2.Government Rebuttal Closing

MS. SASSOON: Thank you, your Honor.

Telling your customers to trust you with their money, telling your customers that their assets are safe, segregated, safeguarded, held in custody, and then taking that money and spending it on yourself, on your business, on the same business that you've told your customers is separate, walled off, treated no differently from any other account, that is not a reasonable business decision. That is fraud.

You've heard time and again——and it's true——that the government is the only party with a burden in this case. We have to prove the charges beyond a reasonable doubt. We've embraced that burden, and we've met that burden.

But when the defense comes up and makes arguments, it's your duty to scrutinize them, to examine whether they match up to the evidence, to the testimony that you've learned in this trial. They don't. The defendant has no obligation to testify. He has a constitutional right not to. But if he takes that stand, it's your duty to scrutinize what he said, to consider whether it matched up with the evidence and the testimony. It didn't.

Now I'm not going to address everything that Mr. Cohen said. You've spent a long time listening to closing arguments, and I know you've paid close attention to the evidence, and I know that when you go to deliberate, you have the tools to consider these arguments and to reject them. And so there are some that I won't spend a lot of time on, like this argument that there was no customer fraud because there were only two customer victim witnesses. I expect Judge Kaplan will instruct you that it's for you to consider what a reasonable customer, a reasonable investor, would have believed based on the false representations by the defendant.

Now Tareq Morad got up there and he told you that when he looked at his account balance, he thought that meant the money was there, that it was being held for him, that it was custodied for him, and of course that was reasonable. You know that from the terms of service, which told customers that their assets belonged to them, but this case doesn't rise and fall on the terms of service. Judge Kaplan is going to instruct you to consider the full slate of representations made to customers. And you've seen them. I'm not going to pull them back up——the tweets, the policy documents, the congressional testimony that was publicized. The defendant himself told you that he knew his customers were reading his tweets, reading the news articles, he was publicizing his testimony on Twitter. And so take a look at the terms of service, but look at exhibits like Government Exhibit 340. This was the asset management policy of the business that applied to fiat and crypto. And it said: We're holding your assets, they're ring-fenced, they don't belong to FTX. And witness after witness got on that stand and told you, this was a sacred, unbreakable rule. Your money is your own. It's not for FTX to use. And that's what the defendant himself said time and again to his customers.

And so you know, without hearing from Tareq Morad or Marc-Antoine Julliard, that a reasonable customer would see and hear those statements and be given the false impression that their money was safe with FTX and that Alameda did not have unlimited access to customer funds without playing by the rules of the exchange.

Another argument that you can reject quickly: Mr. Cohen said, well, if the defendant were a fraudster, why would he repay the lenders instead of taking the money and running? This isn't a crime like robbing a bank in broad daylight, where the defendant committed the crime in broad daylight and then went on the run. He didn't want to be a criminal on the run. You heard about his ambitions. This is somebody who wanted to be president of the United States, who thought he could and should be president of the United States. This is someone who wasn't satisfied starting a crypto trading forum; he wanted to start a crypto exchange. And when he started that exchange, that wasn't enough; he wanted to be the biggest exchange in the world. He wanted to crush his rival Binance. And when his exchange was making a billion dollars in revenue, that wasn't enough to satisfy his spending; he wanted billions and billions of dollars more from his customers, to spend on gaining influence and power.

MS. SASSOON: He wasn't going to take the money and run. It's the same reason that he testified before Congress and spoke to the media. It was part of an effort to present himself as legitimate, as trustworthy, as running an exchange that was reliable and safe, where customers should deposit their money. And when it came to lenders, he had the arrogance that he could get away with the fraud, that if he sent lenders a false balance sheet, that he wouldn't be exposed, and not only would he not be exposed, he would get more money. And that's exactly what happened. You heard that after he sent the false balance sheets, he received more than a billion dollars more in loans to continue his scheme.

Investor fraud. Mr. Cohen said that the timing doesn't match up, that the episodes in 2022 took place after the defendant raised money. That's just wrong. First of all, you heard about how the defendant and Ms. Ellison took FTX customer money to buy out Binance. That was before the fundraising. And you also heard about the countless misrepresentations to FTX investors——the inflating of revenue; the secret transferring of investor funds over to Alameda; the deceptions on the balance sheet by moving the MobileCoin loss over to Alameda so the investors wouldn't know about it; the lies to auditors that kept investors from learning about problems at FTX; and the lack of separation between Alameda and FTX. And you heard from the two investor witnesses that that type of information would have been important to them and would have affected their investment decision.

