1.Adam Yedidia — Direct/Cross/Redirect (Part 2)
2,182 linesUNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 22 CR 673 (LAK) SAMUEL BANKMAN-FRIED, Defendant. Trial
New York, N.Y. October 5, 2023 9:40 a.m. Before: HON. LEWIS A. KAPLAN, District Judge APPEARANCES DAMIAN WILLIAMS United States Attorney for the Southern District of New York BY: DANIELLE R. SASSOON NICOLAS ROOS DANIELLE KUDLA SAMUEL RAYMOND THANE REHN Assistant United States Attorneys COHEN & GRESSER, LLP Attorneys for Defendant BY: MARK S. COHEN CHRISTIAN R. EVERDELL SRI K. KUEHNLENZ DAVID F. LISNER Also Present: Luke Booth, FBI Kristin Allain, FBI Arjun Ahuja, USAO Paralegal Specialist Grant Bianco, USAO Paralegal Specialist
(Trial resumed; jury not present)
JUDGE KAPLAN: I gather we are ready to go.
MS. KUDLA: Your Honor, before we call in the jury -- we can address these at a break, actually. We can call in the jury.
MS. SASSOON: Your Honor, should the witness be brought in?
JUDGE KAPLAN: Yes.
(Jury present)
JUDGE KAPLAN: Good morning, everybody. The defendant and the jurors all are present, as they have been throughout.
Members of the jury, Andy and John Hammel have put together a little calendar showing the days we are sitting and so forth. We will pass it out.
Mr. Yedidia, you are still under oath. Ms. Sassoon, you may proceed.
ADAM YEDIDIA, previously sworn. DIRECT EXAMINATION (cont'd) BY MS. SASSOON:
MS. SASSOON: Good morning, Mr. Yedidia.
ADAM YEDIDIA: Good morning.
MS. SASSOON: Let's start this morning by talking about the people at FTX and your role there. Who founded FTX?
ADAM YEDIDIA: Sam and Gary.
MS. SASSOON: When you say Sam, are you referring to the defendant?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who is Gary?
ADAM YEDIDIA: Gary Wang.
MS. SASSOON: Around when did the defendant and Gary Wang found FTX?
ADAM YEDIDIA: I believe around 2019.
MS. SASSOON: Can we show the witness what has been marked as Government Exhibit 1801.
MS. SASSOON: Who is the person in this photograph?
ADAM YEDIDIA: Gary Wang.
MS. SASSOON: The government offers Government Exhibit 1801.
JUDGE KAPLAN: Received.
(Government Exhibit 1801 received in evidence)
MS. SASSOON: Mr. Bianco, can you please publish Government Exhibit 1801 for the jury.
MS. SASSOON: Mr. Yedidia, who is in this photograph?
ADAM YEDIDIA: Gary Wang.
MS. SASSOON: Is that the Gary Wang you mentioned who cofounded FTX with the defendant?
ADAM YEDIDIA: Yes.
MS. SASSOON: When you worked at FTX, where were FTX's offices?
ADAM YEDIDIA: When I started working at FTX, FTX's offices were in Hong Kong. By late 2021, FTX had opened a new office, its primary office in the Bahamas.
MS. SASSOON: About how many employees worked at FTX when you started there?
ADAM YEDIDIA: About a hundred, maybe a little more.
MS. SASSOON: Who was in charge at FTX?
ADAM YEDIDIA: Sam Bankman-Fried.
MS. SASSOON: What sorts of things did the defendant do at the company?
ADAM YEDIDIA: He was the CEO, so he was sort of in charge of everything. He did marketing and grand strategy, and he would make decisions for what was important. He would sometimes set priorities for the dev team. He would worry about acquisitions. There is other duties too, I'm sure.
MS. SASSOON: From your vantage point, was he involved in the details of the business?
ADAM YEDIDIA: Yes.
MS. SASSOON: You testified yesterday that you were a software developer at FTX. What did you do as a software developer?
ADAM YEDIDIA: I wrote code.
MS. SASSOON: What is code?
ADAM YEDIDIA: Code is instructions for a computer. It's how the computer knows what to do.
MS. SASSOON: Generally, what were you writing code for?
ADAM YEDIDIA: The FTX website.
MS. SASSOON: Is that FTX.com?
ADAM YEDIDIA: Yes.
MS. SASSOON: What does it mean to write code for the website?
ADAM YEDIDIA: It means that you are writing words in a document that are meant to tell the computer what to do when, for example, a user presses a button. So when a user presses a button, the computer doesn't know what to do all by itself. It instead executes commands that were written by someone, so I was writing those commands for the computer to execute.
MS. SASSOON: When you were working on code for FTX.com, who did you report to?
ADAM YEDIDIA: Nishad Singh.
MS. SASSOON: Mr. Bianco, can you please show the witness what has been marked as Government Exhibit 1803.
MS. SASSOON: Do you recognize this person?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who is it?
ADAM YEDIDIA: Nishad Singh.
MS. SASSOON: The government offers Government Exhibit 1803.
JUDGE KAPLAN: Received.
(Government Exhibit 1803 received in evidence)
MS. SASSOON: Mr. Bianco, if you could publish that for the jury.
MS. SASSOON: Mr. Yedidia, who is in this photograph?
ADAM YEDIDIA: Nishad Singh.
MS. SASSOON: Was this the person that you reported to at FTX?
ADAM YEDIDIA: Yes.
MS. SASSOON: Did you report to anyone else informally?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who?
ADAM YEDIDIA: Gary Wang and Sam Bankman-Fried.
MS. SASSOON: Who did Gary Wan and Nishad Singh report to?
ADAM YEDIDIA: Sam Bankman-Fried.
MS. SASSOON: Showing you what's been marked as Government Exhibit 1450 -- this may take one moment -- do you recognize the people in this photograph?
ADAM YEDIDIA: Yes.
MS. SASSOON: Are you in this photograph?
ADAM YEDIDIA: Yes.
MS. SASSOON: The government offers Government Exhibit 1450.
MR. EVERDELL: No objection.
JUDGE KAPLAN: Received.
(Government Exhibit 1450 received in evidence)
MS. SASSOON: Mr. Bianco, if you could publish this photograph for the jury.
MS. SASSOON: Where are you in this photograph, Mr. Yedidia?
ADAM YEDIDIA: I'm the second person from the left in the blue shirt.
MS. SASSOON: Who is the man to your left in a gray hoodie?
ADAM YEDIDIA: Gary Wang.
MS. SASSOON: You can take that down.
MS. SASSOON: Who oversaw the work you, Gary Wang and Nishad Singh did on the FTX code?
ADAM YEDIDIA: Sam Bankman-Fried.
MS. SASSOON: I'd like to return to the FTX website which we started to look at yesterday. Because of your work coding for the website, are you generally familiar with the FTX.com website as it existed when FTX was operating?
ADAM YEDIDIA: Yes.
MS. SASSOON: Are you familiar with certain features of the website?
ADAM YEDIDIA: Yes.
MS. SASSOON: Were you familiar with the processes for depositing and withdrawing money on the exchange through the website?
ADAM YEDIDIA: Yes.
MS. SASSOON: If we could pull up for the jury and the witness Government Exhibit 589, which is in evidence.
MS. SASSOON: I want to direct your attention to the upper left of this screen where it says balances in blue.
First of all, is this a screenshot from the FTX website?
ADAM YEDIDIA: Yes.
MS. SASSOON: What does balances in blue refer to?
ADAM YEDIDIA: It refers to the customers' balances on the website.
MS. SASSOON: So what does this screenshot from the website generally show?
ADAM YEDIDIA: It shows a customer's balances.
MS. SASSOON: When you say balances, what are you referring to?
ADAM YEDIDIA: I'm referring to the money that they had on FTX.
MS. SASSOON: I want to direct your attention to the left side where it says USD with a dollar sign next to it. What is USD?
ADAM YEDIDIA: USD stands for United States dollar. It's the official currency of the United States.
MS. SASSOON: For this particular account balances page, what is the balance displayed in U.S. dollars?
ADAM YEDIDIA: 80 cents.
MS. SASSOON: Once a customer went through the approval process for an account on FTX, what would a customer do to begin trading on the exchange?
ADAM YEDIDIA: They would deposit money.
MS. SASSOON: Do you see here where it says deposit with a red box around it?
ADAM YEDIDIA: Yes.
MS. SASSOON: What does that refer to?
ADAM YEDIDIA: It refers to depositing money on the exchange.
MS. SASSOON: Let's take a look at Government Exhibit 590, another screenshot from the website. What were the four methods of depositing money onto FTX?
ADAM YEDIDIA: For USD they were USD stablecoins, credit or debit card, wire transfer, and cryptocurrencies.
MS. SASSOON: What is fiat?
ADAM YEDIDIA: Fiat refers to any currency that's issued by a government, so in some sense normal money.
MS. SASSOON: Can you give some examples of normal money.
ADAM YEDIDIA: The U.S. dollar is one example, the euro is another example, the Japanese yen is another example, the Brazilian real.
MS. SASSOON: Could a customer deposit money onto FTX using fiat or dollars?
ADAM YEDIDIA: Yes.
MS. SASSOON: Which of the four options reflected here are methods of depositing fiat or dollars onto the exchange?
ADAM YEDIDIA: Credit or debit card and wire transfer.
MS. SASSOON: If I refer to fiat as dollars as a shorthand, will you understand what I mean?
ADAM YEDIDIA: Yes.
MS. SASSOON: I'd like to take a look at Government Exhibit 1561. The government offers that exhibit pursuant to stipulation, Government Exhibit 2000, which the parties have agreed is a true and correct copy of a video posted on FTX's home page called FTX User Guide, How to Deposit Fiat on FTX.
JUDGE KAPLAN: It is received.
(Government Exhibit 1561 received in evidence)
JUDGE KAPLAN: I will just say a word to the jury about stipulations.
The parties, in order to simplify the trial, have agreed on quite a few sort of basic undisputed facts. Those agreements are on pieces of paper labeled stipulations. They are just agreements about what these facts are. That's all there is to it. And you must accept anything they have stipulated to as the fact.
I should also say that in some cases there are occasions when the parties will stipulate that if some person, unimaginary person, John Jones, were called to testify, John Jones would say A, B, and C. In that circumstance you must assume, you must take as granted that if John Jones were called, John Jones would say on the witness stand A, B, and C. But in that case, and that case alone, it would be up to you to decide whether, assuming he said those things, he was testifying accurately and had knowledge of what he was talking about and all other things that may go to the credibility of what John Jones would have said had John Jones been here. But that's not this particular stipulation. This is a hard, fast stipulation as to particular facts.
Let's move on.
MS. SASSOON: Thank you, your Honor.
Mr. Bianco, if you could please play the first 45 seconds of FTX User Guide, How to Deposit Fiat on FTX.
(Video played)
MS. SASSOON: Mr. Yedidia, what is this video about?
ADAM YEDIDIA: How to deposit fiat to FTX.com.
MS. SASSOON: Mr. Bianco, if you could please play another portion of the video from two minutes and 27 seconds through the end of the video, please.
(Video played)
MS. SASSOON: Mr. Yedidia, this video described one method of depositing dollars on the exchange involving a wire transfer. In simple terms, what is a wire transfer?
ADAM YEDIDIA: It is when you tell your bank to send some of your money to a different bank.
MS. SASSOON: Let's go back to Government Exhibit 590.
MS. SASSOON: Now, we have talked about credit or debit card deposits and wire transfer deposits of dollars. Generally, how would a customer deposit stablecoins or cryptocurrency on the exchange?
JUDGE KAPLAN: Excuse me. Maybe we should pause a minute before that question.
Tell us, Mr. Yedidia, please, what is a stablecoin?
ADAM YEDIDIA: A stablecoin is a cryptocurrency that is trying to have a value that's pegged to a particular fiat currency. So a USD stablecoin would be a cryptocurrency whose value would be one USD in all cases.
MS. SASSOON: So are stablecoins a subcategory of cryptocurrency?
ADAM YEDIDIA: Yes.
MS. SASSOON: That subcategory of coins that are supposed to maintain a fixed price?
MR. EVERDELL: Objection.
JUDGE KAPLAN: Overruled.
ADAM YEDIDIA: Could you repeat the question.
MS. SASSOON: Of course. Is that subcategory cryptocurrency called stablecoins, does that have coins that are meant to maintain a certain fixed dollar value?
ADAM YEDIDIA: Yes.
MS. SASSOON: I'd like to return now to how a customer would deposit stablecoins or cryptocurrency on the exchange. How would a customer do that?
ADAM YEDIDIA: The customer would be shown a deposit address for the currency, and they would send their stablecoins to that deposit address.
MS. SASSOON: When you say deposit address, what do you mean by that?
ADAM YEDIDIA: A deposit address is -- it's an address in which money can live for a cryptocurrency. So a cryptocurrency for each possible address would have a balance associated with that address, and the deposit address would be, you know, the address you would enter to send your money to that particular balance.
MS. SASSOON: What is the relationship, if any, between a deposit address and a cryptocurrency wallet?
ADAM YEDIDIA: A cryptocurrency wallet would have a deposit address associated with it.
MS. SASSOON: And what is a cryptocurrency wallet?
ADAM YEDIDIA: It's a place where you can have your cryptocurrency held.
MS. SASSOON: When you say your cryptocurrencies held in this wallet, is this online, is this somewhere else?
ADAM YEDIDIA: For decentralized cryptocurrencies, the ledger that would keep track of who owns what would be tracked across many different computers, not just one.
MS. SASSOON: These are wallets that are tracked on computers?
ADAM YEDIDIA: Yes.
MS. SASSOON: At this time the government offers Government Exhibit 1560, which the parties have agreed is a true and correct copy of a video posted on FTX's home page called FTX User Guide, How To Deposit Crypto on FTX.
JUDGE KAPLAN: It's received.
(Government Exhibit 1560 received in evidence)
MS. SASSOON: Mr. Bianco, if you could please play the first 14 seconds of Government Exhibit 1560.
(Video played)
MS. SASSOON: What is this video about, Mr. Yedidia?
ADAM YEDIDIA: How to deposit cryptocurrencies on FTX.
MS. SASSOON: Mr. Bianco, if you could please play the rest of the video.
(Video played)
MS. SASSOON: Mr. Yedidia, in this video about crypto deposits, when a customer is moving cryptocurrency to FTX, is that cryptocurrency they own elsewhere that they are moving to the exchange?
ADAM YEDIDIA: Yes.
MS. SASSOON: So this would be cryptocurrency that a customer already owns that they are transferring over to FTX?
ADAM YEDIDIA: Yes.
MS. SASSOON: Let's go back to Government Exhibit 589 and look at customer balances.
MS. SASSOON: Once a customer deposits money on the exchange through a wire transfer or a cryptocurrency transfer, how is a customer actually credited on the exchange?
ADAM YEDIDIA: For a cryptocurrency transfer an automatic system would notice that the money had landed in the user's deposit address and credit them with the money on the exchange. For a wire transfer, something would notice that the money had landed in the bank account, and some process would need to figure out which customer on the exchange was the one whose account matched the incoming transfer into the bank account.
MS. SASSOON: Can you explain what it means to credit a customer on the account for their transfer of money?
ADAM YEDIDIA: It means that their balances on the balances page would increase.
MS. SASSOON: And in what way would the balances increase?
ADAM YEDIDIA: By the amount of the transfer.
MS. SASSOON: Where would this information be accessible to the FTX customer?
ADAM YEDIDIA: On the balances page.
MS. SASSOON: If you look here where it says available balance, do you see that column on the balances page?
ADAM YEDIDIA: Yes.
MS. SASSOON: What does that column convey to the customer?
ADAM YEDIDIA: It shows the amount of money they have available in that currency for trading or for withdrawal.
MS. SASSOON: When you say for trading or withdrawal, you mean on FTX?
ADAM YEDIDIA: Yes.
MS. SASSOON: What is a withdrawal?
ADAM YEDIDIA: It's when a customer requests that their money be sent to one of their accounts that are external to FTX.
MS. SASSOON: Is that a way of taking a customer's money back off the exchange?
ADAM YEDIDIA: Yes.
MS. SASSOON: Let's take a look at Government Exhibit 594, which is in evidence.
MS. SASSOON: What were some of the available methods for a customer to withdraw money that they held on FTX?
ADAM YEDIDIA: They could withdraw via stablecoin or via wire transfer or credit card.
MS. SASSOON: If a customer requested a wire transfer, would they be receiving their money back in fiat or dollars?
ADAM YEDIDIA: Yes.
MS. SASSOON: You can take that down.
MS. SASSOON: So you touched on this, but once a customer transferred their money to FTX and they had these balances on the exchange, what could a customer do with that money?
ADAM YEDIDIA: It could trade with it.
MS. SASSOON: What types of products were traded on FTX?
ADAM YEDIDIA: Cryptocurrencies and derivatives on cryptocurrencies.
MS. SASSOON: We will get into that in a moment.
MS. SASSOON: Let's go back to Government Exhibit 599, which we looked at yesterday from FTX's website.
MS. SASSOON: Generally, what do these various boxes represent?
