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Sam Bankman-Fried will testify in his own defense
What to Expect
👋🏽 Hello everyone, gm gm, WELCOME BACK! Big news coming out of the 500 Pearl Street courthouse this week but first…
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SBF’s Very Bad Month
In our last newsletter, I described Sam Bankman-Fried’s very bad week in court.
With the exception of a few minor points scored here and there, that very bad week has largely become a very bad month as the general consensus remains that SBF’s defense has struggled to find its footing during cross examinations.
With the prosecution’s case likely wrapping up this morning, the question now is: can the defense redeem themselves once they start calling their own witnesses?!
We now have confirmation that one of those witnesses will be Sam himself.
What Will Sam Say?
There are a fair number of facts in this case that are going to be quite hard for Sam to argue against without perjuring himself (though, who knows, breaking the law hasn’t stopped him before 🤷♀️)
Instead, once he does take the stand, we’re likely to see Sam attempt to re-cast many of the stories we’ve heard by other witnesses so far in more favorable, less fraud-y light.
Having sat through all 84 hours of trial so far, here’s one argument I think he might, or perhaps, should make on the stand:
Several witnesses have testified to the fact that Sam was aware of the debt Alameda owed to FTX customers in June of 2022 - based on a series of meetings that occurred at the time.
Nevertheless, testimony goes, he told Caroline Ellison to return money to Alameda’s 3rd party lenders that month - which meant dipping even further into customer funds.
Then 3 months later, in September of 2022, Sam circulated a document suggesting that Alameda be shut down.
There was another meeting and shutting down Alameda was deemed impossible given the - again - many, many billions of dollars Alameda owed to FTX customers.
But this then begs the question: If Sam had been aware of Alameda’s massive debt in June - which he only made worse by telling Caroline to repay 3rd party lenders - why would he have asked his team to consider shutting Alameda down in September?
If he was really aware of and keeping tabs on the fact that Alameda was spending lots and lots of customer money - as these other witnesses say - why would he have ever thought shutting Alameda down might be possible in September 2022?
To be clear, I don’t believe that Sam was unaware that customer money was being used. I believe he was the puppet master pulling the strings on everything. Caroline Ellison testified that Alameda’s use of customer money dates back to the beginning of FTX - before she even became Alameda CEO.
But I do think the above argument could help the defense make the Michael Lewis case - that Sam really is just an absent-minded "kid." Sure, he may have been around when conversations about using customer money were happening. But he wasn’t really paying attention.
If I'm the jury, this isn't enough to exonerate him, but it’s a better argument than those the defense has managed to make so far.
Why is he even testifying?
There was a lot of speculation as to whether or not Sam would testify in his own defense, though the prevailing sentiment for the last 2 weeks (at least among crypto-native reporters) has been “yes” primarily for three reasons:
He didn’t listen to his PR team when they begged him not to talk to every journalist with a pulse after FTX imploded. Why would he listen to his lawyers now? He’s got a deranged risk tolerance + a Holmes-ian arrogance that assumes he’s smarter than everyone in the room.
What has he got to lose?
By any measure, the defense’ case isn’t… going… great. He’s almost certainly facing a prison sentence as it is - how much worse could it really get post-testimony? Maybe it could even help with sentencing.
No one likes to see themselves called a monster and then have to stay silent.
I am no fan of SBF and yet I can admit that he is likely more nuanced than the singularly sociopathic picture that the prosecution have painted over the last 3 weeks.
What Else Should You Know?
There are also three other witnesses defense plans to call to the stand tomorrow, including:
Joseph Pimbley, a financial services consultant, who is expected to testify abut the finances of FTX and Alameda
a Bahamian lawyer who was involved in Mr. Bankman-Fried’s case
an expert on the preservation of corporate records.
The current thinking is that these witnesses might be so quick that we’ll be able to finish all four (the prosecution’s final witness + these three) before the end of the day tomorrow, leaving time to start Sam’s testimony 👀👀
As always, OPJ is putting out content every day court is in session. You can check out our latest video here!