I'm going to spend a little more time talking about some of the arguments you heard, but when you go and deliberate, I want you to also think about what you didn't hear, what Mr. Cohen didn't say, the evidence to which he had no answer. For example, Government Exhibit 5. This is a spreadsheet created by the defendant where he listed the lines of credit on the exchange starting with Alameda's $65 billion line of credit. Now if the defendant didn't know about Alameda's $10 billion liability to FTX until October and didn't know about its giant line of credit, or how to use the database, how do you explain Government Exhibit 5, a spreadsheet he made that lists dozens of lines of credit coming out of the database and that have the defendant's own calculations showing that Alameda owed $10 billion to the exchange. The defendant has no answer, and so they said nothing about it.

Government Exhibit 36. If the defendant didn't know that Alameda was repaying its lenders with customer money, how do you explain Government Exhibit 36? NAV Minus Sam Coins. This is a spreadsheet from 2021 that shows that Caroline and the defendant agreed in late 2021 that in the event of a market crash, the only way to repay lenders would be to treat FTX customer funds as their personal piggy bank. The defense has no answer to Government Exhibit 36.

And I'll mention one more, but there are many others.

Government Exhibit 50. This is the spreadsheet from mid-June 2022, and if the defendant didn't know about the fiat liability until later and Alameda's $10 billion negative balance, how do you explain Government Exhibit 50? This is the spreadsheet that Gary, Caroline, and Nishad all testified they prepared at the defendant's direction and that they discussed with him, and that shows in black and white that Alameda owed $10 billion. The defense has no answer.

So without answers to these devastating pieces of evidence, the defense fell back on unsupported and increasingly desperate accusations: The government is painting the defendant as a monster, as a movie villain. I didn't hear those words at this trial. The first time I heard them were out of Mr. Cohen's mouth. The evidence about the defendant's image showed you that he was a different person in public and in private and that it was a performance. His romantic relationship with Caroline Ellison, that was important for you to understand why he chose her as his front and as his deputy. His girlfriend, the person who deferred to him, a person whose relationship——in that relationship, the defendant had all the power.

MS. SASSOON: And most outlandish of all was this accusation that three cooperators got on that stand, that they were pressured to lie, that they pled guilty to crimes they didn't commit, and that they were told to falsely point the finger at the defendant. That's outrageous. Each of those witnesses got on that stand and they told you what they were told by the government from day one——to tell the truth. And you know that that's what they did.

Now this desperate and unsupported accusation, the defense has to make it, because if you believe Caroline, the defendant is guilty; and if you believe Gary, the defendant is guilty; and if you believe Nishad, the defendant is guilty. The cooperator testimony tells you flat out that the defendant oversaw the stealing of FTX customer funds, that he knew it was wrong, that he lied about it, and he took steps to hide it.

And I want to tell you three reasons that you know those cooperators were telling the truth. Let's start with their incentive. Their incentives weren't to lie. And take a look at their cooperation agreements. They're in evidence. This is the 3500 series. And they explain to you how these cooperation agreements work. Under that agreement, they're required to tell the truth. And if they don't, they're stuck with their guilty pleas and facing decades in prison. They get a letter from the government explaining their cooperation to the judge if they tell the truth. And it's the judge who will decide their sentence. And if a cooperator is caught in a lie, any lie, that agreement gets ripped up.

I wrote this down because I was puzzled by it. Mr. Cohen said that the government is treating the cooperators like they had no free will. No free will? Those three witnesses all pled guilty to federal felonies. They took responsibility for what they did. These are not people who came in and said, "I did nothing wrong, it was all Sam Bankman-Fried." From their first meetings with the government, they admitted to serious federal crimes, and they described how they did it and who they did it with.

On the other hand, the defense wants you to believe that none of these cooperators helped the defendant commit crimes and that they all pleaded guilty even though none of them actually thought they were doing anything wrong at the time. Now think about that. And let's take Gary Wang as an example. By this argument, Gary Wang leaves the Bahamas days after FTX declares bankruptcy, less than a week later comes to meet with the government, no one at that point has been charged with any crimes, and he confesses to all sorts of things that he didn't do. In that very first meeting, he pleads guilty to a host of crimes he didn't commit, he exposes himself to penalties for things he never did, and then he comes up here and he lies to you. That makes no sense.

