NEW YORK - Sam Bankman-Fried's fraud trial has given an unprecedented window into how a group of graduates from elite U.S. universities in their late 20s and early 30s tried, and ultimately failed, to avert one of the biggest and swiftest corporate meltdowns ever.
Prosecutors say Bankman-Fried used customer funds to pay lenders to his Alameda Research hedge fund, and that his false assurances to anxious customers in November 2022 were a critical part of his fraud scheme. Nothing happened at first, testified Caroline Ellison, Alameda's former CEO and Bankman-Fried's on-and-off girlfriend. But on Nov. 6, FTX's chief engineering officer Nishad Singh wrote her and Bankman-Fried on encrypted messaging application Signal to say FTX customers had withdrawn $1.25 billion over the past day.The Massachusetts Institute of Technology graduate testified net withdrawals rarely exceeded $50 million before then.
"I was very concerned that this might spell doom," Singh - who, alongside Wang and Ellison, pleaded guilty to fraud charges and agreed to cooperate with prosecutors - testified. In a message seen by jurors, Bankman-Fried suggested four options: call venture capitalists, send a"confident tweet thread," halt withdrawals, or reduce the values of deposits.
Sun said he was"shocked" when the spreadsheet he received showed FTX was short $7 billion. He sent it to Apollo anyway. He said Bankman-Fried later told him Apollo had asked for a"legal justification" for the missing funds."Sam basically said something like, got it. He was not surprised at all," Sun testified.
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