“The case has turned out to be not only as strong as it was expected to be but, if anything, stronger,” stated Samuel Buell, a former federal prosecutor and a legislation professor at Duke University. “Defense lawyers can’t make strong evidence go away. I don’t know where they go from here.”
The trial, anticipated to run for six weeks, is simply getting into its third week. Defense attorneys have but to name their very own witnesses, a roster that would embody Bankman-Fried himself. The former government has pleaded not responsible to seven counts, together with wire fraud and conspiracy to commit cash laundering.
Bankman-Fried’s protection crew signaled of their opening assertion they’d search to current him to jurors as a well-intentioned entrepreneur whose enterprise grew extra shortly than his capacity to adequately guard towards the dangers to it.
But prosecutors could have already succeeded in convincing jurors Bankman-Fried was a manipulative swindler and bully who ordered his high deputies to hold out one of many largest monetary frauds in historical past, specialists stated.
Government attorneys are actually questioning the final of the three key witnesses who as soon as fashioned Bankman-Fried’s tightknit social {and professional} internal circle earlier than pleading responsible to crimes they are saying he directed. Prosecutors’ case arguably culminated with testimony final week from Caroline Ellison, the defendant’s sometimes-girlfriend and the chief government of his crypto hedge fund, Alameda Research.
Ellison spent hours on the witness stand strolling the courtroom by means of the rise and fall of FTX, Bankman-Fried’s crypto buying and selling platform, because the hedge fund borrowed more and more large sums of FTX buyer funds at his path.
In at instances emotional testimony, the MIT-trained mathematician stated Bankman-Fried gave her an moral framework that justified mendacity to prospects and buyers, together with by falsifying stability sheets. She described the “overwhelming feeling of relief” she felt when the fraud was uncovered and the enterprise collapsed as a result of she “didn’t have to lie anymore.”
Prosecutors backed up her account with documentary proof, together with a recording of her discuss to Alameda staff final November as FTX turned bancrupt during which she tearfully admitted to tapping FTX buyer funds at Bankman-Fried’s instruction.
For their half, Bankman-Fried’s crew appeared to battle to reply throughout their cross-examination, though lead protection legal professional Mark Cohen, who additionally represented convicted intercourse trafficker Ghislaine Maxwell, did notch some minor victories: Ellison acknowledged at one level that Bankman-Fried was unaware that some legacy FTX prospects continued wiring funds to Alameda-controlled financial institution accounts even after the trade arrange its personal accounts to deal with their cash — suggesting Bankman-Fried was not calling the entire photographs at Alameda.
But the protection didn’t discredit Ellison or the thrust of her testimony. “It’s very difficult for the defense when you have a witness in the inner circle who has completely embraced that they have been involved with wrongdoing,” stated Jordan Estes, a former federal prosecutor for the U.S. legal professional’s workplace for Southern District of New York, which is prosecuting the case.
Rebecca Mermelstein, one other former prosecutor for the Southern District, stated of the protection there may be “no question they’re having a really hard time.”
In addition to the sheer weight of the proof the prosecution has gathered, Bankman-Fried’s attorneys have additionally grappled with unfavorable rulings from Judge Lewis A. Kaplan, she added.
Before the trial started, Kaplan granted a request by prosecutors to dam the seven witnesses that Bankman-Fried’s crew needed to name. They included a British barrister who was set to testify that FTX’s phrases of service didn’t prohibit the corporate’s management from tapping buyer funds.
Cohen wrote to Kaplan final week asking him to revisit that ruling, arguing the matter goes to the guts of Bankman-Fried’s protection. “A key element of the defense is that no theft occurred. Theft requires the wrongful taking of property,” he wrote.
Yet Kaplan already has signaled he isn’t inclined to permit the protection to push that argument. In the primary week of the trial, he advised attorneys to look into the “buried facts doctrine,” which holds that it may be deceptive to bury necessary data in a prolonged disclosure. “I was very surprised by that,” Mermelstein stated. “Judges don’t usually offer strategic suggestions to the parties.”
Kaplan has in any other case stored protection attorneys on a brief leash, steadily remonstrating them for repetitive questioning. Daniel Silva, a former federal prosecutor centered on monetary crimes, stated the protection’s technique in asking questions already lined by prosecutors was not clear.
The protection attorneys could also be looking for to tug out the method to present Bankman-Fried, who has been imprisoned in a Brooklyn jail since Kaplan revoked his bail in August, extra time to digest the prosecution’s proof, Silva stated. That may grow to be consequential towards the top of the trial, when the Bankman-Fried has to make the high-stakes choice whether or not to testify himself.
Indeed, the decision on whether or not Bankman-Fried takes the stand might be an all-or-nothing gamble. “It’s very hard if the prosecution has a strong case to do nothing,” Estes stated, including the defendant could face a must “shake it up to change the game.”
But taking the stand would additionally expose Bankman-Fried to cross-examination by prosecutors. “That will be really, really tough to get through unscathed, when he’s on the stand and contradicting a whole ton of evidence that the government has already presented,” stated Buell, who served because the lead prosecutor for the Justice Department’s Enron Task Force. “It’s very rare that a defendant can turn a case around from the witness stand.”
Buell identified one other issue that would favor the prosecution: The trial has turned out to be easy, regardless of the complexity of crypto. “It’s a straightforward fraud case: Did he take the money? Did he lie about it? Did he know he was lying about it?”
Eli Tan contributed to this report.