Was FTX an empire ‘built on lies’ or a startup that ‘grew too quickly’?

SBF Trial: The latest updates from the FTX collapse’s courtroom and Caroline Ellison’s testimony

Sam Bankman-Fried, the former CEO of collapsed crypto exchange FTX, remains on trial for alleged fraud and conspiracy as he led the company’s swift rise and implosion. We’re now in the middle of the trail’s second week, with some of the highest-profile witnesses providing their testimony on SBF’s conduct, FTX’s business practices and alleged money laundering.

So far in the second week, the standout testimony has come from Alameda Research’s former CEO Caroline Ellison, who claimed she took $14 billion from customers to repay debts to lenders, using them as a line of credit under the instruction of SBF. And though there are no charges of bribery in the case, Ellison also testified to paying Chinese officials $150 million to restore access to $1 billion in frozen trading accounts.

Our resident crypto expert Jacquelyn Melinek, our expert on all things crypto, painted a full picture of the testimony as she continues to cover the trial from within the courtroom, as the highest-profile criminal case tied to the industry marches on within the Manhattan Federal Court. Between stints in the locked-down courtroom, she’ll be posting to X, as well.

For those in need of a refresher on the case, her breakdown of how FTX went from the third-largest crypto exchange valued at a peak of $32 billion to bankruptcy will get you up to speed. Or if you’re into a deeper dive into week one specifically, you can read more analysis here.

You can also follow along with her and the TechCrunch team’s coverage in the Chain Reaction newsletter, which drops Thursdays at 12 pm PT, and the Chain Reaction podcast, which will hit your feed every Thursday.

How to follow the SBF trial

The trial itself is expected to last at least six weeks, kicking off with jury selection on Tuesday, October 3. From there, access to the proceedings is limited, as no devices are allowed; reports are being physically put together within the courtroom.

Beyond our daily coverage, additional expertise and commentary will live on TechCrunch+. There, you can find stories like this in-depth breakdown of what to expect from both sides of the SBF case, where the prosecution and defense could gain ground or fall short in their arguments and what the takeaways were from the opening arguments.

SBF trial: What we learned in the first week

As expected, the opening statements in the SBF trial were spicy. The prosecution painted a picture of an empire “built on lies” and made a point to show actual pictures of SBF alongside rich and powerful figures to illustrate the peak of his power and influence prior to FTX’s implosion.

“This man stole billions of dollars from thousands of people,” prosecutor Thane Rehn told the court. “He defrauded sophisticated investors and lenders, and he emptied the accounts of ordinary customers, too. He bought himself wealth, power and influence.”

The defense, on the other hand, depicted SBF and his colleagues as in over their heads, without ill-will as FTX collapsed around them.

“Sam and his colleagues were building the plane as they were flying it,” defense attorney Mark Cohen said. “They had to figure out how to navigate a world where they were running FTX, building out its systems, dealing with hacking threats, managing the credit risk of their customers, managing hundreds of employees, all while building up their actual exchange.”

Read a recap of the prosecution and defense’s full arguments here.

FTX’s co-founder and CTO Gary Wang testified Thursday on the extent to which Alameda Research was used for whatever purposes he and SBF saw fit. The crypto trading firm, according to Wang, pulled funding directly from FTX customers, whose transactions would be funneled toward Alameda and then directed elsewhere.

Check here for our rundown of Wang’s testimony so far, resulting from a guilty plea in December 2022. Wang’s testimony is set to conclude on Friday.

Thursday also brought in testimony from Matt Huang, co-founder and managing partner at crypto investment firm Paradigm. That firm invested $278 million in FTX across 2021 and 2022, and is part of a class-action lawsuit accusing it and others of defrauding customers by promoting FTX.

His testimony centered around being left uninformed about FTX’s utilization of customer money to keep the Alameda Research afloat, a practice that Huang says would have halted his involvement. The full breakdown of his testimony on his relationship with FTX, stretching back to 2019, can be found right here.

We also got a look at the composition of the SBF trial’s jury, which ranges from a train conductor to a retired investment banker who attended Stanford University. You can listen to a special joint episode of our podcasts Equity and Chain Reaction to get a better sense of the vibe between the jurors and the rest of the court.

Earlier in the week, we got confirmation that at no point did the U.S. government offer SBF a plea offer.

For a full rundown of our coverage of the SBF trial, check below:

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