't have to wonder what the defendant would say if he thought you weren't listening. You already know. You know because you heard it from his coconspirators, because you saw the secret documents, because you paid careful attention to the evidence in this case, to the difference between his public statements and his private ones, and all of this shows that the defendant is guilty beyond a reasonable doubt on each and every one of the charges.

Here is the plan for this morning. We are going to talk about the evidence and focus on those questions, where did the money go, what happened, who was responsible. Then I am going to talk a bit about some of the defense arguments you heard in this case. And, finally, I am going to talk briefly about the charges.

Let's start with what happened. I am going to talk to you about what the evidence shows happened. What does the evidence show? The defendant took money, and he took cryptocurrency, and he took it from FTX customers who were told that their assets would be kept safe and segregated. That's fraud. It's stealing, plain and simple.

Before there was FTX, there was Alameda. That was the defendant's trading firm. You see it on the screen. He was the 90 percent owner.

MR. ROOS: Thank you, your Honor.

The defendant is Alameda. He was Alameda. He was the 90 percent owner. He was publicly its CEO until 2021. He was the chairman and sole member of Alameda's board. And when Alameda made a profit, it was the defendant who profited.

Now, Alameda didn't have investors. Instead, it borrowed money in order to make its investments. And the way Alameda had money to do cryptocurrency trading was by taking out loans. Alameda was always looking for more sources of capital, meaning more money.

Then the defendant founded FTX, a cryptocurrency exchange you have heard a lot about, where customers can buy and sell cryptocurrency, and FTX would earn money by just taking a fee on those customers' trades.

Once the defendant founded FTX and started getting customer money, he thought he had a new source of money to take for Alameda.

Here is the testimony of Caroline Ellison. The defendant, quote: Said that FTX would be a good source of capital, and he set up the system that allowed Alameda to borrow from FTX. That's from the transcript at page 654.

I am going to be quoting from some of the witnesses' testimony this morning. So if you want to see it, write down the transcript cite. It's in the bottom right corner by their testimony and it's also something I'll say out loud. The same goes for some of the government exhibit numbers. I am going to say some of them out loud, particularly some of the most important evidence, and if you want to see it, just make a note.

The defendant tells Ellison that FTX would be a good source of capital, and then he sets up a system that would allow Alameda to borrow from FTX. When Ellison said, borrow from FTX, what she was referring to was borrowing from FTX customers using their deposits.

Now, the defendant set up two secret ways through which Alameda could take or borrow customer money. You heard about that from Caroline Ellison. You heard about it from Gary Wang. You heard about it from Nishad Singh. They were each the defendant's friends and his coconspirators, his partners in crime. Each of these witnesses testified that they stole customer money at the defendant's direction, and they described the ways he told them to do it.

Let me just take a step back for a second. That means that if you believe even one of those witnesses is telling the truth about this, the defendant is guilty. I'll say that again. If you believe even one of these witness' testimony, Ellison, Wang, Singh, about the way customer funds were stolen by the defendant, that is fraud, and you should find the defendant guilty.

Let's talk about what each of the witnesses said about the secret ways set up at the defendant's direction for taking customer money.

Here is how Ellison described the secret ways they were able to take FTX customer money: Quote, we had access to an essentially unlimited line of credit on FTX, and we received FTX customer funds directly into our bank accounts as part of FTX's fiat deposit system.

This is from her testimony at page 644 of the transcript.

By the way, an unlimited line of credit is just a way of saying unlimited borrowing of customer funds. It's unlimited stealing.

Now, there were two ways that they were able to take customer money, by withdrawing it from FTX from its cryptocurrency wallets in unlimited amounts, and by taking it out of the bank accounts that received those customer deposits.

Ellison also told you who was responsible for the setup, the defendant. Quote: He was the one who set up the systems that allowed Alameda to take the money, and he was the one who directed us to take customer money to repay our loans. That's at page 645 of the transcript. And Gary Wang said the same thing when he testified, that the defendant directed that Alameda be given these secret special ways of taking customer money.

Let's talk about in more detail those two secret systems the defendant set up to give Alameda the ability to take customer money. First, Ellison told you that one of those secret ways was what we just read as an essentially unlimited line of credit on FTX. What was she referring to? She was referring to the way Alameda had an ability to borrow unlimited amounts of money on FTX, withdraw unlimited amounts of money from FTX, and run up a giant negative balance. Each of the defendant's deputies described this secret system.

MR. ROOS: Let's talk about how unusual, how different, how risky the defendant's secret setup was. Before we talk about how the secret system for taking customer money worked, let's talk about what borrowing was like for a typical customer, a customer without those special secret privileges, like the ones you heard about during this trial.

You heard that a major selling point of FTX was the way it managed risk. It was a safe exchange. And the key to that is what they called the automatic liquidation engine. The defendant marketed this to his customers and to his investors as a way that customers could trade safely on FTX and trust FTX instead of like another cryptocurrency exchange. And customers had to maintain an overall positive balance on the exchange. They had to post what has been called in this case collateral or security or assets to the exchange. They had to put it on the exchange before they could borrow money for trading. That's how it normally worked. If the customer's collateral held by FTX went down in value, and the customer's overall account value went down, either to zero or close to zero, then under the normal system, FTX's risk system, its automatic liquidation engine would kick in and it would close the account. And you heard from a bunch of the witnesses about this. This was the standard system. This was the way they contained risk.

When the defendant was on the stand, he tried to make this whole thing sound a lot more complicated and full of exceptions and weird procedural rules. But as the CEO of FTX, it was a lot simpler, and this is exactly what he told the public and his customers.

This is his statement before Congress: FTX's risk-management program requires that digital-asset collateral be placed on the platform itself, rather than pledged, but not delivered to the platform. So it has got to be placed, not just pledged. And the reason is to ensure that the platform has immediate access to the collateral for purposes of managing market risks.

And to borrow money from the exchange, well, a customer had to opt into that spot-margin system which, as I mentioned, requires that they put their collateral up before they borrowed. And the defendant said this was necessary for customers to have prefunded collateral deposits, not simply credit extensions. That was how typical customers were allowed to borrow money through FTX.

So to take a step back, there is a system in place, a standardized advertised system, a system that the defendant testified about before Congress. It's straightforward. You got to put your money up before you want to borrow money. The reason is, so that if the value of what you are doing on the exchange goes down, there is security for them to take to make sure you don't create a massive hole. It was a system that was subject to rules, with limits on borrowing, with requirements where the collateral be kept.

This wasn't a secret. This was in the defendant's public testimony and public statements; secretly, though, secretly the defendant gave Alameda a different way of borrowing customer money, a system that only existed for Alameda, that wasn't subject to the same rules as other customers, that wasn't subject to the same limitations, designed to keep customers' money safe and reduce risk.

These secret rules, as you know, as you learned, allowed Alameda to borrow billions of dollars without collateral on the exchange, to rack up multimillion dollar, billion dollar negative account balances without any risk of being shut down, to being liquidated through FTX's risk system, the very same system that the defendant was publicly saying would keep customer money safe.

Let me pause here for a minute again. The company that the defendant had publicly said was completely separate and free from conflicts of interest was secretly able to take billions out the back door of FTX, and the defendant knew it. And the way you know he knew it is because he set up a system, a public system for everyone and a secret system just for Alameda. We are going to talk more about that. And he directed others to make it work that way.

MR. ROOS: The defendant directed Gary Wang and Nishad Singh to program the secret way of taking customer money right into FTX's computer code. Starting with the computer code, you heard from Wang that at the defendant's direction a feature was added to the code that permitted accounts to go negative, and the naming was not very creative. It was called Allow Negative. And the defendant had it turned on for just one customer's account, Alameda.

Here is the code history that shows the code -- the allow-negative code was added for just one customer's accounts, Alameda. Here is Alameda's account on FTX. This is the database information. And you can see this allow-negative feature far in the right side, in the red box, was turned on.

Now, Wang testified that this feature was added to Alameda's account at the defendant's direction. While there were originally some potentially sensible reasons for some of the code editions, Wang saw that very quickly the defendant started using this feature right here. This is, by the way, Government Exhibit 644. He started using it to allow Alameda to borrow more money than it had.

And to ensure that Alameda was able to withdraw essentially limitless amounts of money, the defendant also had Wang give Alameda a gigantic line of credit. This is that same exhibit again, Government Exhibit 644. This is the screenshot of the code and it's just in black and white right there, a $65 billion line of credit right on Alameda's account. Wang told you the defendant directed him to set up Alameda's line of credit this high so they can make unlimited withdrawals.

Here is that testimony. Quote: Sam asked us to take it to -- Sam asked us to take it to a large number. I took it up to a billion dollars and then the issue happened again. The issue he's talking about is where Alameda exhausted its line of credit. And then he asked me to take it up even farther, and I told him I'm taking it up to 65 billion. He said he is fine with that, and I did that.

As a result of Alameda's ability to go negative and its $65 billion line of credit, it was able to run up this massive negative balance, billions of dollars. When I'm talking about a negative balance, I'm talking about an account that's in the red. It has got a negative sign in front of it, which means it's in a deficit, it's in a hole, and Alameda was in a multibillion dollar hole.

This presented really a massive, totally undisclosed risk to FTX's customers. They were told that their assets would be safe. They were told that if a customer's account would go negative, the way they would be kept safe is by having that customer's account liquidated or shut down.

And what they didn't know, what you all know but they didn't know and what the defendant hid from them, is that Alameda had this multibillion dollar negative balance in its account. And Wang testified that that -- it was these special features that allowed and caused Alameda to have such a large hole at FTX, and Singh said the same thing.

Now what the defendant does -- actually, let me put it this way. What the testimony from these witnesses tells you about the defendant, about the core issue in dispute, is, it tells you the defendant gave special secret privileges to Alameda, knowing it would be allowed to take, to steal customer money. It shows that he knew it was wrong to take money and the way -- and this is critical -- the way you know that it shows he knew it was wrong to take customer money is, if he thought this was legit to just have a giant line of credit and this allow negative feature and borrow from other customers, why was it so secret? Why not just say, hey, Alameda, by the way, has a $65 billion line of credit? The reason it is secret is because he knows it's wrong. Now because of these secret features Alameda was not subject to the same rules as other customers. And while there were limits on how other customers could borrow, there were no limits on Alameda's borrowing. Let me talk about one of those limits on other customers.

Other customers were not allowed to withdraw funds advanced from a line of credit. Here is a customer contract prohibiting it. That restriction, though, as you heard, did not apply to Alameda's borrowing. So while other customers had to have collateral on the exchange, while other customers could not withdraw their lines of credit, it says it right in this contract, Government Exhibit 69, that rule did not apply to Alameda.

MR. ROOS: As a result of these special features, Alameda ran up a huge negative balance on FTX. This is Government Exhibit 1002. This is Alameda's borrowing through its accounts that were allowed to go negative. So this exhibit shows what happened in the major cryptocurrencies in those accounts that had that special allow-negative box checked. The box that we saw in Government Exhibit 644, it's these accounts, and that's what happened. They went as low as negative $12 billion.

By the way, here is another reason why Government Exhibit 644 is critical. This wasn't typical borrowing, right. We have talked about the spot-margin program. And notice Alameda's main account. It didn't even have spot margin enabled. Why that's important is, it was not participating in the program where typical customers had to opt in and post collateral. It was borrowing the defendant's way, through the special advantages. It was borrowing through the $65 billion line of credit, not through the spot-margin program.

As I said, when we are talking about borrowing here, I just want to be clear, Alameda is taking money off the exchange. Unlike a typical customer, who was doing borrowing to trade on FTX, Alameda was just taking the borrowed customer money off of FTX for its own purposes, to cover expenses or to pay for investments.

And Professor Easton gave you some examples. Here is one. This is Government Exhibit 1017A and 1017B. And we saw some of these exhibits for each of the lenders. It goes 1017A through -- I think it's H. There is one for each lender. And what each of them shows is that Alameda's special secret borrowing was used to take customer money to repay Alameda's third-party lenders. This is Government Exhibit 1024. Alameda's special secret borrowing was used to take customer money to buy back FTX's stock.

This is something -- I am not going to go into the details now, because we are going to talk about this further in a bit, but this is another example of using -- again, you can see it at the bottom -- that allow-negative account to borrow a billion dollars to buy back stock.

Alameda had one more secret exception that made everything even riskier. It was exempt from the liquidation system. A liquidation system in some ways is like the giant parachute. It's what -- if an account is getting to a risky position and is about to go bankrupt, liquidation is what stops that process and what stops that risk from turning into some big hole. It closes out the account. But Alameda was exempt. It was not part of that liquidation system. And what that meant is, it would not be shut down. Its account would never be closed, no matter how negative it got, no matter how risky it became.

Here is the proof. This is, again, another piece of the computer code that exempted Alameda from being liquidated. It was added by Gary Wang in 2020, and he testified that defendant directed him to do it.

Keep in mind this date that's on this exhibit. This is important. 611 is the number. Because on cross-examination the defendant admitted to this. This was a stunning moment, I thought, of cross-examination because here is what he admitted.

The question was: In 2020, isn't it true that you directed Gary and Nishad to change the rules in the code so that the auto liquidation rules that applied to other customers on the exchange would not apply the same way to Alameda? That was the question that was asked of him on page 2659 of the transcript. Here is his answer: I suggested that they make some alteration to it. And he was asked a follow-up. For that purpose, correct? And he said yup.

