1.Tareq Morad — Direct/Cross/Redirect
257 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 16, 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: Good morning.
Before we get the jury, one or two things.
As counsel all know, it is quite common to request proposed jury instructions in advance of trial. It was done here. That gave me a chance to consider them and it gave counsel an opportunity to react to one another's proposals. In one of the innumerable letters in which I have been favored, somebody suggested more proposed jury instructions. I think it was the defense.
Any further proposed jury instructions I would like to have by the close of business on Thursday, and any response to them by the close of business the following Tuesday.
My job includes giving instructions that fit the case, regardless of what counsel does or does not request, and I will continue to do my job.
I think we are ready.
JUDGE KAPLAN: How did I guess.
MS. SASSOON: Just quickly, outside the subway this morning I encountered a lost juror or juror who appeared to plainly be turned around and lost, and I did not help her and would appreciate the instruction that the lawyers are not being rude or inconsiderate if they are not allowed to talk to the jury.
JUDGE KAPLAN: I will do that.
Mr. Roos is still up.
MR. ROOS: The other thing, your Honor, is, the second witness today is Nishad Singh.
As your Honor knows, the parties had pretrial briefing on the admissibility of evidence of violation of the Federal Election Campaign Act or campaign finance laws, whether it was direct evidence or 404(b), and I wanted to put on the record that, in advance of Mr. Singh's testimony -- and as your Honor I am sure recalls, Mr. Singh pled guilty to a campaign finance offense or a conspiracy count -- in advance of his testimony we engaged defense counsel on the question of whether we can reach an agreement as to not basically offering his plea to that and then testimony around that; in other words, an agreement that nobody will bring up the campaign -- the violation of the campaign finance law, and they declined.
JUDGE KAPLAN: And therefore you would like me to do what?
MR. ROOS: Nothing. I think it is relevant to the record in terms of the 404(b) issue that was briefed previously, so I just wanted to put this on the record now.
JUDGE KAPLAN: Is there any dispute about the facts, Mr. Cohen?
MR. COHEN: No. We will be asking for a 404(b) limiting instruction at the appropriate time.
JUDGE KAPLAN: OK.
Let's get the jury.
MR. COHEN: Your Honor, before the jury comes in, if we may be heard very quickly at the sidebar.
(Continued on next page)
(At sidebar)
JUDGE KAPLAN: I hope you're aware that I've been advised that people in the gallery can read what's said at the sidebar on the screens on your table.
MR. COHEN: Very quickly, your Honor, just to update the Court on the conversation that we were having, my client advised that he did not receive the extended dose of Adderall this morning.
JUDGE KAPLAN: I last week told you that if there were any problems or questions, you were to be in touch with Mr. Bork in Washington, and your letter said you were trying unsuccessfully to reach somebody else in Brooklyn.
MR. COHEN: We were trying to reach --
JUDGE KAPLAN: The deputy general counsel at the MDC. Maybe it's not surprising you didn't connect.
MR. EVERDELL: Your Honor, that is Mr. Bork who we have been trying to reach. That's the number we have been given for him.
JUDGE KAPLAN: He has got Washington numbers.
MR. EVERDELL: Your Honor, the one I was trying to get in touch with, Ken Bork, gave me the email that I've been using, the BRO email.
JUDGE KAPLAN: I'm misinformed. I have a call in to him too.
One minute. One of you get in touch with Gitner and tell him what's going on.
MS. KUDLA: He has been informed, your Honor, so that process --
JUDGE KAPLAN: He is the head of the criminal division, as you know, and I gather he is overseeing this Bureau of Prisons issue.
(Continued on next page)
(In open court)
JUDGE KAPLAN: Might as well bring in the witness.
MR. RAYMOND: Yes, your Honor. The government calls Tareq Morad.
(Jury present)
JUDGE KAPLAN: The jurors are all present, as is the defendant, as has been the case throughout.
Who don't you recall your witness, for the sake of the record, with the jury present.
MR. RAYMOND: Yes, your Honor.
The government calls Tareq Morad. TAREQ MORAD, called as a witness by the government, having been duly sworn, testified as follows:
JUDGE KAPLAN: You may proceed, Mr. Raymond.
MR. RAYMOND: Thank you, your Honor.
DIRECT EXAMINATION BY MR. RAYMOND:
MR. RAYMOND: Mr. Morad, where do you live?
