With jury selection completed, the trial of FTX co-founder Sam Bankman-Fried (SBF) has officially begun. During the opening statements on Wednesday, SBF’s lawyer, Mark Cohen, argued that his client did not defraud anyone and instead blamed Binance CEO Changpeng Zhao (CZ) for causing a “run on the bank at FTX.” Cohen claimed that SBF acted in good faith and did not steal from anyone, believing that loans made from FTX to its sister hedge fund Alameda Research were permitted. Prosecutors allege that SBF secretly arranged for customers’ deposits to be used at Alameda. The fiat was allegedly stolen by depositing money into a bank account at Silvergate that belonged to Alameda, not FTX. Meanwhile, crypto was taken from FTX customers’ accounts using a hidden backdoor within FTX’s computer systems.
Cohen argued against the portrayal of SBF as a villain, describing him as a math nerd who didn’t drink or party. He claimed that the Alameda account at Silvergate was created for FTX’s use because FTX didn’t have an account for accepting dollars initially. However, poor risk management led to Bankman-Fried mistakenly thinking this money could be lent out like Alameda’s other assets.
Cohen also discussed the role of Caroline Ellison, Bankman-Fried’s on-again off-again girlfriend, who took over as CEO of Alameda in 2021. Prosecutors claim that Bankman-Fried was still calling the shots at Alameda after stepping down as CEO. Cohen argued that Ellison’s failure to follow Bankman-Fried’s advice during the bear market led to the lender going bankrupt.
According to Cohen, Bankman-Fried believed that Alameda’s losses meant that the fund’s bank accounts no longer held FTX client funds. However, things changed when CZ tweeted about concerns regarding both firms, triggering a run on the bank at FTX.
Ellison, along with two other executives close to SBF, has already entered into plea deals admitting to fraud in conspiracy with SBF. Cohen concluded by stating that they would ask the jury to find Sam not guilty.
Hot Take: The trial of FTX co-founder Sam Bankman-Fried is underway, with his lawyer arguing that he did not defraud anyone and instead blamed Binance CEO Changpeng Zhao for causing a “run on the bank.” The defense claimed that Bankman-Fried acted in good faith and believed that loans made from FTX to Alameda Research were permitted. They argued that poor risk management led to misunderstandings about fund usage. Additionally, the defense discussed the role of Caroline Ellison, Bankman-Fried’s girlfriend, and her alleged failure to heed his advice. The trial will continue as witnesses testify in favor of the government.
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