SBF Trial: Week 1 Unpacked | Roundup

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toku welcome back everyone to Empire we have a very special guest which she has been in the Pod but this was pre you know before my time it's been a while but Casey it's great to have you back uh hi thank you so much for having me so for introductions tell us what you do with block Works CU yeah definitely um I'm a senior reporter I cover policy and regulation which which is really not an interesting topic in crypto at all not at all I was gonna say for the first year there was nothing to write about for the last year and a half there's been a ton to write about um so yeah it's been a lot of fun um it's definitely a contentious area of the industry um everyone wants to go on record saying that they welcome

regulation and we'll see how it all plays out that's awesome um well I hear you've been camping out in the sou District of New York uh as of this week uh so tell us what's going on there yeah um so I'm based in Manhattan Sam bankman Freed's trial is happening in the southern district of New York which is downtown it's actually down the street from Trump's New York Supreme Court trial so the security has been absolutely insane so much press in the entire area it's pretty wild um but I am there for Sam's trial it started on Tuesday day um I've gotten there before 6:00 a.m. every morning I think the first morning I showed up a little before 4:30 and I was not the first

person in line so that kind of shows you what the interest has been and um you know people from the general public and also media trying to get in and see what's going on that's a wild so so what's getting more attention to Trump or the SBF trial I would say in terms of so the media camps out um they have and by media I mean like the news trucks with the cameras and the crews and they have these big tents um so they can camp out across the street there's like barriers on how close they can get um to try to get photos in Trump's case of trump walking through um but the attorneys and everything in Sam's trial because he's currently in custody when he comes to court every day from Brooklyn where he's in jail they

transport him underground so he doesn't actually walk past the photographers but Trump does so in terms of the media camp out I would say Trump definitely has more interest there just because you'll actually see him but on the Sam side there there are a lot of cameras there's a ton of people um just trying to get photos of his attorneys or any witnesses that might walk by and they're actually they're selling for like $500 each so if anyone has some free time and wants to head down to F ey then maybe idea okay well um well let's start like so who's actually um showing up um is it mostly crypto reporters crypto Media or is it just the full gamut like yeah it's a good question um I would say mostly crypto but there are a lot of mainstream

Outlets too um Bloomberg The Wall Street Journal the New York Times the New York Times actually flew someone here from California okay to cover the trial they're staying here for a few weeks um monitoring everything and uh there's a few other Publications The Verge wired um it's this intersection of tech um White Collar crime finance and crypto so it is kind of fun to see some different beats converge um and they're also just some general court reporters people that just cover crime in the southern district so it's it's a fun little mix for sure got it and so basically you have to get there like at 4 5 in the morning 6 in the morning to be actually because they limit the number of people that can go

into the courtroom yes um so like I said I got there little before 4:30 on Tuesday and I think I was like third in line I wasn't even first which pretty wild um but yeah it's all first come first serve basis you line up you go through security you're not allowed to bring unless you're an attorney or um a clerk or something you're not allowed to bring a cell phone or any Electronics so like airpods computer charger computer anything it all has to get checked in through security um and then you wait in line until a marshall tells you where to go the actual courtroom um it kind of surprised me it's not that big and there are a lot of reserved seats um for Council for defendants family Sam's mom

is there with a few people that have been sitting with her every day I don't know exactly who they are um but these are all seats that are reserved that media cannot sit in and the public cannot sit in so it is it's pretty Limited in terms of how many seats there actually are for the public got it so let's um I mean I'd love for this episode to be really just a recap of everything that's been going on this week as I understand there was um you know the um there the what is it the panel got selected this week including jury yeah the jury including like I think there's one from Insight Partners which is an investor but she wasn't part of the deal team which I and she said there's no conflict which I find bizarre yeah she was actually dismissed um which

is good um yeah okay good yeah but there so I saw the whole selection process that's what started on Tuesday um I've never been called for jury duty but those who have know that it's not a super fun process everyone was trying to get out of it um so what they do for these massive cases that are a little bit more public uh there's been a ton of media coverage they're expecting it to last six weeks um that's not a typical case for a typical jury so they do bring in a pretty big pool because they know that so many people will have to be weeded out um so they do it in batches about 50 at a time the judge will go through and ask a question a series of questions that the prosecution and the defense

have agreed to um and this is everything from like what do you do for work to have you ever invested in crypto um they even asked if people had seen that 60 Minute story that aired last Sunday the Michael Lewis book A lot of people had seen it so that was something that I assume the defense wanted to know about um they ask about knowledge of crypto all sorts of stuff just to kind of weed out people each side gets a set number of vetos for no reason so they can just say I do not want number five and that's that's fine um obviously they can't do that for everyone right so it's kind of a back and forth process some people um immediately get out if you know there's

a medical condition sometimes they you know have child care there's all sorts of reasons that people can tell the judge about and the judge will determine whether or not they're dismissed based on that reason um someone said that she has two toddlers and she can't get child care or someone lived I don't know like a three-hour commute or something that was just going to be completely unfeasible for her to come for six weeks um was there a common denominator of things that would immediately well not immediately but would dismiss you or people that yeah yeah that's a good question um one person stood up and said I I think the question was about conflicts so I think he stood up to say

that he had travel booked at some point in November which the trial is expected to go around until um Thanksgiving so he said that he might not be here and then he he added that he doesn't know a lot about crypto but everything he's heard since he learned about it has been bad and he doesn't like crypto so that kind of immediately got him out um two people actually mentioned Bernie maid off kind of just off-handed um like I don't know anything about this case but I know about Bernie maid off and I know people are comparing Sam to him so that's the bias that I'm walking into this situation with they were immediately kicked off um not V just just the judge dismissed yes well actually we don't really know um a lot of this happens in sidebar some