TAREQ MORAD: I live in Calgary, Alberta, Canada.
MR. RAYMOND: And what do you do for a living.
TAREQ MORAD: I'm a hotel owner and operator.
MR. RAYMOND: Have you ever bought or sold cryptocurrency?
TAREQ MORAD: Yes, I have.
MR. RAYMOND: Did you ever buy or sell cryptocurrency on FTX.com?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: How did you first learn about FTX?
TAREQ MORAD: Primarily through media. I follow cryptocurrency space as a whole and news related to economy, investments, and things like that, and FTX was a very hot topic for quite sometime.
MR. RAYMOND: When did you first learn about FTX?
TAREQ MORAD: I would say around 2019ish, 2019, 2020.
MR. RAYMOND: What did you learn about FTX when you first learned about it?
TAREQ MORAD: FTX was making a lot of headlines for their advancements of the space, their use of good technology and trading platform. They made some efforts towards legislation of the crypto industry. I learned a lot of their -- their CEO was making a lot of headlines at that time, the founder of the company. Just the typical news related to the platform.
MR. RAYMOND: Did you learn who the CEO was?
TAREQ MORAD: Yes, at this.
MR. RAYMOND: Who was it?
TAREQ MORAD: Sam Bankman-Fried.
MR. RAYMOND: From the sources you reviewed, what, if anything, did you learn about Sam Bankman-Fried?
TAREQ MORAD: At the time he was quite revered in the industry. He was revolutionizing it in ways with use of his technology and platform, again, very revered in the space, came highly regarded. He was spoken about through many prominent figures. He did a lot of media, podcasting, interviews, that kind of thing.
MR. RAYMOND: Did you ever follow Mr. Bankman-Fried on Twitter?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: After learning about FTX, did you ever create an account there?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: About when was this?
TAREQ MORAD: Roughly, April 2021.
MR. RAYMOND: Once you opened your account, did you fund it?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: Ms. Cotto, can you publish Government Exhibit 590, which is already in evidence.
MR. RAYMOND: Mr. Morad, do you recognize Government Exhibit 590?
TAREQ MORAD: Yes, I do.
MR. RAYMOND: What is it?
TAREQ MORAD: That is the landing page where it's giving you options of how to fund your FTX account.
MR. RAYMOND: Did you see this when you were on FTX?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: And how did you fund your FTX account?
TAREQ MORAD: I chose the wire transfer method.
MR. RAYMOND: Ms. Cotto, can you take this down and can you pull up Government Exhibit 568, which is already in evidence.
MR. RAYMOND: Mr. Morad, do you recognize Government Exhibit 568?
TAREQ MORAD: Yes, I do.
MR. RAYMOND: What is Government Exhibit 568?
TAREQ MORAD: Those are the instructions on how to send a money wire to FTX, as described on their website.
MR. RAYMOND: Do you see where it says where to send the money beneficiary?
TAREQ MORAD: Yes, I do.
MR. RAYMOND: What entity is listed as the beneficiary named?
TAREQ MORAD: North Dimension Inc.
MR. RAYMOND: Before you reviewed this page, before Mr. Morad, had you ever heard of North Dimension Inc.?
TAREQ MORAD: No, never.
MR. RAYMOND: Did you know whether North Dimension was connected to FTX in any way?
TAREQ MORAD: I did not. I presumed.
MR. RAYMOND: Ms. Cotto, can you pull that down and show the witness what's been marked for identification as Government Exhibit 540.
MR. RAYMOND: Mr. Morad, do you recognize Government Exhibit 540?
TAREQ MORAD: Yes, I do.
MR. RAYMOND: What is it?
TAREQ MORAD: That is a copy of a completed wire transfer that I made from my personal account to FTX.
MR. RAYMOND: Your Honor the government offers Government Exhibit 540.
MR. LISNER: No objection.
JUDGE KAPLAN: Received.
(Government Exhibit 540 received in evidence)
MR. RAYMOND: Your Honor, may we publish it to the jury?
JUDGE KAPLAN: You may.
MR. RAYMOND: Mr. Morad, can you read what bank the destination bank was.
TAREQ MORAD: Yes. I'll just read the whole thing in its entirety. Bank identifier, SIVGUS66. Silvergate Bank, 4250 Executive Square, floor 3, La Jolla, California. Routing code: ABA. Routing number and in the United States.
