Former cryptocurrency whiz kid Sam Bankman-Fried knowingly stole money from customers of his FTX platform, US prosecutors told a federal court in closing arguments on Wednesday.
“This is not about complex issues of cryptocurrencies,” prosecutor Nicolas Roos told the jury after several days of withering cross-examination of the fallen crypto king.
“It’s about deception. It’s about lies. It’s about stealing. It’s about greed,” he said of the 31-year-old who was estimated to be worth several billion dollars at the height of his fame.
Bankman-Fried is on trial in New York for siphoning funds invested by unknowing customers on his FTX cryptocurrency exchange platform, once the second biggest exchange for crypto investors.
He faces decades in prison if convicted.
Up to $14 billion of client money fuelled the transactions and venture investments of Alameda Research, Bankman-Fried’s personally owned hedge fund.
The jury is faced with the question of whether “the defendant knew taking the money was wrong,” Roos said.
“He knew it was wrong. He did it anyway (and) thought because he was smart he could get away with it,” the prosecutor argued.
To believe otherwise, “you’d have to believe that the defendant was actually clueless. You sat through this trial and you know that none of it is true.”
Already weakened during the first three weeks of the trial, the 31-year-old didn’t turn things around during his several days of testimony.
“He lied to you,” the prosecutor said of Bankman-Fried’s repeated attempts to say he did not know of Alameda’s dire straits or remember false statements that all was fine at his company.
But in the two hours of closing arguments, the prosecution said Bankman-Fried received multiple warnings regarding Alameda’s finances, well before its collapse late last year.
“Every time, he chose to double down, to dig the hole deeper,” Roos told the jury.
During the trial that began on October 3, the Massachusetts Institute of Technology graduate admitted he made “mistakes” in managing his crypto empire, but that he never committed fraud.
He depicted himself as a young entrepreneur swamped with work who only became aware of the trouble at Alameda when it was too late.
He said the problems at Alameda arose because his directions were ignored by staff, including his former girlfriend Caroline Ellison, whom he picked to run Alameda.
Roos pointed out that Ellison and other close associates each claimed that Bankman-Fried had given instructions for Alameda to pilfer the coffers of FTX, virtually without limit.
“That’s fraud. That’s stealing, plain and simple,” Roos said.
The trial has revealed Alameda was authorized to borrow up to $65 billion from FTX via a software “back door”, using the money for risky investments, political donations, and the purchase of swishy real estate.
But the blank check turned sour when the cryptocurrency industry succumbed to a series of defaults in 2022, causing the value of virtually all digital currencies and Alameda’s assets to plummet.
According to prosecutors, at the time of the bankruptcy of FTX, just over $8 billion belonging to customers vanished into bad investments at Alameda.
