The Case Against Sam Bankman-Fried

Is Sam Bankman-Fried going to prison? Five weeks into his criminal trial, 12 randomly selected New Yorkers are preparing to discuss among themselves whether they believe he violated federal law or not.

Bankman-Fried is charged with wire fraud and conspiracy to commit wire fraud against FTX’s customers, wire fraud and conspiracy to commit wire fraud against Alameda Research’s lenders, conspiracy to commit securities fraud against FTX’s investors, conspiracy to commit commodities fraud against FTX customers and conspiracy to commit money laundering.

In laying out the U.S. Department of Justice’s case, a very animated Nicholas Roos walked a rapt jury through an hours-long version of what the court had heard over the past month. Though getting to this point took over a dozen witnesses and more than a hundred exhibits, the DOJ’s case is pretty straightforward.

Billions of dollars of FTX customer and investor funds, and some Alameda lender funds, are gone. There’s really no disputing that. In the DOJ’s telling, Bankman-Fried found FTX – a company he founded and mostly owned – to be a perfect cash cow for Alameda – another company he founded and mostly owned.

The defense, in contrast, argued that everything that happened with FTX was the result of poor risk management and a slow-building series of issues. The DOJ never managed to prove that Bankman-Fried himself was involved in some of the decisions and actions that led to its multibllion-dollar hole, and none of the witnesses ever testified that FTX was set up specifically to divert customer funds from the beginning, defense attorney Mark Cohen said.

We’ve reported the witness testimony and evidence across the last month, so I won’t go into detail here. But it is worth taking a quick look at some of the main arguments we heard on Wednesday.

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The charges

Wire fraud/conspiracy to commit wire fraud against FTX customers (counts 1 and 2)

The loss of customer funds is obviously FTX’s biggest issue. Per the DOJ, Bankman-Fried defrauded (and conspired to defraud) his customers by letting Alameda tap those funds. FTX customers deposited the money…