MR. RAYMOND: Ms. Cotto, can you take this down and can you expand beneficiary.
MR. RAYMOND: Mr. Morad, do you see what the beneficiary listed is? You don't have to read out the address.
TAREQ MORAD: Yes, I do. North Dimension Inc.
MR. RAYMOND: Finally, Ms. Cotto, can you go back and expand correspondent charges.
MR. RAYMOND: Mr. Morad, can you read this section?
TAREQ MORAD: Correspondent charges to be paid by beneficiary. Intermediate bank. Bank identifier: PNBPUS3NNYC. Wells Fargo Bank, NA, 30 Hudson Yards, international operations, New York, New York, United States.
MR. RAYMOND: Ms. Cotto, could you take this part down and take down the document.
MR. RAYMOND: Mr. Morad, after you opened and funded your FTX account, did you trade on FTX?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: What products if any, did you trade on FTX?
TAREQ MORAD: Typically, from U.S. dollar to Bitcoin, Ethereum, and a number of other cryptocurrencies, XRP, Solana, and a few others.
MR. RAYMOND: In total, how much did you fund your account?
TAREQ MORAD: Say roughly about 500,000 U.S. dollars.
MR. RAYMOND: When you funded your account, did you observe the balance on the FTX website?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: Once the funds were there, what, if anything, did you do with them?
TAREQ MORAD: So I would transfer currency, hard currency, to my account, and then I would make transactions from U.S. dollar to the product of choice, coin, or token. So I would trade U.S. dollar to Bitcoin and sometimes Bitcoin to other trading pairs, so just the standard stuff that you do.
MR. RAYMOND: Mr. Morad, did you ever withdraw funds from your FTX account?
TAREQ MORAD: No, I do not believe I did withdraw anything, unfortunately.
MR. RAYMOND: Was the ability to control when you were able to withdraw funds important to you?
TAREQ MORAD: Very much so.
MR. RAYMOND: Why?
TAREQ MORAD: It's my money. I think like a wallet. If you have money in your wallet, you presume you can take it out and use it at any time. I presumed that the balances that were listed there was my money that I had available to withdraw, trade, or do whatever it was of my choice. So I considered it a wallet, like a wallet in your pocket.
MR. RAYMOND: Mr. Morad, were you aware of a program on FTX that allowed customers to lend out their assets?
TAREQ MORAD: No, I wasn't.
MR. RAYMOND: Did you ever agree to any such program?
TAREQ MORAD: No, I didn't.
MR. RAYMOND: When you deposited money into your FTX account, do you expect anyone other than yourself would use your funds?
TAREQ MORAD: No, I did not.
MR. RAYMOND: Did you expect that anyone would borrow or lend out your money?
TAREQ MORAD: No, I did not.
MR. RAYMOND: What did you understand FTX was doing with the funds you had transferred to the --
TAREQ MORAD: Holding it for me, for the ability to use as I wished, whether that was to trade or withdraw or buy.
MR. RAYMOND: If FTX was borrowing your deposits, would you have considered that important information to know?
TAREQ MORAD: Yes, definitely.
MR. RAYMOND: Why?
TAREQ MORAD: That would be a different level of exposure, and I think that it would just be my rights to know if someone was using my money for anything other than what I was aware of. So that would be very, very important to know.
MR. RAYMOND: Mr. Morad, between when you opened your FTX account in 2021 and October 2022, did you see anything else about FTX in the news?
TAREQ MORAD: Lots. FTX was all over the news in the entire period, yes.
MR. RAYMOND: Did you see anything else about Mr. Bankman-Fried?
TAREQ MORAD: Yes. A lot. He was on the cover of magazines, again very prominent in the space. If you read about crypto or you are following it, it's his name often appeared.
MR. RAYMOND: Ms. Cotto, can you publish Government Exhibit 1471, which is already in evidence.
MR. RAYMOND: Mr. Morad, do you recognize this?
TAREQ MORAD: Yes, I do.
MR. RAYMOND: What is it?
TAREQ MORAD: That is Forbes magazine with Sam Bankman-Fried on the cover.
MR. RAYMOND: What, if anything, did you conclude about FTX after you saw this cover?
TAREQ MORAD: This cover and many other things led me to believe, as many others did, much more prominent figures in the space than myself.
