Ari Redbord, the head of policy and government affairs at TRM Labs, is the head of the blockchain intelligence company globally. The first week in a lengthy criminal trial is often the most important. Jury selection, opening statements and the first few witnesses allow the government and defense to tell their respective theories of the case and gain, or lose, credibility with the jury. With the first week of former FTX CEO Sam Bankman Fried in the books, let's take a look at how this first critical week played out.
After one day of jury selection in which the judge and attorneys ultimately chose 12 New Yorkers including a physician's assistant, a librarian, and a nurse, both sides made opening statements. Opening statements - while not evidence - are a way to tell the story of your case - to lay out themes, evidence and the theories that the jury will hear in the coming days and weeks.
The SBF case's theories crystalized immediately in the SBF trial. The government intends to prove that SBF intentionally defrauded customers by using the money he deposited with them to make risky investments and fund a luxurious lifestyle. The defense, on the other hand, intends to counter with classic Sam was sloppy and careless, but he did not have the requisite criminal intent to defraud investors.
The government's theory of the case is that while investors believed their money was safe for them, like a bank, those funds were actually diverted to a'smaller and secretive company' called Alameda Research and SBF also spent investment funds on 'luxuries' for himself, his friends and family members. The government also told the jury that they would hear evidence that Bankman-Fried used the money to make political donations that allowed him to curry favor with politicians on Capitol Hill.
Bankman-Fried's defense team countered the government's narrative by arguing that the defendant acted in good faith as FTX grew too quickly. While SBF may have been mistaken, he never intended to steal customers' money. The defense argued that he was simply swamped.
Bankman-Fried's lawyer, Mark Cohen, said he did 'act in good faith' and that he didn't defraud anyone. The defense plans to shift blame to Cooperating Witnesses who have already pled guilty, Cohen said. The defense doesn't need to prove that SBF is innocent, just that the government didn't meet its high obligation of proving beyond a reasonable doubt that SBF acted intentionally - with criminal intent - to defraud investors.
The first witnesses: An FTX investor, engineer, and co-founder.
After opening statements, the government called its first witness - a FTX customer who lost $134,000. The first witness in a trial is crucial because that witness is intended to provide a brief glance and engage the jury. The government called Marc-Antoine Julliard commodities trader to tell the story through the eyes of a customer who trusted FTX and SBF public persona even when the exchange was teetering.
Co-founder Gary Wang, a co-founder of FTX who pleaded guilty to conspiracy to defraud FTX customers, took the stand Thursday and admitted that he was in part involved in the historic fraud allowing SBF's hedge fund Alameda Research to withdraw unlimited funds from FTX. Bankman-Fried directed Wang to write code that would allow Alameda's FTX account balance to fall below zero, Wang testified. In the past, Wang testified that Alameda had special privileges at FTX that ultimately allowed the crypto hedge fund to spend $8 billion of FTX customers' money.
The government is to continue the case with arguably its most important witness next week. When the trial resumes on Tuesday, the jury will hear from Caroline Ellison, the ex-chairman of Alameda Research, and Bankman-Fried's on-and-off girlfriend. With Wang's testimony and the critical role of Alameda in the alleged fraud, Ellison's testimony and credibility will be critical. The defense would try to portray Ellison as a puppet of the government who will say anything to save herself.