And you know that this is not a case of crimes in hindsight. And let's just take Caroline Ellison as one example. The defense said if she really thought something was wrong, wouldn't she have resigned, cashed out, blown the whistle? Well, she didn't do those things, and that's why she's guilty of participating in a conspiracy. And she told you that during the conspiracy, she did think she was doing something wrong and she expressed it to the defendant. She went to him as far back as 2020 and said, What about these auditors? Are they going to see that we're taking customer money? That would be bad. And he said, Don't worry. The auditors won't see it. When he wanted to buy out Binance, she said, Well, we can't do that without taking customer money. And he said, Well, do it anyway. And in 2022, when he told her to lie to the lenders, she told you the effect that that had on her. She spent a year in dread and fear, waiting for her crimes to be exposed. She cried on that stand and she told you about the worst months of her life, when she knew she was committing crimes and was waiting to get caught, waiting for customers to realize that their money was gone.

MS. SASSOON: And let's talk about Nishad. The defense made a big deal out of the fact that he learned of the conspiracy and joined it a little later. I expect Judge Kaplan is going to instruct you that different people can play different roles in a conspiracy. You can play a minor role, you can play a major role, you can join at a different time. You're still part of the conspiracy. And so it's no surprise that Nishad, who didn't work at Alameda, didn't have visibility into all the spending and all the use of customer money, but when he did, when it sunk in, he didn't say, oh, nothing wrong going on here. He confronted the defendant on that balcony. He was shocked, he was blindsided, and eventually he was suicidal. That is not somebody who didn't think he was doing anything wrong.

But you don't need to take the cooperators' words for it, because they were corroborated by every single other piece of evidence in this case, by the testimony of other witnesses, by each other's testimony. Yes, they had different lenses into what was going on and different roles, but they were consistent in the most important respects, that they were acting at the defendant's direction, that this was his scheme, his spending, his vision, and that they did what he told them.

And Caroline, think about her testimony. She described to you what happened with the seven alternative balance sheets, that she prepared that for the defendant and that they discussed how to hide the borrowing from FTX customers, and the metadata shows you that she was telling the truth. He accessed it shortly before she sent that balance sheet off to Genesis. Her contemporaneous notes matched what she said, her journal entries, her Signal chats. And remember the all hands meeting. That wasn't hindsight; that was before she had ever met with the government, before she knew there was an investigation. And go back and listen to those recordings because they're consistent with what she said on the stand. When she told her employees that she did this with Sam, Gary, and Nishad, and that Sam directed it, she didn't think the government was listening. And it's consistent with what she told you in court.

The last thing I want you to think about when it comes to the cooperators is their demeanor. I know it's been a little while, but each of them got up on that stand and they were the same person during their direct examination and their cross. They tried to answer the questions in detailed fashion, directly, in a straightforward way. They remembered specifics, like where conversations happened, and documents. And then think about the defendant. He was a different person on his cross-examination than his direct, where he was polished and knowledgeable and defining 50 terms, and suddenly on cross, he couldn't remember a thing. Not only that, his story, it's changed so many times, it's hard to keep track. And then think about Caroline, who's been the same from that all hands meeting to today.

Now I want you to think about what it means to accept the defense's argument and what you would have to believe to accept what the defense has said. You've learned in this trial that Sam Bankman-Fried was a talented CEO, he was smart, he went to MIT, he was ambitious, he is good at explaining things, he dazzled investors and Congress and the media, and he worked around the clock to build a successful business. But the defense wants you to believe that this same person was clueless when it came to the most fundamental, important things going on at his business. He didn't know the code; he never looked at the database; he knew that Alameda was accepting customer deposits but he didn't bother to check where they were going; he was authorizing ginormous expenditures but didn't know where the money was coming from; Nishad and Gary were making dramatic changes to the code and he had no clue how those features really worked, even though they were his friends, his roommates, and his employees; Caroline, who was just a trader, when fiat deposits started going to Alameda, well, she knew that Alameda was spending those deposits, but the defendant dated her, he supervised her, he lived with her, but he just had no idea.

MS. SASSOON: And then think about June. The crypto markets are crashing, Alameda's assets are plunging in value, Alameda maybe is going bankrupt, lenders are asking for billions of dollars. The defendant is trying to manage this crisis, but all the while he's asking no questions. He didn't really look at the spreadsheets that metadata shows he received. He didn't bother asking Caroline why there were seven versions of the balance sheet. He overheard that there was an $8 billion bug in a fiat account, but he didn't say, "Hey, what's that and how did it get to $8 billion?" That makes no sense. It's absurd. It's inconsistent with the documentary evidence.

And it doesn't stop there. They want you to believe that in September-October he finally just decided to run a query, the first time he's ever using the database, and he sees a $10 billion liability, and this raises no alarm bells. He has no real reaction. He doesn't demand answers. He doesn't try to repay FTX even though he never knew about this. And he just goes about his business.