of it will get published with the transcripts but um not all of it is is said report yeah and you and you can't uh you don't know who who's being vetoed versus who's being just dismissed by the judge well we know who will not come back for like the next round I guess right yeah but you don't know if it was vetoed by by the defend exactly yeah we don't know we can assume and there are cases where the judge does it retroactively got it um what else and so that that was jury selection has already been established like they already found yes so that took all day Tuesday and then most of the morning on Wednesday um yeah one one potential juror actually

was married to someone that represents FTX in the bankruptcy lawsuit ironically so they were dismissed um but of the jury we're left with so there's 18 total it's 12 that sit on the jury and then six alternates there are nine women and three men um of the 12 um it's a lot of diversity there's a pretty diverse range of Education too it goes all the way from high school to uh I believe there's a few Masters someone has a Nursing degree a couple nursing degrees actually um there's a librarian there is a special education teacher there is one former Banker so

that's I believe the only kind of financial connection um all different ages I think it goes from like 22 to 70 something yeah presumably if you had used FDX FDX Us in this case like you would have been dismissed yes absolutely because if then you're a creditor and like so yeah so those were all kind of part of those general questions um at the very beginning when it was a pool of like a hundred people they asked everyone if anyone had ever invested in crypto I think like people Rose their hands and out of yeah not a lot folks we're still early we are very early very early gosh three out of 100 and they they were not necessarily the most Savvy because the

judge then asked if they had made or lost money and every single one had lost money so gosh need some more trading advice yeah okay um and uh so I mean my understanding in all this is really just based off of suits of what happens in these cour rooms assume it's like more boring than Harvey showing I gave myself a little mini law degree in the month leading up to this trial so okay so this was your first time actually going into one of these it was my first time covering a trial in person yeah okay we've covered the Ripple suits we've done other legal stuff but actually in the courtroom yeah yeah but this is Criminal right and the other ones civil yeah yes um so the jury was selected any

highlights uh I mean of course you mentioned the diversity of the panel and whatnot but as a as I like an aside like during all this process I mean people should remember that the the reason I think uh SPF was put into custody is because he was trying to do like witness tampering meaning like reaching out to FTX employees that he thought were like you know being put into winess protection and whatnot yes um you know look it's a very high-profile case but out of curiosity how how like how are the the jurors like protected from being bribe being reached out to I mean I'm I'm curious if you know how that works yeah yeah that's a good question um in some cases they're sequestered in this case they're not um they are given very strict instructions

from the judge um not to consume any media they're not allowed to read any books podcasts news anything relating to the trial which I'm sure is pretty difficult I mean if you turn on the local news in New York City right now like people are talking about it um you got to imagine these people are like Googling like I mean like and then like the way the algorithm Works guys is you're going to be so like yeah today's also there they're not allowed to speak to anyone about it so like if if you come home from jury duty to your wife you can't tell her what you you're not supposed to tell her what you did all day which in my head just seems difficult and also unlikely I feel like they have to I'm not really curious that if divorce rates go up for people that

have been selected yeah that that is another question um they ask every potential juror who they live with and if they have children so some people live with spouses some people live with boyfriends or roommates um and that's all part of it too okay it's funny it's funny the stuff that they consider and to kind of try to imagine what the prosecution's thinking like who might be someone that would really find Sam guilty or on the defense side who they think would be more sympathetic um there's a lot of psychology that goes into it yeah definitely um okay well okay so so that happened and and and from there what has been going on I guess so then it is opening statements which is I would say closer to like the TV version of a courtroom drama um this

is it's not evidence so nothing they say the jury can take is fact but they can say whatever they want and they can pretty much speak as long as they want um the prosecution I think went for about 25 minutes the defense was a little bit longer maybe like 35 minutes um prosecution goes first so in a criminal case the prosecution the government they are the one that have the burden of proof so they have to present the case Beyond A Reasonable Doubt to the jury the defense legally doesn't have to do anything they don't have to present a case they don't have to cross-examine they don't have to do anything so the government starts their opening statement was pretty on message with what I think most of us would have

expected um you know they said the word stole a lot they kept saying that Sam stole billions of dollars from thousands of people mentioned um a quote lavish lifestyle that he used all this money to fund his celebrity friends and Pen houses and beachfront properties and everything that he was doing um yes folks he was not driving a Kia and they it's pretty funny they uh I'll I'll skip ahead for this one little tidbit uh he actually drove it to Corolla oh sorry Cora yes yes yes that was a that was the the the the facade you know yes yes it was um the Corolla that was parked in the parking garage of the $35 million apartment right yeah of course you know

yeah obviously um no the defense had asked one of the witnesses who who worked at FTX if they knew what kind of car Sam drove the witness said no um the attorney then said well did you ever see a Toyota Corolla around and the judge immediately stopped the questioning and said I think everyone seen a Toya to Corolla like this is a ridiculous line of questioning you can't say that move on so that was pretty funny to be fair like in this particular compound in Bahamas is like uber wealthy and so like presumably insanely wealthy yeah so like you know it's not like San Francisco Lots really you see Prius and and I'm sure it stuck out yeah but okay anyway so um opening statements uh prosecution

