Sam Bankman-Fried Is Losing His Trial 5-0

FTX founder Sam Bankman-Fried is still in the early stages of his trial and yet, things are going from bad to worse.

To put it in simple terms, if this were a baseball game, it would be the bottom of the second inning — and his team is already down 5-nothing.

If you haven’t been following what’s played out in the eight days of action inside the Manhattan courthouse, two of three of SBF’s alleged co-conspirators have already testified and both (as expected) let the jury hear exactly why they pled guilty to the same charges SBF is facing.

(How would you rule if you were a juror? Coinage Members can now vote in our on-chain poll: Is Sam Bankman-Fried guilty?)

To be clear, SBF’s legal team isn’t down bad because of what those alleged co-conspirators had to say (both SBF’s co-founder Gary Wang and his ex-girlfriend Caroline Ellison were expected to testify.) They are down bad because… they’re kind of blowing it.

And, to be fair to Sam’s legal team, I’m not trying to say this was an easy task. Sam Bankman-Fried is facing seven charges at trial, including money laundering, securities and commodities fraud, and conspiracy charges. And three of his closest work associates have all already pleaded guilty and are cooperating with the government against him. But, as Coinage was first to report, it was also expected that SBF’s defense team might put up a fight by showing those alleged co-conspirators were more involved than Sam in executing what led to FTX’s collapse, and $8 billion in customer shortfalls.

SBF’s lead defense attorney Mark Cohen, who also defended Jeffrey Epstein’s accomplice Ghislaine Maxwell, has botched much of the early goings. He has mistaken exhibit numbers of evidence presented to the jury, he’s been repeatedly chastised by Judge Kaplan for stalling and repeating himself, and he seemingly waved the white flag by wrapping his cross-examination of key witness Caroline Ellison a full day early.

On the sidelines of the trial, I turned to my former Yahoo Finance colleague and legal expert friend Alexis Keenan to get her take — seeing as she covered the Elizabeth Holmes trial and observed how those attorneys were able to get Holmes acquitted on four counts. “They seem to be getting frustrated and stopping short of pushing the witnesses,” she told me. We then both agreed we would not want to be defended by SBF’s lawyers (I also never hope to be in need.)

How SBF’s Legal Team Is Losing

The strategy heading into trial was simple. I got a preview of Sam’s defense when I met with him at his parents’ home this summer in Palo Alto and he provided documents he had prepared. As I reported for Coinage (with the help of legal expertise from Bernie Madoff’s former prosecutor Marc Litt) there were three things SBF’s lawyers would try to do:

1. Undermine the credibility of the government’s key witnesses

2. Complicate the government’s narrative with added complexity

3. Try to present a lack of criminal intent

“I think if he is acquitted of all the charges, his defense team will have successfully impeached the three cooperators and shown them to be liars,” Litt told me before the trial started when we provided an exclusive preview of SBF’s proposed defense. Observing the playbook, Litt speculated that SBF’s team would “draw all the complexity they can out of it and try to persuade at least one juror that that complexity casts doubt on his intent and his lack of criminal mindset.”

Instead, on occasion, it actually seems like Judge Kaplan has been more interested than Sam’s own lawyers in jumping in on key witnesses. First up – was Gary Wang, the co-founder of SBF’s crypto trading firm Alameda Research. He testified that he signed millions in loans in the form of promissory notes — including one that let him take out $200,000 to buy a home. He signed another for $35 million, but couldn’t recall for what:

Judge Kaplan: What may you have spent $35 million on as an investment?

Gary Wang: Some company that Sam wanted to invest in, but I don't recall. …

Judge Kaplan: Okay. Counsel, anything you want to ask in light of that?

Prosecution: No, your Honor.

Defense: No, your Honor.

That seemed like a missed opportunity to help jurors understand everyone seemed pretty fine with what was going on at FTX to make personal fortunes … until it all went down and the government offered deals to testify against their friend.

Two days later, it was much of the same meandering for their cross examination of Caroline Ellison. In fact, at one point Judge Kaplan joked Mark Cohen had repeated himself from just two minutes prior when Cohen had asked Ms. Ellison one question:

Prosecution: Objection, your Honor. This was asked on direct, it's been asked on cross [examination.]

Judge Kaplan: It was asked just a couple of minutes ago! Sustained!

At one point, Cohen appeared so fed up with being shot down he cracked a joke when Ms. Ellison noted she regretted losing Alameda $100 million on one cryptocurrency going bust.

“It's always easier in hindsight,” Cohen empathized. The prosecution moved to strike his remark, and Judge Kaplan agreed. “Strike Mr. Cohen's remark, however true it may be. Cohen quipped back, “At least something I said was.”

At other times, the defense just rolled right through obvious opportunites to question either Gary’s or Caroline’s decision making in running Alameda and FTX:

Cohen: Was hacking of the systems a risk to Alameda?

Caroline Ellison: Yes, it was. It happened a few times. 

Cohen: It actually happened?

Caroline Ellison: Yes, that's right. 

Cohen: Now, coming back to accounting matters…

Hopefully that paints a picture of what’s been going on inside the courtroom. But clearly the missed opportunities are stacking up.

To be fair, this was always going to be a 3-on-1 against Sam’s side of what happened at FTX. And on top of that, Judge Kaplan had previously ruled in pre-trial motions to severely limit the routes Sam’s legal team could take during trial proceedings. But just because the window for Sam’s defense is narrow, it doesn’t provide an excuse not to execute.

Then again, Sam’s team hasn’t had a chance to present their case and there is still a lot of game to be played. They will have to wait until the government is done calling their witnesses to do so, when we approach the bottom of the 9th inning.

It’s also still unclear if SBF himself will take the stand. If I were a betting man (which I am) I’d say he does. He’s always played an active role in his defense — and probably thinks he can defend himself better than his legal team. There’s just one problem.

Sam isn’t getting his Adderall.

His defense team filed a complaint with the court once again Sunday night to ensure SBF can stay medicated during the trial. His lawyers noted, “as we approach the defense case and the critical decision of whether Mr. Bankman-Fried will testify, the defense has a growing concern that because of Mr. Bankman-Fried's lack of access to Adderall he has not been able to concentrate at the level he ordinarily would and that he will not be able to meaningfully participate in the presentation of the defense case.”

The trial continues this week with testimony from SBF’s third alleged co-conspirator, FTX’s head of technology Nishad Singh. Stay locked to Coinage for the latest — and get caught up on our exclusive coverage of SBF’s defense.

How would you rule if you were a juror? Coinage Members can now vote in our on-chain poll: Is Sam Bankman-Fried guilty?