Chain Reaction

SBF testifies and closing arguments are made as his trial comes to an end (w/ Alex Wilhelm)

Episode Summary

For this week’s episode, Jacquelyn is joined by TechCrunch+ Editor in Chief, Alex Wilhelm, to discuss the end of the trial for Sam Bankman-Fried, former CEO of FTX, who is facing seven charges related to fraud and money laundering.

Episode Notes

For this week’s episode, Jacquelyn is joined by TechCrunch+ Editor in Chief, Alex Wilhelm, to discuss the end of the trial for Sam Bankman-Fried, former CEO of FTX, who is facing seven charges related to fraud and money laundering. 

They talked about:

Keep up to date with Jacquie's coverage at

Here are some articles to keep you up to date: 

Chain Reaction comes out every Thursday at 12:00 p.m. ET, so be sure to subscribe to us on  Apple Podcasts, Spotif  or your favorite pod platform to keep up with the action.

Episode Transcription

Jacquelyn Melinek  0:01  

Hey everyone, its Jacqueline melanic. Welcome to chain reaction, a show that unpacks and dives deep into the latest trends, drama and news with some of the biggest names in crypto breaking things down block by block for the crypto curious. So after five weeks, we finally come to the day that I was beginning to think may never come Sam Venkman Fried's trial is coming to a close. As a reminder, SBF is on trial for seven counts of fraud and money laundering, among other things, from his time as CEO of FTX. And for his interrelationship with Alameda research, which was a crypto trading firm that he also co founded. There is a lot that's going on with this case. But what the prosecutors want jurors and everyone else to believe is that it really comes down to greed, a lot of lying, and a ton of still alleged fraud. I have TC plus editor in chief Alex Wilhelm here to help me talk about the latest week of the trial and what could be next for SPF as the jurors move into deliberation soon, Alex. Hi, thanks for being here.


Alex Wilhelm  1:05  

It's my absolute pleasure. I'm just kind of shocked and amazed that we're finally at the end of this, it feels like it's been going on since the dawn of time. And finally, we shall soon be free of a criminal case that has consumed pretty much all of your working hours since it started.


Jacquelyn Melinek  1:18  

Yeah, it's been a long five weeks for me, me and other reporters have joked about like, what our lives gonna be like after this. And I'm kind of saying, oh, I'll just go and respond to all the emails in my inbox. And I'm sure that people who have been messaging me would love that. So


Alex Wilhelm  1:32  

the trick to getting things done is to never check your email. I stand by this. I never read email. It's great. We function differently. Yeah. Anyways, last time we were here, Jackie, we were talking about SPS first day on the stand hearing from his defense lawyers and kind of answering their questions. So I'm really curious, how did he do answering questions from the prosecution in the resuming days?


Jacquelyn Melinek  1:52  

Okay. Basically, SBF took the stand for the last time for his trial from Thursday, all the way to Tuesday. And on Thursday, as you said it was the hearing testimony. So there were no jurors present. And then Friday, Monday and Tuesday, the jurors were there. And his defense basically tried to paint him as someone who acted in good faith, which if the jurors determined that they couldn't exonerate him and all seven charges, so the good faith thing is like a major motive that they're trying to drive home. And then meanwhile, the prosecutors were trying to basically say, Sam was lying 24/7 And the way he acted with the defense team, he spoke really fast. He was excited to speak. He had like his narratives going, it was obvious that they rehearsed what they wanted to get across. And then when it came to the prosecutors, he was very slow to reply. He said, I don't remember a million times. He said, Yep, a million times. And the yips were kind of like, yep, yep. Yep. Like it was just kind of like, Yeah, let's move along. So it was like two different people were on the stand in one body. And that was something that also came up later on in the closing arguments, which I'm sure we will get to as well.


Alex Wilhelm  2:59  

Yeah. But I'm really curious about and this is an odd question, but like the human psychological impact of having one set of personas on display when he was talking to his team, and then this seemingly kind of radical transformation into a more reticent character for the prosecution. Do you think that's going to impact how the jury views his first round of questions? Because it sounds like he's kind of doing the Jekyll and Hyde thing here.