I think really on message for what we expected um they really honed in on Sam doing this secretly um they tried to kind of allude to him being the brains of the operation he had all these secret channels he knew about these secret ways that he could funnel money from FTX through Alam to Alam through different code uh loopholes and then he was the one facilitating all of it they mentioned they alluded to Caroline Ellison they didn't actually name her but they said that Sam's on again off again girlfriend was involved um that he put her in a position of power um despite personal relationships they were

really trying to paint a picture of a company that was very unstable um that Sam was completely in control over but also that had no um boundaries and and protections got it and so that was the the government that was the government and how's the defense um statement um it's I personally I thought that they did the best they could I mean it's an uphill battle for them um speaking to other people in the courtroom afterwards and stuff people were pretty disappointed um in their opening statement but the gist of what they said was Sam was just a regular guy his attorney said that he was just a math

nerd who didn't drink and didn't party um he said that Sam had really tried to urge Caroline Ellison to hedge her bet and not be too risky but she just didn't listen um he said that he kept a he's FTX was a startup he kept saying you know it just grew so quickly um he said working at a startup is like building a plane while you're flying it and he said that a riskmanagement system or risk management officer Department was just part of the plane that never got built at FTX so I thought it was interesting that he he called $4 billion startup without a risk management exactly um yeah I mean he he mentioned

twice I think that there was no risk officer risk team which seems strange for the defense to mention that um but yeah the the picture that I got from what he was trying to say what what he's trying to present was that Sam didn't know what was going on he thought that you know whatever channels were being used to move whatever money was something that everyone was doing and everyone was aware of it wasn't something that he did in secret it wasn't something that he directed people to do right um and and the market just crashed yeah let me put a pause on that because do we actually like we probably have an work chart and if you're a

venture investor you had an orc chart at your disposal in these pitch decks which are you know Matt hang I think is GNA be also uh called into question like a and he's a witness I guess and so um these things are under Discovery like I'm pretty sure I mean they had a legal team in in-house legal council right and did they just claim that they didn't have a compliance department or risk management department or that's a good question because that seems like uh factually incorrect from everything that I know so you think that investors were told that they did have a risk I mean like I met Sam even before he built FTX and there was a guy in there who presumably was a compliance guy and he didn't look anything like a compliance guy that you would think like the archetype of

compliance he was like a guy from Australia I'm like this guy doesn't know anything about compliance and I come from banking I know how compliance people look and he didn't have a semblance of what a Chinese wall was interesting okay I don't you know this predates FTX no no that's that's something that we should all be watching for but usually like easily fat check that like you know like the website yeah yeah no the government has not yet claimed that he misled investors in that way okay um I imagine that they probably will Matt is also taking the stand either late this afternoon for a little bit if not definitely tomorrow for context Matt partner co-founder of

formerly as Aya started Paradigm paradig of investing and was part of I think one of the earlier rounds for FDX not this super early but they were involved Fair early on yes yeah I imagine that he'll speak more about seo's involvement but we'll have to see um what the government wants and he's a witness for the government I should add okay got it got it okay um anything so I guess those were the opening statements anything else worth noting uh for those opening statements or I guess the consensus was that the uh defense you know was pretty weak in portraying Sam was like this nerd guy he didn't know anything was going on and everything was doing you know as a startup and you know these

things you know yeah I was I was speaking with an attorney um after Tuesday I guess after opening statements um and he said that in a lot of these white collar C cases we kind of saw with Elizabeth Holmes the defense is either this person was so far at the top they didn't know what was going on or this person was so far at the bottom they didn't know what was going on and it kind of seems like his defense Sam's defense is taking the top approach I see so we'll see we'll see yeah okay um should we I mean where where should we next like uh should we talk about what happened after that should we talk about the witnesses that are going to you know

line yeah yeah see um so we don't know who exactly will testify um the government has to present the defense with a master list of all of the potential Witnesses and we don't know if they'll be called or not um so Sam's father and brother are both on that list which is why they're not in the courtroom if you are a potential Witness if you might be called to the stand you're not allowed to watch the tri and so mother Barat is his mother is there not a witness then or or she's not a witness yes interesting okay she's in court so yeah we'll see and I and I know I'm not as well versed in his parents legal situation I know that they have something else going on um but yeah his

mother has been in court every day she seems fine she's been taking notes um not really showing a super strong expression I will say at one point today I looked over and her she had her head kind of in her hands um but she didn't last she didn't stay in that position very long she kind of quickly recovered I guess while we're at it like this body language stuff like Sam's there how close are you to Sam is there maybe we should started the episode there like how close I know we should have uh well I was joking with uh when I asked her producer about coming on the show I was like I am the closest thing you have to Sam bankman Reed right now so that's what I got um I'm about I wouldn't lead without in normal conversations but for the purposes of

this podcast is fantastic yes yes um outside of this world right yeah so how close are like you're what 20 you know 20 maybe 10 15 feet wow I heard that he looked thinner but he still had his like scruffy kind of like disorganized Look to Him per usual yes is that true definitely thinner um I haven't seen him in person in probably a year and a half so it is kind of hard to tell but definitely thinner he looks really really pale I don't know if that's something that's new or something that he's always been um he did get a haircut I'm sure you saw that that was very big news um the haircut actually uh he a fellow inmate gave it to him ahead of

court so his defense wanted us to know that wait wait what was that his defense uh actually leaked that to another reporter that who gave him a haircut a fellow inmate oh I see and they also mentioned so he's wearing a suit and a tie people were concerned about that um given his typical wardrobe but he is wearing a suit and tie it looks a little oversized I don't know if it's because he lost weight I imagine it's strategic on the defensive side I think everything at this point is strategic they're trying to make him look you know frail or innocent or whatever it is um there's a lot that goes into that but his defense team also mentioned that he bought the suit at Macy's and it was 40%

off so he is not the luxury yeah this is not this is not a Brunello Celli suit folks but who knows maybe it's you know 40% off still pretty expensive who knows nothing you know can't but he he looks he looks you know the same other than than those physical changes he is allowed to use a computer during the trial so he has a privacy screen over it obviously so we can't see what he's typing but he's typing a lot um during the case he will like look over at the jury he for the most part watch is the witness on the stand um he'll kind of lean over and he's sitting with his whole Council there at a big table so he'll kind of lean over and

speak with different Attorneys at different times but so far he has really not shown any emotion got it okay he at one point will be on the stand but that will happen much we don't know oh we don't know probably if I had to put money on it I think he will testify um that's up to the his team to assess right he as you said earlier he you know they don't have to do anything here you're right the government can list him as a witness and so he has to no so he the decision actually is solely up to Sam his attorneys probably do not want him to take the stand and they're probably advising him against it but at the end of the day Sam makes the choice