This story not only makes no sense, it's inconsistent with the testimony of every witness in this case, and you know that it's a made-up story. You should reject it.

The defense threw around these terms, "liquidity," "solvency," and Mr. Cohen told you that the defendant acted in good faith because "he always thought Alameda had sufficient assets on the exchange and off the exchange to cover its liabilities." That's not good faith. First of all, you saw the balance sheets, and these were the same balance sheets that were sent to the defendant in June, in September, in October. There isn't $40 billion of NAV; there isn't even $10 billion of NAV. And you saw the liquid assets, the same liquid assets the defendant was looking at at the time. Alameda had about $500 million in its bank account and owed FTX $13 billion. And the other liquid assets, they were coins like FTT and Serum and Solana. And the government's not claiming, like Mr. Cohen said, that FTT is a fake coin. What you learned in this trial is that it was an illiquid coin, which the defendant and everybody else knew meant that you couldn't sell all those coins and recover the full value on the balance sheet.

So the defendant saw these balance sheets and he knew that Alameda did not have the assets to cover this giant debt to FTX customers. But let me be clear about this. Whether Alameda was liquid, solvent, had $40 billion of coins or gold bars, or just a worthless pile of junk, it doesn't matter. It's a distraction. Because even if the defendant thought that Alameda could sell all its assets and investments that were not on the FTX exchange to repay a $14 billion debt——which it couldn't and it didn't——that wouldn't be good faith. And I'll tell you why. Because when the defendant told his customers that their assets were safe, that a customer had to deposit collateral on to FTX to trade or borrow, that negative accounts would be liquidated and that Alameda's account was just like everybody else, he lied. Unlike every other customer, Alameda did not post collateral, it couldn't be liquidated, and they were not being evaluated by the supposedly automatic computer risk engine. He lied to gain customers' trust, to get their money, and then he decided the rules didn't apply to him and his business. Whether or not he made good investment decisions after that or it was a good business judgment to pay $300 million to meet celebrities doesn't matter, because he embezzled that money in the first place after his customers trusted him with it. The customers did not sign up for that. They told you that. And they would not have put their money on the exchange if they knew what was going on. So whether or not the defendant thought he could get away with it by selling assets or raising money from other investors, he thought he could one day put that money back, doesn't matter. He still took his customers' property based on false misrepresentations, and that is fraud.

MS. SASSOON: I want to say a quick word about Pimbley's chart, Mr. Pimbley. The defense talked about that in their closing statement. You should disregard that chart. You remember cross-examination. Mr. Pimbley couldn't tell you why he looked at certain numbers, what the significance of the numbers were, what the relevance was to this case. He just ran a query in a database and did no analysis whatsoever. And when he was cross-examined, he admitted that those numbers he used made Alameda's debts look lower because he did not include the fiat liability and he had included some accounts that were full of Sam coins, like FTT.

If you want to know the full story, look at Government Exhibit 1002. That chart shows all of Alameda's balances and gives you a better picture of the defendant's actual use of customer money. And look at Government Exhibit 5 if you want to know what the defendant knew, because that's the defendant's own chart showing that Alameda owed negative $5 billion to FTX and owed $10 billion if you excluded the FTT and venture accounts.

One quick thing on this risk officer point. The defense made a big deal that FTX did not have a chief risk officer. That's not a defense. That was a strategy. If you're deleting messages and backdating documents and embezzling customer money, of course you're not going to hire a risk officer. And the defendant didn't need a chief risk officer to tell him that stealing customer money was wrong. You can't go into a jewelry store, steal a diamond necklace, walk out, and then say, there was no security guard. The defendant knew what he was doing was wrong, and that's why he never hired a risk officer.

Before I conclude, I want to make something else very clear, and leave you with this thought. Even if you accept everything the defendant said on the stand, which you shouldn't, he is still guilty of fraud. The defense doesn't dispute that by September or October, the defendant knows about Alameda's massive liability to FTX customers; he knows that they've spent customer fiat funds; he knows they have borrowed billions of dollars from customers, outside the normal rules of the exchange; he knows the state of Alameda's balance sheet, he's been reviewing it; he knows that they have barely any money in bank accounts and a bunch of illiquid tokens and investments that are not on the FTX exchange. And so you know that he directed this fraud, that he was the hub. But even if you accept what he is saying, he wasn't a member of the conspiracy before then, he became a member of the conspiracy at that point in time. The defense wants you to think that the government has to prove that this was a giant fraud from day one and that this was the defendant's plan all along. We don't. Now the evidence shows that——the evidence shows that over time, the defendant exploited FTX to take more and more customer funds for his own spending, that he directed the features in the code, that he directed the use of fiat deposits, but even if you find that it wasn't until September or October that he had the full picture, at that point he knows what's going on and he agrees to help the plan succeed, by covering it up, by trying to raise money in the Middle East to fill the hole, and conceal what's going on, and by lying to customers throughout September and October, publicly, in the media, on Twitter, about the safety of the exchange and the safety of their assets, all while he knows that there's this giant, massive, unrepayable hole.