ADAM YEDIDIA: With the exception of stake, they all represent things that could be traded on the website.
MS. SASSOON: I would like to you direct you to where it says spot. What does spot refer to here in the second box?
ADAM YEDIDIA: Spot refers to the asset itself, as opposed to a derivative on that asset. So, for example, spot Bitcoin would be an actual Bitcoin.
MS. SASSOON: Could customers trade actual Bitcoin on FTX?
ADAM YEDIDIA: Yes.
MS. SASSOON: And other coins as well?
ADAM YEDIDIA: Yes.
MS. SASSOON: Is that called spot trading?
ADAM YEDIDIA: Yes.
MS. SASSOON: Let's look at Government Exhibit 582.
MS. SASSOON: What does this show from the FTX website?
ADAM YEDIDIA: This is the markets page.
MS. SASSOON: For which market?
ADAM YEDIDIA: Spot markets.
MS. SASSOON: Let's just take an example. Do you see the first row that says BTC/USD Bitcoin?
ADAM YEDIDIA: Yes.
MS. SASSOON: What does that entire row refer to?
ADAM YEDIDIA: It refers to the market on which customers could buy Bitcoins with dollars or sell Bitcoins for dollars.
MS. SASSOON: Do you see toward the end of this row where it says price?
ADAM YEDIDIA: Yes.
MS. SASSOON: Does that reflect the price of one Bitcoin on the particular day of this screenshot?
ADAM YEDIDIA: Yes.
MS. SASSOON: Let's go back to Government Exhibit 599.
MS. SASSOON: You see where it says futures?
ADAM YEDIDIA: Yes.
MS. SASSOON: Is that another product that was available for trading on the exchange?
ADAM YEDIDIA: Yes.
MS. SASSOON: What are futures?
ADAM YEDIDIA: Futures are a type of financial instrument or financial derivative which tracked the price of a given asset. So, for example, a Bitcoin future would not represent a Bitcoin itself. Rather, if it had an expiry date, for example, if it expired in March of 2020, then that means that in March of 2020, whatever the price of one Bitcoin was, that's the amount you would be paid out for owning a future in Bitcoin that expires in March 2020.
MS. SASSOON: Let me make sure I understand this. Are those transactions that allowed two parties, a buyer and a seller, to exchange payments based on the change in value of a cryptocurrency?
MR. EVERDELL: Objection.
MS. SASSOON: Your Honor, I am just trying to clarify a confusing subject.
JUDGE KAPLAN: Just a minute.
Overruled.
MS. SASSOON: I'll ask it again, Mr. Yedidia.
These futures transactions that you described, are those transactions that allowed two parties, a buyer and a seller, to exchange payments based on the change in value of a cryptocurrency?
ADAM YEDIDIA: Yes.
MS. SASSOON: And were those futures traded on FTX?
ADAM YEDIDIA: Yes.
MS. SASSOON: Are there other types of futures that don't have an expiration date?
ADAM YEDIDIA: Yes.
MS. SASSOON: What are those called?
ADAM YEDIDIA: Those are called perpetual futures.
MS. SASSOON: Were those traded on FTX?
ADAM YEDIDIA: Yes.
MS. SASSOON: What is your understanding of the volume of futures that were traded on FTX relative to the spot market?
ADAM YEDIDIA: My understanding is that the futures markets had more volume than the spot markets.
MS. SASSOON: Let's take a look at Government Exhibit 583.
MS. SASSOON: Do you see where it says futures in blue on the left-hand side?
ADAM YEDIDIA: Yes.
MS. SASSOON: And what does this page show?
ADAM YEDIDIA: This is a list of futures markets on FTX.
MS. SASSOON: Just taking one example, the first row where it says Bitcoin June 2022 futures, what does that mean?
ADAM YEDIDIA: These are futures that expire in June 2022 on the price of Bitcoin.
MS. SASSOON: Is everything listed here or listed on the spot markets page things that customers could buy and sell on the exchange?
ADAM YEDIDIA: Yes.
MS. SASSOON: We have talked about some of the things customers could trade on the exchange.
What was the FTX business model for making money?
ADAM YEDIDIA: Collecting fees on trades.
MS. SASSOON: What does that mean exactly?
ADAM YEDIDIA: It means that when two customers trade from each other -- let's suppose Alex wanted to buy a Bitcoin from Bob for $10,000. Alex would lose $10,000 and gain one Bitcoin and Bob would gain slightly less than $10,000 and lose one Bitcoin. That slightly less, that difference would be the fee that FTX collects.
MS. SASSOON: I want to turn back to the work you did at FTX. When you first started working at FTX, which office were you working in?
ADAM YEDIDIA: The Hong Kong office.
MS. SASSOON: Over what time period was that?
ADAM YEDIDIA: That was from when I started in January 2021 to around October, early October of 2021.
MS. SASSOON: Can you describe the offices in Hong Kong.
ADAM YEDIDIA: They were a large open office.
MS. SASSOON: Let me show the witness what has been marked as Government Exhibit 1636.
MS. SASSOON: Do you recognize this?
ADAM YEDIDIA: Yes.
MS. SASSOON: What is it?
ADAM YEDIDIA: It's the Hong Kong office.
MS. SASSOON: Your Honor, we offer Government Exhibit 1636.
JUDGE KAPLAN: Received.
(Government Exhibit 1636 received in evidence)
MS. SASSOON: Mr. Bianco, can you publish Government Exhibit 1636.
MS. SASSOON: Are we looking at a portion of the Hong Kong office here?
ADAM YEDIDIA: Yes.
MS. SASSOON: Did you sit in an open floor plan like this when you worked there?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who did you sit with?
ADAM YEDIDIA: I sat next to Nishad Singh.
MS. SASSOON: Where was the defendant generally sitting relative to where you sat at the Hong Kong office?
ADAM YEDIDIA: He was sitting fairly close by. If my memory serves, Nishad was to my left and then Gary and Sam were sort of close to that, but at their own sort of separate desk together near the center of the office.
MS. SASSOON: After Hong Kong, where did you live and work?
ADAM YEDIDIA: The Bahamas.
MS. SASSOON: Over what time period did you live and work in the Bahamas?
ADAM YEDIDIA: From around October 2021 to when I resigned in November 2022.
MS. SASSOON: Mr. Bianco if you could pull up again Government Exhibit 1542, which we looked at yesterday.
MS. SASSOON: What is depicted in this photograph?
ADAM YEDIDIA: This is the common room of the penthouse apartment in which I lived in the Bahamas.
MS. SASSOON: I believe you testified yesterday you lived there with the defendant?
ADAM YEDIDIA: Yes.
MS. SASSOON: Where was this apartment?
ADAM YEDIDIA: It was in the Albany.
MS. SASSOON: What is the Albany?
ADAM YEDIDIA: It's a luxury resort on the western side of New Providence, which is the main island of the Bahamas.
MS. SASSOON: Mr. Bianco, if you could show the witness Government Exhibit 1625.
MS. SASSOON: Are you familiar with these messages?
ADAM YEDIDIA: Yes.
MS. SASSOON: Are you a participant in these messages?
ADAM YEDIDIA: Yes.
MS. SASSOON: Is the defendant also a participant in these messages?
ADAM YEDIDIA: Yes.
MS. SASSOON: The government offers Government Exhibit 1625.
JUDGE KAPLAN: Received.
(Government Exhibit 1625 received in evidence)
MS. SASSOON: Mr. Bianco, if you could publish this for the jury.
MS. SASSOON: Mr. Yedidia, what type of message exchange is this?
ADAM YEDIDIA: Signal message exchange.
MS. SASSOON: Is that a messaging platform?
ADAM YEDIDIA: Yes.
MS. SASSOON: Do you see at the top where it has the name of the message group, people of the house?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who is this group people of the house? What does that refer to?
ADAM YEDIDIA: These were the ten people who lived in this apartment.
MS. SASSOON: Generally, what was the subject matter of this messaging group, people of the house?
ADAM YEDIDIA: Anything that related specifically to people who were residents of that apartment, social stuff sometimes.
MS. SASSOON: Do you recall expressing how you felt about paying for an expensive apartment in the Bahamas?
ADAM YEDIDIA: Yes.
MS. SASSOON: What was that?
ADAM YEDIDIA: Well, the number -- the cost of the rent sounded very high if it was, you know, rent that would be commensurate with an apartment that cost $35 million.
MS. SASSOON: Can you read what the defendant said about that at the bottom of this chat?
ADAM YEDIDIA: Heh, I've been mentally assuming that aggregate rent collected would be zero dollars and mostly thinking of bidding in who gets to direct marginal donation dollars anyway. I'm totally fine/excited if others want to have economic exposure to it, but have been assuming that it's basically just Alameda paying for it in the end.
MS. SASSOON: Where it says Alameda paying for it in the end, what was the it you're referring to in this conversation?
ADAM YEDIDIA: The apartment.
MS. SASSOON: That's the $35 million apartment?
ADAM YEDIDIA: That's correct.
MS. SASSOON: So what was your understanding of how that apartment was being paid for?
ADAM YEDIDIA: Alameda was paying for it.
MS. SASSOON: Were you aware of the defendant sleeping with any frequency on a bean bag during your time as his roommate in the Bahamas in the Orchid penthouse?
ADAM YEDIDIA: It was much rarer than when we were in Hong Kong.
MS. SASSOON: When you lived in the Bahamas, were you aware of him sleeping with any frequency on a bean bag?
ADAM YEDIDIA: I think he would take occasional naps, but not with much frequency, no.
MS. SASSOON: When you worked and lived with the defendant in the Bahamas, were you also socializing with him?
ADAM YEDIDIA: Yes.
MS. SASSOON: Mr. Bianco, can you please show the witness Government Exhibit 1452.
MS. SASSOON: Do you recognize the people in this photograph?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who is in this photograph?
ADAM YEDIDIA: I am and Sam is and there is a third person.
MS. SASSOON: The government offers Government Exhibit 1452.
JUDGE KAPLAN: Received.
(Government Exhibit 1452 received in evidence)
MS. SASSOON: Mr. Bianco, please publish Government Exhibit 1452 for the jury.
MS. SASSOON: Where are you in this photograph, Mr. Yedidia?
ADAM YEDIDIA: I'm the man on the right.
MS. SASSOON: Who is the man on the left?
ADAM YEDIDIA: That's Sam Bankman-Fried.
MS. SASSOON: Where are you eating in this photograph?
ADAM YEDIDIA: The dining room of the apartment.
MS. SASSOON: Which apartment?
ADAM YEDIDIA: The $35 million apartment.
MS. SASSOON: I'd like to show you what's been marked as government of Government Exhibit 1802.
Do you recognize the person in this photograph?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who is it?
ADAM YEDIDIA: Caroline Ellison.
MS. SASSOON: The government offers Government Exhibit 1802.
JUDGE KAPLAN: Received.
(Government Exhibit 1802 received in evidence)
MS. SASSOON: Mr. Bianco, please publish Government Exhibit 1802.
MS. SASSOON: Who is this?
ADAM YEDIDIA: Caroline Ellison.
MS. SASSOON: Was she one of your roommates in the Bahamas?
ADAM YEDIDIA: Yes.
MS. SASSOON: Before you started working at FTX, what did the defendant tell you about his relationship with Caroline Ellison?
ADAM YEDIDIA: Sometime in early 2019, the defendant told me that he and Caroline had had sex and asked if it was a good idea for them to date.
MS. SASSOON: What did you say?
ADAM YEDIDIA: I said no.
MS. SASSOON: How did he respond to that?
ADAM YEDIDIA: He said he figured that was reasonable and thought that I would say something like that.
MS. SASSOON: What role did Caroline Ellison have in the defendant's organization over your time there?
ADAM YEDIDIA: When I joined, she was a trader at Alameda. And then at some point while I was working at FTX, she became the co-CEO of Alameda.
MS. SASSOON: When you worked with the defendant, did he ever describe to you his approach to risk taking?
ADAM YEDIDIA: Yes.
MS. SASSOON: What types of things would he say?
ADAM YEDIDIA: He felt that in general taking risks was a reasonable thing to do in pursuit of other goals.
MS. SASSOON: Did he describe his approach to risk taking relative to other people?
ADAM YEDIDIA: Yes.
MS. SASSOON: How so?
ADAM YEDIDIA: In general, I think he would have described his own approach to risk taking as being more willing to take risks than many others.
MS. SASSOON: I want to turn in greater detail to your work at FTX.
We talked earlier about customers depositing money to the exchange via wire transfer in dollars. When you first started working at FTX, where did you think customer fiat or dollar deposits were being received?
ADAM YEDIDIA: In the FTX bank account.
MS. SASSOON: Did you come to learn otherwise in the course of your work?
ADAM YEDIDIA: Yes.
MS. SASSOON: What did you learn?
ADAM YEDIDIA: I learned that in fact they were being received in a different bank account labeled the North Dimension bank account.
MS. SASSOON: Who controlled the North Dimension bank account?
ADAM YEDIDIA: Alameda.
MS. SASSOON: As a software developer, did you become involved in a project related to customer deposits and withdrawals of fiat or dollar currency?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who assigned you to this project?
ADAM YEDIDIA: Sam.
MS. SASSOON: What was the goal of the project?
ADAM YEDIDIA: The goal of the project was to automate processing of customer deposits and withdrawals.
MS. SASSOON: What do you mean by automate?
ADAM YEDIDIA: What I mean is, for the processing to happen automatically, like for a computer to do it rather than a human.
MS. SASSOON: Let's look at Government Exhibit 589, the customer balance page.
MS. SASSOON: When you talk about automating the process for crediting a customer's account, what do you mean by crediting their account?
ADAM YEDIDIA: What I mean is that their account will show the balances of the amount of the money that was sent.
MS. SASSOON: Where else was this information tracked, if anywhere?
ADAM YEDIDIA: In the FTX database.
MS. SASSOON: What was the FTX database?
ADAM YEDIDIA: The FTX database was essentially the repository for all of the stateful information related to FTX.
MS. SASSOON: This database, is it electronic? Where is it housed?
ADAM YEDIDIA: It's housed in a computer. It's electronic.
MS. SASSOON: When you said it's this electronic database housing information about FTX, can you describe the types of information that were contained in this database?
ADAM YEDIDIA: Customer balances were contained within this database, but also records of every trade, records of every deposit and withdrawal, information on users that was collected. Basically anything you can think of was stored in the database.
MS. SASSOON: The database stored information, but not, let's say, money, is that correct?
ADAM YEDIDIA: That is correct.
MS. SASSOON: The process you have talked about of matching up a deposit via customer to their account balance on the website, did that involve moving any actual money or just information?
ADAM YEDIDIA: Only information.
(Continued on next page)
BY MS. SASSOON:
MS. SASSOON: What about the actual money associated with the account; would that remain with Alameda?
ADAM YEDIDIA: Yes.
MS. SASSOON: What was the goal of your project with respect to this automation of customer deposits and crediting their account?
ADAM YEDIDIA: It was to expedite the process of processing deposits and withdrawals.
MS. SASSOON: What did the defendant tell you about the reason for this project of automating deposits and withdrawals when he assigned it to you?
ADAM YEDIDIA: The reason was twofold—–one was, there was a problem where more and more users were depositing money and this was placing a lot of strain on the settlement team, whose job it was to, for every deposit to the bank account, find which customer that deposit belonged to and credit them with money on the exchange, so because this is a manual process, as there were more and more deposits, this job that they had was overwhelming them. So the first reason for the project was to make it easier on the settlement team.
And the second task——no, second reason, was that because the deposit-processing process was manual, it would sometimes take a long time for a customer deposit to be credited even after the money had landed in the bank, and that would be very frustrating to customers in some cases if their money was taking a long time to be credited to them.
So the two reasons essentially were to make it easier on the settlement team, make their job less hard, and to make processing customer deposits faster.
MS. SASSOON: How involved did the defendant remain in the project after he assigned it to you?
ADAM YEDIDIA: He was very involved.
MS. SASSOON: While working on this project, what did you learn about where FTX customer deposits were being made?
ADAM YEDIDIA: The North Dimension bank account.
MS. SASSOON: And I think you mentioned this earlier, but who controlled that account?
ADAM YEDIDIA: Alameda did.
MS. SASSOON: When you went to work at FTX, was the defendant still operating Alameda, his cryptocurrency trading firm?
ADAM YEDIDIA: Yes.
MS. SASSOON: Was Alameda also a customer on the FTX exchange?
ADAM YEDIDIA: Yes.
MS. SASSOON: When you worked at FTX, what did you observe about the relationship between FTX and Alameda?
ADAM YEDIDIA: It was a very close relationship.
MS. SASSOON: How so?
ADAM YEDIDIA: Well, the two companies shared an office, and obviously the same person was the CEO of both.
MS. SASSOON: When you say the same person was the CEO of both, who was that?
ADAM YEDIDIA: Sam Bankman-Fried.
MS. SASSOON: So this was before Caroline Ellison was named CEO.
ADAM YEDIDIA: Correct.
MS. SASSOON: When Alameda traded on FTX and made money, what was your understanding of who was the ultimate beneficiary of Alameda's profits?