Jacquelyn Melinek  3:22  

Yeah. 100%. I think it'll definitely impact the way they view him. I don't know if him testifying really helped him at all. I think it gave him the opportunity to try and explain what he did. But when it came to the prosecutors asking him questions, he seemed extremely not remorseful. He seemed arrogant. He was a little snarky with them. Sometimes they would ask questions, and he would be like, Well, it depends how you define this, or he just really didn't answer the questions. And obviously, this is a tactic that his lawyers told him to do. Right. And I think by saying I don't remember or I don't recall, it kind of stops the prosecutors from opening up a door to then ask about the things he said he may recall. And with that said, the prosecution brought up like a number of different statements. He made video interviews, ads that FTX did basically to try and paint this picture. And because he was saying I don't remember I don't recall or any of those other variations of those phrases. They would be like Okay, pull up government evidence this and they would pull up the evidence of him stating exactly what they just asked. And then they would be like, does this refresh your memory? And he was like, either Yes. Or oh, I don't remember it was so long ago like I've said a lot of things I've done a lot of things so yeah, it wasn't the best look for him all right.


Alex Wilhelm  4:34  

Far be it for me to jump in front of a bus here for Mr. Bank been freed. But I'm slightly sympathetic to the I don't remember thing in the odd case. Like for example, if you asked me a gun to my head, what did I have for lunch yesterday? I don't know. Yeah, because my life is currently in chaos. So like, I kind of get if I was flying around the world and partying and losing billions of dollars, I to him, I forget a conversation or two, but it seemed like he leaned on that for anything that was going to be an awkward thing for him to answer. And I'm kind of amazed, you can say, I don't know, because it feels like certainly that wasn't always true. And it's a kind of a great way to avoid perjuring yourself while also getting out of answering actual questions.


Jacquelyn Melinek  5:11  

Yeah, that's a really good point. And that's something that his defense team kind of argued as well. It's like, he's done so many interviews, and he's been everywhere all at once. And he works all these hours. How can you remember everything? And it is a fair point, when we were talking about this podcast, I was like, when did we last leave off? I feel like I've lived like five lives since you know. And I think it's a fair point that he is a human at the end of the day, but he also had months to prep for this. So surely, he saw the government evidence beforehand. But they did say it was like millions of documents. And I don't know if that's an exaggeration, but after sitting through this trial, it may not be


Alex Wilhelm  5:46  

okay. Probably not an exaggeration, but not every single one of them had the same weight. I think, for example, the copies of text messages and other sorts of things would be high on the icicle take a look at that side of things. So I don't buy that he doesn't recall or didn't recall. But I just whenever I make that point, I want to give them at least one person credit for, you know, things do happen. But still, I mean, when you're running a business of that size, and you're talking about it publicly, and you're answering interview questions about it and interviewing people and day to day operations, certainly some things are going to stick in your head, right? Especially when they're important for billions of dollars. Like I'm pretty sure I would not forget a 10 or 11 figure transaction, right, just say


Jacquelyn Melinek  6:22  

they also tried to argue that after FTX, filed for bankruptcy, and Sam stepped down, he no longer really had access to company resources. And yet, he still went on this media tour to basically prove good faith and that there was good judgment here. And he had no lawyers to advise him at the time, he didn't have access to any more of those internal documents. And so he was just saying what happened with his memory is how defense team tried framing it.


Alex Wilhelm  6:48  

Well, it's almost like he had a memory than ability to retain information, because I recall him tweeting out notes about what he thought FTX is balance sheet was effectively even after he lost access to the documents. So that's someone showing off in a public forum, their ability to hold on to historical information on a financial basis long into the future after they've lost this source documents. So to me, he kind of scuttled his own ship there, I think. But prosecution has gone through the thing. Before we talk about closing statements, I want you to tell me basically where you thought things stood before we got into the last bit of the trial.


Jacquelyn Melinek  7:20  

So I don't think things looks that great for SPF after his testimonies, the multiple ones he gave, when it came to the defensive side, you know, he was who he genuinely has presented to the public, he was jittery, excited, talking a lot, he would get cut off by the judge because of the narratives he was doing. And then when it came to the defense, as I said before, he was slow and non remorseful. And it did not paint a good picture for him at all. And then even with his own defense team, they brought up the topic of Alameda, quote, unquote, borrowing FTX customer funds, that's the word they've used throughout this trial. It's a borrow, which we know now is not borrowing, they took FTX customer funds. And when the lawyer his own lawyer asked him, Where did the money go? He kind of just like, he paused. And then he said, I don't know how I define an answer on who spent that money. Like what kind of sentence is that? That is a verbatim sentence. I don't know how I define an answer on who spent that money. I feel


Alex Wilhelm  8:17  

like that's what I would tell my spouse if I went out for like, a weekend of drinking, she come back and she's like, what's, like, I don't know how I would defy like I wasn't spent that money.


Jacquelyn Melinek  8:26  

Yeah, it may have been me my alter ego.