and and he can tell the judge I want to be put on the stand um the government cannot call him as a witness um it's part of the Fifth Amendment you can't testify against yourself that kind of thing he can't be fored exactly um so he can't be forced to but he can he can choose to and given what we know about him I really think that he's going to choose to but we we'll have to see so that won't happen until the prosecution's case rests so they'll go through all of their Witnesses I think it's expected to take at least a couple more weeks um and then at the end of that Sam might have the opportunity or he will have the opportunity have the opportunity take this down yeah okay yes we don't know okay but I mean you you

know him I feel like he's well I don't know him that well I just had one him I mean I had I I was on several podcasts with him my first interaction with him was at his offic in Hong Kong when it was just Alam and Alam was just like this no name but like he claimed to be one of the largest like trading shops this was like in 2019 and I was on my way to the binance conference and then he said yeah I want to build an exchange and I was said well we have a fund you're building an exchange it needs to be a clear division there and he was claiming to make these wild like hugely profitable and if people remember the Alam deck raised a whole set of red flags like guaranteed like whenever you're in finance or investing and you

hear there like guaranteed returns just run away like run as far as you physically can don't ever look back it's just it's just not it's it's just can't um right and I saw that and and uh it was like and the terms were egregious it was like worse than rentech it would it was like we can make all this money and we'll just like give you guaranteed 11 or 12% on your capital I was like well if you're no I want to like a traditional hedge fund model is like 220 like charge me 2% management fee and 20% you know take 20% of the profits and I want to participate in the upside why are you capping at 11% but it's guaranteed so it's like and I was like okay all this seems like really strange and then he built FTX like uh he said

yeah I want to build an exchange and he built it and then I was like I didn't hear from ma was because I didn't end up investing in Al the fun knew you were on to them you could have been a witness I mean sure uh but I had um it was a usual demeanor like it was like the bean the bean bags they right Bean like the office it was there was like maybe like less than 10 people in this office and this was in Hong Kong Hong Kong yeah Hong Kong okay like Financial dist some Swanky office but it was like all empty and he had the gaming chair like everything everything you've seen in him like it was it was like that um he portrayed himself as you know hugely like profit like he had done very well at Jane Street and then saw this huge in

efficiency crypto and then moved over and like but uh he was pretty young at this point he was what like 26 27 probably younger than that yeah you know he he look he looked young yeah yeah uh but yeah the the red flag was a deck the guaranteed returns and then the the the idea that he didn't really seem to understand that when you have a fund and you have an exchange like you have client's money like you can't front like there needs to be a clear division right like and he had when I asked him that he was just like he didn't he seemed like like he didn't know about that and he looks over to this what is this compli the compliance guy or whoever like is in charge man and I was like that guy he hired tattooed guy from Australia I'm

like sure yeah no probably not you're I come from JP Mor like you know how complies people look like no disrespect but yeah not like that it's so funny anyways and then I was with a few pod like I was in a few podcasts with him like on I think it was like uh Kobe's podcast up was it op only and he was hugely critical of Def I was and so we always kind of you know I never uh there was like very heated discussions because he was not a very big proponent of Defi and you know admit so anyway that's in as side so what has happened after so like yeah that was my only interaction with him um yeah he just I I've only interviewed him a couple times and obviously it was before a lot of I haven't talked to him in over a year

um so my perspective might be a little bit skewed but I given what I know about him and given his demeanor and his energy I just I feel like he is going to want to take the stand I really think he just genuinely thinks that he can yeah SM Smo his way out of this you know yeah wear a T-shirt and like like like or turtleneck on Elizabeth Holmes um I'm curious uh so what has happened after so that was Tuesday they were Thursday so um what so yeah stury selection and opening statements wrapped Wednesday um and then we had our first witness this episode is brought to you by Chronicle protocol the best onchain source for cost-efficient verifiable

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hadera nosis safe getcoin and a lot more reach out to toku at tok.com Empire or click the link in the description the government called a French man who lives in London he's a Commodities Trader who says that he lost like 140 and 150,000 USD on FTX he was unable to withdraw it um that was like a lot of people I'm curious why this guy's special yes so I thought it was interesting choice um I did not think that they would start with a victim some people did I I I've

heard a lot of mixed hindsights 2020 also um I've heard a lot of mixed theories about who they would start with I I really did not expect it to be a victim um I I also I I just don't why not though I'm curious I kind of thought that they would start maybe with a fellow employee I thought they would start broader like here is how it all went down you know a big picture of this why not go straight for the jugular like hey this guy lost you're right no I again hindsight's 20120 I think I think a victim made sense but I don't think they picked the best victim why is that and and I don't he he's this french guy he trades Coco Bean Commodities um C's been on te so so he has like a thick

like French accon you know I don't know like you know did FTX and 50,000 and uh no idea like uh you know okay I trusted Sam yeah I won't imitate the accent but um yeah so he's this french guy he lives in London he trades Commodities he's talking about trading Commodities I don't really think the jury understands what he's talking about um and then he says that he put a 100,000 Great British pounds into crypto and and he had that money available immediately for him to invest and again I I don't want to be judgmental of anyone in the jury I just I don't think

that that is really connecting with them I don't think yeah that's a lot of Mone I mean for you know like the average salaries I think it's relatable I'm sure he's using a lot of like Financial jargon they're like they don't even know what Alam and FDA exactly exactly and and you know he's talking about being a Commodities Trader he was allowed to invest in crypto because of the disclosure requirements with this company if you don't work in finance and you're just U you know there's a woman on the jury she's 22 years old she works at a grocery store and lives with her parents like she doesn't know what you're talking about um and at the end of the day it's it's the jury that has to I mean as far as victims go like I'm like I don't yeah I it was an interesting choice inter try