So by 2020, here is the question. So by 2020, you knew that Alameda had distinct rules for liquidation. That was the final question here. And what was his answer? Yeah. 2659 of the transcript. On cross-examination he admitted to knowing about that code change. He admitted to knowing that Alameda had distinct rules for liquidation. That's a concession that he knows that Alameda was exempt from the rules that applied to all the other customers.

What was the result of Alameda's secret exemption and privileges on FTX? You know. The defendant took billions of dollars in customer funds, leaving an enormous gap between what FTX said it had in customer money and what it actually had in cryptocurrency wallets.

MR. ROOS: And this is important. This is covered in Government Exhibit 1051, which we'll see in a bit, but it proves that FTX didn't have anywhere close to the amount of money to cover customer deposits, because of these secret privileges.

Now the defendant took the stand and denied that he knew everything about these special features, like that the total size of the line of credit was 65 billion, and he denied that he was told about some of the code features, but he admitted to you that he was the one who directed Gary and Nishad to change the code to prevent Alameda from being liquidated if its overall account was negative; and he admitted to you that he was the one who told Gary and Nishad to increase Alameda's line of credit. He even admitted that he knew Alameda was using a line of credit to borrow billions of dollars.

Let's talk about what that means. Knowing that Alameda was using its unusually large line of credit to take money from FTX, that means that the defendant knows, he knew that Alameda was taking money from FTX customers. He was taking money from FTX customers when he was saying something totally different publicly, when he was lying publicly, and that makes him guilty of fraud.

Now he told you he never queried the FTX or AWS database, or looked at the code. Not only is that farfetched and completely not believable that as the CEO, he was unfamiliar with the computer code that ran the website and the database that had all the transactions for the website, it's also irrelevant. He told his deputies to exempt Alameda from the rules that applied to other customers, to increase borrowing limits, and that's fraud. It's stealing.

You also know that the defendant was deeply familiar with these special features and how they were used to take customer funds because of the documents in this case.

This is Government Exhibit 5. It's an excerpt. This is a spreadsheet created by the defendant. It's important. He admitted during his cross-examination——and he had to, because of this Google metadata. You remember the brief witness from Google who introduced metadata evidence for certain documents. Metadata evidence is like the data information about when documents were created or saved or viewed. And the Google metadata shows that the defendant was the sole creator of this spreadsheet, Government Exhibit 5, and that he made it in early September 2022. And in this spreadsheet it lists out all of the lines of credit. You can see them.

Now that's important, because look at these numbers that are on here, and the email addresses. This is not the type of thing you can memorize, right? It's not the type of thing where you're like, I'm going to——I'm going to commit to memory, 65,365,999,994. And then do that for a thousand different lines of credit. The way he has this is because it's coming from the database. And right there is Alameda's line of credit. And that also shows you that he wasn't telling the truth when he said he couldn't see any of these things.

By the way, did you notice how the exact same number that's on the defendant's spreadsheet, Government Exhibit 5, also is the exact same number in the screenshot that we've looked at, Government Exhibit 644? But again, it shows you, he's able to view these things.

What the defendant's spreadsheet also shows——again, this is Government Exhibit 5——is that he knew Alameda's balance sheet was in terrible shape without the money he had stolen, without the secret $65 billion line of credit from FTX. The number here that's key is the net. That shows how much money Alameda had without its line of credit. And negative 5 billion right here, that number at the bottom, is actually sugarcoating the situation, because without the FTT——which are those coins that the defendant created for his company, which couldn't actually be turned into cash——the balance of Alameda's main account, he knew, was negative 10 billion. So the defendant plainly knew that because of Alameda's giant line of credit, it was able to and did borrow billions. Those billions came from FTX customers.

MR. ROOS: The defendant mentioned a few times when he testified that FTX made a billion dollars in revenue, before expenses. When Alameda was borrowing billions, it was right off the FTX platform, and it was borrowing 10 billion or so, 5 billion, 10 billion. Simple math tells you it's coming from customers. 1 billion revenue, 5 billion borrowing. Like whose money do you think you're taking? Right? It's——if you are——if there's only 1, at most, 1 billion to take and you're borrowing 10, that means it's coming from the other people who have put the money on the platform. That's not your money; that's customer money. This alone makes the defendant guilty of fraud.

Now compare what the defendant told FTX customers to what was actually happening. The defendant told customers that his exchange operated one way that was trustworthy, that it had the liquidation engine, that it kept customer money safe, that it kept——and then simultaneously, he had this hidden, massive exception to that rule that put everyone's money at risk, and allowed him to steal customer money.

You heard a lot about the fiat liability and the use of customer fiat deposits. We're going to talk about that. But keep this in mind. If you conclude that the defendant stole customer money using these code features that I've just described, you can and you should find him guilty on that basis alone. It doesn't matter what happens with those fiat deposits because he's just ripping money right off the FTX exchange.

But that wasn't all. You did hear the evidence about the fiat deposits, and this is a reason also, all by itself, to find the defendant guilty of fraud. He had customers send their bank deposits, their money, fiat deposits, directly into Alameda's bank accounts, and then he spent it. Here's how Ellison described it.

"We received FTX customer funds directly into our bank accounts as part of the FTX fiat deposit system."

Ellison explained to you that long before she was Alameda's CEO, the defendant set up a system to receive FTX customer deposits into bank accounts that belonged to Alameda, and a lot of those deposits came through this entity that we've heard some about called North Dimension. The defendant was involved in opening that account. He signed the application. That is his name right there, as the principal officer. This is Government Exhibit 1348. So he knew.

Once FTX customers' deposits landed in Alameda's bank accounts, they were used as a source of free cash. This is Government Exhibit 1050. In some ways, the picture here just tells you everything, right? Professor Easton traced the money. Rather than holding the customers' money in custody, it was moved all around, commingled, mixed, spent, transferred from one account that received customer money for customers to operating accounts, to FTX accounts, to out the door to all sorts of expenditures, to the defendant's own company called Paper Bird. And that's because, as Ellison told you, the defendant said they could use the money to fund Alameda.

There was a sort of——there was this funny part of the cross-examination yesterday that stuck with me, which was a point when my colleague was asking the defendant: So who moved the money if it wasn't you? Like, who thought they could do this? And we went through this list of names, and it was these low-level people. And so the theory here is that somehow the lowest levels of people, I guess, just moved and took $8 billion. That's not credible, right? That doesn't make sense. That doesn't line up with the evidence. The evidence shows——that we're about to go through——it was the defendant, right? And that makes sense. He owned it, he was the boss, he set up the system, he was FTX's CEO, he was Alameda's CEO when this got started, he was the sole chairman of the board. He's the reason why the money is moving in crazy directions like this.

And how did they use those fiat deposits that came into Alameda's bank accounts? Here's an example. They used it on——a hundred million dollars in real estate in the Bahamas, they used it on investments like buying Robinhood shares. And what was the result? The result was billions of dollars that Alameda spent and owed back to FTX customers.

MR. ROOS: This chart, Government Exhibit 1004, tells the story. The black line, FTX's systems said there were over 10 billion in fiat deposits with Alameda. But in reality, it was the green line, and that's because the defendant and his co-conspirators spent the money, and that's why there's this giant gap in the middle, hole.

I want to be clear about something. Nothing about how FTX customer fiat deposits were taken or borrowed resembled anything close to the system that the defendant had put in place that permitted typical customers to borrow money from FTX. This was not margined borrowing, right? It wasn't even through the system. The defendant admitted that yesterday. He was asked questions: Was this margin trading? Was this margin trading? There was no collateral posted here. This wasn't even Alameda's special secret line of credit. This was all off the exchange, off the books. And during cross-examination, when the defendant was asked whether he could name any other customer that accepted FTX customer deposits besides Alameda, he couldn't name a single one. Alameda was exceptional in that regard, and the way it was exceptional is that it was allowed to take these deposits and use them, because, as Ellison said, there was an additional source of capital for the defendant's agenda. Common sense tells you it was the defendant who set up these systems.

Let's think about the other options. It couldn't have been Ellison alone. She never worked at FTX. She didn't have any way to give Alameda the special ability to withdraw money from FTX, right? She didn't have the access to go into the computer code. And because she didn't work at FTX, she also didn't have the ability to set the wiring instructions to send the customer deposits to Alameda. And of course when this whole system was set up, the defendant is the one who was both the CEO of FTX and of Alameda. Caroline was just a trader. So it can't be her alone.

And then on the other hand, you've got Gary Wang and Nishad Singh, and they could not have acted alone without the defendant. They worked at FTX, but they didn't have any role at Alameda. Wang was a minor owner but had no real role in the business. He had no involvement in the spending. He was sometimes given documents to sign, but as he testified on direct examination, cross-examination, and redirect, he didn't even know what the documents were for. And Singh didn't even ever work at Alameda. He had no role with the company. So it couldn't have been them alone. They didn't have access to the money to spend it.

Now the defendant, he lied to you when he pretended he didn't know Alameda was spending the customer fiat deposits. He told you that he was the CEO of Alameda when this started and never gave a single employee any guidance on safeguarding or segregating FTX customer fiat deposits. And four witnesses——Adam Yedidia, Caroline Ellison, Gary Wang, and Nishad Singh——all told you that in June of 2022, they discussed with the defendant that Alameda's liability to FTX for spending FTX customer fiat deposits was 8 billion. But the defendant, he claims that he just had no idea about this fiat deposit, just had no idea about the liability, no idea about the accounting structure that was then in place, until September, or was it October, or was it the end of October? That's just simply not remotely credible.

The truth is that there was just one person who had a motive to set up the system to give Alameda the secret special ability to borrow money from FTX customers. Who had control? These are the questions. Who had control of FTX in order to give Alameda secret access to customer money? And who had control at Alameda to spend that money? There's one person——the defendant. He set up a system; he directed a system where Alameda could borrow unlimited amounts of money, without any limits, without a requirement that the collateral be on the platform, without any restrictions on withdrawing the money, and without any chance of liquidation; and he set up another system where Alameda would receive customer fiat deposits directly and it could use that money without any restrictions.

MR. ROOS: And just to take a step back about thinking about what the alternative explanation is, so somehow, two different sets of people——because there's no other overlap——two different sets of people come up with two different systems that both happen to give the defendant's company secret access to money. That's got to be the alternative explanation. And you know that's not credible. The defendant knew what he was doing was wrong. He tried to tell you he thought this was actually permissible to use the fiat deposits, but his testimony flew in the face of what every customer who testified says they thought how their money was treated. And you know that because of the things he said publicly that were totally inconsistent with what he was doing in secret.

So one of the ways you know he was lying, one of the ways you know he knew what he was doing was wrong, was while the defendant was secretly giving access to FTX customers and spending it, he was saying something totally different to the customers, to the investors, to the public, and to the United States Congress. He was lying to the public, and he told those same lies on the witness stand.

Let's start with the advertisements. He ran ads saying FTX was safe. "The safest and easiest way to buy and sell cryptocurrency." He told Congress and the public that by "logging in to the customer's account at FTX, the customer can immediately view the types of assets they own, held in custody by FTX." And that last part is critical. He said, they can view the "assets they own, held in custody by FTX." And that wasn't true. When customers logged in to their accounts, they saw a balance. Behind the scenes, the money wasn't there. That in and of itself is a lie. A customer logs in——the first customer witness we saw in this case logged in and saw a number that represented his balance, and that wasn't real. That was false. And that was a lie. It had been taken off the exchange.

And here's the proof of that. This is the chart I was talking about earlier. There was a huge deficit, a huge hole on the exchange. This is Government Exhibit 1051. And it shows you what customers thought they had. That's the black line, right? This is what customer balances were on the exchange. But what they actually had was the yellow line. What was actually there was something totally different. Billions of dollars different. And the difference between the black line and the yellow line is the hole. And this proves that the defendant was lying publicly because he was saying one thing——that we held the assets that you own in custody——when in fact something totally different was going on.

Now the defendant had said he wasn't aware of some of the stuff that was going on, and he lied when he said that. He said something like, it was messy accounting and that was on my list of priorities. So, I mean, give me a break. That's a lie. If that was true, that they had messy accounting, like he claimed, then why did he tell Congress that "FTX regularly reconciles customer trading balances against cash and digital assets held by FTX"? Regularly reconciling means comparing. Regularly reconciling trading balances against cash and assets held would have told the defendant, did tell the defendant, that there was a huge, significant hole, right?

Go back an exhibit.

If the defendant is regularly reconciling balances——that's the black line——against, as he said, what money they had——the yellow line——he knows that there was a huge gap. He knows that. And when he's saying everything is fine, after saying, we regularly reconcile, he's lying. And that tells you that he knows what he's doing is wrong.

MR. ROOS: Now yesterday morning on redirect, the defendant came out and he said that he thought it was okay for Alameda to use customer fiat deposits, and that's a claim that not a single witness besides the defendant has made in this case, right? Universally, they've said this was a bright red line. You cannot touch that money. No one thought it was okay. And the truth was that the defendant, he knew that Alameda was not allowed to use that money, and again, the way you know it is because he said something totally different to Congress. Twice, the defendant told Congress that when an intermediary like Alameda receives customer assets, they must ensure there was "no delay in returning customer funds upon request, and no shortfall where an amount lesser than the value of that customer's assets can be returned." And he told Congress that to ensure that happens, it's important that there be "a restriction on the custodian"——so that's Alameda——"a restriction on the custodian, including, for example, a restriction on the use of customer assets to finance other business expenses and initiatives." Think about that last part of his testimony here. He's saying the third party, the intermediary that receives the money, there must be a restriction on it on using customer assets to finance other business expenses and initiatives. And if you're thinking, well, that sounds familiar, that's because the defendant did exactly the opposite. He used customer assets to finance other business expenses and initiatives. But privately, in secret, you know he knew exactly what was going on and he knew it was wrong.