Alex Wilhelm  8:29  

The other me? Yeah. Okay. So it sounds like the kind of Hail Mary defense of getting Sam on the stand and going through, you know, hours and hours and hours of questions didn't seem to help. And that brings us I think, to closing statements. And I talked to you earlier today, on the lunch recess, and you were telling me how the prosecution was going on? And on and on. And on. So tell me about their statement. And why did it take 8000 years to get out?


Jacquelyn Melinek  8:57  

Yeah, so we are recording this Wednesday night. And as it stands, the defense is still doing their case. They're still doing the closing arguments. I left like an hour ago to come back and record this. I reached out to someone who was there. And they said I left because it was quote, so boring. But we were told that they were going to finish it tonight regardless. So then tomorrow, I'm just kind of giving a little background here. Tomorrow, then the government can give a rebuttal if they want, or it will literally just move to the jurors kind of getting a breakdown of all the charges. And then they're kind of sent on their way to go figure out the verdict could take them an hour could take them 10 days could take them a month. Who knows. Okay,


Alex Wilhelm  9:38  

but yeah, I presume given your answer to that to the prosecution didn't exactly break new ground in their closing statements. So it sounds like it was more of a summary than anything.


Jacquelyn Melinek  9:46  

And the prosecution's closing statements were far from just statements. It was like a monologue. It was hours and hours and hours. And when I called Alex during my lunch break, I expected that we would have been done with the prosecution. I thought maybe we would We've even gotten to the defense at that point. And we were still, I guess we were two thirds of the way through. But still, how long can one person talk? And apparently the answer is for four, maybe five hours. The prosecution's case for bank Winfrey was basically that he lied, he made false promises. And he's responsible for billions of dollars loss for 1000s of FTX. Investors. And they also highlighted he had many opportunities to come clean between 2021 and 2022. They highlighted six different instances. But he didn't. And that kind of goes to their argument that he did not act in good faith, which, again, going back to what I said earlier, is a major, major point that they need to drive home because the burden is on the government to prove this case,


Alex Wilhelm  10:43  

can we hear a little bit more about their definition of a time in which he could have quote, come clean? Like what was an example of one of these situations, so I'm curious what they thought merited that list.


Jacquelyn Melinek  10:55  

Two major ones was the balance sheets that Caroline Ellison, the CEO of Alameda procured back in the summer of 2022, when lenders asked for balance sheet, she came up with seven alternatives to the real one, to basically kind of hide the fact that they owed about $10 billion in FTX, quote, borrowed funds. That was one example he viewed that document. And they have the metadata to prove that he viewed that document. So he knew about it at that point, that was one another is even when FTX collapsed, he said, assets are fine. FTX is fine. Another chance for him to come forward. And then there were other moments in time where he knew that they were taking this money, they were using it that was kind of the biggest theme is that they took customer funds throughout those two years, mainly, and he had many opportunities to come forward.


Alex Wilhelm  11:45  

Got it. And how compelling Do you think that argument is that he could have come clean here or the opportunities didn't take them kept making statements that they view as false or possibly even fraudulent and just never actually owned up to it?


Jacquelyn Melinek  11:58  

I think it was honestly really convincing. Then on the other hand, once the defense came up, it was also a little convincing, but for different reasons. I will say the prosecutors case, was very like boisterous, enthusiastic, they were pointing at Sam, and they were kind of painting him. And this is exactly what his defense team said, as a villain. And when Mark Cohen, who is the defendants main lawyer, spoke, he spoke so softly and it was like he was talking to you like Alex, you know, Sam didn't mean this. And like, he was basically playing on the sympathy card. And he was arguing that the government is trying to make this like Hallmark movie like case against SBF, and that he was this villain and this monster when in reality, he was just someone who made bad business judgments,


Alex Wilhelm  12:49  

bro was just Diet Coke, Icarus, right, like Rose really high fell really fast ended up having very little impact on the long term future of the world. But I mean, if the jury decides that, yeah, the allegations of fraud and misuse of funds and so forth are true. I don't think villain is an incorrect moniker. You know, if you hold yourself up as a paragon of responsibility, and you try to really pull the world in one direction, and turns out you were using stolen funds to do it, you suck. And you're a bad person, they're


Jacquelyn Melinek  13:18  

trying to argue they just borrowed the funds.


