The fifth day of the former crypto mogul’s trial on charges of stealing billions of dollars in FTX customer deposits will kick off with defence lawyers’ cross-examination of Gary Wang, the exchange’s one-time technology chief.
Prosecutors said last week that they planned to call Ellison, the former co-chief executive officer of Bankman-Fried’s Alameda Research hedge fund, to take the stand once Wang finishes his testimony.
Ellison’s highly-anticipated testimony is likely to delve into both Alameda’s business practices and her personal relationship with the 31-year-old former billionaire, whose lawyers are expected to try to undermine her credibility during cross-examination.
Over the summer, Bankman-Fried shared Ellison’s personal writings – in which she described feeling overwhelmed at work and hurt by a recent breakup with Bankman-Fried – with a New York Times reporter. US district judge Lewis Kaplan said that likely amounted to witness-tampering, and on Aug 11 revoked Bankman-Fried’s bail.
The one-time wunderkind is being held at Brooklyn’s Metropolitan Detention Center for the duration of his trial, which could last up to six weeks.
Federal prosecutors in Manhattan say Bankman-Fried siphoned off FTX customer funds to his crypto-focused hedge fund, Alameda, and also used them to buy real estate and donate more than US$100 million to US political candidates to boost his influence in Washington, DC.
Wang and Ellison each pleaded guilty in December 2022 as part of a cooperation agreement with the US attorney’s office in Manhattan. A third former member of Bankman-Fried’s inner circle, ex-FTX engineering chief Nishad Singh, is also expected to testify at trial.
Wang, 30, testified last week that Bankman-Fried knew FTX was in dire financial straits in November 2022 at the time he reassured customers in a now-infamous tweet that the exchange’s assets were “fine.”
Bankman-Fried has pleaded not guilty. In opening statements last Wednesday, his lawyers acknowledged that he “overlooked” key business operations like risk management as FTX grew rapidly, but never intended to steal money.
They also told jurors to question whether cooperating witnesses like Wang and Ellison were putting a new, nefarious spin on old decisions by Bankman-Fried which they had originally agreed with.
Under cross-examination by Bankman-Fried lawyer Christian Everdell on Friday, Wang acknowledged that some of Alameda’s special privileges on FTX – which included the ability to run a negative balance and borrow up to US$65 billion – were implemented to help it provide liquidity on the exchange to help it grow.
Another defence lawyer, Mark Cohen, said in his opening statement last week that Alameda was given those privileges for “reasonable purposes” – part of the defence’s effort to argue that Bankman-Fried took good-faith business decisions that backfired badly, but did not defraud customers.