MR. EVERDELL: Objection, your Honor. Getting into hearsay.
JUDGE KAPLAN: Yes. The question is, what did you conclude? Let's focus on what you concluded after you saw the cover.
TAREQ MORAD: Sure.
I concluded that Mr. Bankman-Fried, a very successful legitimate businessman and entrepreneur revolutionizing the cryptocurrency space.
MR. RAYMOND: Mr. Morad, I would like to turn your attention to November 2022. About how much in U.S. dollar denomination did you have on FTX as of November 1, 2022?
TAREQ MORAD: It would have to be in the range of about 250 to $280,000.
MR. RAYMOND: Did there come a point in November 2022 when you learned that FTX was receiving increased customer withdrawal requests?
TAREQ MORAD: Yes.
MR. RAYMOND: How did you learn that?
TAREQ MORAD: Again, through the media that I followed, YouTube primarily. Just tweets that they have been experiencing increased withdrawals due to -- I believe at that time they said it was balance sheet information that became public and people were a little bit worried about their ability to access all their funds and that they were experiencing -- that many people were withdrawing funds from the platform.
MR. RAYMOND: Were you following Mr. Bankman-Fried's Twitter feed at this point in time?
TAREQ MORAD: Yes, I was.
MR. RAYMOND: And do you recall reading any tweets Mr. Bankman-Fried posted to Twitter around that time?
TAREQ MORAD: Yes, I do.
MR. RAYMOND: Do you recall what they said?
TAREQ MORAD: One in specific was not to worry, all the funds were there and all withdrawals would be covered by FTX.
MR. RAYMOND: What, if anything, did you conclude after reviewing that tweet and others like it by Mr. Bankman-Fried?
TAREQ MORAD: I was very relieved, happy to hear from the leader of the company to know and reassuring and knowing that the money was there and it was just rumors.
MR. RAYMOND: Right after you saw that tweet, did you try and withdraw funds from FTX?
TAREQ MORAD: No, I did not.
MR. RAYMOND: Did there later come a time where you did try to withdraw your funds from FTX?
TAREQ MORAD: Yes. The following day.
MR. RAYMOND: Were you able to successfully withdraw your funds when you tried?
TAREQ MORAD: No. It did not process or go through.
MR. RAYMOND: Ms. Cotto, can you show for the witness what's been marked for identification as Government Exhibit 539.
MR. RAYMOND: Mr. Morad, do you recognize Government Exhibit 539?
TAREQ MORAD: Yes, I do.
MR. RAYMOND: What is it?
TAREQ MORAD: That is a screenshot I took at one time -- I put the date there myself, November 10, 2022 at 1:19 p.m. It was when I came across that banner across the top there. I wanted to make sure that I had evidence or proof that I did have money on the platform in case it wasn't functioning anymore or whichever. It was a screenshot I took.
MR. RAYMOND: Your Honor, the government offers Government Exhibit 539.
MR. LISNER: No objection to the document, except we would request to redact the material that Mr. Morad added to the document, which is the date in red.
MR. RAYMOND: Your Honor, I don't know the basis for that. The witness has explained the source of it.
JUDGE KAPLAN: The request is denied. The document is received in evidence.
(Government Exhibit 539 received in evidence)
MR. RAYMOND: Ms. Cotto, can you publish. Thank you.
MR. RAYMOND: Mr. Morad, was this after you had attempted to withdraw your funds?
TAREQ MORAD: Yes, it is.
MR. RAYMOND: And can you describe how much funds in U.S. dollar denominated were in your account as of that day?
TAREQ MORAD: $257,948.53.
MR. RAYMOND: Ms. Cotto, can you go to the second page of this document.
MR. RAYMOND: Mr. Morad, did you have holdings in Bitcoin on FTX at that time?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: Did you have holdings in Ethereum at that time?
TAREQ MORAD: Yes, I did.
MR. RAYMOND: Mr. Morad, since November 10, 2022, have you been able to withdraw the funds from FTX?
TAREQ MORAD: No, I haven't.
MR. RAYMOND: No further questions, your Honor.
JUDGE KAPLAN: Thank you.
Cross-examination.
CROSS-EXAMINATION BY MR. LISNER:
MR. LISNER: Good afternoon, Mr. Morad.
TAREQ MORAD: Good morning.
MR. LISNER: Just a few questions and a couple of clarifications.