ADAM YEDIDIA: Sam and Gary.
MS. SASSOON: You mentioned that you learned that Alameda was receiving FTX customer deposits through a bank account called North Dimension.
MS. SASSOON: If we could take a look at Government Exhibit 568.
MS. SASSOON: What is this?
ADAM YEDIDIA: These are deposit instructions for ftx.com.
MS. SASSOON: So are these available to customers on the FTX website?
ADAM YEDIDIA: Yes.
MS. SASSOON: And if you could look at the top where it says "Where to send the money to - Beneficiary Name - North Dimension," what does that mean?
ADAM YEDIDIA: It means that the name of the bank account——the bank account was under the name North Dimension.
MS. SASSOON: Which bank account? Where it says——Let me take a step back.
Where it says "Wire Instructions" at the top, who is viewing these wire instructions?
ADAM YEDIDIA: The customer.
MS. SASSOON: And where it says "Where to send the money to - North Dimension," what information is that relaying?
ADAM YEDIDIA: That's relaying that if they want to deposit money on ftx.com, they should wire the money to a bank account under the name North Dimension Incorporated.
MS. SASSOON: Where it says below that, "Receiving Bank - Silvergate Bank," what does that mean?
ADAM YEDIDIA: That means the bank that the bank account is in is Silvergate Bank.
MS. SASSOON: Does it say anywhere here that the customer money is going to Alameda Research?
ADAM YEDIDIA: No.
MS. SASSOON: As far as you know, did FTX disclose to its customers that the North Dimension account was controlled by Alameda?
MR. EVERDELL: Objection.
JUDGE KAPLAN: Ground?
MR. EVERDELL: Personal knowledge.
JUDGE KAPLAN: Overruled.
MS. SASSOON: As far as you know——
JUDGE KAPLAN: I'm sorry. I overruled. Are you just repeating your question?
MS. SASSOON: Yes.
JUDGE KAPLAN: Okay. Go ahead.
MS. SASSOON: As far as you know, did FTX disclose to its customers that the North Dimension account was controlled by Alameda Research?
ADAM YEDIDIA: No.
MS. SASSOON: How did you learn that North Dimension was controlled by Alameda?
ADAM YEDIDIA: I was told by one of Sam, Nishad, or Ryan Salame.
MS. SASSOON: Who was Ryan Salame?
ADAM YEDIDIA: He was the head of settlements at FTX.
MS. SASSOON: And who was Ryan Salame's boss?
ADAM YEDIDIA: Sam Bankman-Fried.
MS. SASSOON: In the conversation where you learned about the North Dimension account, what were you told about North Dimension and why FTX customer money was being sent there?
ADAM YEDIDIA: I was told that FTX couldn't——had had trouble opening its own bank account and so this bank account was being used instead.
MS. SASSOON: Were you able to successfully automate a process for customers getting credited for their deposits on the exchange, for the money that was going to North Dimension?
ADAM YEDIDIA: Yes.
MS. SASSOON: About how long did that project take?
ADAM YEDIDIA: About a month or two, maybe.
MS. SASSOON: Around when was that?
ADAM YEDIDIA: This was sometime in early 2021; maybe between March and June.
MS. SASSOON: Based on your work, what did you understand the money in Alameda's North Dimension account——about who it belonged to?
ADAM YEDIDIA: The customers of FTX.
MS. SASSOON: Why is that?
ADAM YEDIDIA: Well, they were the ones who deposited the money with the expectation that——
MR. EVERDELL: Objection, your Honor.
JUDGE KAPLAN: What's the objection?
MR. EVERDELL: He's talking about the customers' expectations.
MS. SASSOON: Your Honor, he was an employee at FTX, and his understanding is relevant.
JUDGE KAPLAN: Overruled. Re-put the question.
BY MS. SASSOON:
MS. SASSOON: Why was it your understanding that the money in Alameda's North Dimension account belonged to FTX customers?
ADAM YEDIDIA: Because they were the ones who sent the money to the exchange, with the expectation that they would be able to use it on the exchange as they saw fit.
MS. SASSOON: Did there come a time when FTX customers were no longer sending their deposits to Alameda?
ADAM YEDIDIA: Yes.
MS. SASSOON: What happened?
ADAM YEDIDIA: FTX succeeded in opening its own bank account.
MS. SASSOON: And when that happened, what did you do?
ADAM YEDIDIA: I changed the deposit instructions so that instead of pointing to North Dimension, they pointed to a different bank account in the name of FTX Digital Markets.
MS. SASSOON: Around when was that?
ADAM YEDIDIA: Sometime in late 2021.
MS. SASSOON: As far as you are aware, did some customer deposits continue to go to North Dimension into 2022?
ADAM YEDIDIA: Yes.
MS. SASSOON: For the period during 2021 and 2022, the FTX customer deposits going to Alameda, initially, was that concerning to you?
ADAM YEDIDIA: No.
MS. SASSOON: Why not?
ADAM YEDIDIA: Well, customers could still send their money wherever they liked, and one common issue when switching deposit instructions is that a customer would continue to use the old ones even after the new ones had been rolled out.
MS. SASSOON: Was it concerning to you that at any point in time customer money was being deposited with Alameda, initially?
ADAM YEDIDIA: No.
MS. SASSOON: Why not?
ADAM YEDIDIA: Well, I figured Alameda was just holding the money.
MS. SASSOON: When you say "just holding the money," what do you mean?
ADAM YEDIDIA: The money was there in Alameda's pockets, but they weren't, you know——the——the money was there for Alameda to——to use——not for Alameda to use, but for the customer; if the customer asked for the money back, Alameda had it for them.
MS. SASSOON: If you had been told that Alameda was spending the customer money that was going into its bank account, would that have raised concerns for you?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Objection.
JUDGE KAPLAN: Ground?
MR. EVERDELL: Speculation.
JUDGE KAPLAN: I'll allow it.
MS. SASSOON: If you had been told that Alameda was spending FTX customer money that was going into its bank account, would that have raised concerns for you?
ADAM YEDIDIA: Yes.
MS. SASSOON: Why?
ADAM YEDIDIA: Well, then the money wouldn't be there for the customer, if the customer wanted it.
MS. SASSOON: And why is that a problem?
ADAM YEDIDIA: Then if the customer withdraws, their money isn't there.
MS. SASSOON: How, if at all, was the money that Alameda owed back to FTX customers for their deposits being tracked, by the company?
ADAM YEDIDIA: It was tracked in an internal account and database called fiat@ftx.com.
MS. SASSOON: You said the money Alameda owed was being tracked in an internal account in the database. What database are you talking about?
ADAM YEDIDIA: The FTX database.
MS. SASSOON: And you mentioned a specific account name. What was that?
ADAM YEDIDIA: Fiat@ftx.com.
MS. SASSOON: So what was the fiat@ftx.com account?
ADAM YEDIDIA: It was an account that was meant to track the net volume of incoming fiat deposits.
MS. SASSOON: Can you put that in simpler terms, when you say this account was tracking the net volume of fiat deposits.
ADAM YEDIDIA: Yes. It was meant to track the total amount of fiat money that was deposited by customers minus the total amount of fiat money that was withdrawn by customers.
MS. SASSOON: And so once you tracked the total amount deposited, removing the amount that had been withdrawn, what amount remained?
ADAM YEDIDIA: The total amount of money that customers had deposited in fiat, had net deposited in fiat on the exchange.
MS. SASSOON: When you say the total amount of money net deposited, is that money still owed back to customers for their deposits?
ADAM YEDIDIA: Yes.
MS. SASSOON: And the fiat@ftx.com account that was tracking the money that was still owed back to customers, who was responsible for that money that was still owed to FTX customers?
ADAM YEDIDIA: Alameda.
MS. SASSOON: And why was that money owed by Alameda?
ADAM YEDIDIA: Alameda was the one that had received the money in their bank account.
JUDGE KAPLAN: Let me just see if I can clarify something in my own mind. So whatever that amount was that was in the account you identified, the fiat@ftx.com account, that was money which showed up as balances on the customer statements that appeared on the ftx.com website that customers could access, yes?
ADAM YEDIDIA: I'm not sure if that's a totally complete picture. Do you mind if I clarify?
JUDGE KAPLAN: No. That's why I asked.
ADAM YEDIDIA: So when a customer deposited money on ftx.com, there were two things that happened. One is that the customer would be credited with the value of the monies they deposited, so they would see their balances increase. The other thing that would happen is that this account would have its balances decrease, so there was a corresponding decrease. With this increase in the customers' balances, there would be a corresponding decrease in the balances of the fiat@ftx.com account. So both things would happen. And this other account was just meant to track the total, the total amount net deposited by customers.
JUDGE KAPLAN: And why would the net deposited by customers not match their fiat balances on the website to which the customers had access?
ADAM YEDIDIA: Yes, you're right, your Honor. The——it would match the total amount of all the customers, but any single customer would have an amount that differed from the amount——
JUDGE KAPLAN: Oh, okay. Sure. Thank you.
Go ahead.
BY MS. SASSOON:
MS. SASSOON: Just to be clear, if you added up all of customer fiat balances across the exchange, it should match the number that's in the fiat@ftx.com account, except that would be a negative number.
ADAM YEDIDIA: Yes.
MS. SASSOON: And that's because that's the amount of money that Alameda still owed back to FTX customers.
ADAM YEDIDIA: Yes.
MS. SASSOON: And this fiat@ftx.com account, did it have actual money in it or it was just tracking that information?
ADAM YEDIDIA: The latter.
MS. SASSOON: So it was tracking information.
ADAM YEDIDIA: Yes.
MS. SASSOON: So because this is a bit complicated, I'm just going to make sure we all understand.
Every time a customer deposited money into Alameda's bank account, what would happen to the customer's balance on the FTX website?
ADAM YEDIDIA: It would increase.
MS. SASSOON: And what would happen to Alameda's liability to FTX customers reflected in the fiat@ftx.com account?
ADAM YEDIDIA: It would increase by the same amount.
MS. SASSOON: When you say increase, do you mean go further negative?
ADAM YEDIDIA: Yes.
MS. SASSOON: And why would it go further negative?
ADAM YEDIDIA: The negative value of the fiat@ftx.com account effectively represented the liability Alameda owed to FTX's customers.
JUDGE KAPLAN: Okay. And a third piece of this would be that the amount of fiat in the Alameda bank account at North Dimension, back when North Dimension was being used, would increase, yes?
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: Okay. So the money is in the North Dimension account, the fiat currency, that grows when the customer deposits money to the North Dimension account, the fiat account you referred to, that would go down because North Dimension was treating that as money it owed to FTX, and then the customer balances in the aggregate on the FTX website that the customers could see would go up, yes?
ADAM YEDIDIA: That's correct, your Honor.
JUDGE KAPLAN: Okay. Let's go.
BY MS. SASSOON:
MS. SASSOON: And you referred to Alameda's liability to FTX customers. What is a liability?
ADAM YEDIDIA: A liability is a debt owed.
MS. SASSOON: And so following up on Judge Kaplan's question, is the amount in Alameda's bank account supposed to match the amount in the fiat@ftx.com account, except one's positive, one's negative?
ADAM YEDIDIA: Yes.
MS. SASSOON: So if you added up all of customer-deposited balances against Alameda's negative liability in the fiat@ftx.com account, what number should you get?
ADAM YEDIDIA: Zero.
MS. SASSOON: Why?
ADAM YEDIDIA: For every deposit, there's a corresponding increase in customer balances and a corresponding decrease in fiat@ftx.com's balances, and those two amounts should be the same, so when you add the deposited value into the equal negative value, they should cancel to zero, no matter how many times you do that.
MS. SASSOON: And just to take the opposite process, if a customer withdrew money from their FTX account by wire transfer, how did FTX pay for the customer's withdrawal?
ADAM YEDIDIA: Until the bank account was switched, the North Dimension——the North Dimension bank account.
MS. SASSOON: And so when a customer withdrew fiat, what would happen to the money in the North Dimension account?
ADAM YEDIDIA: It would decrease.
MS. SASSOON: And what would happen to Alameda's liability to FTX customers reflected in the fiat@ftx.com account?
ADAM YEDIDIA: It should decrease.
MS. SASSOON: Meaning get less negative.
ADAM YEDIDIA: Yes.
MS. SASSOON: And what would happen to the total customer balances across the exchange if someone withdrew some money?
ADAM YEDIDIA: It would also decrease.
MS. SASSOON: So the number in the fiat@ftx.com account in FTX's database I believe you said documented how much money Alameda owed to FTX customers for their dollar deposits; is that right?
ADAM YEDIDIA: That's correct.
MS. SASSOON: And in June of 2022, what did you learn about how much money Alameda owed to FTX customers for their dollar deposits?
ADAM YEDIDIA: $8 billion.
MS. SASSOON: That is $8 billion of FTX customer money that had never been withdrawn by FTX customers and that Alameda had not yet repaid; is that right?
ADAM YEDIDIA: That's correct.
MS. SASSOON: So is that $8 billion money that Alameda still owed to FTX customers?
MR. EVERDELL: Objection. Leading.
JUDGE KAPLAN: Overruled.
MS. SASSOON: And so that $8 billion that you saw in June of 2022, is that money that Alameda still owed to FTX customers?
ADAM YEDIDIA: Yes.
MS. SASSOON: If Alameda had actually repaid the $8 billion it owed to FTX customers, what effect would that have had on the number in the fiat@ftx.com account?
ADAM YEDIDIA: It would have gone to zero.
MS. SASSOON: During your time at FTX did you ever learn of any of that approximately $8 billion being repaid by Alameda to FTX customers?
ADAM YEDIDIA: No.
MS. SASSOON: You testified that you automated the process for crediting customers for their dollar deposits. Was that in FTX's code?
ADAM YEDIDIA: Yes.
MS. SASSOON: In late 2021 what did you learn about the code that you had written for tracking the money Alameda owed to FTX customers for their dollar deposits?
ADAM YEDIDIA: I learned that it had a bug.
MS. SASSOON: When we're talking about code, what is a bug?
ADAM YEDIDIA: A bug is an error by the programmer that causes the code to do something different from what the programmer intended.
MS. SASSOON: What was the nature of this error or bug in the code regarding what Alameda owed to FTX customers?
ADAM YEDIDIA: It exaggerated the liability to FTX customers.
MS. SASSOON: So it made it seem bigger than it was.
ADAM YEDIDIA: That's correct.
MS. SASSOON: And so this is a bug related to the fiat@ftx.com account in FTX's database?
MR. EVERDELL: Objection.
JUDGE KAPLAN: Sustained.
MS. SASSOON: In plain terms, what effect did this bug have on Alameda's debt to FTX customers for their deposits?
ADAM YEDIDIA: It made it look bigger than it was.
MS. SASSOON: So with this bug, when a customer withdrew money from FTX, what would happen to the customer's balance on FTX in the database?
ADAM YEDIDIA: Their balance would decrease.
MS. SASSOON: And was that accurate?
ADAM YEDIDIA: That was normal, yes.
MS. SASSOON: And with this bug, what was happening to Alameda's liability to FTX customers when it processed a withdrawal for a customer?
ADAM YEDIDIA: If the withdrawal was processed automatically, then Alameda's liability to FTX would appear not to decrease as well.
MS. SASSOON: Was that correct?
ADAM YEDIDIA: No, it was not.
MS. SASSOON: So that was an error in the code.
ADAM YEDIDIA: Correct.
MS. SASSOON: And why was it an error in the code that nothing would happen to Alameda's liability if it paid for a customer's withdrawal?
ADAM YEDIDIA: Alameda's liability was supposed to decrease by the amount of the withdrawal.
MS. SASSOON: How did you first learn about this error in the code?
ADAM YEDIDIA: I was told about it by one of Gary or Nishad. I think one of them found it. I think it was Gary.
MS. SASSOON: And did you talk to the defendant about this error in the code?
ADAM YEDIDIA: Yes.
MS. SASSOON: Initially, when you first learned of this bug or error in late 2021, by how much money did the bug exaggerate the total amount of money that Alameda owed to FTX customers?
ADAM YEDIDIA: $500 million.
MS. SASSOON: $500 million. So by that time about how long had the bug been in the code?
ADAM YEDIDIA: About six months.
MS. SASSOON: When was this error or bug in the code actually fixed?
ADAM YEDIDIA: Six months after that.
MS. SASSOON: So would that be around June 2022?
ADAM YEDIDIA: Yes.
MS. SASSOON: Who fixed the bug that was overstating how much money Alameda owed to FTX customers?
ADAM YEDIDIA: I did.
MS. SASSOON: Who told you to fix the bug and make Alameda's liability to FTX customers accurate?
ADAM YEDIDIA: Sam Bankman-Fried.
MS. SASSOON: What preceded the defendant telling you to fix the bug in June of 2022?
ADAM YEDIDIA: I observed a meeting between Sam, Caroline, Gary, and Nishad.
MS. SASSOON: What do you mean when you say you observed a meeting between Sam, Caroline, Gary, and Nishad?
ADAM YEDIDIA: I saw the four of them walk into a room and have a meeting together.
MS. SASSOON: And how did you perceive that group of people——the defendant, Gary Wang, Nishad Singh, and Caroline Ellison?