Alex Wilhelm  13:22  

Okay, let's play a fun game. Jackie, I come to your house. And I helped myself to the television that I can see behind you and your, your camera shot here. You come to me and you say you steal my TV, and I go, Oh, Oh, contraire. And then we go to coordinate merely point out that I borrowed it without permission. Not in the TOS didn't tell anybody till the rules my TV the whole time. I don't think you would find that compelling. And so I'm just curious, like, under what real world scenario, would we allow this definition of borrowing to to stand up? It feels tenuous


Jacquelyn Melinek  13:53  

to me. So there's a whole argument. And there's been evidence pulled up on their margin trading. And basically, by enabling margin trading on FTX, you're almost permitting them to use your funds. But margin trading isn't turned on for everyone. And I think in the end, only 4.4 billion of the eight to $12 billion they took was from users with margin trading. And that's not to say they could even take those to begin with, because again, going back to the terms of service, they claim that you couldn't so it's an argument between the government and the defense saying like, can you or can you not take margin trading funds, but still, in the end, they took more than that. And they were, they had retail investors come up who never signed up for margin trading, and they can't access their funds and they, you know, they basically took it so again, it's not bartering. It's stealing. And Cohen kind of harped on how the government's kind of bullying Sam, by bringing up his appearance and His romantic relationships and having a bad haircut and all these different things and he's like, but that's not evidence and that doesn't make him guilty. He's just like a bad dress. CEO and like I was like, dude, now it's not the time to make a joke.


Alex Wilhelm  15:04  

Yeah, this is not the moment for humor. But this does bring us back to the relatively hilarious picture of him in the private jet wearing socks and passed out in a chair looking like someone who had too much lunch. Yeah. and is currently in a lazy boy. How did that come up? Again speaking,


Jacquelyn Melinek  15:18  

the private jet. Yes, the defense brought it up during an argument on Monday after the prosecution brought it up, and basically said that Sam spent frivolous amounts of money on his private jet travel. And it was because he is in the Bahamas and he goes to DC a lot. And it's it's hard to get to DC from the Bahamas such last minute is what the defense said. And then the prosecutors basically said, Well, you sent packages on your private jet, just packages, not even people packages. And she was like, how much did those cost? And Sam was like, I don't know. And to be fair, like, how could you remember what it costs to ship a package on a private jet? That's such a crazy metric I can't even imagine. But she did get him to admit that he authorized those packages being shipped. And then the defense kind of tried to argue that, you know, they use the private jet for valid business expenses, depending on the context, but they never brought up the packages when it was their turn. It was just this whole ordeal. And I can't even imagine shipping a package on a private jet. I just use FedEx, they have overnight shipping. I want to get on the private jet. Like give me


Alex Wilhelm  16:25  

a free ride. And also, the Bahamas aren't on Mars,


Jacquelyn Melinek  16:29  

right? Like, yeah, it's right below New York or DC or wherever he's traveling to and from, like, I'm sure I can get a flight out there tonight.


Alex Wilhelm  16:36  

Yeah, and for a lot less money than takes a fly private jet. private jets are very expensive. And this sort of corporate expenses does add up. But if you want a historical example of when private jets have also shown up in criticisms of CEOs behavior, I'll give you two examples. One was Jeffrey Immelt, the former CEO of GE, who used to have a tail plane, follow him around the world. So he brought two private jets with him on his trips. And then when people found out about this, they were like, bro, you're not the president, you know, and that was pretty unpopular. And then the other famous example is the former CEO of we work at a Newman, who used investor funds to buy private jet and then got bounced out of Israel for smoking weed and on international flights. Anyways, the point is, a lot of people get high on their own supply historically, and spend too much money on private jets. That said, I've never heard of a CEO using one. It's a private parcel service. And I think that does underscore either a complete, like column of idiocy in this man, or hubris to the point of I actually kind of believed this was all a bunch of fraud like that. There's no think of a carbon footprint. I feel bad enough about using Amazon.


Jacquelyn Melinek  17:40  

I know like me, I know. And it's funny, because when it came to the private jet conversation to his lawyer, Cohen kind of tried to say, Oh, well, based on how big they were at the time, it made sense that they were using the jet for these business purposes. And it's like, I don't care if you're Jeff Bezos, he shipped his packages, probably with his Amazon plans, but those are filled with other packages. You know,


Alex Wilhelm  18:01  

FTX was not a multi trillion dollar International Technology conglomerate where this does become a de minimis expense. It was a fraudulent crypto exchange. So allegedly, I mean, that's brutal. I guess the thing that I'm struggling to see here is why the journey wouldn't land and one particular side of this argument just given what you've told me, and the fact that honestly, I was willing to come into this with open mind and ready to be proven off my priors, but it doesn't seem like there was much to actually combat the allegations, other than the government's being mean, my boy can dress and he's actually incredibly stupid. That's not much of a defense.


Jacquelyn Melinek  18:37  

Yeah, I think, you know, honestly, as someone who's been living and breathing this for the past five weeks, and I've been covering this for basically the past year, you know, even his lawyer got me feeling a tiny bit sympathetic. And so if he can do that, to me, imagine how these jurors who may or may not know about the situation might be impacted. And both sides were obviously fighting to win over the jurors.


