Day 5 - October 10, 2023
Gary Wang's cross and redirect examined Alameda's balances, special FTX privileges, promissory notes, and cooperation. Caroline Ellison then began direct testimony about customer funds, Bankman-Fried's role in major decisions, and Alameda's investment risks.
Full day summary
1. Gary Wang — Testimony (Part 3)
Gary Wang’s testimony on Day 5 concluded after continued cross-examination, redirect about Alameda’s privileges and balances, and questions from the court and defense about promissory notes and possible investment interests.
Highlights
Gary Wang — Crosstestimony highlightWang agreed that correcting the fiat@ bug produced a positive overall Alameda NAV and initially brought relief, but he qualified that the assets might be illiquid and that later positive-NAV calculations depended heavily on investment valuations.Gary Wang — Cross“I said it was true but misleading.”— Gary WangWang resisted the defense's attempt to characterize his initial assessment of the November 7 assets tweet as simply true.Gary Wang — Crossevidence eventNine promissory notes signed by Wang were admitted. One published note reflected an approximately $35 million obligation, annual interest, Wang's signature, and Caroline's signature for Alameda.Gary Wang — CrossconfrontationThe defense examined Wang's cooperation incentive, establishing five initial proffer sessions, four guilty pleas carrying a stated maximum of 50 years, continued preparation meetings, and his hope for a government sentencing letter.Gary Wang — Redirecttestimony highlightWang rejected market making as the sole explanation for Alameda's special features, attributing approximately $8 billion in withdrawals to them and saying neither those withdrawals nor the $65 billion credit line was necessary for market making.Gary Wang — Redirectevidence eventUsing Government Exhibit 50, Wang identified a negative $2.8 billion balance in Alameda's main account, said excluding a large FTT-holding account made Alameda's balance negative $16 billion, and described a negative $14 billion balance by September 2022.Gary Wang — Redirecttestimony highlightWang said FTX's public statement that its assets were fine was misleading because FTX lacked enough money to satisfy customer withdrawals, then testified that he admitted crimes with Bankman-Fried at his first government meeting before receiving an agreement.Gary Wang — Redirect“Because it was unlike -- regardless of how you define assets, FTX did not have enough money to satisfy customer withdrawals.”— Gary WangWang explained why he regarded the public assurance about FTX's assets as misleading.
2. Caroline Ellison — Direct (Part 1)
Caroline Ellison's Day 5 direct examination addressed Alameda's use of FTX customer funds, Sam Bankman-Fried's authority over major decisions, misleading lender balance sheets, and investments made despite liquidity risks.
Highlights
Caroline Ellison — DirectadmissionEllison admitted committing fraud, conspiracy, and money laundering with Sam, identified FTX customers, FTX investors, and Alameda lenders as the affected groups, and testified that he directed her conduct.Caroline Ellison — Direct“I sent balance sheets to our lenders at the direction of Sam that incorrectly stated the amount of our assets and our liabilities and made Alameda's balance sheet look less risky than it really was.”— Caroline EllisonEllison admitted sending misleading lender balance sheets and attributed the action to Sam's direction.Caroline Ellison — Directtestimony highlightEllison testified that Sam approved using Alameda's FTX line of credit to finance the Binance stake buyback, including approximately $1 billion she identified as customer cryptocurrency.Caroline Ellison — Direct“It showed that at a high level, making $3 billion more of venture investments and funding that with open-term loans would put Alameda in a significantly riskier position and make it much less likely or almost impossible that we would be able to pay off our loans if all of our loans were called at once.”— Caroline EllisonEllison summarized the central conclusion of her contemporaneous risk analysis.Caroline Ellison — Directevidence eventUsing the admitted NAV Minus Sam Coins spreadsheet, Ellison testified that an additional $3 billion in venture investments could leave Alameda unable to meet recalled loans in the modeled downturn even when customer funds were included; she said most loans ultimately remained open term.