ADAM YEDIDIA: I saw them as the leadership of FTX at Alameda.
MS. SASSOON: Did you learn some of what was discussed at that meeting?
ADAM YEDIDIA: Yes.
MS. SASSOON: From who?
ADAM YEDIDIA: I think it was Nishad.
MS. SASSOON: And what did Nishad tell you about that meeting?
ADAM YEDIDIA: He told me that——
MR. EVERDELL: Objection.
MS. SASSOON: Your Honor, it's the statement of an agent, and it also explains the witness's subsequent actions.
JUDGE KAPLAN: All right. Go ahead.
MS. SASSOON: What did Nishad tell you about what happened in that meeting?
ADAM YEDIDIA: He told me that the purpose of the meeting had been to do a full accounting of the two companies.
MS. SASSOON: What is a full accounting of the two companies?
ADAM YEDIDIA: Tallying up the——or enumerating the companies' assets and liabilities.
MS. SASSOON: When you say "the companies," which companies are you referring to?
ADAM YEDIDIA: I'm referring to FTX and Alameda.
MS. SASSOON: And what does it mean to tally up assets and liabilities? What are assets and liabilities?
ADAM YEDIDIA: An asset is something that you own, and a liability is a debt that you owe.
MS. SASSOON: So in doing an accounting for FTX and Alameda, would the fiat@ftx.com account fall into that accounting?
ADAM YEDIDIA: Yes.
MS. SASSOON: How so?
ADAM YEDIDIA: It would be an asset for FTX and a liability for Alameda.
MS. SASSOON: And why was it a liability for Alameda?
ADAM YEDIDIA: Because it was a debt owed by Alameda to FTX's customers.
MS. SASSOON: In this context of the full accounting review, what did the defendant say to you about the bug?
ADAM YEDIDIA: He told me he wanted the bug to be fixed.
MS. SASSOON: Where did this conversation take place when the defendant told you to fix the bug in Alameda's liability to FTX customers?
ADAM YEDIDIA: It took place in the offices in the Bahamas.
MS. SASSOON: So this was an in-person conversation.
ADAM YEDIDIA: Yes.
MS. SASSOON: Did you in fact fix this bug or error in the code?
ADAM YEDIDIA: Yes.
MS. SASSOON: By the time you fixed the error in the code, by approximately what dollar amount was Alameda's total liability to FTX customers exaggerated?
ADAM YEDIDIA: About $8 billion.
MS. SASSOON: And so what was the total liability or debt reflected in the fiat@ftx.com account to FTX customers while this bug was in effect?
ADAM YEDIDIA: You mean at the time I fixed it?
MS. SASSOON: Yes.
ADAM YEDIDIA: About $16 billion.
MS. SASSOON: And once you corrected the bug, what did you learn about approximately how much money Alameda actually owed to FTX customers?
ADAM YEDIDIA: Also about $8 billion.
MS. SASSOON: So the error was about 8 billion and the actual amount was also about 8 billion?
ADAM YEDIDIA: As I recall, yes.
MS. SASSOON: And together, that added up to 16 billion.
ADAM YEDIDIA: Yes.
MS. SASSOON: Okay. Did you tell the leadership of the companies——meaning the defendant and the others you identified——when the bug was fixed?
ADAM YEDIDIA: Yes.
MS. SASSOON: Did you tell the defendant that the remaining amount of money that Alameda owed to FTX customers for their dollar deposits was about $8 billion?
MR. EVERDELL: Objection.
JUDGE KAPLAN: What's the objection?
MR. EVERDELL: Leading.
JUDGE KAPLAN: Sustained, form.
MS. SASSOON: What, if anything, did you tell the defendant about the actual dollar debt that Alameda owed to FTX customers, the amount?
ADAM YEDIDIA: I told him the amount of money owed by Alameda to FTX customers.
MS. SASSOON: What was that amount?
ADAM YEDIDIA: $8 billion.
MS. SASSOON: Around what date did you fix the bug?
ADAM YEDIDIA: In June 2022.
MS. SASSOON: And would that be mid-June, early June, late June?
ADAM YEDIDIA: Mid-June.
MS. SASSOON: Did you document the results of your work?
ADAM YEDIDIA: Yes.
MS. SASSOON: How so?
ADAM YEDIDIA: I wrote a postmortem document that was meant to, in detail, explain exactly what the bug was and exactly what I did to fix it.
MS. SASSOON: Did you share this document with the defendant?
ADAM YEDIDIA: Yes.
MS. SASSOON: How did you share it with him?
ADAM YEDIDIA: By a Signal message.
MS. SASSOON: And what exactly is Signal?
ADAM YEDIDIA: Signal is an end-to-end encrypted messaging app.
MS. SASSOON: When you say Signal is an encrypted messaging app, what does encrypted mean?
ADAM YEDIDIA: It means that the messages are not easily read while they're in flight or possibly while they're stored.
MS. SASSOON: Why were you using Signal to communicate with the defendant?
ADAM YEDIDIA: It was his instructions to use Signal in many cases for communications.
MS. SASSOON: When you say it was the defendant's instruction to use Signal, who did he give that instruction to?
ADAM YEDIDIA: To my knowledge, the entire company.
MS. SASSOON: What features, if any, were implemented on the Signal communications between employees of FTX and Alameda?
ADAM YEDIDIA: Automatic deletion timers.
MS. SASSOON: What is an automatic deletion timer?
ADAM YEDIDIA: It causes messages to be deleted after a certain amount of time.
MS. SASSOON: Who implemented the auto-deletion feature on company Signal communications?
ADAM YEDIDIA: Would you clarify what you mean by "implemented."
MS. SASSOON: Yes. So why were your communications set to auto-delete on Signal?
ADAM YEDIDIA: Sam instructed people to do that.
MS. SASSOON: When you say "people," do you mean employees of the company?
ADAM YEDIDIA: Yes.
MS. SASSOON: Around the time that the defendant directed employees of the company to auto-delete their Signal messages, what, if anything, did he explain to you about this policy?
ADAM YEDIDIA: He said that it was all downside for messages to be kept around.
MS. SASSOON: What, if anything, did he explain about why it was all downside to preserve messages among company employees?
ADAM YEDIDIA: There wasn't much benefit to keeping messages around, and if regulators found something they didn't like in those messages, that could be bad for the company.
MS. SASSOON: Did the defendant say that?
ADAM YEDIDIA: He didn't use exactly those words, but that was what the substance——that's the substance of what he said.
MS. SASSOON: You said that you communicated with the defendant about Alameda's debt to FTX customers by Signal. Do those Signal messages still exist?
ADAM YEDIDIA: The documentation that I created does, but the message that carried the documentation does not.
MS. SASSOON: Meaning the message to the defendant with your analysis does not exist?
ADAM YEDIDIA: Correct.
MS. SASSOON: Why not?
ADAM YEDIDIA: It was deleted.
MS. SASSOON: And this was deleted in keeping with the company policy?
ADAM YEDIDIA: Right. It was deleted by the automatic message deletion timer.
MS. SASSOON: You testified that after the bug was fixed you learned that Alameda still owed FTX customers about $8 billion. How did you know that number?
ADAM YEDIDIA: I saw it.
MS. SASSOON: Where did you see it?
ADAM YEDIDIA: In the FTX database.
MS. SASSOON: Were you aware whether that information was visible to other executives at the company, like the defendant?
ADAM YEDIDIA: Yes.
MS. SASSOON: Was it?
ADAM YEDIDIA: Yes.
MS. SASSOON: So in the course of fixing the bug, you learned that Alameda owed FTX customers about $8 billion. What was your reaction to that?
ADAM YEDIDIA: The number seemed large to me.
MS. SASSOON: And what was your reaction to the $8 billion debt seeming large to you?
ADAM YEDIDIA: I had a conversation with Sam.
MS. SASSOON: Before you had a conversation with Sam, what was your reaction to this $8 billion liability being very large that led to your conversation with Sam?
ADAM YEDIDIA: It concerned me.
MS. SASSOON: Why did it concern you?
ADAM YEDIDIA: It seemed like a lot of money for Alameda to be owing FTX, and I wanted to be certain that Alameda could repay that debt.
MS. SASSOON: Why did you want to be certain that Alameda could repay its $8 billion debt to FTX customers?
ADAM YEDIDIA: Because it was possible that FTX customers would need that $8 billion to be repaid themselves if they withdrew.
MS. SASSOON: But did you share those concerns with the defendant?
ADAM YEDIDIA: Yes.
MS. SASSOON: Can you describe that conversation.
ADAM YEDIDIA: Yes. So the conversation began with me bringing up the——the large debt owed by Alameda to FTX and asking something like, Are things okay? In response, Sam said something like, We were bulletproof last year but we're not bulletproof this year. And in response to that, I asked, How long until we're bulletproof again? And he said, I'm not sure. I'm not sure is his words. Maybe something like six months to three years. And I said, Are things going to be okay? Basically. And he said, Yeah, yeah, or, you know, he——from that point on I——I recall him saying some things that were meant to reassure.
MS. SASSOON: So let's break that down.
Around when was this conversation with the defendant about Alameda's debt to FTX?
ADAM YEDIDIA: Soon after I fixed the bug.
MS. SASSOON: And around when was that?
ADAM YEDIDIA: Around——it would have been probably in late June or early July 2022, maybe.
MS. SASSOON: Where did this conversation with the defendant take place?
ADAM YEDIDIA: It took place in the paddle tennis court.
MS. SASSOON: Mr. Bianco, can you please show the witness Government Exhibit 1457.
MS. SASSOON: Do you recognize this?
ADAM YEDIDIA: Yes.
MS. SASSOON: What is it?
ADAM YEDIDIA: It's a paddle tennis court.
MS. SASSOON: Does this resemble the paddle tennis court where you had this conversation with the defendant?
ADAM YEDIDIA: Yes.
MS. SASSOON: Government offers Government Exhibit 1457.
JUDGE KAPLAN: Received.
(Government's Exhibit 1457 received in evidence)
MS. SASSOON: Mr. Bianco, please publish Government Exhibit 1457.
BY MS. SASSOON:
MS. SASSOON: What is this, Mr. Yedidia?
ADAM YEDIDIA: It's a paddle tennis court.
MS. SASSOON: And where is this paddle tennis court?
ADAM YEDIDIA: It's in The Albany.
MS. SASSOON: And can you remind us, what's The Albany?
ADAM YEDIDIA: The Albany is a luxury resort on the western side of New Providence, Bahamas.
MS. SASSOON: So is that where your apartment was?
ADAM YEDIDIA: Yes.
MS. SASSOON: And is this where you had this conversation with the defendant that you've been describing?
ADAM YEDIDIA: I believe so, yes.
MS. SASSOON: And when you had this conversation with the defendant about the money that Alameda owed to FTX customers, what had you been doing beforehand with the defendant?
ADAM YEDIDIA: I believe I'd been playing paddle tennis.
MS. SASSOON: And where were you for this conversation with the defendant that you've been describing, using this photo as a reference?
ADAM YEDIDIA: We were under or around that——that little hut in between the two courts on the——the——on the near side of the photo.
MS. SASSOON: And when you were with the defendant near this hut between the paddle courts, can you describe the substance of the first question that you posed to the defendant.
ADAM YEDIDIA: I asked about the debt that Alameda owed to FTX and I asked, Are things okay?
MS. SASSOON: Why were you asking if things were okay in connection with the debt that Alameda owed to FTX customers of about $8 billion?
ADAM YEDIDIA: It was a very large debt, and I wanted to know that Alameda could repay it.
MS. SASSOON: What did the defendant say in response to your question?
MR. EVERDELL: Asked and answered.
JUDGE KAPLAN: Sustained.
MS. SASSOON: Where was the defendant when he responded that We're not bulletproof anymore, during this conversation?
ADAM YEDIDIA: He was in——I think somewhere underneath this——this little hut in between the two courts.
MS. SASSOON: When you responded to the defendant, How long until we're bulletproof again? when he said We're no longer bulletproof, who was the "we" that you were referring to?
MR. EVERDELL: Objection.
JUDGE KAPLAN: Overruled.
ADAM YEDIDIA: I understood "we" to mean Alameda and FTX.
MS. SASSOON: And when you asked How long until we're bulletproof again, what did you mean by that?
ADAM YEDIDIA: I was asking at what point Alameda and FTX's financial health would be sound.
MS. SASSOON: When the defendant responded to you, Maybe in about six months to three years, how would you describe his demeanor?
MR. EVERDELL: Objection.
JUDGE KAPLAN: Overruled.
ADAM YEDIDIA: Worried, or nervous.
MS. SASSOON: What makes you say that he appeared worried or nervous?
ADAM YEDIDIA: His facial expression at the time.
MS. SASSOON: Was that typical of your interactions with the defendant over the course of your about decades-long relationship?
ADAM YEDIDIA: No.
MS. SASSOON: After this conversation did you feel reassured that Alameda would be able to repay its approximately $8 billion debt to FTX?
MR. EVERDELL: Objection.
JUDGE KAPLAN: Sustained.
MS. SASSOON: When the defendant said We're not bulletproof anymore, did you press for more details?
MR. EVERDELL: Objection.
JUDGE KAPLAN: Overruled.
ADAM YEDIDIA: No.
MS. SASSOON: Why not?
ADAM YEDIDIA: I was a developer at FTX rather than an accountant or a trader at Alameda. I felt that my duties were to make sure that FTX's code ran well and to build more features for FTX. And I——I trusted Sam. I hoped that Sam and Caroline and others at Alameda would handle the situation.
MS. SASSOON: After this conversation you had with the defendant on the paddle court about not being bulletproof anymore, did you and the defendant have any subsequent conversations about FTX's financial situation?
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: Let's break here for about 15 minutes.
COURT CLERK: Would the jury please come this way.
(Recess)
JUDGE KAPLAN: Let's get the jury.
MR. ROOS: Judge, there was something I wanted to raise with you about transcript binders relevant to the next witness. I don't think we are going to get there before lunch.
JUDGE KAPLAN: Transfer binders?
JUDGE KAPLAN: Transcript binders.
MR. ROOS: There are two recordings with the next witness. We have little binders for the jury that have transcripts so that they can read along with the recording. I just wanted to run it by your Honor before we do that, but my sense right now is maybe we will break for lunch before that.
JUDGE KAPLAN: Could be.
(Jury present)
JUDGE KAPLAN: The defendant and the jurors all are present, as they have been throughout.
You may continue, Ms. Sassoon.
MS. SASSOON: Thank you, your Honor.
BY MS. SASSOON:
MS. SASSOON: Mr. Yedidia, after your conversation with the defendant on the paddle court, did you have any subsequent conversations with the defendant about FTX's financial situation?
ADAM YEDIDIA: Yes.
MS. SASSOON: What do you recall about that?
ADAM YEDIDIA: There was a conversation that Sam and I had that I had the impression was related to the previous conversation in which he talked about his plans for raising money from Saudi Arabia and/or the United Arab Emirates.
MS. SASSOON: When you say he talked about raising money from Saudi Arabia or United Arab Emirates, what, if anything, did he say about what he was raising money for?
ADAM YEDIDIA: FTX.
MS. SASSOON: Did the defendant explain why he wanted to raise money for FTX from Saudi Arabia or the United Arab Emirates?
ADAM YEDIDIA: He said he wanted FTX to have more cash as I recall.
MS. SASSOON: As far as you know, were any efforts to raise money from Saudi Arabia or the United Arab Emirates successful?
ADAM YEDIDIA: No.
MS. SASSOON: About how soon after that conversation did FTX go bankrupt?
ADAM YEDIDIA: Somewhere between one and three months, I think, maybe one and four months.
MS. SASSOON: And around what month of 2022 was that?
ADAM YEDIDIA: November 2022.
MS. SASSOON: Before FTX declared bankruptcy, what was happening at FTX with respect to FTX customer withdrawals?
ADAM YEDIDIA: A lot of customers were all withdrawing at once.
MS. SASSOON: And what happened when large numbers of customers were all trying to withdraw their money at once?
ADAM YEDIDIA: Not all of them received their money.
MS. SASSOON: Did you have any conversations with the defendant in November of 2022 about what was happening at FTX?
ADAM YEDIDIA: We had a conversation over Signal.
MS. SASSOON: What do you recall about that conversation?
ADAM YEDIDIA: I said, I love you, Sam, I am not going anywhere. Don't worry.
MS. SASSOON: Why did you say, I'm not going anywhere?
ADAM YEDIDIA: I had learned that a lot of the other employees had quit, and I wanted to reassure him that I wouldn't do the same.
MS. SASSOON: Yesterday you testified that you resigned from FTX in November of 2022. So what changed?
ADAM YEDIDIA: I learned that Alameda had used FTX customer deposits to repay its loans to creditors.
MS. SASSOON: And why did that change your mind about staying at FTX?
ADAM YEDIDIA: What Alameda did seemed like a flagrantly wrong thing to have done.
MS. SASSOON: No further questions.
JUDGE KAPLAN: Thank you.
Cross-examination.