not to pass too much judgment on it but so yeah that was witness number one okay um and they really the government really tried to focus on they actually showed the Larry David Super Bowl commercial they showed a Tom Brady commercial and they showed all these things to kind of say that you know here's this man this French man with all this money that trusted Sam because of his marketing strategy and because of his presence on social media and because he was taking photos with Bill Clinton um so that was the gist of that the next witness um was a little bit more exciting former employee former bestie with Sam bankman free they met at MIT yes um they lived together

yida Adam yida and then it was hired right what's that they they went to MIT and then I think they knew each other and then that he was hired same yeah so he they met at MIT they lived together um and then he actually was an intern at Alam for only about two months and then Adam the witness went and got his PhD and then came to work at FTX as a developer got it so he was with FTX I think think from like mid 20 October 2021 until November 2022 yeah obviously he did not work past that um no and he uh the big bombshell from him was he was granted

immunity so he um he was actually subpoena by the prosecution immediately in November December right when this is all going down they're investigating Sam they think crimes have been committed Adam gets subpoena and he agrees to qu operate um I'll say in exchange for immunity the government is very very clear that uh it's no it's it's not a deal you know the he's not just saying what the prosecution needs in exchange for no jail time um the prosecution is very clear that he's not lying under oath he's saying the truth um and in exchange for cooperation he is not going to face any jail time which is different than

Ellison and and um Gary and and some of the others who different from this case they potentially do they guilty yeah so Caroline and Gary have pled guilty they have not been sentenced yet um but they will face some something reduced but the but the gist there is some reduced yes yes the idea of you take a plea deal you agree to cooperate and instead of being 117 years it's exactly 20 or something exactly and this includes who knows what they'll get who knows what they'll get yeah but this includes um Caroline Ellison yes right uh includes um Ryan salami yes Ryan um Gary Wong and Gary's

a co-founder yes um and Ryan I think was a CEO of uh FTX International or right I believe so something yeah um and then um Caroline where NAD nishad the co-founder where is Sam truko in all of this it's a good question because you know this this is like people like people remember Sam was this like Trader at FTX and he he us to put these like epic like um tweet threads where he was like we made all this money like when Whenever there was like some week with like crazy volatility he would like do a postmortem of the hugely profitable trade that Al

yeah and then he quietly like abruptly quit I think he was a COO Caroline abruptly quit before and then like he was like I'm going to buy a boat and sail into the sunset and then like that's all we when did he quit pre pre bankruptcy oh yeah yeah yeah yeah this was this was uh probably a yellow flag that people like obviously in hindsight it was like okay why is he quitting um but yeah this was I a few months I don't recall exactly when he quit but this was before everything like like a Brett Harrison um quit FTX us I think yeah I think it was around that time a okay yeah around that time it was in the summer yeah um has he is being like what's his

role is he do you know where what's what Ro he's gonna uh truko yeah yeah I I don't witness he might be we don't know um we don't know I got to believe that he's going to be like he was just a super important role I do too um I'm sure on the list um but I cannot confirm he's he hasn't been in court so right could mean something um but yeah we so just to kind of give everyone like a general idea um there's no like schedule for the trial it's just trial so right now the prosecution is in the process of presenting their case they have been

cooperating with the defense and that they're giving them a little bit of heads up on who they're calling to the stand so so on Wednesday I believe they told us that the next Witnesses would be Matt and Gary um who will hear from today tomorrow potentially also next week just depending on how long it takes we don't know who's after that yet they'll probably tell us tomorrow or maybe there's no court on Monday maybe on Tuesday they'll tell us um who we can expect after that but there's not it's not like oh today you know Caroline Ellison's next Thursday like we just don't know yeah but you have like a day's notice if you will we yes we generally have a day or two's notice um also the prosecution confirmed that Caroline will be testifying which should

be a shock to no one but she will be so we'll be waiting for so from now for the couple of weeks it's just going to be Witnesses yes um yes and I I want to go back to Adam so he he's the former friend uh he was a developer at FTX um he said that he was aware that the bank account that FTX customers used to wire money into their own trading accounts if they opted to fund their account via wire transfer that account was owned by Alam was under alita's name like at if you wired Mone FTX it was uh

going through silvergate Al's yes yes um and he said that he knew that for a long time many months um and that was kind of where the prosecution started they I think they lost the jury a little bit on this next part um so Adam became aware so basically okay the money goes to Alam Alam controls the money of s FTX customers internally at FTX they had a system to track how much that liability was so in theory it was the amount of deposits minus the amount of fulfilled withdrawals how much money

does FTX you know collectively owe FTX customers um there was a bug apparently that Adam discovered um it said that the liability was 16 billion and in reality it was really eight billion So Adam was tasked with fixing this bug in the code of this system that tracked the deposits ract the liability the debt of alam to FTX customers it was being overstated by 2x it was being overstated by 2x yeah it was double what it should have been um unsure why but basically the the reason why prosecution

brings all of this in and like I said it was confusing I I think that they really lost the jury um you know they're talking about code and bugs and accounts and the jury was completely lost one woman actually fell asleep so we'll see what happens um anyway so I I prosecution said all of this to establish the fact that Adam as a developer probably would not have had a lot of access to the financial statements it just wasn't his part of the business but because he fixed this bug he knew 100% that Alam owed 8 billion to FTX customers that was something that he knew for certain and

that he had firsthand knowledge of um so he said that after he discovered that that the liability was post bug fix in reality 8 billion he went to Sam he said I'm concerned about this it seems too high can Alam to pay it and Sam I want to look at my notes so I make sure I get the quote right um Sam said that last year we were we were bulletproof but not this year and he did not explain what bulletproof meant meant Adam did not ask Adam said how long until we are bulletproof again and Sam said 6 months to three years and to put this in a time frame for everyone Sam said this in July

