Sam Bankman-Fried Makes his Case - SBF on Trial Day 14
Oct 28, 2023
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Cryptocurrency entrepreneur Sam Bankman-Fried takes the stand in his trial. Interesting topics include financial numbers and manipulation, accounting efforts and balance sheet discussions, liabilities and marketing concerns, and Sam's fixation with Net Asset Value and miscalculations.
There is a discrepancy between witness testimonies and Sam Bankman-Freed's testimony regarding the manipulation of revenue numbers, raising questions about the legality of the actions and their impact on potential investors.
Witness testimonies and Sam Bankman-Freed's testimony reveal a discrepancy in Sam's knowledge and level of responsibility regarding the large debt owed by Alameda Research, raising questions about his involvement and awareness of the financial situation.
Deep dives
Backdating revenue
In the podcast episode, it is discussed that Sam Bankman Freed, the defendant, allegedly wanted to boost FTX's revenue to reach the one billion dollar mark for 2021. According to witness testimony, he proposed charging for the service of serum staking and backdating transactions to make it appear as though customers had been charged for the service throughout the year. On the other hand, Sam testified that he had calculated the revenue to be over one billion dollars and had discussed it with his colleagues. He believed that the 2021 revenue was accurately calculated, and he did not recall the specific details of the alleged backdating conversation. This discrepancy in testimonies raises questions about the legality of manipulating revenue numbers and its impact on potential investors.
Balance sheet concerns
Another key point discussed in the podcast episode is the issue of balance sheets at FTX and Alameda Research. Witness testimony highlights concerns about a significant debt owed by Alameda to FTX, amounting to around 13 or 14 billion dollars. One witness, Caroline, testified that she sent a balance sheet to Sam with a note expressing her worry about the unfavorable financial situation. Sam, in his testimony, mentioned his general worry about liabilities but emphasized that the net asset value (NAV) was positive. The different versions of this conversation reveal a discrepancy in the level of Sam's awareness of Alameda's debt, with one witness testifying that Sam seemed unsurprised by the debt amount, while Sam's testimony lacks mention of the specific debt number. This discrepancy raises questions about Sam's knowledge and level of responsibility regarding the financial situation at Alameda.
Conversation with Adam Yadditya
The podcast episode discusses a conversation between Sam Bankman Freed and Adam Yadditya, a former senior engineer at FTX. According to Adam's testimony, he raised concerns about Alameda's large debt owed to FTX, to which Sam allegedly responded that they were no longer 'bulletproof' and unsure of when they would be again. Sam's testimony presents a different version, stating that Adam asked about Alameda's risk profile after the market crash, and he expressed general concerns without specific mention of the debt. This contradiction suggests uncertainty around Sam's level of awareness about the debt and the nature of the conversation, raising further questions about his involvement and knowledge of Alameda's financial situation.
Discussion about shutting down Alameda
The podcast episode explores a discussion among FTX executives about the possibility of shutting down Alameda Research. Witness testimonies reveal that Sam circulated a memo suggesting shutting down Alameda, sparking a conversation among the executives. One witness testified about concerns related to a large debt, while another mentioned the amount of 13 billion dollars being borrowed from FTX. Sam's testimony focuses more on a general discussion about liabilities and Alameda's risk profile without specific mention of the debt amount. This disparity in testimonies highlights the contrasting perspectives on the severity of the financial issues at Alameda and Sam's level of awareness regarding the debt.
Sam Bankman-Fried took the stand (officially this time)!! In today's episode I'm breaking down how Sam's version of events compares to what we've heard from the other witnesses so far.