CROSS-EXAMINATION BY MR. EVERDELL:
MR. EVERDELL: Good morning, Mr. Yedidia.
ADAM YEDIDIA: Good morning.
MR. EVERDELL: Mr. Yedidia, you went to college at MIT, correct?
ADAM YEDIDIA: Correct.
MR. EVERDELL: You majored in electrical engineering and computer science?
ADAM YEDIDIA: And math as well, yes.
MR. EVERDELL: You graduated MIT in 2014, is that right?
ADAM YEDIDIA: That's right.
MR. EVERDELL: And you went back to MIT to do your graduate work?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: You got a doctorate?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Did some postdoctorate work at Berkeley?
ADAM YEDIDIA: Yes.
MR. EVERDELL: I think you met your now wife, Andrea Lincoln, at MIT?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You first met Mr. Bankman-Fried while you were at MIT?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You lived in the same house, you said?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Did you also meet Gary Wang at MIT?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And he lived in the same house as well, isn't that right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: You became friends with Sam in college?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You got to know him?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Sam grew up in California, is that right?
ADAM YEDIDIA: I believe so, yes.
MR. EVERDELL: After college he worked at Jane Street Capital, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That was a well-regarded trading firm on Wall Street?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Jane Street does something called quantitative trading, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Quantitative trading, just generally speaking, involves using computer algorithms, right, and mathematical models to identify trading opportunities?
ADAM YEDIDIA: I don't actually know the definition of quantitative trading.
MR. EVERDELL: They identify trading opportunities to trade with, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And they can involve the use of complicated schemes or thought-out schemes or methods to trade on -- they can use mathematical methods, for example, to determine how and when to trade on something?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Jane Street is what's called a proprietary trading firm, isn't that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Sometimes that's called a prop trading firm?
ADAM YEDIDIA: I've heard it called that.
MR. EVERDELL: That means it is a firm that trades its own money or money it receives from lenders, right?
ADAM YEDIDIA: I think that's where the name comes from, yes.
MR. EVERDELL: So it doesn't have any customers itself, right?
ADAM YEDIDIA: I am not sure if prop shops always do or don't have customers.
MR. EVERDELL: It doesn't make trades on behalf of customers.
ADAM YEDIDIA: I guess I am not sure.
MR. EVERDELL: He worked there at Jane Street for a few years before starting Alameda Research, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, you said in, I think, 2017, Sam offered you an internship position at Alameda, is that right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: So this is when Sam was the CEO of Alameda?
ADAM YEDIDIA: I believe he was the co-CEO, yes.
MR. EVERDELL: Who was he co-CEO with?
ADAM YEDIDIA: Tara MacAulay.
MR. EVERDELL: But he coowned that company with Gary Wang, isn't that right.
ADAM YEDIDIA: I believe so, yes.
MR. EVERDELL: That was a private company, correct?
ADAM YEDIDIA: To my knowledge, yes.
MR. EVERDELL: It was not a public company?
ADAM YEDIDIA: To my knowledge, that's correct.
MR. EVERDELL: And you were working there as an intern before he started FTX?
ADAM YEDIDIA: Correct.
MR. EVERDELL: And you interned there for a couple of months, roughly I think you said December 2017 to January '18, 2018?
ADAM YEDIDIA: That's right.
MR. EVERDELL: And this was before you went back to MIT to do your graduate work?
ADAM YEDIDIA: That's right.
MR. EVERDELL: Alameda was a trading firm that traded in cryptocurrencies, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And it typically engaged in what's called arbitrage trading, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That just means that Alameda was trying to find opportunities to buy a particular cryptocurrency where the price was lower in another and sell it where it was higher in another place. Is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And it was very successful with its trading strategies, right?
ADAM YEDIDIA: I don't know exactly how successful Alameda was.
MR. EVERDELL: It was a profitable company.
ADAM YEDIDIA: I don't know if that's true.
MR. EVERDELL: Well, you worked as a trader during your internship at Alameda?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That was your first exposure to trading, right?
ADAM YEDIDIA: I had been an intern at Jane Street earlier in my life, but I did no trading at Jane Street, so yes.
MR. EVERDELL: You were at Jane Street but I think you were working in data analysis there, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: You weren't trading because you were an intern?
ADAM YEDIDIA: Correct.
MR. EVERDELL: Now, in October, I believe October of 2020, you reached out to Sam about maybe getting a job working at FTX, is that right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: And you said you began working for FTX in Hong Kong around January of 2021?
ADAM YEDIDIA: Correct.
MR. EVERDELL: And you worked for several months in Hong Kong?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And then FTX moved to the Bahamas, you said?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So you moved to the Bahamas in, you said, roughly October 2021?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you continued working for FTX in the Bahamas until November of 2022?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you said FTX was a cryptocurrency exchange, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Explain to us again what that is.
ADAM YEDIDIA: It's a website on which people can buy and sell cryptocurrencies from each other.
MR. EVERDELL: So it's a little like the New York Stock Exchange, right, in the sense that it's an exchange?
ADAM YEDIDIA: It has the word exchange in it. I don't know to what extent it resembles the New York Stock Exchange in terms of how it works.
MR. EVERDELL: Understood. But New York Stock Exchange is a place where buyers and sellers of stock can trade stock with each other, right?
ADAM YEDIDIA: To my knowledge, yes.
MR. EVERDELL: FTX is a similar concept, except it allows buyers and sellers of cryptocurrency to buy and sell with each other?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, you worked, when you got to FTX, you worked as a developer, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That's someone who, as you said, deals with code, right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Computer code.
And you reported directly to Nishad Singh, is that correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And he was the head of engineering, is that right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: And Mr. Bankman-Fried was the CEO?
ADAM YEDIDIA: Yes.
MR. EVERDELL: He ran the company, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And Gary Wang was the chief technical officer, is that right?
ADAM YEDIDIA: I thought chief technology officer, but yes.
MR. EVERDELL: CTO, is that what he was?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And he was the senior most developer himself, wasn't he?
ADAM YEDIDIA: Do you mean senior in the sense of having worth in the company longer or senior in the sense of higher ranking?
MR. EVERDELL: I mean higher ranging.
ADAM YEDIDIA: Yes.
MR. EVERDELL: But you yourself became one of the senior developers at FTX while you were there?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Your job was to generally to maintain and update the computer code that allowed FTX to function, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Your role was to run queries in the FTX transactional database to retrieve and analyze data occasionally?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And I think you said you wrote computer code itself for the company, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: In particular, about the website design.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And as a senior developer you supervised and trained other FTX developers, isn't that right?
ADAM YEDIDIA: I did a lot of training of other developers, but I didn't do very much supervising.
MR. EVERDELL: But you trained them?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, you said that one of your jobs was also to fix bugs in the code base, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So, generally speaking, a computer bug is when the code isn't functioning properly, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: It may happen when a coder writes a piece of code incorrectly, for example.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And that incorrect code might cause unexpected results in the functioning of the code base.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you would fix those bugs.
ADAM YEDIDIA: I would fix some bugs, yes.
MR. EVERDELL: It was a pretty regular part of your job, to fix bugs, correct?
ADAM YEDIDIA: Correct.
MR. EVERDELL: So there were lots of times where you had to do this. This was something that happened on a fair number of occasions?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You didn't yourself have any role with the finances of FTX, did you?
MR. EVERDELL: You didn't interact with the investors.
MR. EVERDELL: You didn't deal with marketing or advertising, right?
MR. EVERDELL: You didn't deal with the media.
MR. EVERDELL: You didn't have any role in deciding how FTX spent its money.
MR. EVERDELL: Those were all the responsibility of other people, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: I think you said that Sam was the public face of FTX, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And he was highly involved, I think you said, in marketing and brand strategy, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That's what a CEO does, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: They are the public face of the company, right?
ADAM YEDIDIA: In most cases I would say, yes.
MR. EVERDELL: And they are typically in most cases the ones to talk to the media, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Well, Sam had a lot of roles to fill at the company, didn't he?
ADAM YEDIDIA: Yes.
MR. EVERDELL: He was, as you said, the one who typically talked to the media, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Did he set the strategic goals for the company?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Did he deal with the finances of the company?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Deal with investors?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And he had to manage the employees as well who were beneath him?
ADAM YEDIDIA: Yes.
MR. EVERDELL: But Sam himself was not one of the developers, right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: For example, he didn't review any code that you wrote for the time he was there?
ADAM YEDIDIA: Correct.
MR. EVERDELL: He himself wasn't doing the coding in the database.
ADAM YEDIDIA: He was not.
MR. EVERDELL: In fact, he didn't have access to the code base, did he?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained. Form at least.
MR. EVERDELL: As you said, he was not reviewing lines of code, that at least you created, right?
ADAM YEDIDIA: Not to my knowledge.
MR. EVERDELL: Mr. Yedidia, outside of your summer interns and Alameda, you didn't have any experience in the financial industry, is that right?
ADAM YEDIDIA: That's right.
MR. EVERDELL: You didn't have any experience yourself in financial regulatory compliance.
MR. EVERDELL: And you didn't have any formal accounting experience?
MR. EVERDELL: You didn't have any experience in custody and customer funds, things like that.
MR. EVERDELL: Mr. Yedidia, FTX, where you worked in Hong Kong and then in the Bahamas, was set up as an international exchange, is that correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So it's first based in Hong Kong, correct?
ADAM YEDIDIA: I think the company may have been incorporated elsewhere, but the offices were based in Hong Kong.
MR. EVERDELL: Then the offices became based in the Bahamas, right.
ADAM YEDIDIA: Yes.
MR. EVERDELL: It was not a U.S. company?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained at least as to form.
MR. EVERDELL: It was not a company that was incorporated in the U.S., to your knowledge?
ADAM YEDIDIA: Not to my knowledge, no.
MR. EVERDELL: And it was not a company whose headquarters or offices were based in the U.S.?
ADAM YEDIDIA: Not to my knowledge, no.
MR. EVERDELL: And the exchange itself was not open to U.S. residents, was it?
MR. EVERDELL: So if you're a U.S. resident, you did not have the ability to open an account on the FTX international exchange, right?
MS. SASSOON: Objection. Form.
JUDGE KAPLAN: Sustained as to form.
MR. EVERDELL: So if you were a U.S. resident, you could not --
MR. EVERDELL: One moment, your Honor.
I'll rephrase.
MR. EVERDELL: To your knowledge, Mr. Yedidia, if you were a U.S. resident, you couldn't open an account on the exchange?
JUDGE KAPLAN: Sustained as to form. The to-your-knowledge formulation is susceptible to two equal and opposite meanings. Why don't you try to rephrase that.
MR. EVERDELL: I will move on to one question that I think should help.
MR. EVERDELL: Mr. Yedidia, you previously testified that companies that were based in the U.S. but had subsidiaries in foreign countries, the subsidiaries could trade on the exchange, is that correct?
MS. SASSOON: Objection. Misstates the testimony.
JUDGE KAPLAN: Do you have a page for me?
MR. EVERDELL: Your Honor, I'm sorry. I don't have a page for you.
JUDGE KAPLAN: I'll take advice from wherever I can get it.
Do you want to rephrase?
MR. EVERDELL: Yes. I'll ask a separate question.
MR. EVERDELL: Mr. Yedidia, is it your understanding that companies that were based in the U.S. but had subsidiaries in foreign countries, the subsidiaries could trade on the exchange?
ADAM YEDIDIA: Yes.
MR. EVERDELL: These were multinational companies, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And so in your dealings with these companies, it was only the foreign subsidiary who could open the account, is that correct?
MS. SASSOON: Objection. Foundation.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Your Honor, I can give you a page cite for the other point.
JUDGE KAPLAN: I don't need it now because you have moved on.
MR. EVERDELL: I'm moving back to the question, your Honor.
MR. EVERDELL: Mr. Yedidia, you testified that institutions that were based in the U.S. but had entities outside the U.S. were allowed to trade on FTX.com, but assuming they were trading with their other entities, isn't that right?
ADAM YEDIDIA: That was my understanding.
MR. EVERDELL: So the other entities being the ones located outside the U.S., right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And isn't it true that a foreign -- a company that was going to do that had to attest that all trading decisions could be made by non-U.S. personnel?
MS. SASSOON: Objection. Foundation.
JUDGE KAPLAN: Well, the witness can answer if he knows.
But if you don't know, don't speculate.
ADAM YEDIDIA: I'm sorry. Could you repeat the question, please.
MR. EVERDELL: Sure. Are you aware of any attestations that the companies have to make if they were going to engage -- have their foreign subsidiaries transact on the account?
ADAM YEDIDIA: I don't recall that.
MR. EVERDELL: You do recall dealing with a company called, I think, Tower. Do you remember a company called Tower?
ADAM YEDIDIA: I recall a company called Tower, yes.
MR. EVERDELL: And they did business on the exchange, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And they were a multinational company, to your knowledge?
ADAM YEDIDIA: I don't know.
MR. EVERDELL: You recall having discussions with developers from Tower, right?
ADAM YEDIDIA: No, I don't recall having discussions with developers from Tower.
MR. EVERDELL: Do you recall having discussions with people located in Singapore?
ADAM YEDIDIA: I had discussions with people located in Singapore, but not in the context of Tower.
MR. EVERDELL: Let me ask this question, Mr. Yedidia. Didn't FTX, the international exchange where you worked, take steps to try to prevent U.S.-based customers from accessing the international exchange?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So, for example, FTX set up geofencing, didn't it, to block U.S.-based IP addresses?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And that just means that you would look to see where the customer was connecting to the exchange, right?
ADAM YEDIDIA: You would look at the IP address to infer from country they were connecting from.
MR. EVERDELL: You would look at IP address and look at what country that suggested. And if it looked like they were connecting from a U.S.-based IP address you would block their access, correct?
MS. SASSOON: Objection. Form.
JUDGE KAPLAN: Overruled.
ADAM YEDIDIA: Correct.
MR. EVERDELL: And FTX had know-your-customer protocols, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Know-your-customer protocols are sometimes called KYC protocols, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And just means you try to find out information about who your customers were, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And that's in part at least to make sure that they were ones who were permitted to use the exchange, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So FTX had KYC protocols to do just that, didn't it?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And FTX implemented those KYC protocols to verify their customers.
ADAM YEDIDIA: Yes.
MR. EVERDELL: For example, you'd have customers provide personal information about themselves, like name, date of birth, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And at one point you implemented a phone verification to make sure the customer was who they said they were, right?
ADAM YEDIDIA: By you, do you mean me specifically?
MR. EVERDELL: No. Who the customer says you were. The company had a protocol whereby that was implemented, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And in fact in some cases customers were required to have their faces scanned by a web cam, isn't that right?
ADAM YEDIDIA: That was one of the options available, yes.
MR. EVERDELL: This is to make sure it was an actual human being and not some bot somewhere, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: These were all procedures that the company used to make sure that the people using the exchange were actually foreign-based customers, not U.S. customers, right?
ADAM YEDIDIA: That was one of the purposes, yes.
MR. EVERDELL: And this is an effort that Mr. Bankman-Fried, Sam, endorsed, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: This is something he cared about, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Well, it's true that he wanted to make sure that this problem was being addressed if it was a problem?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: You had discussions with Sam about non-U.S. customers using the international exchange, didn't you?
ADAM YEDIDIA: Yes.
MS. SASSOON: Objection. Hearsay, to the extent he is going to elicit the conversations.
JUDGE KAPLAN: Let's see what the next question is.
MR. EVERDELL: Did he want to make sure that the problem was being addressed?
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Was it your understanding --
MR. EVERDELL: Withdrawn, your Honor.
MR. EVERDELL: It's true that at the time Mr. Bankman-Fried was engaging with regulators about his exchange, correct?
MS. SASSOON: Objection, form. What time are we talking about?
JUDGE KAPLAN: Sustained.
MR. EVERDELL: During your employment at FTX, which you said began in January of 2021 going through November of 2022, Mr. Bankman-Fried was trying to have discussions with regulators at the time, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Are you aware that Mr. Bankman-Fried had discussions with regulators?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Are you aware that he was having discussions with law makers too?
ADAM YEDIDIA: Yes.
MR. EVERDELL: He did not want to ignore regulators and law makers, correct?
MS. SASSOON: Objection, your Honor.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: This was part of a company effort to engage with law makers, wasn't it?
MS. SASSOON: Objection to form.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Are you aware that Sam testified in front of Congress?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And it wasn't typical, was it, for an executive of a crypto company to want to engage with law makers at the time?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Are you aware of -- you yourself didn't think this was going to be a worthwhile effort, isn't that true?
MS. SASSOON: Objection. Form.
MR. EVERDELL: I'll rephrase.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Did you have an opinion about engaging with regulators and whether that was worthwhile for the company to do?
ADAM YEDIDIA: Which regulators are you talking about?
MR. EVERDELL: U.S. regulators.
JUDGE KAPLAN: That's a yes-or-no question, unless there is an objection.
Is there an objection, or not?
MS. SASSOON: Relevance, your Honor.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: One moment.
I'll move to a different topic.
MR. EVERDELL: Mr. Yedidia, at the time you joined FTX in January of 2021, it was growing quickly, wasn't it?
ADAM YEDIDIA: Yes.
