Second day of Sam Bankman-Fried trial begins with defense

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Second day of Sam Bankman-Fried trial begins with defense

The second day of Sam Bankman-Fried trial began with the continued jury selection procedure, which was completed within a few hours, allowing the trial to start in full, with both the prosecution and the defense presenting their opening arguments.

Central to the prosecution's argument were accusations that he gave misleading assurances to FTX customers, investors, and lenders about the security of their assets - all while using Alameda to misappropriate funds and curry favor with politicians in Washington, D.C.

Bankman-Fried's defense effectively depicted Bankman-Fried as a young, enterprising individual who made numerous bad business decisions that eventually did not pan out despite his best intentions. SBF lawyers vehemently denied allegations of covert transactions between FTX and Alameda or any schemes designed to defraud customers.

The defense contends that every transaction was transparent and legitimate, particularly during the turbulent times of the crypto market downturn and the fall of FTX in November 2022.

The defense also highlighted the role of Binance in the chain of events leading to FTX's financial collapse. The lawyers argued that SBF believed FTX's lending funds to Alameda was a legitimate business transaction with the market maker and dismissed any possibility of clandestine dealings between the two companies.

Three key individuals, Caroline Ellison, Gary Wang, and Nishad Singh, were mentioned as possible witnesses who could provide insider information regarding SBF's involvement in FTX's operations and the alleged infractions, as all three held executive leadership positions within the company.

The defense sought to question the credibility of all three witnesses because of their cooperation agreement with the government, which requires them to testify against SBF.

The defense argued that FTX clients, especially those engaged in margin trading, were well-informed about the potential risks. The lawyers highlighted that there was no theft and added that leading a company into bankruptcy is not a crime.

The jury listened to testimony from two witnesses - a former FTX client, Mark Julliard, and Adam Yedidia, who had a professional relationship with SBF.

Julliard, a French trader, testified about his choice to trust FTX with his assets, particularly four Bitcoins amounting to roughly $100,000 as of press time. He attributed his faith in FTX to its advertising campaigns and the support of well-known venture capital firms.

He believed that these VC firms had conducted due diligence on FTX. During cross-examination, prosecutors said Julliard used FTX solely for spot trading and wasn't aware that the exchange was utilizing client funds for trading with Alameda Research.

Yedidia, who had personal and professional connections to SBF, provided insightful insights into his tenure at Alameda and FTX. Bankman-Fried, whom Yedidia met at MIT, described his education, which he learned at the University of California, where he first encountered Bankman-Fried.

He worked briefly at Alameda in 2017 and later joined FTX in 2021. FTX had him living in the Bahamas on FTX's $30 million property. Prosecutors presented old ads on FTX during Yedidia's testimony to indicate the platform's emphasis on being a trusting crypto investment avenue, showcasing collaborations with celebrities like Tom Brady and Larry David.

The jury in the trial of ex-FTX CEO Sam Bankman-Fried was finalized on Oct. 4, with the opening statements scheduled for later this day.

Inner City Press, a New York-based independent news source, revealed in the courtroom that 12 primary jurors and six alternates were confirmed on the second day of the trial.

A thorough screening was conducted to identify possible biases or conflicts of interest among the candidates. The diversity of the potential jurors' backgrounds and professions underscored the case's widespread societal impacts, indicating a broad scope of the investigation.

Bankman-Fried can't use uncertain U.S. crypto regulations as a defense, he said.

The Department of Justice in a letter sent to judge Lewis Kaplan said that SBF cannot use the unreliable regulatory landscape in the U.S. as a defense in his trial.

The DOJ emphasised that the real violations were traced to the misappropriation of customer assets. It also mentioned that the existence or absence of specific regulations doesn't negate potential fraudulent activities or misleading statements to customers.