Oct 6, 2023

CoinDesk's global policy and regulation managing editor Nikhilesh De shares the details of what it's been like inside the courtroom for FTX founder Sam Bankman-Fried's ongoing trial.

Video transcript

We are on the fourth day of the Sam Bakeman free trial. New revelations are emerging about FTX from witness testimony given in the criminal trial. Joining us now to discuss is Coin Desk's global policy and regulation managing editor Nick Day, who's also the editor of Coindesk state of crypto newsletter. Good morning, Nick. Hey, good morning. Not only are you our regulation uh reporter and editor, but you are an amateur sketch artist and it has been just such a delight seeing your sketches come out of the courtroom. So thank you for those Nick. I feel like I'm there, learn how to draw out. I think by the end of this, by the end of this trial, you, you might be able to switch careers if you like the back of the back of those match box, those you know, the match books. It's like, can you draw flippy and it's like, OK, all right, let's talk about what's been, what's been going on inside the courtroom. Nick. Of course, no cameras are allowed no phones. So we really have to rely on people like you who are inside the courtroom. Um Talk to us about what's been happening. And more notably, I've seen some people tweet that some of the jurors are falling asleep. Is that true? So, it looks like a, you know, one alternate juror yesterday was falling asleep or dozing off, at least for part of the, uh you know, early testimony uh on yesterday specifically. So, you know, it's not that we've seen this consistently or anything like that yet. It's that, um, you know, it's a, you know, case that starts at 9 30 continues on to today and uh it began, you know, pretty much 2030 minutes or so after the jury was selected. So a lot of folks kind of just really like yanked into this. Um It's also worth noting that again, we have six alternate jurors as well as the 12 actual jurors. The alternates are not going to really be involved in any of the decision making unless one of the primary uh jurors is, uh, you know, unfortunately, you know, unable to keep the, get a trial for whatever reason. So, um it is true, but I think, you know, there's a little bit of how much of how much, how much of the, of the uh charges were explained to the jury. Do they, do they understand what's at stake or what they should be looking for? So, you know, so far we are, you know, this is day three of testimony, Gary Wang, the former FTX CE po and co-founder is going to take the stand again, uh, you know, in about 25 minutes or so. Um, what's really interesting is so the DOJ has, you know, begun its case, it begun defending its case over the course of the three days. They've been really easing the jury into, you know, I would say all of the, what you could describe as a more complicated concept. They haven't really gotten into, you know, too deeply into, you know, the statutory requirements for fraud or, you know, conspiracy. They haven't gotten too deeply into issues like, you know, how do cryptocurrencies actually work or how do exchanges actually work? Uh The first witness was, you know, just a customer whose job was to say, you know, I invested in blockchains, which are just kind of invest in cryptocurrencies which use blockchains and cryptocurrencies are just kind of, you know, thing. Uh And I lost $100,000. The second witness was a former, uh you know, college friend and roommate and, oh, yeah, the uh and, and his job was to just kind of build a little bit upon that. The next witness was paradise that long. He built a little bit upon that. The DOJ is really kind of, you know, easing the jury into the actual, you know, the concepts and issues at stake. Here. You're starting with, you know, here are people who lost money. Here are people who were betrayed by people who believed in Mare or FTX and were let down by what happened last November. So, like, what's, what's Sam's reaction been, like, hearing these stories, uh, retold in the courtroom isn't really glued to, uh, a laptop. He has access to an air gap laptop in the courtroom and he's been working on it typing up what appears to be a doc or, or something of that sort. Um, presumably it's defense material. You know, things that his lawyers can ask or, uh, you know, things that his lawyers can ring up later and try and refuse some of the allegations or statements being made by the witnesses. Uh, so far. So, you know, he's been there, he's been present, he's been, uh, you know, just really focused on, uh, working on whatever it is you're working on. And one of those witnesses, Gary Wong, uh, he testified against, as you said, he is a former roommate, I believe of, uh, uh, of Sam Bank MRE. He's coming back again today. Uh What happened yesterday? Why are they bringing him back? So, Gary is, I think the first, um, you know, we can say heavy hitter witness, right? All the witness so far have, uh, talked about and around what happened with FTX last November and how, you know, things fell apart. But Gary is, uh, Gary Wong is the, you know, he is an individual who built a lot of the code that FTX now need to relied on. And, um, uh, I think, you know, what the prosecutors are going to want to get into is just how exactly, uh, was it possible on a technical level that Alameda was able to borrow funds from FCX customers? And, uh, you know, from FCX, how did they have this, uh, you know, as long, but this unlimited, uh, line of credit or a large line of credit is what he said. Um, and more importantly, did be fried know and sign off on this or not. And it is worth noting here that Wang is uh he pleaded guilty to, you know, these charges of wire fraud and other frauds uh as either at the end of December or beginning of January. So he is testifying and uh you know, he is certainly testifying in the hopes of a uh lighter recommended sentence from the, but he is also very infant part of the company that fell apart. So he does have, he said and, and he said that that he was taking out there were loans taken out in his name that were actually for FTX or Alameda, which was it that he himself took about, it was a million dollars he took for himself as a loan as a personal loan. But then uh there were, there were a lot more loans taken out in his name, but it didn't go to him or so he's a legend. Correct. Right. And again, these are just kind of the allegations that the doj is gonna want to hone in on and say, well, you know, did make free sign off on this. And because if so, you know, I think this is the part where they're gonna start saying like, ok, well that is, you know, wrong Nick. We've asked you about the jurors, we've asked you about Sam. Judge Kaplan has had quite a time with both, both the defense and the prosecution leading up to the trial. Um, you know, of course, trying to get Sam out of jail, trying to get him in jail. Um, now we're finally at the trial. What's Judge Kaplan's demeanor? Like, um, some of the chatter I've heard online is, he's kind of been a little lighthearted and cracking some jokes through it. Yeah, he's definitely had, uh, you know, a few jokes throughout the, certainly the hearings leading up to the trial. Um, and a few jokes did, you know, at the beginning of the trial, um, he definitely seems focused on trying to, you know, make sure this is an efficient trial process. Um, you know, he, we reported this morning, uh, and yesterday that he's starting to, he's seemingly appearing to lose patience with the defense a little bit, uh, you know, sustaining objections before they even made, you know, telling the, uh, defense attorneys to move on if they're just repeating a point. Um, you know, yesterday, uh, right before lunch, he said the jury out and then admonish, basically one of the defense attorneys for repeating the same lines of questioning that were already, uh, you know, completed by the prosecution on one of the witnesses. So he, he definitely seems focused on trying to get this, you know, make sure this thing happens and doesn't, you know, in his words, isn't the, or doesn't set a record for the longest trial, but at the same time, he does have this kind of, you know, just a dry sense of humor that, you know, intentionally or not, you know. Um, and, you know, this is where maybe we can talk a little bit about the logistics of covering this space, but at least in the overflow room where I have been for most of the trial, um, you know, every time he sustains an objection or before it, you know, even is made, uh, it's kind of becoming this routine, this predictable routine that it, you know, you hear laughter in the gallery because of it. All right, Nick, we are gonna have to leave it there, but we look forward to hearing more from you on Monday. Good luck. Good luck in court today. Thank you. All right. That was Coindesk global policy and regulation. Managing editor Nick Day and don't forget to sign up for the new SBF trial newsletter that will take you inside the courtroom.

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