The Witnesses at SBF’s Trial Are Telling the Same Damning Story About Him

This is part of Slate’s daily coverage of the intricacies and intrigues of the Sam Bankman-Fried trial, from the consequential to the absurd. Sign up for the Slatest to get our latest updates on the trial and the state of the tech industry—and the rest of the day’s top stories—and support our work when you join Slate Plus.

The material outcome of the collapse of FTX has never been in question. The crypto exchange had money its customers deposited, and then it didn’t. The issue at the heart of Sam Bankman-Fried’s trial hasn’t even been whether he stole the money or simply lost it. It’s been whether he was a fraudster—if he made a bunch of misrepresentations to his customers and his lenders. Someone could dream up a version of what happened in which Bankman-Fried committed fraud and told significant lies but wasn’t some sort of devious crypto Svengali. The simplest version: Bankman-Fried went out of his way to bill FTX as the safe and responsible crypto exchange, but actually, he was quite rowdy and reckless in his management of the company and its customers’ money. The government could send him away to prison for fraud on that basis.

Bankman-Fried’s story about himself, since FTX’s meltdown, has been that he simply blew it. “I fucked up,” he has said, and he told longer versions of that story during a whirlwind pre-indictment press tour late last year that his lawyers could not prevent him from taking. In his view, he made crippling but good-faith errors that knocked down FTX’s house. That story fits pretty well with how Bankman-Fried presents himself. (He had those wild curls! He didn’t really understand what a men’s suit is or how he should wear one!) And it matches how his own mother talks about him in the press, as a person who “will never speak an untruth.” A picture comes together of earnest arrogance. Perhaps, maybe, a jury could be sympathetic to such a figure.

The portrait of Bankman-Fried that the prosecution and its witnesses are painting at his trial is much more devious. It was reasonable to expect that it would be, since the U.S. attorney for the Southern District of New York spent months striking plea deals with seemingly every FTX bigwig except the man who used to sit atop the org chart (such as it was). But as SBF’s former colleagues, ex-girlfriend, roommates, and subordinates (sometimes witnesses overlapped into several of those groups) have taken the witness stand in New York, they have punched holes in the notion that Bankman-Fried was not a knowing and deeply criminal participant in the affairs that brought down his empire.

One by one, Bankman-Fried’s old compatriots have sat in the witness box and, in their own ways, aided the prosecution’s case that Bankman-Fried knew the jig. Caroline Ellison is the most high-profile witness in the case because she ran Bankman-Fried’s affiliated hedge fund and was also, at turns, his romantic partner. Whatever Ellison was going to say figured to be explosive, as Bankman-Fried was apparently worried enough about her testimony that he got sent to jail over his efforts to mess with it. But I did not expect to hear that the hedge fund, Alameda Research, had an entire buffet of fake balance sheets to fool Bankman-Fried’s lenders, as Ellison alleged on the stand. The Alameda balance sheet that went public last year, precipitating FTX’s implosion, was so grisly that I figured it was the real one, or at least the only one. Allegedly there were other balance sheets, and Ellison said Bankman-Fried had her develop various fakes that might make the company look better. I suppose there are many crimes someone could commit naïvely rather than calculatedly, but having a subordinate cook up several fake sets of books is not one of them. Ellison said that Bankman-Fried, a self-described effective altruist who purportedly wanted to make the world better by making tons of money, used that angle to justify their crimes together.

Gary Wang, FTX’s former chief technology officer and a co-founder with Bankman-Fried, testified about one particularly bad detail. Here the mechanics of FTX’s collapse are important: The exchange gave customer money to Alameda, the hedge fund, which then lost it on some mixture of bad crypto bets, advertising payouts, venture investments, political donations, and personal goodies for Bankman-Fried and top brass. (The specifics are still the subject of a good bit of question, because the companies’ recordkeeping was bad enough that the guy who handled Enron’s bankruptcy said he had never seen such a galling lack of corporate controls and documentation as occurred at FTX.) Alameda traded on FTX’s platform, and Bankman-Fried has said in public that the hedge fund’s account was just like anyone else’s. But Alameda, Wang testified, did not have a normal account: The hedge fund could trade without its positions being liquidated if their value went too far in the wrong direction. In other words, Alameda was allowed to make a mess that other customers weren’t, and it did so with FTX customer funds. Bankman-Fried made the request for that feature, Wang said, and had FTX engineering director Nishad Singh implement the code.

Singh corroborated that testimony and explained that Bankman-Fried knew of the company’s excesses and didn’t address them. Singh testified that FTX spent more than $1 billion on celebrity and corporate sponsorship deals—relationships subsidized indirectly if not directly by FTX’s customers—and prosecutors shared a spreadsheet detailing it. When Singh went to Bankman-Fried with concerns over the spending, he said, the boss blew him off or responded antagonistically. Singh said that Bankman-Fried was personally intimidating and that he “unilaterally” decided to use FTX customer money on various poor business decisions.

Bankman-Fried has tried to tell a story that he’d never screw over his customers or lenders on purpose. The people he surrounded himself with at FTX and Alameda have, under oath, told a different story. This one is more like “Yes, Sam would do that, and what’s more, he would do it on purpose, and he was so dominant and had such a sharp understanding of the company that he was hard to stop.”

Now, the story Bankman-Fried has told about himself has occurred on social media and in the press, not in the courtroom. His defense has not yet made his case or called witnesses, and it’s not known if Bankman-Fried himself will testify. As my colleague Nitish Pahwa reported after sitting through days of the proceedings at the courthouse, Bankman-Fried’s lawyers do not appear to have a clear strategy. They’ve let this highly specific, pointed testimony about their client’s intentionality go mostly unchecked. Perhaps they are just exhausted by representing a defendant who is hard to represent, or maybe they’re leaving Bankman-Fried an opening to appeal the case based on the quality of his own counsel. (Some legal commentators have suspected that Bankman-Fried might be setting up something in that ballpark, but revolving around FTX’s former counsel, not his current legal team.) We will learn in the next few weeks how Bankman-Fried plans to counter all this sworn testimony that says he was a highly aware crook instead of an underprepared kid who did his best and made some mistakes.

In a way, maybe Bankman-Fried’s best defense against the idea that he’s a cunning operative would be to demonstrate his incapacity by having an extremely sloppy defense. (Mission accomplished?) He would go to prison, sure, but at least he wouldn’t give additional credence to the image his old friends have provided of him. One way of viewing Bankman-Fried’s general inability to stop talking about his case in public is that he hasn’t been playing a legal game at all, but has just been recklessly rationalizing himself in public, because that alone has some internal value to him. It probably would not have much value to the lawyers representing him.