We've talked a lot about all the special advantages and secret privileges that Alameda had. The defendant knew how wrong and unfair these privileges were to every other customer on the exchange, how these privileges flew in the face of everything he said about trust and safety on the exchange. So he lied about it, to cover it up.

And what was the defendant saying about the relationship between FTX and Alameda? Throughout his time at FTX, the defendant was saying things publicly like, Alameda is treated just like everyone else. He tweeted that. "Alameda is a liquidity provider on FTX but their account is just like everyone else's." He was quoted in articles as saying that Alameda is a wholly separate entity. And he told CNBC that he "worked to eliminate conflicts of interest," and that he doesn't run Alameda anymore, and that Alameda is a "neutral piece of market infrastructure." Those were lies. Privately, the defendant knew that Alameda had all sorts of special privileges and features on FTX. It wasn't wholly separate, it wasn't just a piece of neutral market infrastructure, its account was not like everyone else's. Unlike any other customer, Alameda had the $65 billion line of credit. It was able to do unlimited amounts of withdrawals, make unlimited amounts of borrowing, have its account go negative, not post any collateral, not be liquidated, not be shut down. Its borrowing wasn't just through the spot margin program. Much of it wasn't even on FTX. If customers knew that the defendant had directed these special privileges for its own affiliated company, they would have run for the exits. It would have been clear as day that their money wasn't safe, that the defendant was treating their deposits as his personal piggy bank by funneling that money to Alameda. And so the reason he made these public statements is to conceal what he was doing, because he knew what he was doing was wrong.

You know these were deliberate lies. He told customers that backstopping customer assets was primary within weeks of using customer money to repay his debts. He told reporters that Alameda was totally separate in September, when he was internally freaking out about the close relationship between FTX and Alameda. And at the same time, in September 2022, when he wrote this spreadsheet, Government Exhibit 5——this is the spreadsheet we were looking at a little bit ago, where the defendant listed out all of the lines of credit and listed out Alameda's line of credit as 65 billion, and the next closest as 150 million——this is the same time he made those statements to Bloomberg and to CNBC; the same time he said, they're totally separate, treated like everyone else, neutral market infrastructure.

MR. ROOS: And you saw an example of a line of credit agreement that VIP other customers used. And those customers had to sign these documents, and there was of course a limit on how much they could borrow. And it was only as much as their line of credit. And they were prohibited from withdrawing it. So no other customer had a setup like Alameda. And as Alameda was using this line of credit to spend billions on loan repayments, on investments, and on expenses, it had nothing to do with their trading at FTX.

So from this, here are the key points: (1) Alameda had a special feature, a secret advantage over other customers, and it certainly was not treated like other customers; and (2) the defendant knew about it at the same time he was making public statements.

So you sat through this trial, obviously, and you've seen a lot of examples of the defendant saying something publicly different than what he was doing in secret. And what does this say about his intent? Right? Because that's one of the key questions. To view FTX as safe, secure, custodian of their money, that's what he was projecting publicly. He wanted it to be viewed as a trustee. These public lies also, though, show his criminal intent. The fact that he was saying things publicly that were different than what he was doing privately shows he knew what was going on behind the scenes wasn't okay.

So next I want to talk about some of the details of where the money went and who was responsible. But before I do that, let me ask your Honor if you want to take a break right now or later.

MR. ROOS: Thank you, your Honor.

So the defendant directed that these systems be put in place that allowed him to take FTX customer money, and then once the systems were in place, there were points in time, points along the road, where the defendant was presented with a choice——come clean or double down. And every time he chose to double down, to take more criminal steps to dig the hole in customer deposits deeper.

And so what we're going to do now is I'm going to talk about six moments in time. And here are the first three. But six moments in time in 2021 and 2022 where the defendant was presented with a choice about coming clean or doubling down and digging the hole deeper. And each time, he indisputably knew the financial situation at FTX and Alameda, and he knew that he would be spending customer money, and each of these times, he took the path of doing the wrong thing, he took the criminal path, and so that's what we're going to talk about.

And No. 1, the first reason is the defendant's purchase, his buying back of stock from Binance using customer money in 2021.

So starting in the middle of 2019, back when FTX was started, the defendant sold some of FTX's stock to a company called Binance, which was run by this guy on the left. And fast forward two years later, FTX and Binance, according to the defendant, are rivals, and the defendant hated the fact that his rival owned part of FTX, so in 2021, the defendant wanted to buy out Binance. And buying out Binance or buying back Binance's ownership of FTX stock was expensive. Binance had about $2 billion worth of FTX's stock. And so remember what the defendant said about how much money in revenue they were making at this point——about a billion dollars. That's only half of the $2 billion that he needs to buy back FTX's stock from Binance. They didn't have enough money to do it. But the defendant kept telling Caroline Ellison it was really important to him to buy back Binance's stock.

He said——and this is testimony. He said to her, and this is what she said to him: "We don't really have the money for this, we'll have to borrow from FTX to do it." And he said this in response: "That's okay, I think this is really important, we have to get it done."

Let me say it again. This is from page——by the way, this is from page 668 of the transcript. She says, "we don't have the money, we have to borrow it." And what she's talking about is taking it from FTX customers. And he says, "that's okay, we have to get it done." It doesn't matter how much he wants to do it; if they're talking about money from customers, it's clear as day the defendant knows that they're stealing and committing fraud. And that's exactly what they do.

This is Government Exhibit 1024. To pay the $2 billion to buy back the stock shares, they used the billion dollars they had and then a billion dollars of customer money from FTX. And this came out of that main Alameda account with the "Allow Negative" turned on and the $65 billion line of credit. This has nothing to do with the members of the settlement team that he was saying were in charge of spending fiat deposits. This wasn't margin trading. This was just taking money straight out of an account with a negative balance that had a special privilege so that he could pay the nearly $2 billion he needed.

And notice what the defendant said and what he didn't say when he testified about this. He admitted that there was a stock buyback, and he admitted the amount of money he used, but he was totally silent about the specifics. He didn't say anything about the conversation with Caroline Ellison, and that's because it was bad for him. Bad for him because they were using FTX customer money. Way back in 2021——and this is important. The timing here is important. Way back in 2021, well before there was market turmoil that caused problems, way before all the events the defendant testified in 2022, when he bought back these shares, they didn't have those issues. So when he was asked about the buying back of the shares, the defendant gave a vague answer. And remember what his answer was? It was, he didn't know exactly which entity bought back the shares. And he didn't want to say who bought back the shares, and the reason he was vague and didn't give a straight answer when he testified is because the truth on this one is particularly inconvenient for the defendant.

MR. ROOS: And this is the critical document. This is Government Exhibit 317. It's an email, and it's from the defendant, okay? And it's him saying transfer the money to buy back these Binance shares. And let me just point out something about who's on this email. No one from Alameda, right? They're not even copied. It's the defendant who's leading this effort. And that tells you everything you need to know about this. He's the one, and he knew exactly where the money was coming from. It wasn't like there were settlement people who were doing this process. It was him. He took about a billion dollars of customer money, without his customers knowing, and when FTX did not have all the money it needed to do this buyout. This wasn't something that he needed to do to make the exchange run, this wasn't the result of bad luck, this wasn't the result of, you know, some hedging gone wrong. This was a deliberate decision. This was him spending money that he wanted to spend. And remember why he did it. He said this was "really important to me." He was confronted with the question by Ellison, we have to spend customer money, and he said, "that's okay, this is really important to me." So that's how you know the defendant knowingly took FTX customer money and intentionally committed fraud. He knew this wasn't permitted borrowing, because it was not a way that was allowed on FTX. He did it because it was really important to him, because he really cared about this rivalry. And when he was given the choice of not buying the stock back that they couldn't afford or digging a deeper hole by taking more customer money, what did he do? He decided to double down, to take more customer money, to make that Alameda account more negative, and when the question about this was put to him on the witness stand, he had no answer for it. That's the first moment to think about. When you deliberate, that's a moment in time to think about, when the defendant was presented with a choice and he chose to double down, he took a criminal act, and that tells you everything you need to know about his knowledge and his intent.

Here's the second moment in time, the second instance when the defendant was given a choice and yet again he decided to double down. And what I'm talking about now is a period in the fall of 2021 when Alameda was already borrowing customer money and was financially not in good shape. But the defendant was greedy. And when he was presented with a choice again of coming clean or doubling down and digging the hole deeper, you know what he did. He kept digging. And this is the second point in time that you can see where the defendant indisputably knew about the financial situation, indisputably knew that they were taking customer money, and then did it anyways. And that shows you that he knew what he was doing was wrong.

So here's some background. In the fall of 2021, the defendant sends Caroline Ellison what he calls the 10th Percentile Scenario, which Ellison told you is something like a scenario that could plausibly happen, isn't so likely to happen, but you have to take seriously because it might happen. And here's the question the defendant puts to her: What happens in a scenario where cryptocurrency prices drop and a bunch of our investments lose money, and what would happen if in the meantime, we spend $3 billion more on investments? So it's like this scenario he's mapped out. And in everyday terms, this is like: What would happen if I brought a brand new sports car that's really expensive and then at the same time the economy got really bad and at the same time I also lost my job? This is like his version of: What is this thing?

And she, because everyone loves spreadsheets, does a spreadsheet, and she makes a spreadsheet for the defendant that addresses this question: What are Alameda's assets and liabilities? And this is another critical document in the case. This is one to think about. Government Exhibit 36. And the name of this is NAV Minus Sam Coins. A funny name. It's net asset value, or NAV, minus the Sam coins, which are the coins, like FTT, that he created. So what's our financial picture without the Sam coins? And this is something that she shows the defendant, and he admitted during his testimony that he saw it. That's at page 2458 of the transcript.

MR. ROOS: So let's look at what the defendant saw when he looked at this spreadsheet back in 2021. So right off the bat, Ellison has a calculation for the defendant of what Alameda's value is without the Sam coins, NAV Minus Sam Coins. And the Sam coins, by the way, are FTT, Solana, Serum. And the reason they're doing the NAV minus the Sam coins is because those coins are not so easy to sell. We heard like tons about this in this case. They're not very liquid. There's not a market for them. If you try to sell them, they're not easily——there's not like a buyer out there who wants to buy $3 billion of the Sam coins. And so they've got a value, but that's just on paper. In real life, you can't actually sell these things for that much. So her estimate for what their finances are without those Sam coins is what looks like, you know, as written, as $2700, negative 27, but we know these are all in millions, so what that is is negative 2.7 billion. They are negative 2.7 billion at this point in late 2021. And then Ellison adds up the assets and liabilities at the time, and here's what the defendant saw. They've got 8 billion in assets, and 9 billion in loans. So math, 8 minus 9 is negative 1, and so they're in the negative. At this point he's already able to see in late 2021 that Alameda has more loans than it has assets.

And let me just pause here for a second and mention that throughout his testimony, the defendant was saying these things like, ah, at the time we had tens of billions, we had a NAV of 40 billion, and that was funny number accounting and just plain bald-faced lies. And when you think about it, think about where is the evidence that those were actually real numbers, where is the balance sheet that says those numbers, where is the balance sheet that says those numbers with assets that they could actually use or sell or spend, there isn't any. And there are still——by the way, these are still billions, very large numbers, but the point is, they're in the red.

And then there are these two lines on here that say "FTX borrows," and Ellison told you, "that referred to the amount of FTX customer deposits that were currently on the exchange and that were available for Alameda to borrow." Let me translate that. By "available. . . to borrow," what she's talking about is FTX customer funds that are available to steal, right, and spend however the defendant wanted.

So the defendant is looking at the situation with Caroline, he sees that they've got more loans than assets, he sees they're in the red. And I don't want to pass over this like it's just some random number. When they're talking about borrowing from FTX, they're talking about borrowing customer money, and this number here, 3 plus 4, is how much customer money exists there. It's like how much money is in the bank that you could potentially rob. This is like the target right here. 3 plus 4 is 7. This is how much money we can take. And so this is the conversation: Here's how much money we could take to potentially spend. And then the next question the defendant asks Caroline, which is right in the spreadsheet, is: What happens if the economy gets worse and how does this change with another 3 billion of venture investments? Right? 'Cause this was his question. This was: What happens if the economy gets bad and then I want to buy that new sports car? And there isn't a dispute over this. During his testimony, the defendant admitted that the point of this spreadsheet was to consider more investments for Alameda, coming out of customer money.

So, look, you don't have to go to MIT to know that if you have more debts than you have money and you want to spend more money, you're going to be in more debt. So when the defendant had more debts than assets and the only available money was this FTX customer money, where is the $3 billion for investments coming from in this scenario? And the answer is: Customers.

MR. ROOS: So Caroline does the math, where she takes this current financial picture and she assumes the economy gets bad and crypto prices drop and then assumes $3 billion more in investments, and she told you her math told her spending 3 billion on investments was a really bad idea because they could already not afford 3 billion without spending customer money. How did the defendant respond? He said he wanted to go ahead with billions of dollars of venture investments anyways. So when you're thinking about the defendant's mind-set, think about that. Think about how he's——how she's like, so financial picture is not so good, also, we're going to spend $3 billion more and I think that's a really bad idea, and he says, I hear what you're saying and I want to go ahead with it and do it anyways. And this is easy math for him. He knows where the money is coming from. It's coming from customers. And he knows it could be a really bad situation where they don't have the money for the customers, but he spends it anyways.