MR. EVERDELL: I think you said that when you got there it had roughly 200 employees is what you said?
ADAM YEDIDIA: I think what I said was maybe a hundred, maybe a little bit more.
MR. EVERDELL: It eventually got up to about 350 employees, thereabouts. Is that about right?
ADAM YEDIDIA: About right, yeah. Within 100 or so in either direction.
MR. EVERDELL: So that's roughly doubling the time that you are there.
ADAM YEDIDIA: Right.
MR. EVERDELL: Now, part of the reason why it was the growing quickly is that it offered products and services that other exchanges didn't have, isn't that right?
ADAM YEDIDIA: I am not sure that's true. I don't know.
MR. EVERDELL: You did offer services that certain exchanges didn't have, right? You had a lot of products?
ADAM YEDIDIA: Could you give a specific example of a product?
MR. EVERDELL: Sure. Let's take a competitor at least in the U.S. You're familiar with Coinbase, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Coinbase was one of the largest exchanges at the time, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And Coinbase was a spot exchange, right?
ADAM YEDIDIA: To my knowledge, yes.
MR. EVERDELL: That allows customers to trade cryptocurrencies one for one, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: In other words, if I had $100 worth of Bitcoin, I could trade it for $100 worth of Ethereum?
ADAM YEDIDIA: Right.
MR. EVERDELL: FTX was different. FTX allowed customers to trade on margin, is that right?
ADAM YEDIDIA: You're talking about the international exchange?
MR. EVERDELL: International exchange, yes.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And that just means that customers are allowed to borrow funds and trade, as long as they put up collateral to back the borrowing, right?
ADAM YEDIDIA: That's my understanding, yes.
MR. EVERDELL: So, for example, if I had $100 worth of Bitcoin in my FTX account and I wanted to borrow $500 worth of Ether to trade with, I could do that, right?
ADAM YEDIDIA: I am not sure about the details of that, but the broad strokes are correct, to my knowledge.
MR. EVERDELL: I would just have to post my $100 as collateral, right?
MS. SASSOON: Objection. Form, and he said he doesn't know the details.
JUDGE KAPLAN: Let him answer.
Please answer.
ADAM YEDIDIA: Could you repeat the question, please.
MR. EVERDELL: I would just have to post some collateral for that borrower.
ADAM YEDIDIA: That's my understanding.
MR. EVERDELL: That would serve as security for the borrowed funds.
ADAM YEDIDIA: Sorry. I am unfamiliar with that term. What do you mean by that?
MR. EVERDELL: Meaning if you started losing your money, that funds that you posted as collateral could be taken by the exchange to protect against the loss?
ADAM YEDIDIA: Right. My understanding, at a broad level, is that the customer could be liquidated, which means that their collateral would be turned into whatever it needed to be turned into in order to even out their position.
MR. EVERDELL: Correct. So to avoid a loss?
ADAM YEDIDIA: Right.
MR. EVERDELL: And margin trading was a feature that FTX allowed, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And it allowed other products as well too, the international exchange?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And it processed in settled trades faster sometimes than other exchanges too, is that right?
ADAM YEDIDIA: I'm not certain it was faster than other exchanges.
MR. EVERDELL: But there were a lot of products that were sophisticated that other exchanges didn't offer, is that right?
ADAM YEDIDIA: I guess if you're comparing specifically to Coinbase, then FTX.com, as we discussed, did offer products that Coinbase did not.
MR. EVERDELL: We talked a little bit about the rapid growth. You mentioned the number of employees just now that went up, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Also, the average amounts of trades per day went up during that time period, isn't that right?
MS. SASSOON: Objection, form. What time period?
MR. EVERDELL: I'm referring to the time period of your employment from January 2021 to November of 2022.
ADAM YEDIDIA: I am not sure that trading volume went up the entire time, but I think -- there were various points during my employment during which trading volume did go up.
MR. EVERDELL: At some point it averaged billions of trades per day. Does that sound right?
ADAM YEDIDIA: I am not certain.
MR. EVERDELL: And FTX's revenue also was increasing; isn't that correct?
ADAM YEDIDIA: I believe that there were points during my employment during which FTX's revenue was increasing, but I don't have specific knowledge of what it was.
MR. EVERDELL: And its number of users was going up too, wasn't it?
ADAM YEDIDIA: Yes.
MR. EVERDELL: I think by 2020 at some point it had about 6 million registered users. Does that sound about right?
ADAM YEDIDIA: I don't know.
MR. EVERDELL: Well, give or take. Is that in the ballpark of what your understanding might be?
ADAM YEDIDIA: I have very little understanding of how many users the exchange had in 2020.
MR. EVERDELL: Understood.
I'm saying 2022, Mr. Yedidia.
ADAM YEDIDIA: Apologies.
MR. EVERDELL: Let me rephrase the question so we make sure that we have it correctly. I am referring to the time period in 2022 now.
In 2022, or by 2022, FTX had about 6 million users or thereabouts. Does that sound correct?
ADAM YEDIDIA: I have substantial uncertainty about how many users it had exactly, but it sounds about right, maybe within a factor of ten.
JUDGE KAPLAN: I'm sorry. I lost the end of your answer.
ADAM YEDIDIA: I was saying -- I was trying to quantify my uncertainty about how many users FTX had during 2022. I was saying --
JUDGE KAPLAN: You're quantifying your uncertainty about the quantities you're talking about.
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: Good. I'm glad we now know what quants are.
Do you have any knowledge, however many registered users there were, how many of them were active?
ADAM YEDIDIA: I don't know, your Honor.
JUDGE KAPLAN: Let's move on.
MR. EVERDELL: Yes, your Honor.
MR. EVERDELL: Safe to say that this was a pretty busy time for everybody at FTX?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: During this time we just spoke about, where FTX is growing, you were working fairly hard yourself, weren't you, Mr. Yedidia?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You were working very long hours, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So typically how many hours were you working during a day?
ADAM YEDIDIA: I was probably working about nine hours a day six days a week.
MR. EVERDELL: And others were working even harder, isn't that right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Did you observe others in the offices or in the apartments doing work and seeing how often they were working?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And isn't it true, based on your observations, that people were working very hard at that time?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Well, isn't it true that you were concerned about, for example, Gary Wang?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You were concerned because he was working so hard you thought he might burn out, isn't that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: In fact, you were so concerned that you had to institute a rule not to wake him up at night to fix bugs in the code because he wasn't getting enough sleep.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And others like him were working that hard as well, weren't they?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained. I think you have made your point, counselor.
MR. EVERDELL: By this point FTX had a billion dollar valuation, isn't that right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Now, let me talk a bit about the types of employees that FTX had while you were there. I think we said it was several hundred employees by the time --
JUDGE KAPLAN: We have been up and down that mountain a couple of times.
MR. EVERDELL: Let me get to some categories. There were computer developers, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: There was a whole team of computer developers, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: There were marketing people?
ADAM YEDIDIA: Yes.
MR. EVERDELL: There were investor relations people?
ADAM YEDIDIA: Yes.
MR. EVERDELL: There were customer service people?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Compliance people?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And settlements people. We talked about that a little bit already.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, one issue that I think you noticed, though, that persisted was FTX needed more developers, didn't it?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So in the time that you were there, there weren't enough developers to do the work, isn't that fair?
ADAM YEDIDIA: Certainly, a lot of projects were bottlenecked on developers.
MR. EVERDELL: So you had a lot of things that needed to get done that needed to get done by developers, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And it was hard to find enough developer time to get all those projects done, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That was a byproduct of the company's growth, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And I think you even mentioned you discussed this issue with Nishad Singh, didn't you?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And he was your supervisor.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you were also concerned about Nishad too, right, about his burnout?
ADAM YEDIDIA: Nishad worked very, very hard, but I wasn't afraid that he would burn out exactly. I didn't think it was likely that he would burn out completely.
MR. EVERDELL: You had to cover some of his responsibilities from time to time because he was so busy, isn't that right?
ADAM YEDIDIA: On occasion, yes.
MR. EVERDELL: I think at some point you had to ghostwrite some of his employee's reviews because he didn't have time to do that.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Still, despite all these issues with man power, at least with the developers, you thought that FTX was very well run, didn't you?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Didn't you speak to members of the FBI and the prosecutors?
MS. SASSOON: Objection, your Honor.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Did you have a sense -- isn't it true, Mr. Yedidia, that you thought FTX was a well-run company?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And despite the difficulties in manpower, you believed in FTX, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: In fact, you still thought that one day FTX could overtake Binance and Coinbase as the biggest exchange on the market, isn't that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, Mr. Yedidia, you received a salary for your work at FTX?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you also received bonus compensation as well, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you paid fairly well for your work there, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Your annual compensation was between $175,000 and 200,000 per year, is that right?
ADAM YEDIDIA: That was the base salary, yes.
MR. EVERDELL: And then you also got bonuses on top of that, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you got two bonuses in 2021?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So your July 2021 bonus was -- I think it was $650,000 in cash, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you had stock options worth one to two million?
ADAM YEDIDIA: Yes.
MR. EVERDELL: FTX stock.
ADAM YEDIDIA: I think it was FTX U.S. stock if you're talking about -- yeah, fine.
MR. EVERDELL: In December of 2021, your second bonus was $6 million in cash, is that correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And another 5 million in stock options.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And then I think you used that cash to immediately buy $5 million worth of FTX equity, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Because you thought it was a good investment, I guess.
ADAM YEDIDIA: Yes.
MR. EVERDELL: You were putting your money back into the company?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: And you got another midyear bonus in July of 2022?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That was another 5 to 6 million?
ADAM YEDIDIA: About half in cash and half in options, yes.
MR. EVERDELL: So all told, you received several million in cash and several million in options, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That's for about a year and a half of work.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, Sam was making a lot of money too, wasn't he?
ADAM YEDIDIA: Yes.
MR. EVERDELL: He was the majority owner of both FTX and Alameda.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And they were both billion dollar companies.
ADAM YEDIDIA: Yes.
MR. EVERDELL: So Sam himself was a billionaire many times over himself?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Well, he owned both companies, right?
ADAM YEDIDIA: He owned a large stake in both companies.
MR. EVERDELL: As the owner, he could have paid himself out a sizeable portion of the profits, couldn't he?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Well, he could have spent quite a bit of money on himself, couldn't he?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Let's talk about, did you observe Mr. Bankman-Fried and how he spent his money in your day-to-day interactions with him?
ADAM YEDIDIA: To some extent, yes.
MR. EVERDELL: Well, you saw what he wore, for example?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You saw what things he bought for himself?
MS. SASSOON: Objection.
JUDGE KAPLAN: Overruled.
ADAM YEDIDIA: I apologize. Can you repeat the question.
MR. EVERDELL: You saw what things he bought for himself?
ADAM YEDIDIA: I saw some of the things he bought for himself, yes.
MR. EVERDELL: So he didn't buy, for example, fancy watches, did he?
ADAM YEDIDIA: Not to my knowledge, no.
MR. EVERDELL: To your knowledge, he didn't buy an expensive sports car?
MR. EVERDELL: He didn't buy a yacht, correct?
ADAM YEDIDIA: Correct.
MS. SASSOON: Objection.
JUDGE KAPLAN: Overruled.
MR. EVERDELL: You can answer.
ADAM YEDIDIA: To my knowledge, he did not buy himself a yacht.
MR. EVERDELL: Do you know what car he did drive?
MR. EVERDELL: Do you recall seeing a Toyota Corolla?
MS. SASSOON: Objection. He just said he --
JUDGE KAPLAN: I think there is anybody in the room who has never seen one, so let's get on with it.
MR. EVERDELL: In terms of clothes, he didn't buy fancy clothes, right?
ADAM YEDIDIA: I didn't see him wear fancy clothes.
MR. EVERDELL: He wore the same T-shirt and shorts he always wore, didn't he?
ADAM YEDIDIA: He was typically wearing a T-shirt and shorts.
MR. EVERDELL: I want to just show what's already in evidence as Government's Exhibit 1469, if I could.
Mr. Yedidia, we took a look at this photo already on the direct exam. You see that?
ADAM YEDIDIA: Yes.
MR. EVERDELL: I think you said you recognize the people in the photo, right?
MS. SASSOON: Objection. He didn't testify --
JUDGE KAPLAN: Look. I have given you a lot of latitude. The purpose of cross-examination is not to repeat the direct. Let's get on with it.
MR. EVERDELL: Yes, your Honor.
MR. EVERDELL: One last question on this. Are you aware whether or not Mr. Bankman-Fried had any personal safety concerns?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Let's go to a different topic, Mr. Yedidia.
You said that when you moved to the Bahamas you eventually lived in the Orchid penthouse, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: We saw some pictures of the Orchid, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: I think before you lived in the Orchid you lived in an apartment called the Cube, is that right?
ADAM YEDIDIA: That's right.
MR. EVERDELL: And that was also in the Albany housing development?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And that was -- that meant you didn't have to live in a hotel, for example, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And that was housing that was FTX housing, right?
ADAM YEDIDIA: I lived there.
MR. EVERDELL: I think in October of 2021, your fiance at that point, Andrea Lincoln, came to work at FTX?
ADAM YEDIDIA: I'm sorry. When did you say that was?
MR. EVERDELL: October 2021.
ADAM YEDIDIA: In October 2021, she came to the Bahamas, but she only began working at FTX later.
MR. EVERDELL: Understood. But she joined you in the Bahamas, right?
ADAM YEDIDIA: While she was in the Bahamas she joined FTX.
MR. EVERDELL: And you both lived in the Cube?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Sam lived in the Cube too, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And there are other apartments that other employees lived in too, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And I think a few months later you moved to the Orchid penthouse, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: And we saw pictures of that apartment, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, Sam lived there as well, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: He didn't -- he lived there with lots of other people, including yourself, right?
ADAM YEDIDIA: That's right.
MR. EVERDELL: I think you said -- for example, Nishad Singh lived there, didn't he?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So did his girlfriend?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And Gary Wang lived there as well?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So did his girlfriend?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Caroline Ellison live there?
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: This is needlessly repetitive, counsel. A. Yes.
MR. EVERDELL: Understood, your Honor.
MR. EVERDELL: I'll keep going. This was essentially like dorm living, right?
ADAM YEDIDIA: It was similar to dorm living in certain senses and different in others.
MR. EVERDELL: Everybody was sort of together, at least those people that I mentioned were together living together in that apartment, right?
ADAM YEDIDIA: There were ten of us living in that apartment.
MR. EVERDELL: And that allowed you guys, for example, to discuss the business together, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So that apartment was never actually used as Sam's personal apartment, right?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: There were always other people living there, correct?
ADAM YEDIDIA: I believe at all points there were people besides Sam living in that apartment.
MR. EVERDELL: Thank you.
MR. EVERDELL: I'll move on, your Honor.
MR. EVERDELL: Mr. Yedidia, you testified before that you are testifying today under a grant of immunity, is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, that means that you asserted your Fifth Amendment right not to testify, is that correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: But the prosecutors gave you immunity for your testimony.
ADAM YEDIDIA: Right.
MR. EVERDELL: Immunity means that the prosecutors can't use any of this testimony or information that you give today or that you gave before against you in a criminal case, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: But testimony at trial here isn't the only time you were given immunity, is that right?
ADAM YEDIDIA: That's right.
MR. EVERDELL: You were also given immunity back in December of 2022, when the grand jury was investigating this case?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you testified that you don't recall getting a subpoena from the prosecutors at that time, right?
ADAM YEDIDIA: I made a mistake during my testimony about the subpoena. I was uncertain about what had happened there, but I apologize for that mistake. I don't know if that's what you're referring to here.
MR. EVERDELL: Did you get a subpoena from the prosecutors?
ADAM YEDIDIA: Yes.
MR. EVERDELL: It wasn't your idea to reach out to the prosecutors, right?
ADAM YEDIDIA: I wanted to reach out to the prosecutors.
MR. EVERDELL: But you got a subpoena, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: You received a subpoena. And you spoke to them because they wanted to talk to you, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And the prosecutors contacted your lawyers, I think, at the end of 2022, right?
ADAM YEDIDIA: I am unsure of the exact date, but that's plausible.
MR. EVERDELL: A few weeks after you resigned from FTX, right?
ADAM YEDIDIA: Around then.
MR. EVERDELL: And it was just a few weeks after you left the Bahamas to return to the United States?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you knew the prosecutors were investigating what happened at FTX?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you knew they were investigating Sam.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And they told you that the lawyers -- they told your lawyers the investigation was moving quickly, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Overruled.
MR. EVERDELL: They told your lawyers that the investigation was moving quickly, didn't they?
MS. SASSOON: It's beyond the scope.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: You knew that they wanted to talk to you, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And they said that are all options were on the table for you, right?
ADAM YEDIDIA: I don't recall that verbiage.
MR. EVERDELL: You needed to come talk to them soon, isn't that right?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Sustained, form.
MR. EVERDELL: Was it your understanding that they wanted you to come talk to them right away?
MS. SASSOON: Objection.
JUDGE KAPLAN: Overruled.
ADAM YEDIDIA: It was my understanding that they wanted to talk to me quickly.