You were located in Canada when you opened your FTX account?
TAREQ MORAD: Yes, I was.
MR. LISNER: And you always accessed it from outside of the U.S.?
TAREQ MORAD: Yes, I did.
MR. LISNER: Before you began using FTX, you had accounts on other crypto exchanges, correct?
TAREQ MORAD: That is correct.
MR. LISNER: Do you recall what exchanges those were?
TAREQ MORAD: Binance, Coinsquare, Bittrex. I believe I had an account open with Poloniex. So I had a number of different platforms that I was using prior.
MR. LISNER: Is it fair to say that you opened your FTX account because FTX offered additional products and cryptocurrencies that weren't available on those exchanges?
TAREQ MORAD: Yes, that's one of the reasons, yes.
MR. LISNER: Now, you testified that you never sought to withdraw funds prior to November. Have you ever heard of anyone else being unable to withdraw funds prior to November 2022?
MR. RAYMOND: Objection, your Honor.
JUDGE KAPLAN: I am not sure I understand the question.
What's the objection?
MR. RAYMOND: Hearsay for one, your Honor.
JUDGE KAPLAN: Sustained.
MR. LISNER: One clarification. You mentioned that, I believe, you deposited approximately 500,000 in U.S. dollars, never made any withdrawals and, at the end, in November, you had approximately 257,000 left, correct?
TAREQ MORAD: Correct.
MR. LISNER: Was the decline from 500 to 250, was that the result of the market decline?
TAREQ MORAD: Yes, it was.
MR. LISNER: You never read FTX's terms of service, true?
TAREQ MORAD: True.
MR. LISNER: And you testified that you expected FTX would maintain your assets on the exchange without lending them out, is that right?
TAREQ MORAD: Yes, that is correct.
MR. LISNER: And that understanding wasn't based on anything that you have heard or read from FTX, true?
TAREQ MORAD: I can't say that's -- how that understanding developed, I am not sure.
MR. LISNER: Sitting here today, you can't recall any statement?
TAREQ MORAD: The statement that was on Twitter the day of, that all withdrawals would be covered, so that is primarily meaning that your money is there. So I am just trying to think if prior to that I heard anything. But that would led me to conclude, for one, that the money was there that I deposited.
MR. LISNER: So other than that statement, you can't recall anything?
TAREQ MORAD: Not particularly, no.
MR. LISNER: You have never had contact with Mr. Bankman-Fried, correct?
TAREQ MORAD: No, I have not.
MR. LISNER: No further questions.
JUDGE KAPLAN: Anything else, Mr. Raymond?
MR. RAYMOND: No further questions, your Honor.
JUDGE KAPLAN: I have one or two.
Were the terms of service ever provided to you by FTX or anybody else?
TAREQ MORAD: When you open your account, I believe, like anything, any website, you can agree to the terms of service but they are not there, so you have to click, I believe, to read them, to the best of my recollection.
JUDGE KAPLAN: Did you click to read them?
TAREQ MORAD: No, I did not.
JUDGE KAPLAN: Did you click even to see how long they were?
TAREQ MORAD: No, I did not.
JUDGE KAPLAN: Thank you.
Any other questions in light of mine?
MR. RAYMOND: Your Honor, can I just ask very briefly one more question?
JUDGE KAPLAN: Yes.
REDIRECT EXAMINATION BY MR. RAYMOND:
MR. RAYMOND: Mr. Morad, following up on what Judge Kaplan asked, do you recall when you were asked to look at the terms of service or when you were provided the opportunity to look at the terms of service?
TAREQ MORAD: I believe when I signed up to open the account.
MR. RAYMOND: And that was, I think you testified, in about March or April 2021?
TAREQ MORAD: As close as I recall, March, 31, April 1ish, 2021.
MR. RAYMOND: No further questions, your Honor.
JUDGE KAPLAN: Thank you, Mr. Raymond.
Mr. Lisner.
MR. LISNER: Nothing from the defense, your Honor.
JUDGE KAPLAN: Thank you.
You are excused. Thank you.
(Witness excused)
JUDGE KAPLAN: Next witness, please.
MR. ROOS: Thank you, your Honor. The government calls Nishad Singh. NISHAD SINGH, called as a witness by the government, having been duly sworn, testified as follows:
JUDGE KAPLAN: You may proceed, Mr. Roos.