Now when the defendant was questioned about this document, did you notice how he evaded talking about what the document was actually about? He commented on some notes about FTT and the note about hedging, and he just totally glossed over what the spreadsheet was about, which was about how they were in a poor financial position and did not have the money to pay for new investments. And that was a deliberate decision by him when he testified. It was deliberately evasive and it was a misdirection. And that tells you how——why this spreadsheet is important. It shows that he knew they were using customer funds, and the way he reacted to this piece of evidence shows you that he knew what he was doing was wrong.

Okay. So they have this moment in time. They talk about this spreadsheet. They see the potential financial picture. The defendant says, let's spend the money. And he goes on this spending spree that would rival someone that had just won the lottery, except he had not, obviously, won the lottery, he had stolen billions of dollars. And so what does he spend the money on? Professor Easton told you he spent the money on this $30-plus million penthouse apartment for him and his friends and his co-conspirators to live in. And he spent the money on a $16 million house for his parents. And it totaled 100 million on real estate. And all that came from customer money. There's no real dispute that the money that was used to pay for this real estate was coming from customers.

And by the way, when the defendant was asked about these property purchases, when he testified on direct, he told you another half-truth. As you can see, what he told you was, it was that FTX paid for these, and that was only half the truth. When you look at it, the money came directly from FTX, but where did the money originally come from? It was passed through a bunch of accounts, and it originally came from Alameda. And where did the money originally come from to Alameda? From customers. Why would he tell you it came from FTX without acknowledging the true source if he thought it was okay?

So the defendant also spends billions during this period on investments. Right? And this was the plan. He bought hundreds of millions of dollars of stock in Robinhood, and here's the analysis by Professor Easton. Almost all of it was customer money. He transferred that stock from Alameda to a company he controlled called Emergent Fidelity Technologies. And this is Government Exhibit 200. This is another important document. And look who does this sale of all of Robinhood shares held by Alameda to Emergent Fidelity Technologies. The defendant, as the chairman and sole member of the board of Alameda. This is all the defendant. He spent that money.

MR. ROOS: And did you notice how he responded when he was asked about this particular document on cross-examination? He was, again, evasive. First, he wasn't sure which board of directors this was referring to, then he couldn't recall what Alameda entity this was about, then he didn't want to admit that he was the sole member of the board of directors of Alameda, then it wasn't until he was asked whether he became a director by mistake or accident that he acknowledged that he was the sole member of the board. The reason he didn't want to talk about this document is because this was a handshake with himself, right? It's incriminating. Because it shows a transfer of hundreds of millions in stock bought by Alameda using customer money directly to the defendant. Just him, no one else, right? It's a handshake deal with himself. And that tells you everything you need to know about the defendant's intent.

He also spends 300 million on investing in K5, and almost all that is customer money. And this is Government Exhibit 56. It's the payment confirmation for that K5 investment, and it's signed by the defendant. It proves he's responsible for this spending. Remember it was the defendant who really wanted to invest in K5. Nishad Singh told you about how he told the defendant it was an awful idea, but the defendant wanted to invest with these guys because——the guy who ran K5 because he hung out with celebrities, took the defendant to dinner with famous people and made connections. Now the defendant claimed, looking at this picture, that he just happened to bump into these people at the Super Bowl, but right after the defendant got back from the Super Bowl, he wrote to Nishad and others that the guy who ran K5 was "probably the most connected person I've ever met and we can get from them essentially infinite connections." So he was celebrity chasing. And he liked it. He liked the vibe of all this, he liked the connections, and for him, it cost about $300 million. And he didn't have that $300 million, so he took that money.

And there was other spending we saw evidence of too. Genesis Digital, the crypto mining company; Anthropic, the artificial intelligence company; Dave Inc., that online bank. I'm not going to go through all of these. But during Professor Easton's testimony and during the defendant's cross-examination, he admitted that he was involved in all these transactions.

Let me just pause here and note that the defendant made a big point of saying that yes, he made these investments, but he really only wanted to do some of them if Alameda also hedged. Right? And let's just be clear about this. Wanting to hedge these investments, that is not a defense. The defendant was gambling with customer money. And whether he thought these were sure bets or safe bets or risky bets or almost sure bets, or that he was going to win more money back in the long run, it doesn't matter. When he took the money and he played roulette with it, he was stealing.

I expect Judge Kaplan is going to tell you just that. He's going to instruct you on the law, and what he says controls. I'm not going to read you the detailed legal instructions that Judge Kaplan does, so you should defer to everything he says. What he says trumps what I say about the law. So I expect you're going to hear that if you wrongfully take someone else's money, even if you think you might later be able to put it back, that's still fraud. The defendant here was greedy. He wanted to spend money. He wasn't satisfied with what he had. This was like a person who just doesn't like the financial situation but other——but rather than living with what he has, he went out and took more money. And all the dollars he spent on real estate and on investments and other things are reasons you know the defendant is guilty.

The third point in time that I want to talk to you about, where the defendant had a choice and doubled down and dug the hole even deeper, is the discussion the defendant had with his co-conspirators——his friends, the people who were his roommates in June 2022——about Alameda having a $10 billion negative balance and then how he told Ellison to repay Alameda's lenders, spending billions of dollars more in the process. And this was another critical moment in the defendant's scheme. He knows the financial situation. He knows they're deeply in the red. And he decides to use more customer money, knowing what he's doing. So let's walk through that.

MR. ROOS: To set the scene at this point in time, it's May or June and cryptocurrency prices have dropped, and Caroline Ellison is looking at Alameda's balances and she sees they may be insolvent, out of money, and the defendant is looking at Alameda's balances at this time too. And you heard from several witnesses that the defendant would sit at his computer and would constantly have it open on six monitors, a page showing Alameda's balances. And even when the defendant was questioned about this, he ultimately admitted that, yeah, he had a balances page on his computer, but it was just an auto open. But he also told you that Ellison would routinely send him Alameda's balance sheets and that he was reviewing them. So he knew the financial situation at the time. He sees Alameda's balances are not good. And he gets more bad news. Alameda's lenders now want their money back, because the market is going down.

Here's an example. This is Matt Ballensweig from the crypto lender Genesis. He's messaging the defendant and Caroline on June 13th, and he says, basically, we need our loans back. Here's one of those messages. He writes, "We're going to increase the OT loan pull back"——which" is open term loan pull-back——and he's looking for $400 million back. And he wants to know the ETA on 250 million.

So they're under the gun. They've got their lenders asking for money.

And you heard a similar thing from Zac Prince, who was the CEO of BlockFi, who testified on one of the Fridays that we sat. And he made similar demands for the loan paybacks. Ellison told you they were getting loan demands back from all the lenders. And so the defendant knows that: (1) Alameda's balances are not in a good place; and (2) they're about to get even worse because all the lenders want those loans repaid.

By the way, this is literally the scenario that the defendant and Ellison had talked about a few months prior, right? A scenario which was like, our balances are not so good, we've got more loans than assets, and what happens if the market gets worse, and we've spent $3 billion, and now here they are. So he knew something like this could happen, and then it happens. And then he's presented with another point in time where he has to make a choice, and again, he's got two options. Option one is what you heard some other cryptocurrency companies did. Zac Prince told you about it. The market got bad and they closed up shop; they couldn't repay their loans.

MR. ROOS: One option for the defendant was come clean, face the consequences, and he didn't pick that option. The other option was double down, more lies, dig the hole deeper, spend more customer money when it came to repay.

And he doesn't stumble into this. He gets his coconspirators together. He says: Let's figure out Alameda's balances. Let dig in, figure how much debt it has, how much money it can pull together. And you heard from each of the witnesses about this, right. All three of them testified about this moment in time. So this is a very important moment in which the defendant has a criminal conspiracy where they know what the financial situation is, and then he makes another choice to do something wrongful.

Here is Caroline Ellison's testimony. The defendant asked Caroline, Gary, and Nishad to put together a spreadsheet showing Alameda's balances on FTX. She makes an initial version and then Gary and Nishad revise it. Here is what that looks like. This is Government Exhibit 50. This is a very important document. It's one you have heard a bunch about. And this is the balances sheet calculation for Alameda in June of 2022. Taking a look at this exhibit, you immediately can see that Alameda has a lot of negative balances, including almost 3 billion negative in its main account. It's right there.

Right there on the spreadsheet it has that fiat@FTX account. You can see, even after that bug correction we heard about, it has an $11 billion negative balance, in addition to the fact that the spreadsheet showed the defendant that Alameda had a gigantic negative balance on FTX and it showed the defendant that it had a -- that it had a fiat liability that was very large and it showed the defendant had an overall negative balance that was very large. Gary tallies up that balance. That's the number right there. They are over negative 11 billion. This is all in Government Exhibit 50.

So Gary told you that without Alameda's FTT that Alameda's balance gets even higher as negative -- by higher, I mean more negative, even more negative, to 16 billion. So Ellison also makes an additional analysis. This is the same exhibit. And it's a tab in the spreadsheet where she calculates how much customer money they have taken to this point, and here is that calculation. The tab is called balance sheet by liquidity.

And one of the numbers on here which the defendant sees is how much they are borrowing in customer money from FTX. The number is 13.25 billion. Here is what Ellison said about it. That represents 13.25 billion. That represents money that Alameda was borrowing from FTX customers. So it's right there in the spreadsheet. The defendant sees it.

And there is another key piece of information on the spreadsheet. It's this. USD 13,000, 3,000 minus 10,000. What does that number mean? Ellison told you. Those are the total assets that were held by FTX at the time. So they, customers, had deposited 13 billion and only 3 billion was available at FTX. The other 10 billion, that minus 10, that's what they borrowed on FTX.

So this spreadsheet, Government Exhibit 50, is very important and from it the defendant knows the following: 1. Alameda has a total negative balance of $11 billion; 2. It has borrowed over $13 billion in customer money; 3. Around 3 billion of that is by going negative on FTX in its main account. And there is another 10 or 11 by taking fiat deposits. Finally, 4, as little as a quarter of the customer money is actually on FTX. This shows there was a gigantic hole.

This spreadsheet is a key piece of evidence because it basically shows you everything you need to know about the defendant's conspiracy, and what's so important about it is that he and his coconspirators all work on it together. It's absolute proof that he knew in June 2022.

MR. ROOS: Now, you have at this point heard about the defendant -- you have heard the defendant testifying about this meeting and this balance sheet. He told a very different story. He acknowledged there was an issue with Alameda, and he even acknowledged that Gary and Nishad and Caroline did a spreadsheet, but then he just skipped the discussion of the spreadsheet. He didn't talk about Government Exhibit 50 in his direct testimony at all. And the reason he didn't want to talk about it is because looking at the exhibit would tell you he was lying during his testimony, that he knew clearly from the exhibit exactly what was going on with customer money, he knew where Alameda's balances were, he knew how much had been borrowed, he knew what was left on the exchange.

You know that the defendant was lying about this meeting because you heard from the three other people who were not just in the meeting but were his friends, his closest confidants. I think the defendant described him as the numbers 2, 3, and 4 people. And they all have testified about this meeting. But there is another reason you know he's lying about seeing this or knowing what's going on, and that's because we were able to go back and get the metadata for this document. You heard something about the metadata in this case, but I don't think you folks actually saw the metadata. We are about to look at it now.

Metadata, like I said, is just the information from Google that tells you information about who viewed the document, and we can use that metadata to determine whether the defendant's version of what happened is right or whether all three of the cooperating witnesses gave the right testimony -- sorry -- testified about what happened.

Here is that metadata, and it shows you the truth is exactly what Nishad, Caroline, and Gary testified to. The defendant viewed this spreadsheet on June 14. That means he saw that fiat@ account. He saw Alameda's huge negative balance, he saw Caroline's calculations, and he saw how much money he was missing. The metadata fully corroborates what the witness has told you, and it completely undermines everything the defendant said about this.

By the way, this is Government Exhibit 50. The metadata is called 50M.

There is more. The witnesses also told you about a Google meeting they had over their computers to discuss the spreadsheet. Here is Nishad Singh's testimony. He said during cross-examination, actually, that I know that she, Caroline, sent it, meaning the spreadsheet, to me, Sam, and Gary. I'm sure that the four of us got on Google Meet and worked on it, like investigating it. One Google Meet, one long discussion over Google Meet.

Here is the evidence that happened. This is a Google Meet record for June 14, 2022. And you can see the people who joined the meeting, the Google Meet are the defendant, Caroline, Nishad, and Gary. Here is the really important part about this. Who started this Google Meet? The defendant. How long was he logged into this meeting? 17,000 seconds, which is a little under 30 minutes.

So when the defendant was on the stand and was testifying that he didn't look at this and didn't know what was going on, that was a total lie. He was studying it with his coconspirators. He viewed the document. That's what the metadata shows, that's what the witnesses said, and he had a 30-minute-long meeting to discuss it.

How did everyone react to Alameda's negative balances? You heard that they were pleased to learn that there was no bug and that the negative balance was 11 billion and not negative 20 billion. It was negative 11 billion and not negative 20 billion. But they still knew this was a big problem. Here is an example.