MR. EVERDELL: That was serious, wasn't it?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That made you worry, didn't it?
ADAM YEDIDIA: I was aware of the seriousness of the situation.
MR. EVERDELL: Because you were a senior developer at FTX, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Worked there for two years.
ADAM YEDIDIA: A little bit less, but yes.
MR. EVERDELL: And you were close to Sam.
ADAM YEDIDIA: Yes.
MR. EVERDELL: You didn't know what the prosecutors thought about you at the time, did you, when they give you a subpoena?
MR. EVERDELL: You didn't know how they thought about your conduct, did you?
MR. EVERDELL: So you asked them to give you immunity for your testimony before you spoke to them, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And they agreed to do it?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And so the prosecutors -- you asserted your right not to talk to them, is that right, not to testify?
ADAM YEDIDIA: Right.
MR. EVERDELL: And the prosecutors obtained an order from the judge compelling you to testify, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now, under this order the prosecutors couldn't use any testimony or information provided against -- that you provided against you in a criminal case, right?
MS. SASSOON: Objection. Misstates the order and this was asked and answered.
JUDGE KAPLAN: Sustained as to both.
MR. EVERDELL: Isn't it true that the order says that any information that is directly or indirectly derived from your testimony or other information -- excuse me. I take it back. No testimony or other information compelled under this order or any information directly or indirectly derived from such testimony or other information may be used against you.
MS. SASSOON: Objection. Mischaracterizes the order.
JUDGE KAPLAN: Somebody have the order?
MS. SASSOON: Your Honor, there is a caveat, which is, he can be prosecuted if he lies under oath.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Let's just put it this way. It is your understanding that, based on what testimony you give today, you can't be prosecuted for your testimony that you give, correct?
JUDGE KAPLAN: Sustained.
MS. SASSOON: Objection.
JUDGE KAPLAN: Counselor, Ms. Sassoon just told you what the problem with your question is, which has been in each iteration of the question.
MR. EVERDELL: All right.
MR. EVERDELL: You understood, Mr. Yedidia, that if the prosecutors thought you were lying to them, then you could still be prosecuted, is that right?
ADAM YEDIDIA: That was my understanding, yes.
MR. EVERDELL: Now, if you were going to be prosecuted for lying, it's the prosecutors who would decide to prosecute you, correct?
ADAM YEDIDIA: I don't know who would prosecute me if I lied.
MR. EVERDELL: Well, you had to tell the truth, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And it's the prosecutors who are going to be listening to what you have to say, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: They are the ones who are going to be evaluating whether or not you are telling the truth, right?
ADAM YEDIDIA: I don't know who would evaluate whether or not I was telling the truth, but, yeah.
MR. EVERDELL: They are the ones you were providing information to, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: If they thought you were lying, they could prosecute you for perjury, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So it was up to the government to decide whether or not you were telling them the truth, correct?
ADAM YEDIDIA: Yeah.
(Continued on next page)
BY MR. EVERDELL:
MR. EVERDELL: They're the ones who would be making that evaluation, correct?
ADAM YEDIDIA: As I understand, yes.
MR. EVERDELL: Okay. Now you never actually testified in front of the grand jury, right?
MR. EVERDELL: You just met with the government instead.
ADAM YEDIDIA: Yes.
MR. EVERDELL: All right. And they debriefed you about your recollection of what happened at FTX.
ADAM YEDIDIA: Yes.
MR. EVERDELL: All right. So you met with them a number of times, didn't you?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You met with them on December 13th, for example, if you recall.
ADAM YEDIDIA: That sounds right.
MR. EVERDELL: You met with them again in February——February 6th, in fact, right?
ADAM YEDIDIA: The date sounds plausible.
MR. EVERDELL: You met with them again in August; August 10th this time.
ADAM YEDIDIA: Yes.
MR. EVERDELL: All right. And then you met with them four more times this past month to prepare for your testimony here, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Three times in September, once in October, right?
ADAM YEDIDIA: That sounds about right.
MR. EVERDELL: Okay. And in fact, the last time you met with them was earlier this week, wasn't it?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And these meetings were all covered by this immunity order that we just looked at, right, that we just spoke about?
ADAM YEDIDIA: As I understand, yes.
MR. EVERDELL: Okay. And in those meetings the prosecutors went over the questions they were going to ask you on the stand, right?
ADAM YEDIDIA: They asked me questions in the meetings, yes.
MR. EVERDELL: All right. They went over your responses to the questions.
ADAM YEDIDIA: They would ask me questions and I would respond.
MR. EVERDELL: Okay. Right. They would ask you questions about what they might ask you on the stand, right?
ADAM YEDIDIA: They would ask me questions.
MR. EVERDELL: Okay. And you would give your responses.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you went through this process multiple times, right?
ADAM YEDIDIA: There were several occasions on which they asked me questions and I gave answers.
MR. EVERDELL: Okay. And for your trial testimony today you also received a separate immunity order as well.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And it's essentially the same agreement that we've been talking about as before; is that right?
MS. SASSOON: Objection. It's not an agreement, your Honor.
JUDGE KAPLAN: Sustained. Rephrase.
MR. EVERDELL: Well, the order has the same provisions, roughly the same provisions as the one for the grand jury immunity, correct?
ADAM YEDIDIA: As I understand, yes.
MR. EVERDELL: Meaning you can still be prosecuted if you lie, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: But you will not be prosecuted apart from that by what you testify to here today, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: Your statements here today can't be used against you, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: One moment, your Honor.
MR. EVERDELL: Okay. Let's move forward to a different topic, Mr. Yedidia.
All right. Let's talk now about fiat deposits on FTX, all right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: You talked about that in your direct.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. Now when you began working at FTX, FTX customers were able to deposit fiat currency on the exchange to trade with, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. Customers who wanted to deposit fiat, they'd click on a button, right, on the FTX website?
ADAM YEDIDIA: Yes.
MR. EVERDELL: We looked at some of that in your direct, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And at least during your early time in the company, they would be provided with bank account details for a company called North Dimension; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And North Dimension had a bank account with Silvergate Bank, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And that bank account was owned by Alameda, no?
ADAM YEDIDIA: That's what I was told, yes.
MR. EVERDELL: Okay. So Alameda was receiving the deposits of customer funds on behalf of FTX.
ADAM YEDIDIA: Yes.
MR. EVERDELL: It was difficult, I think you mentioned, at the time for FTX to have its own bank accounts; is that right?
ADAM YEDIDIA: That's what I was told.
MR. EVERDELL: Okay. And so FTX used the Alameda accounts in order to accept the fiat deposits, right?
ADAM YEDIDIA: That's what I was told, yes.
MR. EVERDELL: Okay. And this arrangement was known within FTX and Alameda, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Well, you were aware of this, right?
JUDGE KAPLAN: That's what he just said.
MR. EVERDELL: Okay. The people who worked in the settlements groups at both companies knew about this arrangement.
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: You're familiar with what the settlements group does?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. They are the ones who, when a deposit comes in, right——they're the ones who credit the customer's FTX account when the deposit comes in; is that right?
ADAM YEDIDIA: That was how the manual system worked, yes.
MR. EVERDELL: The manual system. Right. So if there was a fiat deposit that had to be reconciled, as they did early on before the automated system came around, that would need to be reconciled by someone in the settlements group, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: Okay. All right. And so the settlements group was the one dealing with the bank accounts, right?
MS. SASSOON: Objection, form.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Settlement group would see the deposits coming in?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And they would see the bank accounts that they were coming into, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And that would include the North Dimension bank account.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay.
JUDGE KAPLAN: Were there others?
ADAM YEDIDIA: Were there other? Other what?
JUDGE KAPLAN: Other bank accounts into which customer fiat deposits were going.
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: Okay. Go ahead.
BY MR. EVERDELL:
MR. EVERDELL: All right. So this was not a secret to those people at the company, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Well, the customers also were aware that their money was going to the North Dimension bank account, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. Because that was on the wire instructions that they were given, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And when they did make their deposits, they got a credit on their FTX account, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Now you mentioned that the deposits were not fully automated when you started, right?
ADAM YEDIDIA: That's right.
MR. EVERDELL: Okay. And there was a project that you were assigned to work on to automate that process; you testified about that.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And that was a project that Sam had assigned you, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And Sam wanted the process automated to, among other things, cut down on the delays in processing customer funds, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Ground.
MS. SASSOON: What Sam wanted and——
JUDGE KAPLAN: Yes, sustained.
MR. EVERDELL: Mr. Yedidia, your understanding that one of the reasons why the project was necessary was because there were delays, bottlenecks in processing all of the deposits.
ADAM YEDIDIA: It was my understanding that part of the point of the project was to expedite deposit processing.
MR. EVERDELL: Okay. And the project that you worked on involved an application programming interface, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That's called an API?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That's just a way for different computer systems to talk to each other, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So in this case the goal was to have the computer systems for Silvergate Bank talk to FTX's computer systems, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And this would allow FTX to automate the deposit process for customer funds that were wired to Silvergate Bank, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And you were the lead developer on this project, right?
ADAM YEDIDIA: I worked closely with Nishad on it, but I would say that I was primarily working on it.
MR. EVERDELL: Okay. And you completed the project roughly around March 2021?
ADAM YEDIDIA: That could be right, but it also could be later.
MR. EVERDELL: Okay. But early 2021?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. So by early 2021 you yourself were aware of the fact that Alameda was receiving FTX customer fiat deposits, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: And you were also aware, true, that Alameda's liability to FTX that resulted from the transfers was being tracked by the fiat account, right?
ADAM YEDIDIA: I only became aware of the importance of the fiat account as a means of communicating between FTX and Alameda when the bug was found.
MR. EVERDELL: Okay. We'll talk about the bug in a minute. But at least in early 2021 you were aware that Alameda was receiving FTX customer funds, fiat deposits?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And that fact alone didn't concern you, right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Okay. There was nothing that raised any concerns about that.
ADAM YEDIDIA: Right.
MR. EVERDELL: Okay. One moment, your Honor.
Your Honor, I may be starting a new topic now. Does it make sense to break?
JUDGE KAPLAN: How much longer do you expect to be with the witness?
MR. EVERDELL: I still have, I would say, maybe an hour, maybe less.
JUDGE KAPLAN: Folks, I'll see you at 2:00.
Counsel remain, please.
COURT CLERK: Will the jury please come this way. Bring your notebooks with you.
(Jury not present)
JUDGE KAPLAN: Be seated, folks.
Mr. Everdell, I just want to express my growing concern about the extent of the entirely unnecessary repetition, and I've given you a lot of latitude, but you're wearing out the welcome on the repetition. I understand there are things that need to be repeated in this case because this is unfamiliar ground in some respects, and I'm making allowance for it, but it needs to be curbed.
Okay. Thank you. I'll see you at 2:00.
THE LAW CLERK: All rise.
(Luncheon recess)
AFTERNOON SESSION 2:00 p.m.
(In open court; jury not present)
JUDGE KAPLAN: Before we bring in the jury, let me put on the record that I have a note from Juror No. 5, who writes that his family is concerned that he is the only juror called out by name in the articles he's seen on the internet. "PS - I understand that there's probably nothing that can be done. I just wanted to make you aware."
I will tell him there is nothing that can be done. Any objection? That will be marked Court Exhibit next in order.
MS. SASSOON: No objection. And perhaps we can also tell the juror that if he's getting unwanted contacts, he can let the Court know?
JUDGE KAPLAN: Good point. Thank you.
Let's get the jury. And let's get the witness.
(Continued on next page)
(Jury present)
JUDGE KAPLAN: Mr. Zimmer, I have your note. Your supposition that there's nothing I can do about it is absolutely right. But if for any reason you get any unwarranted communications, please let us know and we'll take appropriate action.
Mr. Yedidia, you are still under oath.
Mr. Everdell, you may proceed.
MR. EVERDELL: Thank you, your Honor. CROSS-EXAMINATION CONTINUED
BY MR. EVERDELL:
MR. EVERDELL: Good afternoon, Mr. Yedidia.
ADAM YEDIDIA: Good afternoon.
MR. EVERDELL: All right. You testified on direct examination about a bug that existed that related to the fiat@ account. Do you recall that?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That was the bug that caused it to overstate the size of the fiat balance, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. That bug, I think you discovered it——you became aware of it around December of 2021; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: But that bug was introduced I think first in July or thereabouts, 2021; is that right?
ADAM YEDIDIA: Yeah, or thereabouts, yeah.
MR. EVERDELL: Okay. And I think it was you who introduced the bug; is that right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Okay. And that bug made it appear that Alameda owed more to FTX than it actually did, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Meaning that normally when customers withdrew fiat deposits from FTX, the balance of the fiat account became less negative, right?
ADAM YEDIDIA: Right. That would be the normal way it worked.
MR. EVERDELL: Right. By the same amount that was returned to the customer, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: But because of the bug that was introduced, when customers asked to withdraw certain fiat deposits, the fiat account didn't change; it stayed where it was.
ADAM YEDIDIA: That's right. If the withdrawals were processed automatically, that's what happened.
MR. EVERDELL: So the fiat@ account in those cases wouldn't increase or become less negative, right?
ADAM YEDIDIA: That's right.
MR. EVERDELL: So over time the fiat@ account looked more negative than it should have, correct?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Meaning that it looked like Alameda owed FTX more money than it actually did.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. Now you said you discovered this, or you became aware of it for the first time around December of 2021?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: And by that time, because of the operation of the bug, the fiat account was already overstated; is that correct?
ADAM YEDIDIA: Correct.
MR. EVERDELL: And at that point Alameda's debt to FTX was overstated by around 500 million, I think you said, right?
ADAM YEDIDIA: Correct.
MR. EVERDELL: Okay. And there was some discussion I think around that time about fixing the bug.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. I think maybe you had some discussions with Mr. Wang and Nishad Singh about that?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And I think it was agreed that this is something that one of the two of them would handle at the time.
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Okay. So you weren't going to do it at that point.
ADAM YEDIDIA: Correct.
MR. EVERDELL: Okay. But in fact to your knowledge, neither Mr. Wang or Mr. Singh fixed the bug.
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Okay. So they just——they never got around to it.
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Well, safe to say that the bug didn't get fixed until you fixed it, right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Okay. But if anything, that bug made Alameda's financial position look worse than it actually was, right?
JUDGE KAPLAN: That's the third time since lunch that you've made that point, and I was serious about what I said to you earlier.
MR. EVERDELL: So the bug wasn't fixed until about June or so of 2020, right? 2022. Excuse me.
ADAM YEDIDIA: Yes, yes.
MR. EVERDELL: That was several months later, right?
JUDGE KAPLAN: June is several months after December.
MR. EVERDELL: All right. So now let's jump to June, Mr. Yedidia. That was a time when a decision was finally made to fix the bug.
ADAM YEDIDIA: Correct.
MR. EVERDELL: Okay. And I think you testified that you saw a meeting take place around that time?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And that was a meeting between——you said it was Sam, Caroline Ellison, Gary Wang, and Nishad Singh, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And that you think you saw them enter a room in the offices; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. But you weren't inside the room yourself.
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Okay. So you don't know what was discussed between them in the room.
ADAM YEDIDIA: I was told afterwards about the substance of the meeting, but I don't know firsthand what the——what was discussed.
MR. EVERDELL: Understood. But after the meeting you had a conversation with Nishad; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And after that meeting there was——there was going to be a need for a full accounting; isn't that right?
ADAM YEDIDIA: I thought the full accounting was done within the meeting.
MR. EVERDELL: Well, I think you got direction, right, after the meeting that there needed to be an accounting of the assets and liabilities of FTX and Alameda, right?
ADAM YEDIDIA: I was directed to fix the bug.
MR. EVERDELL: Okay. Well, so you were told to fix the bug. Okay. And it was Sam who told you to fix the bug, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. So Sam wasn't ignoring the problem with the bug, right?
JUDGE KAPLAN: At what point in time?
MR. EVERDELL: This was in——I believe you said it was in June, at that time?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So Sam told you to fix the bug in June.
ADAM YEDIDIA: Correct.
MR. EVERDELL: Okay. And you implemented the bug fix.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And as part of the bug fix, you wrote new code to correctly process those fiat withdrawals that had been sent by the API, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And you also, as part of that, were trying to figure out how much Alameda's liabilities were overstated as a result of that, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And you learned that as a result of the fiat@ bug, that Alameda's liability was about $8 billion bigger than it should have been, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you said you also learned that the remaining liability after you corrected the bug was roughly 8 billion as well, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And you kept notes, right, about how you fixed the bug.
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you did that because you wanted to make sure you recorded what you did to fix the bug.
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: Sorry. Can I clarify something here. Mr. Yedidia, you said that as of December, the amount in the fiat account was overstated by 500 million; is that right?
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: And when you fixed the bug, just before you fixed the bug, the liability in that account was $8 billion larger than it should have been, yes?
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: The $7½ billion difference between the 500 million in December and the 8 billion when you fixed the bug in June, where did that come from? How did that happen?
ADAM YEDIDIA: It came from, I presume, customers withdrawing a total of $7.5 billion in withdrawals that were processed by the API during that time period.
