Close Confidants of Sam Bankman-Fried Have Testified at His Trial

Over the past three weeks, former employees and friends of Sam Bankman-Fried have testified that he orchestrated a scheme to misappropriate billions of dollars in customer money from his FTX cryptocurrency exchange, which collapsed last year.

The witnesses have painted a portrait of Mr. Bankman-Fried, 31, as a controlling boss who directed them to commit fraud. They said the FTX founder had known for months that the exchange had no way of paying back at least $8 billion in customer money that was used to buy lavish real estate, invest in other crypto companies, make campaign contributions and pay back lenders to a trading firm that Mr. Bankman-Fried also controlled.

Here are highlights of the testimony from several prosecution witnesses — including Mr. Bankman-Fried’s employee and on-again, off-again girlfriend, Caroline Ellison — who have been central to the case:

Adam Yedidia

The first prosecution witness was Adam Yedidia, a former FTX developer who was a close friend of Mr. Bankman-Fried’s and lived with him and other associates in the Bahamas.

Mr. Yedidia, who has not been charged with any crimes and testified under immunity, said Mr. Bankman-Fried had known that FTX and Alameda Research, a sister crypto trading firm, were on thin ice.

Mr. Yedidia described a conversation he had with Mr. Bankman-Fried at their paddle tennis court the summer before FTX collapsed, as the crypto market crashed and lenders to Alameda were asking for their money back. Mr. Yedidia said Mr. Bankman-Fried had told him that FTX “was bulletproof last year, but we’re not bulletproof this year” and that it would take six months to three years to make the company “bulletproof again.”

Caroline Ellison

Ms. Ellison, who ran Alameda and was Mr. Bankman-Fried’s former girlfriend, was the government’s star witness. She detailed the close relationship between Alameda and FTX, including several instances when, she said, Mr. Bankman-Fried directed or greenlighted the use of FTX’s customer deposits.

Ms. Ellison, who has pleaded guilty to fraud charges and is cooperating with prosecutors, said Mr. Bankman-Fried had been eager to buy back FTX shares from Binance, a rival crypto exchange. She was apprehensive about the move, she said, because she knew that would mean borrowing $1 billion in FTX customer funds for the transaction.

“That’s OK, I think this is really important, we have to get it done,” Mr. Bankman-Fried told Ms. Ellison, according to her testimony.

Ms. Ellison also offered insight into Mr. Bankman-Fried’s mind-set, detailing their relationship and his somewhat unconventional view that rules about not lying and not stealing were of lesser importance than actions that he saw as serving a greater good.

Gary Wang

Mr. Wang, an FTX co-founder who has pleaded guilty in the case and agreed to cooperate with prosecutors, told the jury that Mr. Bankman-Fried had directed him to include features on the exchange that gave Alameda an advantage on the platform. “In the end, it was Sam’s decision,” he testified.

The soft-spoken coder spent much of his time on the stand explaining the intricacies of FTX’s computer code, which supported prosecutors’ point that Alameda was intentionally given special privileges on the platform so it could use FTX customer deposits as if they were a piggy bank.

Mr. Wang met Mr. Bankman-Fried in high school math camp, and they were classmates at the Massachusetts Institute of Technology before founding FTX together in 2019.

Nishad Singh

Mr. Singh, a former FTX executive who has also pleaded guilty, detailed Mr. Bankman-Fried’s lavish spending — including big real estate purchases and political donations — that was bankrolled by FTX customer deposits.

Mr. Singh said he had given other associates access to his bank accounts to make political donations under his name, including Mr. Bankman-Fried’s younger brother, Gabe, who ran the nonprofit group Guarding Against Pandemics. At one point, when a credit wire wasn’t going through, Gabe Bankman-Fried sent one of his assistants to the Bahamas “with a bunch of checks from my bank account,” Mr. Singh testified.

Prosecutors also showed an email exchange between Mr. Singh and Mr. Bankman-Fried’s mother, Barbara Fried, who was receiving $1 million from FTX for her nonprofit Mind the Gap. Ms. Fried, a Stanford law professor, suggested that Mr. Singh make the donation under his name “because we don’t want to create the impression that funding MTG is a family affair, as opposed to a collective effort by many people (including some mystery guy Nishad Singh :)).”

Can Sun

Mr. Sun, a former top FTX lawyer, testified that Mr. Bankman-Fried had pushed him to find a legal justification for the exchange’s repeated misuse of billions in customer money — even after Mr. Sun told his boss there was none.

At Mr. Bankman-Fried’s urging, Mr. Sun said, he ran through a few theoretical options to justify the borrowing and spending of FTX customer money. But Mr. Sun, who testified after securing an agreement that prosecutors would not pursue charges against him, said he had once again told Mr. Bankman-Fried that none of those options were supported “by the facts.” Mr. Bankman-Fried responded by saying “something like, ‘Got it,’” Mr. Sun testified.

Prosecutors then played a clip from an interview that Mr. Bankman-Fried gave ABC’s “Good Morning America” days before FTX filed for bankruptcy in November. In that interview, Mr. Bankman-Fried offered up one of the theoretical options that Mr. Sun had provided him as an explanation for what happened to FTX’s customer money.