
Kaplan's displeasure with the defense team highlights the difficulties they face when mounting their two-pronged campaign to secure a 'not guilty' verdict from the jury. First, they must use cross-examination to undermine government witnesses' credibility in jurors' eyes. Second, they must inject Sam's most favorable facts into the court record by asking witnesses questions that don't get shot down at a cringe-worthy frequency.
Yedidia had been called to testify about a FTX accounting software bug that caused it to overstate how much Alameda Research owed exchange customers: $16 billion instead of the real debt, which was half of it. Even 8 billion dollars missing from customers' accounts was a big problem, too.
A different opinion was offered by the defense. In its opening arguments, lawyers characterized Alameda's banking relationship with FTX as no secret and its loss of customer money as nothing criminal - though perhaps really, really dumb. They want to get that line across to the jury.
Sam's lawyers seem to be injecting that effort into their cross-examination, where they've been asking witnesses questions whose answer they want to be yes. This included questions about who could use FTX as an exchange, how hard people were working and whether the witness thought that FTX was very well run.
The FTX co-founder and former chief technology officer Gary Wang has already taken the stand, getting in about 40 minutes or so of testimony at the end of the day Thursday. He's probably going to spend quite a bit more time on Friday discussing his role in overseeing FTX, and more specifically the backdoor that allowed Alameda to access FTX customer funds.
While the judge is evidently not happy with how the defense has been conducting so far, the real question is how will the jury take it. Even if the judge stayed its opposition to several defense questions, the fact that defense lawyers raised questions hinting at issues with witnesses' credibility may leave a lasting impression.
Similarly, the fact that Yedidia - the former FTX developer - said he lost his faith in the company because is probably going to leave an emotional mark that may be difficult to overcome, even if the defense and judge immediately asked to strike the line from the record.
We are seeing the DOJ's strategy continue to play out, and again, it seems almost laser-focused on this emotional appeal. We heard from Matt Huang, who admittedly may not be a super-sympathetic figure, as a fairly well-off venture capitalist, who said his firm marked down $278 million of investments in FTX to zero.