2022 so roughly like four months before the November 2022 collapse um Adam then said that he received a phone call in November from a fellow FTX employee someone named Leila lla um and she told told him that someone had told her that Alam used FTX customer funds to repay their creditors and that is why he quit h so that was the the long- winded story of his testimony um the government uh they have screenshots from some signal messages they use those they put those into

evidence which was pretty funny um Sam obviously had instructed all of his employees to only use signal they had Auto delete installed um allegedly he said that he wanted to keep these messages away from Regulators um all in all this witness it's looking bad for Sam how did they get the signal like if it was Auto delete someone was taking screenshots someone must have taken screenshots yeah presumably Adam but they didn't actually confirm that because because a lot of people like wait wait does signal have a back door no everyone rest ass this also came uh in the B is also for binance case because they like it is so anyways puts into question signal yeah and the

government mentioned several times that the only reason that they have evidence of these messages is because someone did take SC someone did take screenshots yes they confirm that um which you know someone in there was saying I want to keep these for leverage or something's going wrong I need to document this and like would be a whistleblower exactly and yeah okay yeah so part of it's now part of yeah public record yeah yeah public record it's all there anything interesting or juicy in those signal uh screenshots um it was funny there was one a signal group chat with everyone that lived in the penthouse in the compound yeah um yeah so Adam lived there with Sam and Caroline and Gary and

I think there there were like 10 of them total um there were a lot of stories that came out later that happened in that Penthouse um so yeah there was a group chat of them and they were talking about paying rent which I thought was funny I didn't realize that they actually did pay rent I thought that alanita had purchased it on behalf of wasn't that the case so Sam basically gave people an opportunity to get some Financial exposure he called it and and pay rent or maybe he was asking them if you know it it could eventually lead to like equity in the condo or something but um no people did not have to pay rent to live there sounds like a Fred house but yeah it does well it's funny

that um so then the defense it's their opportunity to cross examine and Sam's lawyer looks at Adam and says well that apartment was just like living in a dorm right and Adam's like well you know not really it was communal living whatever not exactly your MIT dorm room folks but not exactly your MIT dorm room yeah I mean they showed photos so many photos of the penthouse have been entered into evidence I mean it is it's beautiful so yeah nothing like a dorm definitely not not my taste in terms of there's some things there but yeah sure yeah yeah I uh several things about the situation that uh would not appeal to me in a living situation but um yeah not comparable to a college storm definitely

not um okay anything else noteworthy from this particular witness yeah I think that the the big thing is you know he's conf confirming that Sam knew Sam knew Sam knew had exact knowledge that there was a hole exctly because he also said that there would take up to six to three years that there was a hole and then if you actually go back and I'm thinking of those threads that Sam you know was posting while all this was going down when CZ exposed him and like he was he said hey look we're whole entered into evidence right yeah and so there's a there's a lot of those tweets that I remember reading said like

we're whole like we're well you know we'll be like we have I think he claimed at one point that they they were there was no like asset liability mismatch they had they and so and I think there was there's something they said had I think he said that the lawyers he claimed at one point that the lawyers had advised him to like go into like claim like chap file for chapter 11 but had they not done that and in 72 hours like the situation would have been remedied and I was like clearly not the case if there's 8 billion it's gonna because now he's saying it's going to take three to six month three what is it six months to three years that doesn't exactly sound like a hour range that's a mass range well it probably depends on

like you know like crypto markets at the time you know crypto markets were post Tera like this you know it's pretty gnarly um you know so yeah uh the other thing I I'll add that he that witness mentioned um around the time where they're talking about not being bulletproof and and needing six months to three years to kind of recover um Sam allegedly told Adam that he was in talks with raising money from Saud Arabia and slor the UAE so there was apparently a frantic attempt to yeah I think there were some rumors around that U yeah I think I feel like we had heard about a sovereign wealth fund maybe in the Middle East that would maybe bail them out right so yeah that's that's now been

confirmed that that was a um a last resort plan that he was working on um yeah interesting so that was it any other W after that that no other Witnesses yeah I mean it then it's just a little bit of legal fun uh it goes into cross-examination um I think I said this the beginning and we all know Sam's attorneys are they have a very hard job um I'd imagine that they're probably spending a lot of time already working on an appeal just because it's seems so unlikely that he's not found guilty at least on some counts um so their cross-examination was to be honest was pretty hard to watch um really there just wasn't the attorney just could

not he couldn't do it um he kept you know asking questions that were perceived as leading so then you've probably seen this on TV there's objection yeah and the judge sustains it and the lawyer has to kind of regroup and reframe I think there were like three times where he paused the questioning to go over and like whisper with Sam and the other attorneys and then kind of regroup and come back um it's just it's not a great look he had this massive binder up on the podium with him he's like flipping through all these Pages just frantically um whereas the prosecutor comes up with no notes her hands are like behind her back yeah she's perfectly composed and relaxed I want to double click on who is uh do we

have any knowledge on who these people are like who's on on both sides yeah so the the prosecution is they're representing uh Damen Williams office he's the attorney General Daman was actually there on he's been Damen Williams has been the high-profile Souther District New York like behind pretty much all the major clampdowns in crypto that you've seen yes yes and he's done um you know it's not often that he's in the courtroom although he was in the courtroom on Wednesday um he's doing all the press conferences anytime you see a statement from that office it's from him it's from him yes so he's he's the top guy um so the main prosecutor on that case representing Daman Williams is um suum that's her last name okay her

first name's escaping me um and like I said she she's good she's composed um obviously these are all of her Witnesses so they've been prepped with her for weeks I think Adam the um second witness Sam's former friend he met with the prosecution like eight times just really nailing everything down um so yeah I mean it's it's their show they have the burden of proof it's their chance to to prove it to the jury because they have the burden of proof they have access to the witnesses ahead of time they can prep them but the defense does not or they they they don't have as much time or access to the witnesses yeah so the defense um like