MS. SASSOON: I expect Judge Kaplan is going to instruct you about a concept called conscious avoidance. And that means if the defendant deliberately closes his eyes to what otherwise would have been obvious, or if he's aware of a high probability of a fact but intentionally avoids confirming it, he is still acting knowingly under the law. And according to the defendant's own testimony, that's what he did here. He knew Alameda was receiving customer deposits. He was CEO at the time, and he permitted employees to use that money. He put in place no restrictions, no policies to safeguard that money, to prevent stealing, and he turned the other way and spent billions of dollars without really asking where that money was coming from. He directed changes to the code that he knew would treat Alameda differently from everybody else, but then he didn't really ask any questions. And when he overheard in June, according to him, that there was an $8 billion bug in the fiat account, he didn't say, "Hey, what's that?" Instead of getting to the bottom of why Alameda owed billions of dollars in an account called fiat, that's conscious avoidance. Even if you believe every word of that unbelievable story, that is conscious avoidance and he is guilty.

Let's talk about November, because at that point in time, the defendant indisputably demonstrated that he was a member of an illegal conspiracy and he had wrongful intent. I expect Judge Kaplan is going to instruct you that a single act——one act——may be sufficient to draw a person into a criminal conspiracy. Now the defendant, he committed countless acts——false statements, deception, embezzlement, use of customer funds, directing changes to the code, directing false balance sheets——but one act in furtherance of the conspiracy is enough.

And so when November rolls around, and the defense admits the defendant at this time knew the state of affairs——he knew about the borrowing; he knew that Alameda had not been liquidated; he knew that Alameda had spent the customer fiat deposits; he didn't tell customers the truth; he took steps to continue the scheme; he lied to customers; he lied to keep their money, to prevent withdrawals, to hide what happened. He helped Caroline, for example, write a misleading tweet——that's Government Exhibit 875——saying that Alameda's balance sheet was secure because they had repaid all their loans. Repaid all their loans? They owed FTX $10 billion.

And then he tweeted himself. This is not the government's favorite piece of evidence. I don't know if that joke was meant to distract, but this is a significant piece of evidence, and you should take it seriously, because when the defendant said FTX had enough to cover all client holdings, that was a lie. And the defendant himself admitted that that statement, he was taking into account Alameda's balance sheet, the company he told the public was walled off and separate, and he was taking into account assets that were illiquid and that were not on the FTX exchange. FTX did not have enough to cover all client holdings.

And just look at Government Exhibit 21, where at the same time in private he's saying, We have one third of the money to cover what client assets should be.

So that tweet alone shows that he joined the conspiracy, he took an act in furtherance of it, to prevent customer withdrawals, and he lied over and over again.

The defense said that the fact that he deleted this tweet somehow shows that he had good faith. Give me a break. On November 7 he thought he could still fool the world. He thought that if he lied to customers, maybe they wouldn't withdraw their money. And when he deletes the tweet, it's because the curtain has been pulled back. The world at that point knows the money's not there. He's destroying evidence. He's deleting evidence of his lies.

And then the defendant went and made false statements to the press, and that's when he thought he would never be caught, that his messages had been deleted, that his fingerprints were not on the code, and that his deniability was airtight.

MS. SASSOON: He went on Good Morning America for the same reason he sent a confident tweet thread, because he thought he could fool his customers, reporters, the public, and now you. Don't fall for it. You know better.

When the defendant sent that false tweet, when he lied to the public, he didn't bargain for the metadata or Caroline's journals or the complicated tracing of crypto and dollar money movements that show when and how he took the money and where he spent it. He didn't bargain for his three loyal deputies taking that stand and telling you the truth, that he was the one with the plan, the motive, and the greed to raid FTX customer deposits, billions and billions of dollars to give himself money, power, influence. He thought the rules did not apply to him. He thought that he could get away with it. But his crimes caught up to him. His crimes have been exposed.

It's time to deliberate without fear, favor, sympathy, or prejudice. You sat through this trial. You know what happened. Find him guilty.