SBF’s Lawyers Could Be Annoying the Judge. How Might That Impact the Trial? - Ep. 554
Oct 9, 2023
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Join legal experts Sam Enzer, a partner specializing in cryptocurrency law, and Brian Klein from Waymaker, as they dive into the high-stakes criminal trial of FTX’s Sam Bankman-Fried. They discuss the prosecution's strategic advantage with compelling testimonies and explore how jury dynamics could sway the outcome. The pair debate the defense's challenges, particularly around witness credibility and the implications of their strategies. Expect insights into the intricate legal maneuvers and the potential ripple effects on the crypto landscape.
FTX coded special privileges for Alameda Research, contradicting transparency and misleading customers.
Disconnect between FTX's actions and investors' expectations in terms of governance controls and transparency.
Witness testimonies linking Sam Bankman-Fried to intentional deception challenge defense's argument of lack of knowledge or intent.
Deep dives
The Prosecution's Case: Coding Special Privileges
During the trial, the prosecution presented evidence showing that FTX coded special privileges for Alameda Research, allowing them to have a negative balance and access unlimited funds. They showcased screenshots of GitHub commits, demonstrating that these privileges were actively implemented. Additionally, a tweet from Sam Bankman-Fried was shown, where he stated that Alameda would be treated like any other user on FTX. This contradicted the coding of special privileges and raised questions about transparency and misleading customers.
Investor Expectations and Collateral Security
Testimony from insiders highlighted the expectations of investors, including the belief that there would be no preferential treatment. Paradigm, for example, invested based on the understanding that Alameda's special privileges would not exist. The lack of governance controls and transparency, along with the increasing size of the line of credit, raised concerns about value leakage and potential fraud. These factors suggest a disconnect between the actions of FTX and the expectations of investors.
Damning Testimony and Admission of Crimes by Insiders
Witnesses like Adam Yadidya and Gary Wang provided testimony linking Sam Bankman-Fried to fraudulent activities. Yadidya revealed conversations where Bankman-Fried knew about the lack of assets at FTX and made false statements to customers. Meanwhile, Gary Wang admitted to committing financial crimes with Bankman-Fried, highlighting Alameda's ability to withdraw unlimited funds from the platform. The testimonies painted a picture of intentional deception, challenging the defense's argument of lack of intent or knowledge.
Credibility and Emotional Impact on Jury
The credibility of the witnesses played a significant role in the trial. Adam Yadidya's honest and thoughtful demeanor resonated with the jury, while Gary Wang's admission of guilt and cooperation with the prosecution added weight to his testimony. Key moments, such as screenshots of GitHub commits and tweets contradicting Sam Bankman-Fried's statements, had an emotional impact on the jury. The prosecution strategically leveraged these moments to establish a pattern of deceptive practices and build their case against Bankman-Fried.
Judge Kaplan's frustration with the defense
Judge Kaplan has expressed irritation with the defense during the trial. He has repeatedly asked them to stop asking repetitive questions that have already been covered. The defense's questioning has been seen as unnecessary and potentially wasting time. Judge Kaplan expects the trial to run efficiently and has shown impatience with the defense's approach. While the defense may be trying to humanize Sam Bankman-Fried and take the sting out of bad testimony, their strategy has not been well received by the judge.
Impact on jury perception and defense credibility
The sustained objections against the defense and the repetitiveness of their questions may impact the jury's perception of the defense and Sam Bankman-Fried. When objections are continuously sustained, it suggests that the defense is asking improper or irrelevant questions. This can undermine the defense's credibility and affect the jury's trust in them. In a long trial like this, building rapport with the jury is crucial, and the defense's repetitive and objectionable questioning may harm their likability and hinder their ability to make persuasive arguments during closing.
The first week of the criminal trial of former FTX CEO Sam Bankman-Fried has come to a close, with his former friends and FTX colleagues Adam Yedidia and Gary Wang delivering powerful testimonies that are forming the foundations for the prosecution’s arguments — arguments that the defense may have a difficult time surmounting. Sam Enzer, partner at Cahill Gordon & Reindel, and Brian Klein, partner at Waymaker, discuss Alameda’s special privileges coded into the FTX software, the reason why a scorched FTX customer may have been chosen as the first witness, and why upcoming key witnesses are going to be a “real problem” for the defense.