the defense did not have an opportunity to pre- cross-examine Adam yeah right right if that's what you're asking yeah exactly they like Sam's attorney has what Sam has shared with him right he has has anything that's been entered into evidence so like all those screenshots from signal for example he was given those ahead of time right that's presumably that huge binder that he's referencing exactly yeah and I mean there's like there's thousands of documents yeah I know massive yeah yeah it's crazy yeah so they really have to scramble each and every time they they have they have the massive list of witnesses so they're they're frantically kind of like preparing a strategy for each and every one of them Consulting with Sam right obviously what is being put into evidence by the prosecutor they

have access to that so they can see what they're seeing to then develop a strategy for each witness but it's Al but but it's a harder U they don't have the benefit of having talk to them and and so that EXA because they have you know the the you know the pressure or I guess the you know the government needs to prove that he's guilty so it makes sense that it's a bit sided like that yeah um yeah I mean the defense like you said they they have an idea of what the prosecutions angling for with each witness like every witness is serving a purpose for the government yeah um so yeah it's the defense has to be um flexible right in terms of like being prepared for everyone it's also I mean it's it's been

more difficult with Sam being incarcerated for the last few months he had his bail revoked and he now has limited access to his attorneys um you know they can visitation rights are limited I guess per day yeah it's it's limited he um he's allowed to come to the courthouse for this trial he com early and he has an opportunity to to meet with his councel but um it's it's not the 247 access he was getting when he was on House rest as parents place in California interesting yeah I mean that that really is uh like if you're the lawyer that that as you said it really puts a greater amount of difficulty to develop a strategy if you don't have like it would have been way easier for them if Sam was in his parents house exactly or like a hotel room you have

access to him all the time huh interesting um they mentioned his Aderall too was a funny little tidbit um apparently Sam is supposed to get four doses of Aderall per day does he get access to stimulants he yes he's court ordered allowed four doses they didn't say like the milligram amount but four seems in my personal opinion High um no idea I've never taken it it's I I have an but it's just for just seems like a lot um he's been given for listeners if you have any context or knowledge maybe love to know milligram dosage here but yeah please please let

us know um there's a shortage too so for I mean there's been a for for years though I believe like shortages like feels like this is now like forget about oil prices folks like there's a shortage of the country is no longer productive okay Jose of our producers say definitely a lot than okay four is a lot but is four like is is there a standard like milligrams like each tablet that's a good question wait four or 40 not 40 okay 40 40 pills no be insane all right okay Joseph Joseph is is has no idea what's going on I can't imagine that it would be lower oh he says four is not much four is not much I can't imagine that the dosage would be lower than 10 milligrams I feel like that's okay we're

totally getting into speculation the point is um the judge said that he could have four a day but he's only been getting two because he's been in court so he's not at prison for lunchtime I guess which is when they would give it to him or whatever it is um so they're trying to work on that because he has not been able to focus while in the courtroom okay his attorney said so yeah we'll see I mean if you were taking all he was using that patch and whatever and all that Aderall and you still had a bug in the contract and you still didn't catch 16 billion dollars or or wait eight or whatever it was I'm sorry guys but you know it's I the bug the bug you really they like glossed over the bug the fact there was an issue in the code

you know there's a lot of bugs in crypto but money coming in is a I'm not a developer and it seems like such a simple equation you know you're taking amount whatever comes in that tells you exactly how much Mone you how much like the liability side of the house is very very straightforward I'm sorry very straightforward the assets however you're valuing these things and the liquidity of said and how you give like a a current like standing value to those assets I understand but the liabilities it's like no it's like fairly straightforward what comes in the house yeah because you're using that money yeah to do whatever s and Co we doing okay interesting yeah um any other like

initial reactions from the people that were there from different Media or different yeah it's a what's the sentiment in the room probably sound like a nerdy journalist but it has actually been a lot of fun um you know going to conferences and stuff a lot of us know each other so you know standing in line together and being in the courtroom it it is entertaining um the judge is is pretty funny he's had a few onliners that have made the entire courtroom laugh um one juror during the selection process even said something that got Sam's mom to crack a smile so the energy is is high I would say um one of the prosecutor today actually asked about the FTX Arena that got a lot of the Miami Heat right got renamed FTX and

then yes uh the defense was trying to say that Sam didn't spend a lot of money on on crazy things and he didn't have fancy cars or whatever and then the prosecution said well what about this arena in Miami so that was that was pretty funny um but yeah the Energy's been good uh there have been a few just regular people just members of the public that want to come and watch um there's been a lot of attorneys in the audience I actually I sat next to a woman yesterday who is an attorney for one of the witnesses she obviously wouldn't tell me who um but if her if her client gets called then I guess we'll know um a lot

of the clerks that work in the court house and the building for other judges I mean the line to get into the courtroom was just insane all of the clerks wanted to watch it they want to see the opening statements um it's drawing a lot of interest not just from the Block Works reporter and and other crypto media I would think like uh you think you're gonna have to wake up like at 4:20 like uh in the morning every for the next month or do you think like the interest is gonna like you do that's a good question um I I do I think the interest probably I it has to die down a little bit unless like a very special like when when Caroline or Matt like high-profile people get called like sure you know get there early but if it's just like a random yeah I mean for S I

really hope it dies down but um try are they serving coffee inside how do you like how long serving coffee you know the honestly food is a bigger issue you're not allowed to eat in the courtroom and there's just there's no time for eating so you're there for you know 4 in the morning 5 in the morning until and you leave at like noon or so it wraps around today I left a little bit early but um it wraps around 4:30 every DayM um PM there's an hour lunch break um okay you're allowed to if you go out you still have your you save your place so to get yes your spot gets saved so like your seat in the courtroom gets saved which is great um but so you leave the courtroom you can run downstairs uh