Ellison testified in June 2022, we were in a bad situation, and she was mostly concerned that if anyone would find out, everything would come crashing down. The defendant was thinking the same thing. He had seen Alameda's balances. He knew its financial position was getting worse. He knew that Alameda's lenders wanted their money back. So he knew that everything could come crashing down if the truth came out.

MR. ROOS: Let me pause here for a second and just note something about the relationship between these four people: The defendant, Ellison, Wang, and Singh. By June 2022, you heard the evidence in this case. By June 2022, they are sitting in a room and on a Google Meet and looking at the negative balances, and they have a long history together at this point. I am not just talking about friends or as roommates or as people who were dating. I'm talking about a long criminal history together.

Remember, the defendant had directed Nishad to backdate documents to inflate revenue a whole year earlier. The defendant and Ellison have already stolen money to pay Binance to get those shares back, and they had paid a bribe. That all happened a year prior.

They had all lied to auditors by this point. The defendant had told all three of his deputies, transfer a giant negative MobileCoin loss to Alameda to hide it. He had Nishad and Gary maintaining that fake insurance fund number. So they have got a history together, right. They are used to at this point doing crime together.

And so the reason that's important is, Government Exhibit 50 is actually shockingly explicit in how it lays out what they are doing, what they owe. But there is also and I expect you are going to hear this from Judge Kaplan, a level of history and comfort level, and that's why these folks can speak in innuendo, in code, they can avoid labeling things explicitly because they have a long criminal history together at this point.

I told you that the defendant had a choice to make in June 2022, and at this moment he decides what to do. He doesn't decide to give up. Instead, he knows they are in a bad place and he decides to double down, when Alameda is already in significant debt, and repay lenders. And Gary Wang was asked this directly: Where was the money coming from to repay those lenders? And his answer was: Either from Alameda's FTX account or from Alameda's accounts elsewhere, but, either way, the money -- all the money came from FTX customers.

Caroline Ellison said the same thing. They knew where the money was coming from. So did the defendant. He obviously knew because this was his company. He was checking the balance sheets, he was having his people work on the spreadsheet project, so he knows where the money is coming from. Then it is him, the defendant, who makes the call to repay those lenders. Here is Ellison's testimony. It was Sam's decision. So Ellison testified that the defendant continued to direct her to repay loans. He was telling her to use customer funds to repay our loans.

Wang said the same thing. He turned to Caroline, meaning he, the defendant, turned to Caroline and said that Alameda can go ahead and return the borrows to lenders who loan Alameda's money. We are asking for it back. That's what they did. Here is two documents, two exhibits we have looked at already. They pay back the lenders using customer money. It's in black and white. And it comes out of Alameda's account with that big negative balance. It's customer money.

Overall, of the $6.5 billion they used to repay customer money, 4.5 -- of the 6.5 they used to repay lenders, 4.5 was coming from customer money. This is Government Exhibit 1018.

Let me just put this in context. We heard multiple times over the course of this trial that there was somewhere between 9 and 12 billion in cryptocurrency on FTX in the summer of 2022. So when Alameda takes 4.5 billion off of FTX to repay lenders, they are taking between half and a third of all of the cryptocurrency on FTX, right. Let me say that again. They are taking as much as half of the cryptocurrency that is supposed to be sitting in the wallets to repay their lenders.

As the owner of Alameda and the CEO of FTX, that's something the defendant clearly knew about. But according to him, half the money from his exchange is gone, and he doesn't know. According to him, Alameda has to pay back almost all of its loans, has to pay out $6 billion, and he doesn't know where it's coming from. And, according to him, he is not checking Alameda's bank accounts, he is not checking their balances, he's not checking the fiat@ account. He can't see any of this. None of it adds up.

If you were to believe the defendant's testimony, it would have to be that somehow each of these people who reported directly, his 2, 3, and 4 people, knew about Alameda's balances, knew where the money was coming from. That just doesn't add up that he doesn't.

MR. ROOS: Do you remember what he said when my colleague asked him? He claimed that the people he supervised told him to stop asking questions. He claimed that even though he had been concerned, he was worried that Alameda was insolvent. He was asking them to check the balances. There is this bug in the system. He claimed that the people who reported to him were like, stop asking questions.

And then, even though he had cancelled his trip to D.C. and he was worried that maybe Alameda was insolvent, he just didn't follow up, and he doesn't now remember what ended up happening. I think his answer was, I can't recall.

There were four witnesses in this trial that said they talked to the defendant about Alameda's massive negative fiat@ balance in June 2022: Yedidia, Wang, Ellison, and Singh. When the defendant testified that he didn't learn and couldn't remember, that was a lie. And the reason he's lying about that is because this is a moment in time where he clearly knows that Alameda is using FTX customer money, and he lied on the stand because he knows it's wrongful and totally inconsistent with everything he said publicly.

Let me make one last point about what happened in June and why it proves the defendant knew what he was doing was wrong.

Here is what the defendant does in May and June of 2022:

May 13. FTX publishes terms of service that say: None of the digital assets in your account are the property of or shall or may be loaned to FTX Trading. Promise to FTX customers.

June 13. Genesis and other lenders asked the defendant for loan repayments.

June 14. The defendant has the spreadsheet project, and they look at all of it, and they see the negative balances. He sees they are in the hole. He makes the decision to repay the money anyways.

June 16. Repayment happens to places like BlockFi and Genesis using customer money.

Then here is the revealing part. June 23. The defendant's congressional testimony that we have already looked at where he says: Whoever is in control of customer assets cannot be misallocating or misusing those assets.

Then June 27 he tweets: Backstopping customer assets should always be primary.

What this sequence tells you is that the defendant went out in public, promised them, we are not using your money, it's safe. Then in June he needs money, so he's taking his customers' assets. And then if that wasn't enough, he has the audacity within a week to go before Congress under oath and go on Twitter and tell his customers, his victims, that he's not using their money, that money, protecting their money is his top priority, and when the defendant is doing that, when he is taking their money secretly and then within a week is out there publicly lying about it, that tells you he knows what he's doing is wrong.

The next moment in time is June 2022, when the defendant works with Caroline Ellison to send a fake balance sheet to Alameda's lenders. This is another moment where the defendant made a deliberate decision to double down on this fraud. So what happened? We have been talking about June.

And after Alameda repays its lenders and spends billions more in customer money, the defendant wants to take out new loans, because he hasn't had enough of spending money already, so he goes to Genesis and BlockFi and others, but there has been changes in the cryptocurrency market and prices have fallen and some of these companies have gone out of business, so as third-party lenders they asked for new balance sheets, and now he is presented with a situation that he has to make a decision in.

No lender who actually knew the state of Alameda's balances were ever going to lend them money, right. It was 10 billion plus in the hole, and that was before they repaid their loans, and then he spent a few billion dollars more repaying the loans, so they are deeply in the red, totally under water. This was very clear to the defendant.

Caroline comes to him and says: I think it looks bad. I don't think we can send this to Genesis, talking about their balance sheet. Do you agree? And he says: Yeah, that sounds right.

MR. ROOS: Here is Alameda's real balance sheet in June 2022, Government Exhibit 44, the main tab. What's the reason they can't send this to Genesis and other lenders? Ellison told you it showed that Alameda was in a very risky position, borrowing around 10 billion from FTX and with about 5 billion of its loans to FTX's executives. Where does it show that? Here. Exchange borrows: 9,900. That means, according to Ellison, Alameda had borrowed 9.9 billion from FTX customers.

Here, related-party loans. That was 4.5 billion in loans to the defendant, Wang, and Singh. According to Ellison, it might make it look like Alameda was effectively giving or funneling money to FTX executives.

So at this point the defendant knows Alameda is deeply in debt. He knows they borrowed customer money, he knows that it's in the billions, and he knows they have made billions in loans to FTX executives.

So the defendant had to make a choice, and this is another critical point, and he decides to lie yet again. He told Ellison that she should prepare some alternative ways of presenting this information and setting this thing up, ways to conceal things in their balance sheet.

So Ellison creates seven alternative balance sheets, and here is that. This is Government Exhibit 44. It's another critical document to think about. The main tab here is the real balance sheet, and then there are seven alternative options. The alternative options hide Alameda's borrowing of FTX customer funds and the big loans to the executives.

By the way, this spreadsheet is so obviously for the defendant, because why would Ellison just be doing this solo? In what world is a person making eight alternative balance sheets for themselves and not be shared? She makes seven alternatives because she knows someone else is picking an alternative and that person is the defendant. So she testifies then that Sam said we should use alternative 7. He said alternative 7 looked like and that she, Ellison, should send that one to Genesis.

The difference between the real balance sheet and the fake alternative 7 balance sheet is obvious. Here they are side by side. And what's missing from alternative 7? Exchange borrows, meaning borrowed or stolen customer money. 10 billion is missing. What else is missing? Related party loans for 4.5 billion. Remove from the spreadsheet. The defendant picked alternative 7 because it concealed the evidence of his fraud.

And in case there was any doubt about the defendant's involvement in this, here is the metadata on this document. Government Exhibit 44M. It shows it was shared with the defendant and he viewed it on June 19, 2022. He took a look at it just hours before it went out the door to lenders.

If you have a balance sheet for your own private viewing and then you make it an external balance sheet to send to your lenders, that's fraud. And if you have two balance sheets and they are totally different, then you -- clearly you have one too many balance sheets. And if you prepare seven alternative balance sheets and you are like, hey, let's go with alternative 7, that's definitely the best one of how we stole $10 billion, that is definitely fraud, and you know that from your own common sense and life experience.

The CEO of one of the lenders who testified in this case, he said lending crypto isn't that different from other types of lending, so imagine you knew someone who wanted to get a mortgage or a small business loan, but before they walked out the door to go to the bank, they said, you know what, let's come up with an alternative statement of my financial position, one that doesn't make my debts look so bad, makes them look smaller. Let's actually come up with seven alternatives, and then let's pick the version that makes my debt seems the smallest, and let's give that to the bank. You would obviously say to them, using your own common sense and life experience, no, you cannot come up with alternative versions of your finances and give them out to go get a loan.

MR. ROOS: Well, the defendant, he did just that. He picked the alternative 7. He told Ellison to send it to their lenders to get new loans. She sent it out. It went to Genesis. It went to BlockFi. It went to other lenders. We looked at examples, their balance sheet. Here is Government Exhibit 17. It's the false balance sheet that went to Genesis. Here is Government Exhibit 419. It's the false balance sheet that went to BlockFi. Ellison told you all these were false because they all omitted those key parts that the defendant wanted to hide.

As a result of sending out those fake balance sheets, they got new loans. This shows it. Over a billion dollars in new money came in. That's new money that the CEO of BlockFi testified they never would have loaned had they been -- had the truth been revealed.

So this is another important moment because it tells you everything about the defendant's knowledge and his intent. From just looking at the balance sheet, the defendant has to know that they have been using customer money, both FTX customer crypto and fiat deposits, because it says it. He sees Alameda doesn't have much money in its bank account. It says 500 million in the bank, just a fraction of what it owes, and he sees without its -- without those long-term investments, which he can't sell and can't get out of, they actually have fewer assets than liabilities, so he knows they are borrowing customer funds.

The spreadsheet also tells you that taking and spending billions of dollars of customer funds is wrong. Why else would the defendant want to remove from Alameda's balance sheets these figures, right? It's not like he is removing even every liability.

Like if it was just about minimizing liabilities, which by the way would still be a crime, but if it was just about that, he would remove all of them, but he removes a specific one, and the one he removes is the one that says, I'm stealing money from FTX customers. So there is no confusion or uncertainty about what his mental state is. He is picking the one that is revealing that they have a fraud, and that's why he is sending out a doctored balance sheet.

Now, we heard the defendant's story about this. This time at least he admitted to seeing the spreadsheet. But his testimony was extremely vague and evasive. Remember he said he got the spreadsheet with the main tab and seven alternatives, and he had to admit that because he has seen the metadata proving it. But what did he tell you? He said that he doesn't remember any of the details. He can't remember for sure which tab he looked at. He can't remember if it had seven alternatives. And he just went with one that seemed reasonable.

Think about this explanation for a moment. Remember, the defendant admitted that he was just warned this month that his company might be on the verge of bankruptcy, and then he gets his balance sheet for it and it has all these alternatives, but he wants you to believe that he only just looked at one of them and it just happened to be alternative 7, and that he didn't ask Caroline any questions, and then they just sent it out. It's not plausible. He has got no explanation for the spreadsheet because it's really incriminating evidence and because the metadata shows that he viewed it. There is no innocent explanation for having eight alternatives to a balance sheet and then picking one of the alternative ones that omits the key crimey fraudy parts of the balance sheet.

The next moment in time where the defendant presses forward with his fraudulent scheme that we are going to talk about is September. He has a conversation with the same people. They have discussed Alameda's negative balances and then he, again, made a choice to spend more customer money. So it's another reason you know the defendant knew what he was doing, knew that it was wrong, and then proceeded forward.

So in September 2022, the defendant knew that Alameda was borrowing billions of dollars from FTX customers. In June, the period that we just looked at, he saw these numbers on spreadsheets. He knew they had just borrowed more from lenders. They had just repaid money to lenders also. And by September 1, he knows the number is $13.7 billion.

MR. ROOS: How do we know that? Government Exhibit 90. This is another important document. This is an internal balance sheet from September 1, 2022. It shows that the defendant -- right there it shows that Alameda is borrowing 13.7 billion from FTX. There is no dispute the defendant saw this. Not only did Ellison tell you he saw it, but, again, there is metadata that shows it. By the first day of September he knows that Alameda is negative. 13 or 14 billion, right. Keep this date in mind. This is September 1. We are going to talk about what happens next in September.