JUDGE KAPLAN: During the interval between December and June; is that right?
ADAM YEDIDIA: Yes.
JUDGE KAPLAN: Okay. Thank you.
Go ahead.
BY MR. EVERDELL:
MR. EVERDELL: So you said you made a recording of the steps you took to fix the bug, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And it was Gary Wang who told you to do that, right?
ADAM YEDIDIA: As I recall, it was Nishad Singh who told me to record the steps I took to fix the bug.
MR. EVERDELL: Well, did you prepare a document that summarized the steps you took to fix the bug?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And I think you said that that was——you circulated that via Signal; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And the Signal message that has that document, that message doesn't exist anymore, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: But the document itself does exist, right?
ADAM YEDIDIA: That's right.
MR. EVERDELL: Okay. You called it a postmortem, I think, for the actions you took?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you noted in that document that the error from the fiat bug was approximately 8.2 billion; isn't that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. But you didn't note in that document what the remaining liability was, did you?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Okay. So at this point, Mr. Yedidia, after the bug fix, you had been aware for some time that Alameda was receiving fiat deposits for FTX customers, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you'd been aware of the existence of the fiat@ account since you first learned about the bug in end of 2021, right?
MS. SASSOON: Asked and answered prior to the break.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Okay. Well, so the change, the new information you had at this point after fixing the bug was you were now aware of the size of the liability; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And when you learned about the size of the remaining $8 billion liability, that's what gave you some concern, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. Okay. So that made you concerned because you felt like that was risky.
ADAM YEDIDIA: The number seemed enormously large to me.
MR. EVERDELL: Okay. All right. So now you said that next or soon afterwards, you had a discussion with Sam on the paddle tennis court; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And you said that was sometime in the summer of 2022.
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And you said that you spoke to him after you guys played paddle tennis?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you said that in the conversation you asked Sam if everything was going to be okay, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: All right. And I think you said that Sam responded that FTX was bulletproof, right?
ADAM YEDIDIA: Had been bulletproof.
MR. EVERDELL: Excuse me. Had been bulletproof. Okay. And that it wasn't anymore. Okay. And you responded, Well, how long before we're bulletproof again; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And he said he wasn't sure, it was going to be about three to——three months or so, or maybe longer.
ADAM YEDIDIA: As I recall, he said something like six months to three years.
MR. EVERDELL: Okay. Now you didn't know what necessarily Mr. Bankman-Fried meant when he said "bulletproof," right?
ADAM YEDIDIA: I had some idea of what he meant.
MR. EVERDELL: He didn't tell you.
ADAM YEDIDIA: He didn't clarify beyond using the word "bulletproof."
MR. EVERDELL: Right. He simply used the word "bulletproof," right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. All right. But at the time, at the time of that conversation, Mr. Yedidia, this was right in the middle of the crypto winter, wasn't it?
ADAM YEDIDIA: You could call it that.
MR. EVERDELL: Okay. So there was a lot of distress in the crypto markets at this point, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. There was a company you're familiar with called Three Arrows Capital?
ADAM YEDIDIA: Yes.
MR. EVERDELL: That company had collapsed, right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Crypto lenders also were in distress?
ADAM YEDIDIA: I know less about that subject.
MR. EVERDELL: You're familiar with a company called Voyager.
ADAM YEDIDIA: I've heard of them, yes.
MR. EVERDELL: Didn't they declare bankruptcy sometime in July?
ADAM YEDIDIA: That sounds familiar, but I'm——I don't know the exact time line.
MR. EVERDELL: Well, the price of Bitcoin was way down at the time, wasn't it?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. So at that point really no crypto company looked bulletproof, given the scenario, did it?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: Now your only concern was whether Alameda and FTX had sufficient assets to cover the debts, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. Now you didn't yourself have a sense of the financial picture of Alameda, did you?
MR. EVERDELL: You didn't yourself have a good sense of the financial picture of FTX, right?
MR. EVERDELL: That wasn't really what you focused on, right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: And you didn't really have a picture of what assets were available to cover a liability like the one Alameda owed, did you?
MR. EVERDELL: Okay. That was——that part of the business, in terms of thinking about assets and liabilities, was more Sam's bailiwick, right?
ADAM YEDIDIA: Him and others, yes.
MR. EVERDELL: Okay. And he acknowledged that there was an issue, right, in the "bulletproof" conversation?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. But he wasn't treating it as a full-scale crisis, was he?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: His opinion was FTX would be able to weather the storm, right?
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. EVERDELL: One second, your Honor.
MR. EVERDELL: All right. Mr. Yedidia, I just want to talk to you about your decision to resign from FTX, okay? All right.
Now you testified that you resigned because you said you learned that Alameda used FTX customer funds to repay loans to creditors; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: And you said that you recall learning this from a phone call; is that right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: You had this phone call with another developer at FTX, right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: Do you remember who that was?
ADAM YEDIDIA: Yes. Her name was Leila. Do you want her last name as well?
MR. EVERDELL: Please.
ADAM YEDIDIA: Clark.
MR. EVERDELL: So you learned this on a phone call with Leila Clark?
ADAM YEDIDIA: Correct.
MR. EVERDELL: And did Leila say where she had gotten that information?
ADAM YEDIDIA: I believe she said that she heard it from Alameda employees who had attended the all hands meeting with Caroline.
MR. EVERDELL: Okay. So she said that she got it from an Alameda employee.
ADAM YEDIDIA: I don't recall if she said she got it from a single Alameda employee or several.
MR. EVERDELL: But she didn't identify which ones.
ADAM YEDIDIA: I don't recall her identifying which ones.
MR. EVERDELL: Okay. And you said that she said that the Alameda employees had attended a meeting; is that right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: Okay. And you weren't at that meeting, right?
ADAM YEDIDIA: That's correct.
MR. EVERDELL: And Leila Clark I guess wasn't at that meeting.
ADAM YEDIDIA: I presume not.
MR. EVERDELL: Okay. And the employees who were at that meeting were reporting on something that was said at the meeting?
ADAM YEDIDIA: Leila told me that Alameda employees had told her that they had heard at this meeting that they were at with Caroline——
MR. EVERDELL: Okay.
ADAM YEDIDIA: Sorry.
MR. EVERDELL: Finish, please.
ADAM YEDIDIA: ——that Caroline had said the thing about Alameda repaying its debts to creditors with FTX customer funds.
MR. EVERDELL: Okay. So your information was you heard from Leila, who heard from unnamed Alameda employees who had been at a meeting, who had heard from Caroline what was discussed.
ADAM YEDIDIA: Correct.
MR. EVERDELL: Okay. All right. So——and that, you say, is when you decided that you thought something bad had happened here, right?
ADAM YEDIDIA: Yes.
MR. EVERDELL: So based on that chain of conversations, that information, that's when you decided that you had to resign.
ADAM YEDIDIA: Yes.
MR. EVERDELL: So it was not——you were not resigning because Alameda had——you were aware that Alameda had borrowed $8 billion from FTX, right?
ADAM YEDIDIA: Right.
MR. EVERDELL: That wasn't the problem, right? Because you had known about that a few months earlier.
ADAM YEDIDIA: Right.
MR. EVERDELL: Okay. It's because of what you learned in this phone conversation, that's what you did.
ADAM YEDIDIA: Yes.
MR. EVERDELL: One moment, your Honor.
Nothing further, your Honor.
JUDGE KAPLAN: Thank you.
Ms. Sassoon, anything further?
MS. SASSOON: Yes, your Honor.
REDIRECT EXAMINATION BY MS. SASSOON:
MS. SASSOON: Mr. Yedidia, you testified about correcting the bug and learning that the amount of money Alameda actually owed to FTX customers was $8 billion in June of 2022; do you remember that?
ADAM YEDIDIA: Yes.
MS. SASSOON: Why when you learned that Alameda owed customers $8 billion did you not resign at that point?
ADAM YEDIDIA: I figured things were still probably fine and that customers could be repaid.
MS. SASSOON: Did you have any idea at that point that Alameda was spending $8 billion of customer money out of its bank account?
MR. EVERDELL: Objection.
JUDGE KAPLAN: What's the objection?
MR. EVERDELL: Presumes facts not in evidence, and it's leading.
JUDGE KAPLAN: Sustained.
MS. SASSOON: At that point did the defendant or anyone else tell you anything about whether Alameda was spending the $8 billion of customer money out of the bank account?
MS. SASSOON: If you had been told that, would that have concerned you?
ADAM YEDIDIA: Yes.
MS. SASSOON: Why?
ADAM YEDIDIA: Because if they spend the money that belongs to the FTX customers, then it's not there to give the FTX customers should they withdraw.
MS. SASSOON: And why is what you heard in November of 2022, that Alameda had used customer money to repay loans, why did that lead you to resign?
ADAM YEDIDIA: Because if Alameda was repaying its loans with FTX customer money, that implied that it didn't have money of its own to repay the loans with, which means the money was simply gone.
MR. EVERDELL: Objection.
JUDGE KAPLAN: Overruled.
MR. EVERDELL: Okay.
MS. SASSOON: And had you heard anything like that prior to November of 2022?
MS. SASSOON: I want to talk to you about your conversation with the defendant on the paddle court.
Mr. Everdell asked you about what the defendant meant when he said, We're not bulletproof. When the defendant said that to you, what had you just asked him?
ADAM YEDIDIA: I had just asked him about the debt that Alameda owed FTX and I'd asked, Are things okay?
MS. SASSOON: And so when he said, We're not bulletproof, what did you understand that to be referring to?
ADAM YEDIDIA: The debt owed by Alameda to FTX.
MS. SASSOON: And what did you understand that to mean with respect to the debt Alameda owed to FTX?
ADAM YEDIDIA: I understood it——
MR. EVERDELL: Objection.
JUDGE KAPLAN: Overruled.
MS. SASSOON: He opened the door, your Honor.
MR. EVERDELL: Asked and answered. A. Sorry. Could you repeat the question, please.
MS. SASSOON: Yes. And so in that context of talking about Alameda's liability to FTX customers, what did you understand We're not bulletproof to mean?
ADAM YEDIDIA: I understood it to be expressing doubt about the ability of Alameda to repay FTX customers.
MS. SASSOON: Did the defendant provide you more details during that discussion?
MS. SASSOON: Did he say anything to you that indicated to you that he might have more information than you had available to you?
ADAM YEDIDIA: Yes.
MS. SASSOON: What was that?
ADAM YEDIDIA: Well, he was saying things to me like the fact that, you know, we, whoever "we" was, wasn't——weren't bulletproof, and that was news to me, so that implied he had information I didn't, because he was saying stuff to me that I didn't previously know.
MS. SASSOON: You were asked on cross-examination about your meetings with prosecutors. Why did you first meet with the government after FTX went bankrupt?
ADAM YEDIDIA: I wanted to help them figure out what happened.
MS. SASSOON: In those meetings what, if anything, did the government tell you to do in court today?
ADAM YEDIDIA: Tell the truth.
MS. SASSOON: You were asked some questions on cross-examination about the defendant's spending. What was the FTX Arena?
ADAM YEDIDIA: The FTX Arena was——
MR. EVERDELL: Objection, your Honor.
JUDGE KAPLAN: Yes. What's the objection?
MR. EVERDELL: Beyond the scope of the cross.
MS. SASSOON: There were questions about the defendant's spending, and this was a form of spending.
JUDGE KAPLAN: Proceed. Overruled.
BY MS. SASSOON:
MS. SASSOON: What was the FTX Arena?
ADAM YEDIDIA: The FTX Arena was the renamed version of the Miami Heat Arena in Miami.
MS. SASSOON: Is that a basketball stadium?
ADAM YEDIDIA: I believe so, yes.
MS. SASSOON: And did you learn about how much money the defendant spent on branding the Miami Heat basketball arena with the name FTX?
ADAM YEDIDIA: As I recall, it was about a hundred million dollars.
MS. SASSOON: Did the defendant otherwise share with you how much money he was spending on marketing of FTX?
ADAM YEDIDIA: I don't recall him sharing other numbers for marketing. It's possible that he did and I don't recall the numbers anymore, but——
MS. SASSOON: Mr. Bianco, if you could pull up Government Exhibit 1469, please.
MS. SASSOON: You were shown this photograph on cross-examination of the defendant with Bill Clinton and Tony Blair. Did the defendant share with you how much money he gave to be introduced to Bill Clinton and Tony Blair?
MS. SASSOON: Did the defendant share with you how much money he spent in political donations?
MS. SASSOON: Did the defendant share with you how much money he gave himself in personal loans from Alameda?
MS. SASSOON: You were asked some questions about your $35 million penthouse apartment. I think Mr. Everdell called it a housing development. How would you describe it?
ADAM YEDIDIA: It was a luxury apartment.
MS. SASSOON: You were asked some questions about spending some time living in The Cube in the Bahamas as well. Was there other housing options on the island besides The Albany and The Cube?
ADAM YEDIDIA: Yes.
MS. SASSOON: Let's pull up Government Exhibit 1452.
I apologize. Let's pull up Government Exhibit——if you give me just one moment——1542.
MS. SASSOON: Mr. Everdell asked you some questions about dorm living. How did this apartment compare to your living arrangement with the defendant at MIT college?
ADAM YEDIDIA: The living arrangement in the Bahamas was more luxurious.
MS. SASSOON: Did this feel like a dorm to you?
ADAM YEDIDIA: It felt like a dorm in the sense that I was living with others but not like a dorm in the sense that it was very luxurious.
MS. SASSOON: What, if any, other apartments did the defendant purchase for himself in the Bahamas?
ADAM YEDIDIA: Sam had another apartment, I think in the Gemini building, on the first floor. I'm not sure if he owned it. I presume he did. But there was another apartment in which he would sometimes spend time.
MS. SASSOON: And you said the Gemini. Is that part of The Albany?
ADAM YEDIDIA: Yes.
MS. SASSOON: And as far as you know, did this other apartment in The Albany resort, did the defendant share it with other roommates?
ADAM YEDIDIA: Not as far as I know.
MS. SASSOON: You were asked some questions on cross-examination about your belief in FTX as a business. Do you recall those questions?
ADAM YEDIDIA: Yes.
MS. SASSOON: And I think you testified that at some point in 2022 you really believed in FTX. Do you recall that?
ADAM YEDIDIA: Yes.
MS. SASSOON: Did your belief in FTX change?
ADAM YEDIDIA: Yes.
MS. SASSOON: Why did it change?
ADAM YEDIDIA: Well, FTX defrauded all of its customers.
MR. EVERDELL: Objection.
MS. SASSOON: Your Honor, I didn't know exactly how the witness would phrase his answer, but I can move on. And we can strike that testimony.
JUDGE KAPLAN: Stricken.
BY MS. SASSOON:
MS. SASSOON: You were asked some questions about your compensation. Was all the compensation that you described on cross-examination in dollars?
MS. SASSOON: How were you compensated?
ADAM YEDIDIA: I was compensated partly in dollars and partly in options on the company.
MS. SASSOON: And so what happened to the compensation you received?
ADAM YEDIDIA: Well, most of it was lost because most of it was either put into buying equity or put into taxes paid.
MS. SASSOON: When you say money was lost put into buying equity, what equity are you talking about?
ADAM YEDIDIA: The equity that I bought in December 2021, FTX equity.
MS. SASSOON: Just to be clear, you used your compensation to buy a stake in FTX; is that what you're saying?
ADAM YEDIDIA: Yes.
MS. SASSOON: And what happened to that?
ADAM YEDIDIA: It became worthless.
MS. SASSOON: What was your most recent employment subsequent to resigning from FTX?
ADAM YEDIDIA: I became a teacher.
MS. SASSOON: What have you been teaching?
ADAM YEDIDIA: I taught math at a high school; two——two sections of Geometry, one of Algebra II, one of AP Statistics.
MS. SASSOON: You were asked some questions about things you were aware of around the time that you fixed the bug, including that you knew Alameda was receiving customer deposits. Do you remember that?
ADAM YEDIDIA: Sorry. Could you repeat the question, please.
MS. SASSOON: Yes. You were asked some questions about information you were aware of as an employee at FTX, including that Alameda was receiving customer deposits. Do you recall that?
ADAM YEDIDIA: Yes.
MS. SASSOON: Did anyone ever tell you, prior to November 2022, that Alameda was spending customer money from the North Dimension account on its own expenses and investments?
MS. SASSOON: No further questions.
JUDGE KAPLAN: Thank you.
Any recross?
MR. EVERDELL: No, your Honor.
JUDGE KAPLAN: Thank you. You are excused, Mr. Yedidia. Thank you.
ADAM YEDIDIA: Thank you.
(Witness excused)
JUDGE KAPLAN: Next witness?
(Witness sworn)
COURT CLERK: Thank you. Please be seated.
And if you could please state your name and spell your last name for the record.
ADAM YEDIDIA: Kungyu Matthew Huang. K-U-N-G-Y-U, M-A-T-T-H-E-W, H-U-A-N-G.
JUDGE KAPLAN: All right. You may proceed, Mr. Rehn. KUNGYU MATTHEW HUANG, called as a witness by the Government, having been duly sworn, testified as follows: