As Sam Bankman-Fried trial reaches closing arguments, jurors must assess a spectacle of hubris
It was a high-stakes gamble with almost everything on the line, and in the end it may have been the clearest demonstration of Sam Bankman-Fried's biggest weakness: his hubris. The former crypto billionaire's decision to testify in his defense was an incredibly risky move for a man facing seven felony counts for allegedly defrauding millions of global customers out of a mind-boggling $8 billion, among other crimes.
But after all, he is the same man who attracted immense press for taking risks while building what seemed like an innovative crypto exchange, FTX, valued at one point north of $65 billion and putting him in the same social circles as Bill Clinton, Tom Brady and Katy Perry.
Bankman-Fried has pleaded not guilty, with his defense team arguing that he was simply an overworked entrepreneur who was
too successful and delegated big tasks to a team that couldn't handle them. But the MIT graduate turned Jane Street Capital intern could have allowed his lawyers to do all the talking, so as to prevent himself from being exposed to the government's relentless, well-prepared cross-examination.
He didn't. He built his own empire and believed he could mount his own defense.
Wednesday's closing arguments are closely watched by the New York City jurors as they decide Bankman-Fried's fate after more than four weeks of lengthy, often complicated fintech-themed testimony – including that from three of SBF's co-conspirators and former friends.
Caroline Elison, an executive and onetime romantic partner, Gary Wang and Nishad Singh pleaded guilty to their part of the scheme, which included using Alameda Research – an FTX-sister company – as a vehicle to spend and invest FTX customer deposits illegally. All are cooperating with the prosecution to secure more lenient sentences, but could also face decades behind bars.
Still, for all the complexity of cryptocurrencies, "margin exchanges" and "front-running," jurors only need to answer one simple question: can you believe what Bankman-Fried says?
When pressed by the government's lead prosecutor, Assistant U.S. Attorney Danielle Sassoon, on whether he meant what he said to Congress while advocating for crypto-exchange regulation, Bankman-Fried said he did. But then he was asked to read aloud the government's evidence of his texts to a reporter at that time — "just PR" followed by "f*** regulators" and calling customers "dumb motherf****ers."
When asked if he remembered telling reporters how he safeguarded customer deposits after the fall of FTX, but before his indictment, he couldn't recall, which was often followed by the exact podcast audio, split-screen video or news article transcript confirming that the loquacious founder did make those remarks.
At one point he was asked about admitting that FTX would not have grown so large if not for its sister company Alameda Research, but he said he didn't remember saying as much. Prosecutors then handed him investigative journalist Zeke Faux's newly released book "Number Go Up" and asked him to turn to page 232 in which Bankman-Fried is quoted as saying Alameda Research "had more leeway" on FTX than your typical customer.
Even if the jury takes into account that it is expected for a federal prosecutor to hammer the defendant, they also watched as Southern District Court Judge Lewis Kaplan repeatedly interrupted Bankman-Fried's testimony to get him to answer questions clearly, at one point saying in a calm but stern voice, "look, just answer the question."
CBS legal analyst Rikki Klieman, a former defense lawyer, says, "Jurors take their direction, whether it's explicit or implicit, from a judge and [Kaplan] has also been pretty harsh with Sam Bankman-Fried's lawyers; the jury doesn't miss that."
At the very least this jury, which includes a nurse, retirees, and a special education teacher, has been shown in dramatic fashion how a 31-year-old Silicon Valley whiz calculated massive risks and faced potential peril. They will soon decide if any of it was criminal.
There were many times when Bankman-Fried seemed to buckle under pressure when pressed by the prosecution on how he approached risk/benefit calculations. At one point on Tuesday he was asked repeatedly in various ways, "Was it your practice to maximize making money even if there were a risk of going bust?"
Bankman-Fried eventually answered, "With some business decisions, yes."