Notably, this is an exhibit that the defendant just skipped over. He didn't even have an explanation for it. By the way, remember, when the defendant claimed Caroline's spreadsheet usually had multiple tabs, well, there is no additional tabs on this one. It's just one tab and it says it right there, right on its face, FTX borrows 13.7 negative, so he knows in September.

A few days later, on September 7, the defendant sends Wang and Singh a Google Doc about the pros and cons of shutting down Alameda, and it's Government Exhibit 18. Here is the key line in this document. Really hard to unwind Alameda. What's that a reference to? When the defendant is writing, it's really hard to unwind Alameda, what he's talking about is the fact that Alameda has almost $14 billion in debt of money it took from FTX's customers. And that's not reading between the lines. That's literally what they discussed when the defendant raised this question of shutting down Alameda.

Here is Gary Wang's testimony. He says at pages 449 to 450 of the transcript: So I asked Caroline how much Alameda was currently borrowing from FTX, and she said 14 billion. And he was asked whether there was any way that wouldn't involve the use of customer money, and Wang said no. Because FTX did not have that much money itself.

Here is what Caroline said about this when she was asked about Alameda's ability to repay that 13.7. She said: We had no way to repay it. That's page 823 of the transcript.

Here is what Nishad Singh said at page 1403 of the transcript. He learns that Alameda is borrowing 13 billion from FTX. And Caroline Ellison tells him, Gary, and the defendant over a Signal chat that it is impossible to close out Alameda's borrowing because of the size of the hole.

How did the defendant respond to all this? Here it is. Gary was asked just that question. Ellison says Alameda was borrowing 14 billion. Do you recall the defendant responding with any message of surprise? And Gary's answer was no. No. He was not surprised when Ellison said they were nearly 14 in the red because he already knew it. He was the one who designed the systems. He was the one who had directed the spending. He knew it from over the summer. He knew it from the prior year. He knew it from the internal balance sheets he was getting in September. He knew it from the balance sheet he got six days before.

So Wang told the defendant the hole was too big to shut down Alameda. And what did the defendant say? He said: Acknowledged, acknowledged. No pushback, no request for clarification, no like, well, what hole are you talking about or what do you mean? No confusion. He just acknowledged it.

Here we have another conversation where you have three witnesses who all said the same thing. They all said -- they talked about a giant hole, between 13 and 14 billion, and that's why they couldn't shut down Alameda. And the defendant sat through this trial and he knows that's the witness' testimony, and he knows they are saying he is part of that conversation, and there is too much evidence for him to say, I didn't know what was going on. I wasn't involved.

What does he say about it? Well, keep in mind at this point we know that the defendant -- he admitted this, that Alameda is only doing like 3 percent of the market making on FTX, so he knows he can't say at this point the reason we didn't shut down Alameda was because Alameda -- the reason we didn't shut down Alameda is because Alameda was too important to FTX. That's not a realistic or credible argument at this point. He knows that. So he didn't say that.

What he said was, quote: He did not feel confident he had gotten a clear reason why. So he was asked, what's the reason? He says, I'm not confident I got a clear reason why.

MR. ROOS: Just think about this explanation. The defendant wrote a five-page memo that includes six numbered points for why to shut down Alameda. The metadata shows he worked on this for hours, and it has got several subpoints and it has got a list of alternatives and it has got the pros and cons and it has got a two-page-long tweet string of what he would tweet out if he announced Alameda being shut down. But his testimony is that Gary and Caroline and Nishad came to him and said, we can't do this, and then without any reason he just dropped it. That's not a credible story.

That night the defendant and Nishad speak on the balcony and Singh asked the defendant -- this is at page 1407 of the transcript -- what about what Caroline said today? And Gary said today that there is a 13 billion borrowed and we can't pay it all. He put the question to him directly. And the defendant says: Right, that. We are a little short on deliverables.

Again, there is no confusion, no question by the defendant. He knows exactly what Nishad is talking about. He says right, that. He is not surprised. He is not confused. He has known for months. And he says: We are a little short on deliverables. And this, by the way, is quite an understatement for a $13 billion hole, but it's still a damning concession. He knows there is a hole. He knows they can't fill it if the customers want their money back. We are a little short on deliverables.

And then the next thing he says is critical. He says: This has been taxing me for some 5 to 10 percent of my productivity for this year. What is he saying? He is saying that this has been weighing on him because he knows that Alameda cannot repay this debt and that FTX is at risk, which means he is at risk of having his fraud be exposed. That's what is weighing on him. And Nishad says: This is going to be doing a lot more damage to me hitting me a lot harder. And the defendant says: Yeah. I was worried about that. It might have been a mistake for me to circulate that document this morning. People are going to freak out. They have stolen the money.

Nishad sees the giant hole, and he is freaking out, and the defendant knew they were stealing the money too, but he wasn't freaking out as much as Nishad. You know the reason why is because he was already comfortable with the situation. He had already known about it for a long time and it was his decision to take that money, so he has come to terms with it. He wanted to use the money. He did use the money.

He had the arrogance to think he could get away with it and just raise more money from other investors or come up with somehow. When people like Nishad started freaking out about it, he said the mistake here wasn't, we by accident took the customer money. The mistake here wasn't, I thought we could use the customer money. The mistake was telling Nishad about it. That tells you everything you need to know about what the defendant was doing, why this was deliberate, and why what he was doing was wrong.

This is another place where we heard a different story from the defendant. He admitted that he talked about Alameda's liabilities, but he was very vague about what actually was discussed in the conversation.

But you know that Nishad's explanation, his testimony is corroborated by another witness, because you heard from Can Sun. He was the last witness before our break. And what he told you is, he told you about a conversation that he had with Nishad before FTX went bankrupt, as it was collapsing.

Here is what Can Sun said that Nishad said to him right before the collapse. He said that he had found out about the hole, basically that Alameda was taking FTX customer assets in September 2022. He said that he confronted Sam directly about it, and Sam told him back then that it is what it is and there is nothing we can do about it. That's page 1954 of the transcript. That's very important. It's how you know that Nishad is telling the truth about the conversation with the defendant.

MR. ROOS: And defense counsel may get up and say that Nishad has a poor memory, but remember this testimony from Can Sun. Can Sun told you that he had a conversation with Nishad, right. And Nishad told him, recounted what happened, and this happened long before Nishad ever met with the government, long before he ever testified here. It's a prior statement by him, a statement before, according to the defendants, he didn't have any reason to change his story, and that tells you, that's evidence for you to consider when you are evaluating his testimony.

Now, what happened next is predictable. Caroline told you that throughout 2022, she was in a constant state of dread, and she was worried imagining every day what might happen.

Nishad told you that he was blindsided and horrified that FTX had turned out to be so evil, that spending anything after September was necessarily digging the customer deficit hole deeper continuing the crime.

But what did the defendant do? Again, he doubled down. Here is the proof. This is a spreadsheet of all sorts of investments the defendant was doing, and look at these two: 250 million to Modulo Capital on September 26, 45 million to Skybridge on September 7. Those are hundreds of millions of dollars after Nishad confronts him, after he tells him to stop spending customer money, and the defendant keeps doing it.

And notice the names on the spreadsheet. The names on the spreadsheet are the defendant and people who he said reported to him. They are not Caroline, they are not Nishad, they are not Gary. It's the defendant who is doing the spending.

Here is the proof it was the customer money. This is Government Exhibit 1033. Professor Easton testified that, on September 26, a payment to Modulo Capital came exclusively from customer money. Here is Exhibit 314. It's a Slack message in which the defendant says he wants to make that payment to Modulo. Here is Government Exhibit 350. This is the contract signed by the defendant committing 250 more to Modulo. This is all the defendant's doing.

The same is true for that payment to Skybridge. This is Government Exhibit 1028. It proves the Skybridge investment was paid for with customer money. Here is the proof it was the defendant's doing: Government Exhibit 201. It's the investment credit contract signed by the defendant as founder of Alameda Research ventures.

One more. This is part of Alameda's ledger. And in September and October 2022, there are millions of dollars going out to Sam Bankman-Fried. That's Government Exhibit 141A. Below that shows that at least some of that money went to political donations. That's Government Exhibit 1089.

Here is why that's so important. This is a really important point, and think about the timing.

September 1, the defendant sees a balance sheet listing Alameda's borrowing of customer money at 13.7 billion.

September 7, he proposes shutting down Alameda, talks to his coconspirators. They all talk about how there is a giant hole. Nishad confronts him on the balcony. He's freaking out. He tries to get the defendant to stop spending money. He tells the defendant: Every dollar you spend is customer money.

The same day he spends $45 million on Skybridge. Ten days later he transfers $10 million out to himself. September 26 -- September 22, transfers $4 million to himself.

On September 26, transfers $250 to Modulo for his investment.

Finally, October 3, he transfers 6 million more for a political donation.

In the month of September he knows Alameda is massively in debt, he knows it doesn't have the money, he knows they are taking from customers, and he knows what he's doing is wrong. That's all that you need to know to find him guilty.

The last moment in time I want to talk about is November. In November, the defendant tells more lies, including false tweets to try to keep customer money.

Now, you remember in November customers started withdrawing their money from FTX as a pace faster than the defendant had seen before. Everyone was nervous, and the defendant and his coconspirators were nervous, not just about the pace of the withdrawals, but what could happen as a result of all the withdrawals. Their fraud might be exposed.

Here is what Ellison said. She was terrified. This is what she had been worried about for months. When she was asked if they could repay she said: We could not.

MR. ROOS: Now, the defendant knew he had a problem. He was doing the math and watching the withdrawal numbers and wrote a Google Doc on November 6 with notes about the current status. And this is a very important document, Government Exhibit 21. Here is what he wrote. They had, quote, enough to process about one-third of remaining client assets. Let me repeat that. He writes, the defendant writes: We have enough to process one-third of remaining client assets. In other words, they are missing two thirds of the money. But the defendant had a plan, a criminal plan, fraudulent, and this alone is a basis to convict him. Here is his plan. Send a confident tweet thread. That's what he calls them. What does that mean? Nishad told us, quote: A very confident and therefore misleading statement or false statement about FTX's financial condition. The point here, folks, was to stop getting people to stop withdrawing their money.

Now, Nishad told the defendant he was, quote, not comfortable with this. He said: No, no way. Recusing myself. He didn't want a part of it. And the defendant acknowledged in a kind of annoyed way, and then he proceeded to tweet. Here is what he has tweeted, and you have now seen this tweet a bunch of times. You know it well. Government Exhibit 866.

The first tweet on November 7 says: FTX is fine. Assets are fine. Every witness said this tweet was false or misleading.

Here is Gary Wang. Was the tweet accurate? No. Why not? FTX was not fine. Assets were not fine because FTX did not have enough assets for customer withdrawals.

Here is Nishad. Was that accurate as of November 7, 2022? No. We had determined definitively that FTX had a hole. So this first tweet was plainly a lie. It was a confident tweet to fool customers into not withdrawing their money.

Look. It wasn't just the defendant's coconspirators who knew this was false. The defendant knew this was false, and we know that from the time. Notice when he sends this tweet that assets are fine. It's on November 7 at 7:38 a.m. That's after he has written internally that they only have one-third of the assets they need. So compare those, 866, Government Exhibit 866, to Government Exhibit 21.

Here is another example. At 3:08 a.m. on November 7, the defendant sends a list of possible assets that they have in the small group Signal chat. And here is his math. He estimates there are 12 billion in customer assets they need to meet, but he is only able to come up with that number at the bottom, 3.9 billion. So he has got a difference, and there it is, a deficit, a hole of 8.1 billion. Remember the time. This is at 3:08 a.m. on November 7.

What does he do four hours later? Tweets. He's missing 8.1 billion, according to his own chat, and he says, assets are fine. FTX has enough to cover all client holdings.

This is yet another case where the defendant took the stand and said something totally that was contradicted by the evidence. He sat there and he said he only realized there was a hole on November 8. But you have seen his own Signal messages now. You have seen his own Google documents. You know that was not the case.

Defendant didn't stop there. This is his second tweet: FTX has enough to cover all client holdings. We don't invest client assets, even in treasuries. That was false. Gary Wang testified this was not true because FTX did not in fact have enough assets to cover all client holdings and because FTX was lending client assets to Alameda.

Caroline testified that the tweet was not true because FTX only had 4 billion to cover 12 billion of client holdings. Nishad testified that the tweet was even more false than the last one, that FTX did not have enough to cover client holdings.

What was the result of the defendant's lies? FTX customers didn't withdraw their money. Here is what one customer said. He was relieved after seeing the defendant's tweets. He found it reassuring. Another customer told you that after seeing the defendant's tweets he felt comfortable to just sit and wait.

That's what the defendant had intended. He sent a confident tweet thread, a series of false tweets to lull his victims into leaving their money, to convince them that everything was fine, assets were fine, while the wall was coming crashing down.

The fact that the defendant lied on Twitter to convince people to not withdraw their money is really important for two reasons.

MR. ROOS: The first reason is, it shows he had criminal intent. He knew the situation and he lied. He knew he had only a third of the money, four out of 12, $8 billion hole. He knew that before he tweeted, and then he tweeted anyway. It wasn't an accident. It wasn't a misunderstanding. He had intended it.

