‘We were close friends’: former ally of Sam Bankman-Fried returns in FTX trial

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Sam Bankman-Fried’s crypto fraud trial entered its third day Thursday morning with one of his former allies, Adam Yedidia, returning to the stand as a prosecution witness. Bankman-Fried faces seven counts in Manhattan federal court, on fraud and conspiracy charges in relation to the shocking implosion of his crypto exchange and its related hedge fund, Alameda Research. Opening arguments began on Wednesday, followed by testimony from the prosecution’s first witnesses. Yedidia was the second witness to testify, and did so under an immunity order, meaning he can’t be charged based on his testimony, so long as it is truthful. Yedidia explained that he was Bankman-Fried’s friend from the Massachusetts Institute of Technology (MIT) and worked at FTX. “We were close friends,” Yedidia said. They lived together at times and worked together, he said, which at one point came to include at FTX. Yedidia said he last saw Bankman-Fried in November 2022 and had not spoken to him since. The week that FTX declared bankruptcy, “I received a phone call from another developer at the company,” Yedidia said in explaining his departure. “I heard that Alameda Research had used FTX customer profits to pay back its loans to creditors.” “After you learned that, what did you do?” the prosecutor Danielle Sassoon asked. “I resigned,” Yedidia said. Yedidia was asked why he was testifying with an immunity order. “I was concerned that, as a developer for FTX, I may have unwittingly written a code that contributed to a crime,” he said. On Wednesday afternoon, jurors also heard from a commodities trader who had invested in FTX, only to lose more than $100,000. The trader who testified, Marc-Antoine Julliard, explained how Bankman-Fried projected positivity, which helped woo him to the platform. Julliard said he learned about FTX from a friend and searched FTX online, poring over Google results and social media. “I was about to commit significant amounts of money to trading cryptocurrency, and I wanted to be sure,” Julliard testified. He started to follow FTX and Bankman-Fried’s Twitter accounts and opened an FTX account in spring 2021. “He would come across to me as the future face of the general crypto industry,” Julliard said. His testimony about extensive advertising and public relations was meant to demonstrate how unsuspecting FTX investors dumped their money into the exchange by seeing respected, familiar faces on ads, including celebrities. Julliard recalled seeing an ad with the supermodel Gisele Bündchen, who appeared in FTX advertising with her then husband, the NFL star Tom Brady. Julliard was asked about a series of Bankman-Fried tweets from November 2022 in which the then tech titan reassured investors. In a 7 November tweet, for example, Bankman-Fried wrote: “A competitor is trying to go after us with false rumors. FTX is fine. Assets are fine.” Julliard was shown another tweet that read: “FTX has enough to cover all client holdings. We don’t invest client assets (even in treasuries.) We have been processing all withdraws and will continue to be.” He was asked what he thought about his deposits after reading those tweets, and said he thought his “money was there, it was fine” and that maybe there were just some technical difficulties. He decided to “just sit and wait” and didn’t try pulling out his money. At the time he had investments in FTX totaling about $100,000. He wound up changing his mind a day later, but when asked whether he was ever able to withdraw any money, he replied: “Never.” The line of questioning was in keeping with opening statements, during which prosecutor Thane Rehn described Bankman-Fried as an unrepentant huckster who pocketed FTX customer funds for his own purposes– and to buoy Alameda as crypto’s volatility dealt it blow after blow. “One year ago, it looked like Sam Bankman-Fried was on top of the world. He ran a huge company called FTX. He lived in a $30m apartment in the Bahamas. He jetted around the world on private planes. He hung out with celebrities like Tom Brady and politicians like Bill Clinton,” Rehn said in his opening. “But all of that, all of it, was built on lies. Behind the curtain, Sam Bankman-Fried was not who he appeared to be. He was using his company, FTX, to commit fraud on a massive scale.” Bankman-Fried has pleaded not guilty. During defense openings, his lawyer painted him as a “nerd” who meant to do the right thing but was overwhelmed with a fast-growing company. “Sam didn’t defraud anyone. Sam didn’t intend to defraud anyone. Sam acted in good faith,” the defense lawyer Mark Cohen said. “There was no theft.”

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