Alex Wilhelm  19:01  

I wonder if the jury is gonna be meaner than we are. So I feel like nicer, like, soft spot. Well, I don't know. I mean, I have a slight soft spot for erratic, crazy technology people. I just do I think they're fun. Yeah, it's my way of TechCrunch and I'm also a big fan of risk and failure. Right. I think it's fun. The average person that's trying to make rent, you know, yeah, probably doesn't have any sympathy for private jet travel. Like you and I. Yeah, and we know enough people and


Jacquelyn Melinek  19:30  

we write about like massive raises and valuations and like a ton of money moving 24/7 So when we see like, 30 million, we're like, oh, 30 million, but to someone else, like, that's unfathomable. And I'm not saying I have $30 million. I wish I did.


Alex Wilhelm  19:45  

But you heard it here first. Jackie is a multi dusting dries. Yeah, no, but no raise for you.


Jacquelyn Melinek  19:52  

For these people. You're right. They probably do look at this. And they're like, What is going on with this guy? Yeah, but at the same time, if they paint this picture or that he was just someone who made bad decisions. If they had a risk management team, none of this would have happened. He didn't mean it. He was just trying to build two companies. And he did build two companies. These are all arguments that they were making. So with all that said, if I wish you guys could see Alex's face, he has his hand on his head like, enough, you know, but basically, the jurors during the closing arguments today, one were exhausted, I think they want out. And two, they were making eye contact with both Cohen and Bruce, who was the person from the prosecution side. And they were genuinely like, looking and taking notes throughout the whole thing. And I will say in the past, the jurors really didn't take notes during Sam's testimony. And now they're taking notes for both the closing arguments, and they were actively looking, some of them even made facial expressions, which I'm pretty sure they're not supposed to do. With that said, I think you're probably right. And a lot of people have predicted that this will not go in his favor. Whether or not it will go not go in his favor for all seven charges.


Alex Wilhelm  21:05  

That's absolutely true.


Jacquelyn Melinek  21:06  

That's, you know, that's up in the air, but I don't think they'll deliberate for too long.


Alex Wilhelm  21:10  

That was my my next question was, how long do you think deliberations are going to last? Because historically, they can be like 20 minutes, so they can be like 20 days, there can be a hung jury. Like there's many options here. But how it's gonna go but doesn't sound like you think that's going to be much of a question cuz it'll be over soon. Right?


Jacquelyn Melinek  21:25  

So the court is closed on Friday, and tomorrow, the jurors will get together. As I mentioned, the government has the chance to rebuttal tomorrow morning, whether or not they want to, and I say tomorrow morning, as in when this episode airs on Thursday, because we are recording Wednesday night again, but the court will be closed on Friday. So unless a verdict is brought together on Thursday, which everyone kind of agrees is unlikely, even the security guards at the courthouse said that's really unlikely based on the cases they've watched in the past, it'll probably be at least next week. So I think the end all be Hall is to just kind of leave it from here and see where things go. I mean, I think the prediction game is up in the air, and everyone's made their predictions on what's gonna happen to Sam. And I guess time will tell


Alex Wilhelm  22:08  

time will tell I will be back when we do have a verdict, I presume? Yes. Yes, we will. All right. And I will not announce the results of the TechCrunch betting pool for a number of years, but we'll see how close we can. And I'm kidding. We don't have one though. Now that I said that I wish we did.


Jacquelyn Melinek  22:22  

Although I did come up with a number of my guests, but we won't get the actual sentencing for at least three months. This is just whether or not he's found guilty on seven counts. So a number


Alex Wilhelm  22:33  

of the seven charges and then Okay, so we're a world ways off from actually getting the the hard number. Okay. All right. Wow. The law takes forever. But thank you, everybody. I'm John, Jackie, and thank you for doing all this. Thank you for going and I guess we'll learn more soon.


Jacquelyn Melinek  22:46  

Yeah, thanks for chatting. We'll be back next week with conversations around what's going on in the wild worlds of web three with top players in the crypto ecosystem. You could keep up with us on Spotify, Apple Music or your favorite pod platform and subscribe to our companion newsletter, also called chain reaction. Links to the newsletter and stories we talked about can be found in our show notes. And be sure to follow us at chain underscore reaction on Twitter. Chain Reaction is hosted by myself Jacqueline melanic and produced by Maggie Stamets with assistance from Nishad Kulkarni and editing by Kel Brice Durbin is our Illustrator and Henry pick Yvette manages TechCrunch audio products. Thanks for listening in. See you next time.


Transcribed by