The second reason, these are important, is I expect Judge Kaplan will tell you that if after obtaining money, like customer deposits, the defendant participated in a scheme to keep the victim's money by making false or fraudulent representations, that is, to retain it, that can be a scheme to defraud. So when you find the defendant made these false tweets, that alone is a reason to find him guilty of fraud.

There is one more thing I want to talk about briefly for November, and that is a conversation that happens the next day with Nishad Singh as he's leaving the Bahamas. So he has a conversation over Signal with the defendant. And in that Signal chat the defendant makes an admission.

Let's look on November 8, shortly before Nishad leaves. He was in a dark place. He was suicidal, as he told you, and he sends a Signal message to the defendant. This is Government Exhibit 480C. So he sends the message and he says: This is Nishad. He says: Wildly selfish of me. But they, the FTX employees, may need to know that there wasn't a ton of people orchestrating it. I think it makes them more likely to want to be here to help save the situation. What's the it? The it is the fraud. Nishad is saying to the defendant: FTX employees need to know there wasn't a ton of people orchestrating this fraud. And Nishad explained this. He said -- he testified about it. He said he wanted the defendant to clarify what everyone's role in this fraud was. He said it was selfish of him because he wanted the defendant to clarify, that he, Nishad, wasn't orchestrating it. Nishad was saying to the defendant that he should clarify, that is, the defendant should clarify he was orchestrating it.

How does the defendant respond? Yup. For what it's worth, I don't think that's super selfish. I think that's probably correct. There it is. Nishad asked the defendant to clarify that he was orchestrating the fraud, and the defendant says, I think that's probably correct. This is an admission to his coconspirator at the end of the conspiracy that the defendant was orchestrating. That is a reason right there to convict him.

Notice what he doesn't say. He doesn't say: Orchestrating what? He doesn't say: That's not right. He doesn't say: Anyone else is to blame. He says: I think that's probably correct.

Keep in kind this context. The context is, this is a Signal message, one of the messages that they have been sending all along to auto delete, and this is one of his closest confidants. It is not a public tweet. It is not an interview. This is a private space between him and his coconspirator over an encrypted messaging platform with auto delete set so he can tell, Nishad, I think that's probably correct.

I told you the questions we were going to answer. They were: What happened? Where did the money go? Who was responsible? We have now answered those questions together, what happened. The defendant was motivated by greed and ambition, and he wanted more money for Alameda, so he set up systems to take the money. We have talked about what he did. We talked about where the money went. It went to investments, to purchases, to expenses, to donations. It was siphoned off. And the defendant is responsible.

Your Honor, do you want me to keep going? I'm about to switch sections.

MR. ROOS: Thank you.

When we left off, we had talked about what happened, where did the money go, and who was responsible, and you now know the answer to all those three questions.

Now at the beginning, this morning, I told you there were a few things we were going to do, and the last two were talk about the crimes and talk about some of the defense arguments you've heard, and these parts will be a lot shorter. We've already covered the meat of it. So let's get into it.

The defendant is charged with seven crimes, and they're up there on the screen. You can read them. And basically they fall into four categories——fraud on FTX's customers; fraud on FTX's investors; fraud on Alameda's lenders; and conspiracy to commit money laundering. And Judge Kaplan is going to give you detailed instructions on these crimes tomorrow, and you should listen to them closely. I'm just going to talk to you about how some of the evidence you've heard fits within these crimes.

So let's turn to the fraud crimes. There are three counts relating to the fraud on FTX's customers——wire fraud on customers, conspiracy to commit wire fraud on customers, and the essence of Counts One and Two is that there was a scheme to defraud FTX's customers by making false statements to get them to deposit their money, and then by misappropriating or embezzling or stealing that money that had been entrusted to the defendant and his company, the defendant knowingly and wilfully participated in that fraud, and that there were interstate wires that were used as part of it. And that last part just means wires are things like emails, financial transactions that go across states, phone calls.

Count Two relates to the same types of conduct but it's a conspiracy charge, and the essence is that the defendant had agreed with at least one other person to commit the wire fraud, okay?

So let's talk also about Count Six. Count Six is the conspiracy to commit commodities fraud charge. And this is another conspiracy charge, and there are three elements. And they're up here on the screen. And they're very similar to the wire fraud elements except for a few distinctions that I'm going to talk about in a few minutes.

Here's the objective of the commodities fraud conspiracy, and you'll see there are elements that resemble parts of the wire fraud charge. Again, Judge Kaplan's going to give detailed instructions on all of this. You don't need to learn or memorize this now. But the key is that there was——in connection with the sale of commodities or swaps, the defendant knowingly and wilfully participated in a scheme that involved an artifice of fraud or manipulative device.

Now these fraud crimes are what we spent most of the morning talking about, right? We spent the entire morning talking about the false statements the defendant made. We talked about the false pretenses he set up by displaying customer balances while simultaneously not actually having that money behind the scenes. We talked about the relationship of trust he established, how his policy documents indicated he and his company were a trustee of his customers, how they were in a custodial relationship, and how, simultaneously, he was lying about that, how he embezzled and stole that money.

And we've talked about how the defendant orchestrated the scheme by convincing customers that they could trust him, about how he made lies, about how he directed people, how he made statements and representations, how he moved the money, how he stole and how he misappropriated. And we've also talked at length about the overwhelming proof that he knew what he was doing was wrong, that he knew what was happening with customer money, that he had a fraudulent intent, and that he agreed with his co-conspirators. So we've already gone through all the evidence that establishes that he's guilty of these frauds on customers.

And on this last element that we talked about, about the wires, you saw the tweets, you saw the financial transactions, so that's met too.

Now on the conspiracy charge, conspiracy to commit commodities fraud, for that charge only, there is an additional element, which is that the crypto involved fit the definition of a commodity. And the defendant even admitted that before Congress in 2021.

MR. ROOS: There it is right there. He's admitting that Bitcoin and Ethereum are two tokens covered as commodities under the CFTC definition. You also heard evidence from Adam Yedidia where he explained that the futures that were sold on FTX were the exchange of risk which resembled what Judge Kaplan will describe to you as a swap.

And the other requirement is that some of the conduct——and this is, again, just for the commodities conspiracy——either occurred in or affected the United States. And Judge Kaplan will give detailed instructions on that, and follow his instructions. And what I'll tell you now is that there's plenty of evidence that in connection with the commodities fraud charge, Alameda was in the United States. That's where its bank accounts were; it itself was incorporated there; North Dimension, through which the defendant sold customer fiat deposits, that was set up in the United States and had a bank account in California; the defendant made false statements in the United States when he was physically located in Washington, DC; there were customers like BlockFi and Sculptor of the United States. So this requirement is easily met.

Counts Three and Four charge the defendant with wire fraud on lenders and conspiracy to commit wire fraud on lenders. And the essence of Counts Three and Four is that the defendant schemed and conspired to make material false representations to Alameda's lenders, and that he knowingly and wilfully participated in that. And again, they used the wires. And on these counts, the evidence is straightforward, and it's overwhelming. I'm not going to spend much time on it because the key document here is that alternative spreadsheet, Government Exhibit 44. That's the spreadsheet that laid out the real balance sheet and the alternative balance sheets. And you've heard and you've seen all the evidence that that fake balance sheet was sent to BlockFi and to Genesis and then afterwards they loaned new money. And you heard testimony from the CEO of BlockFi, who told you that those types of representations mattered to them, that they would have not made the same lending decisions had they known the truth, had they known there was a massive borrow from FTX customers, or had they known that the balance of assets and liabilities were different, or had they known that there were these undisclosed loans to executives. So that's all evidence of why the defendant participated in and conspired to participate in a scheme to defraud Alameda's lenders. And the evidence on that is overwhelming.

Let's talk about Count Five. This is the securities fraud on FTX's investors. And this is another conspiracy charge. And there are three elements——that there existed a conspiracy to commit securities fraud; that the defendant joined the conspiracy; and that one member of the conspiracy committed an overt act.

And I expect Judge Kaplan is going to tell you that the crime of securities fraud, which now there's a summary on the screen, the essence of it is that there's a scheme to defraud or make false statements in connection with the selling of a security——so here, FTX's stock——and that the defendant knowingly and wilfully engaged in that scheme or conspired to engage in that scheme. And again, this involved the interstate or foreign commerce.

So what are we talking about here for Count Five? Again, the evidence is overwhelming. And the primary evidence here is very similar to the other counts. We heard from investors like Matt Huang, who was the first week of the trial, one of the first witnesses; and Robert Boroujerdi, who was one of the later witnesses, I think the last witness in the government's case——second to last witness. The last witness before the break. They testified about how the representations about——and the statements they received about how customer funds were treated, how they were used, were all important to them, and if they had known the truth, they never would have invested.

But the fraud on FTX's investors is not just limited to those types of false statements. There's also other frauds that were made on FTX's investors, and so I just want to highlight those for you. And you've heard evidence about this.

MR. ROOS: And one is, for both those investors, you heard that they were very interested in the relationship with Alameda, right? And this is separate and apart from how the customer funds were used. They were interested in whether there was a conflict of interest between Alameda and FTX or the defendant in being involved with both those companies. And the defendant told those investors time and time again that there was no conflict of interest, that Alameda was treated just like everyone else, that they were separate, and those are lies that mattered to those investors. And that alone is enough to convict the defendant of securities fraud, or conspiracy to commit securities fraud. You could even convict him of conspiracy to commit securities fraud without deciding the question of whether he knowingly used the customer money. And of course that evidence is overwhelming, but I make this point because there were so many lies to those investors.

Here's another one. He lied about the revenue information. Do you remember this document? And it came up on cross-examination. There was a point in time in 2021 where the defendant wanted the revenues to be over a billion dollars for FTX. And so he had a conversation with Nishad Singh, and they agreed on putting in some revenue, some money, some income, for something called Serum staking, right? And this was of course at the end of 2021, so it's kind of——it's like the last day of the year. It's too late to earn a bunch of money. And so they just add these numbers to their balance sheets, to the FTX stat sheets, and we've got——we saw that. That was Government Exhibit 51. So they add this fake revenue, and it's backdated. And Nishad Singh admitted to that. But the defendant initially, when he testified, he said, oh, I wasn't involved in that, I didn't know about that, but then on cross-examination, he was confronted with the exhibit you're looking at right here, Government Exhibit 323. And this is the key. This is signed by the defendant, right? And it's dated in January of 2021. So the deal goes down, the backdated transaction, at the end of 2021, but he signs this document dated January 2021, and he admitted that on the stand. And what that tells you is he agreed to this backdating, he agreed to trick his investors, and those investors testified that if they knew the revenue numbers or the expenses numbers were different, they wouldn't have invested. That would have mattered for their decision-making. They of course would not have invested if they had known that the defendant was lying to them, that he was backdating transactions, that he was coming up with phony documents.

There were some other points you heard about the investors. The defendant fraudulently concealed the fact that they were shifting some of the losses to Alameda. He concealed the fact that the FTX insurance fund wasn't so big. You heard testimony early in the case from Gary Wang about how in fact that FTX insurance fund number was a made-up number. They literally just had this random number generator that they used to come up with a fake number for the insurance fund so they could project that out. And that was the same information they were giving to their investors, when they're saying this is a safe system. So the lies to the investors are pervasive, they mattered to them, they invested, and they lost all their money, and it's very straightforward, and the evidence is overwhelming.

One last point on this. You remember he moved FTX investor money from FTX to Alameda. And we saw one of the things they spent that money on; that was on real estate. And so this is Government Exhibit 1023, and it shows you all the investors who had their money moved over from FTX, which they thought they were investing in, to the Alameda slush fund. And so he duped investors by lying about this too. And that's another reason to find him guilty of investor fraud.

MR. ROOS: Let's talk about the last count, Count Seven, conspiracy to commit money laundering. As I expect you'll hear from Judge Kaplan, there are two ways to commit money laundering. The first way is in essence to engage in a financial transaction that is designed to conceal a source or the nature or the ownership of the money that came from that wire fraud the defendant engaged in. And the other way is by doing a financial transaction over $10,000 that involves the money from the wire fraud. And you've got both of those here. And you're going to have to be unanimous on at least one of them, but he can be found guilty if you find unanimously that he is guilty of either of them. And he certainly did that here. And I'm not going to spend a lot of time on that because we've already this morning walked through dozens of transactions in which the defendant moved money from Alameda's bank accounts that had customer money to another bank account and to another bank account, and to another bank account, and to another bank account, and they did it for those donations that they were running through Nishad Singh and Ryan Salame, they did it for the investor——for the investments, where they ran it through a bunch of bank accounts, and so the evidence on this is very straightforward.

And keep in mind, I'm not going to go through all Professor Easton's charts, but they're numbered Government Exhibits 1001-1051. That's the full range. And so if you want to look at all his tracing, his analysis of the balances, that's the range to ask for, 1001-1051. They all show that the defendant stole money and moved money, and engaged in money laundering to conceal the source of the funds.

There's one last requirement which here is called venue. And that just means that acts in furtherance of the crimes need to have taken place in the Southern District of New York, which includes Manhattan. And there was plenty of that in this case. FTX processed wires through Signature Bank, which was located in Manhattan. So is ED&F Man, where those Robinhood shares were purchased. Tareq Morad, who was one of the customers who testified in this case, he told you that the wire to fund the accounts was processed through a Wells Fargo bank in New York. BlockFi and Genesis, which are both lenders in the case of BlockFi, which is also a customer, are in New York. Zac Prince, the CEO of BlockFi, said he got those balance sheets while he was in Manhattan. And customers and investors like Third Point and Sculptor are based in Manhattan. And finally, you know from Richard Busick, who was the FBI Agent who did the cellular tower analysis, he told you that the defendant was all over Manhattan doing meetings with investors, acts in furtherance of his crimes. And that analysis is Government Exhibit 1080. So venue has been met.

