Bankman-Fried jury weighs duelling accounts of FTX’s downfall

Four people were in the room. That much is uncontested.

Caroline Ellison, Gary Wang, Nishad Singh and Sam Bankman-Fried sat together in June 2022 in the Bahamas office of FTX, the crypto exchange founded by Bankman-Fried and Wang, then worth $40bn. Bankman-Fried and Wang also owned Alameda, a private trading firm that Ellison ran. And on that day, Ellison feared Alameda was bankrupt.

In the weeks after the meeting, Ellison authorised billions in loan repayments ultimately funded by borrowing from FTX. Bankman-Fried tried unsuccessfully to raise more equity for the crypto exchange, and he kept telling investors, customers and the wider world that his two companies were completely separate and financially strong. He promised customer assets were safe.

They were not. In November 2022, too many customers asked for their money back from the exchange, and FTX could not pay. Days later, FTX and Alameda filed for bankruptcy. All four people at that June meeting were subsequently hit with criminal charges — but only one has gone to trial.

As the end of Bankman-Fried’s trial approaches, the case against him comes down to what was said in the conversation in Nassau in June, and who knew what and when.

When the jury begins deliberating later this week, it will have to decide which version of events to believe: did Bankman-Fried order his lieutenants to drain customer funds and cover it up? Or did his closest allies make mistakes that led FTX to disaster, which Bankman-Fried did not discover until it was too late?

A central question is whether it is plausible that Bankman-Fried — with his college degree from the Massachusetts Institute of Technology, his Jane Street Capital pedigree and his famous intellect — left the June meeting after hearing that Alameda might have been bankrupt without having pinned down the details.

“You never got to the bottom of that?” assistant US attorney Danielle Sassoon asked this week in cross-examination. Bankman-Fried said his top lieutenants were working it out. “I trusted them,” he said.

Wang, Ellison and Singh have all pleaded guilty to fraud and are co-operating with prosecutors, having taken the stand against their one-time boss. Their memories appeared more concrete than Bankman-Fried, who told prosecutors dozens of times that he “didn’t recall” crucial details.

Wang, Bankman-Fried’s college friend and taciturn right-hand man, and Ellison, his former girlfriend, both testified that Bankman-Fried was told about the more than $10bn debt Alameda already owed FTX in June, and still authorised it to borrow even more to avoid defaulting on its loans and collapsing his business empire. They said the money came from FTX customers — there was no other source of so much cash.

Ellison told the same story in a meeting with her employees in November, as FTX was collapsing and before she…