you can't bring your phones in and your computer you have to check that so you retrieve your phone and computer you have to leave the courthouse you have to walk outside to turn on your phone um so then that's when all the journalists are out there like sending their tweets and writing stories and everything and then you go back back in so you're really not eating during that hour you're not eating during that hour reporting back to headquarters reporting back quite literally reporting back yeah um but no it it has been fun and trial is it's only four days a week every week um so it's either Monday or Friday I mean most people now work from home so you know that's the fulltime for all T of purposes yeah getting dressed every day I'm like I'm not used to this but no it's been good it's been good we'll see

um like you said I think when Caroline testifies and everything it'll probably be another circus but um it's never a dull day yeah I'm sure there's there's a lot to come uh can they I mean what happens if they call ZZ as a witness is he in the witness list CZ yeah yeah he was not named I mean good Lu trying to get him into the courtroom but I don't think he's gonna show up I we'd have to ask an attorney this I don't know what the deal is about testifying if you your self for also I mean for for context folks CZ was probably the the guy that they were invest so binus was an investor in FTX they had a huge amount of ftt tokens and

then CZ was really the guy that tripped this up and then coindesk reported it and then everything kind of unraveled after that but CZ knew I've heard really crazy like I've heard some stories about how CZ got like actually ended up knowing I mean but he was as an investor he had like and you know like binance int whatever like on chain analytics or whatever they knew um and he really tripped us up so I mean he's like a good wi and and then they try to acquire there was like a whole back and forth between them getting W like buying you know and um FTX and then it they dropped out and so it was yeah I mean he could be a witness but it sounds like he'd be a perfect witness um yeah but I don't think he's gonna show up and no I I he was not so they

list a big to the jury um they give them like a massive laundry list of every name company entity Etc that could even be mentioned during trial um and he was not on that list I'll have to double check the transcript was binance on that list I don't I binance was I do believe um I'll have to double check the transcript I'm pretty sure he was not on that list but also we' have I I'm curious what the legal um opinion is on testifying if you're also going through an yeah there's so I I don't know they can I don't know um it seems like it might be

a issue with difficult yeah yeah I gon want to enter the United States anytime soon given everything that's going on um excellent okay well is there anything else that we haven't covered that we should um I don't think so um I'm sure everyone's been following this on Twitter but yeah there'll be a lot more updates to come um some early mornings for us and gosh yeah yeah 4:20 in the morning I mean yeah send snacks to yeah yeah please fooks uh you know southern district New York you know go yeah and um if you if you want to try to make 500 bucks then come early and try to get a photo of Mark Cohen Sam's attorney there we go go that's a

lot um well great I mean this has been Illuminating just I you know again like this is like a the real suits but you know what happens in in courtrooms yeah no thank you so much for having me I know a lot of it is definitely boring and no I mean it wasn't boring like this is really uh just the procedures and the witnesses and whatnot and uh just kind of the sentiment of and the interpretation of of the different people in the room and how they're assessing kind of the strategy and whatnot so uh Michael Lewis presumably he wasn't in the courtroom and is he was not in the courtroom uh this is actually pretty funny the he was not there um okay the and he's not a witness um he spent a lot of time with Sam he spent a lot of time he will tell you he could be

a I mean he could be a witness for no he I mean reasonably speaking um I think he would make sense but he's as far as I know he's not um I will say though so the journalist all the you know the book came out on Tuesday which is when the trial started everyone's talking about it um everyone's reading reviews um Zeke faul who uh is a Bloomberg journalist he wrote a I don't want to say competing story but he also wrote a book about SPF that came out pretty recently um he was there everyone's talking about Michael Lewis to be honest everyone's kind of on Michael Lewis um little did we know that someone who works with a a podcast he does or works on a podcast that he's involved with or something was

there there um so yeah watch what you say even if you think you're among like not to be ruthlessly transparent but yeah no yeah yeah no she she was very understanding I mean I I think the 60 Minutes story was just so poorly done I haven't read the book yet so I won't pass judgment on that but I have read some reviews and it seems unfortunate what I heard was that it's sort of like him trying to say face because how do you spend so much time with a guy and have the inside look and didn't pick up the fact that he was like how do you justify like having spent all this time and he he didn't even ask and yeah he didn't say like let me you know it's it's one thing if he said show me a

financial document and then later we found out it was falsified or something but he didn't even ask um he never even reached out to binance so like you know obviously in the midst of him following Sam around and writing the story everything blew up um you know as as a journalist as part of your reporting part of that should be reaching out to CZ and saying yeah what happened what's your side of the story you know I saw one side he never did that um ignorance at all he saw no need to he said so it just seems very um shortsighted and sounds like someone paid him a bunch of money and FDT tokens to write this book and then you know yeah seriously uh journalism Integrity yeah so awesome

Casey well you know uh I don't want to keep you here longer because you probably need to catch up on sleep and a bunch of other things um thank you for coming on I it's very eliminating I think our listeners would love it uh we'll probably gonna have to have you on down the road as these things progress six weeks long got so much more content I also I think saw that you running preparing for the New York Marathon I am running the New York Marathon yeah that's um I am running it too by the way but I don't need to wake up at 420 in the morning each day yeah having the trial like the four weeks before the marathon it's a bummer but I think it'll be okay um I think so I did I've done 20 miles okay I was gonna do it again yeah

is this your first it is not I've done my third Marathon no no fourth Marathon third New York Marathon nice what about you this is going to be my fth New York and I've done like eight now it's yeah New York is the best in my mind my humble great in New York yeah I don't think living here and not running it like when when you cross the bridge into Manhattan and get to First Avenue like that feeling alone you're you're hearing the people like halfway through the like there are very few moment headphones yeah yeah there there are very few moments where I felt that kind of electricity and it's just it's just amazing yeah I'm really excited hopefully we have good weather

hopefully yeah we never know you know that's that's what makes New York New York all right well good luck with training and you yeah then uh I guess we'll see you know running yeah for sure great well thanks everyone for listening uh if you want to learn more about the trial and other details around that you please drop us a comment uh Twitter or YouTube and um we'll try to have Casey back so you can report definitely thank you guys thank [Music] you