Those are the crimes the defendant is charged with, and the evidence is overwhelming.

And so in our final minutes together, what I want to talk about are some of the defenses you've heard in this case. And like I said, the defense didn't need to make any arguments. We have the burden, and we embrace that. But when they do make arguments, you should scrutinize them. And I want to focus on just three arguments that have come up in this case.

Here they are: the argument that the defendant acted in good faith; the argument that he thought it would all work out in the end; and lastly, this argument that this was somehow margin lending.

And so starting with the first argument, I expect Judge Kaplan will tell you that good faith is when someone honestly believes in the truth of what they're saying or honestly believes the victims were not being deprived of property. And that's not what happened here. We spent this morning talking about all the reasons you know the defendant knew what he was doing was wrong, and those are all reasons why the defendant wasn't acting in good faith.

MR. ROOS: Here's another reason. We've seen this chart before. This is Government Exhibit 1083. The defendant used Signal. Now of course there's nothing wrong with texting and nothing wrong with encrypted apps. But what the defendant insisted on was auto-delete. He insisted that their Signal chats be deleted. And I expect Judge Kaplan will tell you that if you find that the defendant deleted communications, you can infer that he believed he was guilty, that he didn't have good faith. And so how do you know that was his purpose here? Well, Adam Yedidia testified that when the defendant began insisting that people use Signal and delete messages, he said it was "all downside for the messages to be kept around. And if regulators somehow found out, found something they didn't like in those messages, that could be bad for the company." And the result was that when FTX collapsed and people were asking questions, there were no Signal messages before November, and that made it a lot easier for the defendant to claim that he had no idea what happened. And so this is important. It's in some ways a small point, but in other ways it's very significant. He knew what he was doing was wrong. He envisioned a day like today. He knew that some day the regulators would see something they didn't like. What he means is they would see something that was incriminating. And so he had in mind a courthouse, a courtroom like today, and he didn't want it to be like that so he demanded that the messages be set to auto-delete. And of course he couldn't delete everything, but that was the aim here, and that tells you about his intent and that it wasn't good faith.

And you also heard about coded language he used. Ellison told you the defendant would get upset when they used explicit words, so she said things like "FTX borrows" or "the thing," instead of saying things like FTX customer funds.

And finally, on this topic of good faith, I want to talk about one conversation the defendant had with Can Sun, who was one of FTX's lawyers, as FTX was collapsing.

In FTX's final days, after one potential investor asked the defendant for "a legal justification as to why the funds were missing, and were at Alameda," the defendant asked Can Sun to come up with legal justifications. And this testimony by Can Sun all begins around page 1959 of the transcript. Now importantly, at this point the defendant didn't point to any legal justifications for taking the money. He had none. When Sun asked whether the defendant identified——when Sun was asked whether the defendant had identified any justifications that he was aware of, the answer was no. And that shows you——this is an important point. The answer "No" is important because it shows you the defendant was not acting in good faith. He didn't have a justification at the time for why he honestly thought this was okay. He posed the question to Sun. He didn't say, I think I'm allowed to use this customer money, can you please confirm this for me; he said quite the opposite. He didn't provide any justification. And so then what happens next?

MR. ROOS: Can Sun takes a look at the terms of service and does some other research around the company, and then goes on a walk with the defendant, and during that walk, here's what Can Sun tells the defendant. He says there was no justification for the funds being missing and taken by Alameda. He says there were theoretical arguments, but none of them were supported by the facts. And what's important about this conversation is what happened next. It's the defendant's reaction is what particularly matters here. And so he tells——Sun tells the defendant that while there are some other crypto exchanges that do not make it clear what is the relationship between a user when they deposit funds on the exchange and the exchange, that's not feasible for us because of our terms of service. They make it very clear that when a user deposits assets onto the exchange, those assets continue to belong to the user. So in other words, Sun is telling him Alameda cannot use customer money. And then, like I said, what's important is how the defendant responds, because it tells you everything about his good faith or lack of good faith here today. The defendant doesn't fight him. He agrees with Can Sun. He says——and here's the testimony——"he acknowledged." He "basically said something like, got it." He "wasn't surprised at all." If the defendant actually believed that he was allowed to use customer money, as he claimed when he took the witness stand, why didn't he say that back in 2022? In this private conversation back in 2022, why didn't he say what he said up on that witness stand? He didn't direct Can Sun to some part of the terms of service. He just acknowledged Sun's conclusion and didn't seem surprised. And that tells you he wasn't acting in an honest belief or in a good faith.

There's another part of this conversation that matters and tells you something about the defendant not acting in good faith. And that's that Can Sun told the defendant that he considered, as one of the theoretical justifications, whether, under Section 16 of the terms of service, which concerned margin trading, whether FTX could have theoretically argued that it could take the customer funds. So that was another theoretical justification that Can Sun raised with the defendant. And Sun told the defendant that he asked Nishad and Ramnik Arora, another employee, to pull some numbers, and those showed that this theoretical justification was not supported by the facts. And how did the defendant respond? Again, this is the key part for knowing about his intent. He acknowledged. "He said, yup, yup. No pushback." By the way, do you notice how Can Sun's answer resembled exactly the way the defendant answered? "He said, yup, yup. No pushback." This tells you that the same time the defendant didn't think this was part of the terms, at this time the defendant did not think this part of the terms of service allowed him to use customer money. And that's important, not just for his good faith or lack thereof, but it's important because of what happens next.

After FTX declared bankruptcy, the defendant did interviews. You heard about that during his testimony. And one of them was on Good Morning America with George Stephanopoulos. And during the interview the defendant is confronted with the exact same terms of service that he spoke to Can Sun about in that private meeting. And Stephanopoulos presses him. He says, "If Alameda is borrowing the money that belongs to FTX depositors, that's a bright red line, isn't it?" And Stephanopoulos is gesturing to the terms of service. It says that "digital assets may not be loaned out to FTX. They can't be loaned out." So Stephanopoulos confronts him with this.

MR. ROOS: And the defendant takes a long pause. And then he gives a false excuse. He says, "There existed a borrow lending facility on FTX, and I think that's probably covered in the terms of service." So the defendant gives Stephanopoulos, on television, the very justification he had discussed with Sun as not being a theoretical justification that worked. And this is a false excuse. And I expect Judge Kaplan will tell you tomorrow that if a defendant gives a false excuse or a false exculpatory in order to divert——in order to divert suspicion from himself, you may consider that as evidence that he believed he was guilty. So this is another reason you know that the defendant was not acting in good faith, because he thought he was guilty, and that's why he lied and gave a justification he knew wasn't true on television before he was charged with a crime.

There's another defense I want to touch on just very briefly, and this is the defense that the defendant has brought up again and again, that he just got unlucky. When he took the witness stand, he blamed everyone and everything. He claimed the problem wasn't from——that they didn't hedge right, that they had bad luck, that FTT prices dropped, that the investments happened to be illiquid, and the defendant claimed that with just a little more time, everything could have worked out, and they could have processed some more withdrawals. And I expect Judge Kaplan is going to tell you that a belief by a defendant, even an honest belief, that ultimately everything would work out fine or that victims wouldn't ultimately lose money, does not mean the defendant acted in good faith. The crime here was when the defendant took the money, when he made false statements to get that money. What ended up happening later on doesn't make him not guilty of the crime.

The last argument I want to talk about today is this idea that it was all margin lending. And with every hour the defendant spent on the witness stand, we saw this argument get more and more absurd. Suddenly, any withdrawal off the exchange, to repay any sort of third-party debt or expense, or to buy muffins, this was a margin trade, according to the defendant. And according to the defense opening, the theory, I guess, is that Alameda was also doing these margin loans and that somehow, under the terms of service, they could just rip all the customers' money because everyone was doing margin trading. And this was an argument that was put out by the defendant after he committed his crimes, after he was arrested. It isn't supported by any facts. You should reject it.

Here's what really happened. First things first. FTX customers did not automatically have their money in the spot margin loan program. It wasn't free money for the defendant to take or borrow. Customers had to opt in. They had to agree. They had to enable margin trading. That's what we're looking at on the screen. So if a customer didn't enable spot margin trading, their money couldn't be borrowed. One example is the very first witness you heard in the case. He testified that he never enabled spot margin trading. His money wasn't in the program. It shouldn't have been taken.

And even after a customer opted into the spot margin trading, their money still isn't in the program. It's not just there just because you turned on the opt-in. You have to then take another step and lend it out. And that's what this shows. Customers had to actually click the lend.

Now the defendant called this witness Mr. Pimbley, and he showed some charts of the balances of people who had just opted in. But that didn't represent what was actually going on. As he conceded during cross-examination, his charts don't show how much money customers actually agreed to lend out. It just shows the balances of the customers who had opted in, not what they actually lent. The amount that was actually available to be borrowed, the amount that actually had been lent, was a lot smaller. And we can see that from one of Professor Easton's charts.

MR. ROOS: Here's a third problem with the defendant. The main account that Alameda was borrowing through did not even have spot margin enabled. So this whole idea that, oh, they're just borrowing through the spot margin program, in fact, notice how all of Alameda's accounts with the "Allow Negative" set were not enabled for the spot margin borrowing. That means none of the accounts that match up to the withdrawals were ones that had spot margin trading. Maybe Alameda had other accounts that had spot margin trading, but the key is these accounts they used to make those gigantic withdrawals of customer money, those were not part of the spot margin system.

And here's some proof of that. Government Exhibit 1002. It tells you that the giant negative balance is the one that's coming out of these "Allow Negative" accounts, from 2 to 12 billion negative. And that's not any borrowing in the spot margin program.

And by the way, we're just talking about stealing money off the exchange right now. Of course we talked this morning about stealing customer money through fiat deposits. And there was tons of spending of customer money on investments——K5, the crypto mining company, the AI company, the donations, the real estate, that all was just coming out of bank accounts. And that is just straight embezzlement. That is theft. That is not borrowing on the spot margin program. That was off-the-exchange borrowing.

Here's the fourth problem I want to highlight with this defense. Professor Easton told you there was not enough money in the spot margin program to explain all Alameda's borrowing. What this shows is that from June to November 2022, Alameda had taken between 8 and 12 billion, when there was at most 4 billion in the margin lending program. This is critical. It is literally, mathematically impossible that they could have taken the money from the borrow/lend or the spot margin program. It's impossible, mathematically, that this could have been a loan, right? And this is the key distinction I was talking about. You have to look at what customers were actually lending out, what was actually available to be borrowed. That's the key. It's not——the number is not the balances. It's what was actually being lent out, what was available to be borrowed. And these are in Government Exhibits 1010 and 1011.

Finally, there's a real problem with the claim that defense counsel made in his opening that FTX could somehow claw back money from unwitting customers who were doing margin loans. Here's the piece of the terms of service they put up in their opening statement.

Nishad Singh testified, after this argument emerged, he testified that clawbacks weren't even implemented. The code could never cause a clawback. So how about this. This whole argument of, oh, well, there's a scenario where you can claw back money because, you know, we socialized the losses, fiction. They actually hadn't even built the system. It was not in the code. This was not a real capability. This was just, well, we'll get to it, we'll tell you what this is.

What Can Sun said, who was one of the authors of the terms of service, he was asked about this, and what I want to highlight is what he said about it. He said he talked about this——he had not discussed the specific provision with Sam, right, but when he talked with Sam about clawbacks, the defendant always made it clear that FTX does not claw back money from users, right? So we have this argument now that's totally contrary to the defendant's prior statements. And here's the important point. At the end, "I just asked you, what's the reason this is in there? If it's not——if they couldn't even do it, what's the reason it's in there?" Can Sun said, "Well, in fact, this provision was drafted mostly for disclaimer purposes, nothing more."

I expect Judge Kaplan will tell you tomorrow that a defendant cannot disclaim away his false statements and lies by putting a provision in a terms of service. And keep in mind these terms of service, they weren't even adopted until May of 2022, which means there were thousands of customers who never even agreed to this when they joined FTX.

Here's my last thought on this margin defense.

MR. ROOS: When the defendant was asked directly yesterday under cross-examination whether he was saying the big hole in customer funds in November was the result of a clawback, he sort of fumbled for a second. And then he said he wouldn't describe it that way. He conceded that's not actually what happened. This is a distraction. It's something manufactured after the fact. It's something that he came up with after everything came crashing down. He came up with it for a day like today, in a courthouse, and you should reject it.

You've all paid close, careful attention. Let me leave you with this thought. This was a fraud that occurred on a massive scale. Thousands of people lost billions of dollars. Everyday people lost savings, companies went bankrupt, all because of this defendant's fraud, because he wanted more money to do whatever he wanted with. So when you go back to the jury room, follow the truth. Let the evidence prevail over his storytelling. The defendant, he lied and he stole from his customers; he lied and he stole from his lenders; he lied and he stole from his investors. He's guilty of wire fraud; he's guilty of securities fraud; he's guilty of commodities fraud; and he's guilty of money laundering. Do justice. Reach the only verdict consistent with the evidence, with the law, and with the truth, that the defendant is overwhelmingly, beyond any reasonable doubt, guilty.