SBF Trial – Forensic accountant reveals almost 70% of Alameda’s loans were serviced with FTX customer funds

The eleventh day of the Sam Bankman-Fried (SBF) trial revolved across the testimony of accounting consultants introduced ahead by the prosecution to make clear the disappearance of $9 billion in FTX buyer funds that preceded the cryptocurrency trade’s chapter.

The principle witnesses for the day had been Professor Peter Easton, an esteemed accounting skilled from the College of Notre Dame, and FBI accountant Paige Owens, who revealed the findings of their in-depth evaluation of FTX and Alameda’s accounts and financial institution statements.

Peter Easton’s testimony

Easton’s testimony was a meticulous evaluation that unveiled the extent of the purported misappropriation of FTX buyer and investor funds by the trade’s sister hedge fund, Alameda Analysis.

Easton’s scrutiny disclosed that from January 2021 till Nov. 11, 2022, accounts held by Alameda on FTX persistently displayed substantial deficits regardless of persevering with payouts to fulfill monetary obligations.

Easton revealed that out of the $11.3 billion in FTX buyer funds that had been alleged to be held by Alameda Analysis, solely $2.3 billion had been present in its financial institution accounts. He detailed how these funds had been diverted for numerous functions, together with investments at SkyBridge Capital, property acquisitions, political contributions, and charity foundations.

One significantly telling hint of funds led to Modulo Capital, the place a considerable sum of buyer funds was invested via Alameda. Moreover, FTX buyer crypto belongings had been used to repay a good portion of a mortgage that Alameda had acquired from Genesis Capital.

The professor asserted {that a} staggering 68% of Alameda’s third-party loans, valued at roughly $4.5 billion, had been serviced with FTX buyer funds — a disturbing mingling of sources.

The testimony additionally revealed that the acquisition of Binance’s $2.2 billion stake by FTX was financially underpinned by $1.2 billion sourced from “clients on the FTX trade.”

He additionally informed the courtroom that SBF’s dad and mom, Joe Bankman and Barbara Fried, acquired a $16.4 million property within the Bahamas, most probably by using buyer funds.

Path of political contributions

The following witness to take the stand from the prosecution was FBI accountant Paige Owens, who supplied insights into the in depth political donations attributed to SBF, Nishad Singh, and Ryan Salame.

In keeping with Owens, Alameda’s Prime Belief account executed seven transfers — cumulatively amounting to $47 million — to SBF’s private Prime Belief account between January 2022 and April 2022.

The prosecution contends {that a} substantial portion of those funds was directed in direction of numerous political motion committees, together with Guardians Towards Pandemics, Constructing a Stronger Future, and a number of Democratic PACs.

Nishad Singh’s political donations, surpassing $3 million, originated from Alameda and FTX Digital Markets financial institution accounts, with recipients together with quite a few PACs and marketing campaign funds. Ryan Salame, the CEO of FTX Digital Markets, equally acquired funds for political donations.

Public statements and censure

The prosecution additionally introduced Eliora Katz, the previous director of presidency relations and coverage at FTX’s US division, to the stand to debate a few of SBF’s public statements.

Katz learn tweets and written testimonies by SBF from congressional hearings held in 2021 and 2022.

A few of these statements contradicted the timeline of her employment on the firm, suggesting that SBF had made public assertions about FTX earlier than she formally joined in April 2022.

One other witness, Google Cory Gaddis, additionally took the stand briefly however was censured by Decide Kaplan resulting from a lack of understanding. The decide admonished each the prosecution and the protection for losing the court docket’s time.

The protection expressed issues about SBF’s entry to Adderall and its potential impression on his capability to focus, elevating questions on whether or not he’ll testify. SBF will reportedly be given an extended-release dose from Oct. 19.

Early conclusion doubtless

The trial is progressing forward of schedule, with the prosecution more likely to conclude its case subsequent week, leaving the protection with essential selections relating to its technique.

Easton’s testimony marked a vital second within the trial, as he is without doubt one of the closing authorities witnesses earlier than prosecutors conclude their case within the third week of proceedings. Earlier testimonies included three members of SBF’s internal circle – Caroline Ellison, Gary Wang, and Nishad Singh — all pleaded responsible and cooperating with the federal government.

Regardless of the protection’s efforts to undermine their accounts, these witnesses painted an image of Bankman-Fried allegedly orchestrating the fraud and making high-risk selections, even when shut associates raised issues.

The continuing trial continues to captivate observers because it uncovers allegations of monetary impropriety and political contributions linked to one of many cryptocurrency trade’s distinguished figures. Ought to SBF be convicted of the fees, he faces substantial authorized penalties.