A meeting with President Bill Clinton in midtown Manhattan, a dinner with the head of Saudi Arabia’s sovereign wealth fund, an invitation from Anthony Scaramucci to attend a Steelers game. These were some examples presented in court that showed how Sam Bankman-Fried was rising in prominence just as his trading firm Alameda Research was running out of money.
A new trove of documents were presented in Bankman-Fried’s criminal trial this week as evidence of how the founder of FTX and his associates spent voraciously on investments, donations and real estate even in the final months before the crypto exchange’s collapse. Bankman-Fried is accused of using billions of customer funds from FTX to spend lavishly and engage in speculative trading through Alameda Research, FTX’s sister hedge fund.
Emails, bank statements and wire transfers are among the items prosecutors used to detail how FTX customer funds were allegedly spent. They painted a picture of Bankman-Fried building up influence in elite circles through investments, political contributions and donations.
During the third week of the trial, prosecutors called forensic accountants, including an FBI agent and a professor at the University of Notre Dame, to testify about how they traced the source of the expenses back to FTX customer money. The defense pushed back, looking to show inconsistencies about whether the expenses were paid by customer funds and casting doubts on the expert analysis and accounting methods.
Here are the key documents presented to the jury:
STAR-STUDDED PRIVATE DINNER IN LA
The jury saw a copy of Bankman-Fried’s notes about his experience at a private dinner in LA in early 2022 hosted by Michael Kives — a former Hillary Clinton aide and co-founder of K5 Global investment firm — who he described as “probably, the most connected person” he’s ever met. Attendees at the dinner included Clinton, Katy Perry, Jeff Bezos, Leonardo DiCaprio, Kendall Jenner and Kris Jenner, he wrote.
Seeing K5 as a one-stop shop for celebrity connections, Bankman-Fried decided to make a sizeable investment. Nishad Singh, FTX’s engineering director who pleaded guilty and agreed to cooperate against his former boss, testified that he unsuccessfully pushed back on the decision. “Partnering with K5 and giving them this amount of money would be really toxic to FTX and Alameda culture,” Singh said in court, because politicking and social climbing shouldn’t be rewarded. Read the full PDF here.
K5 GLOBAL INVESTMENT AGREEMENT
Prosecutors showed a summary of an investment agreement between Bankman-Fried and K5, as well as a letter for the payment confirmation. In the letter, K5 acknowledged that it has received a wire transfer of $300 million from Bankman-Fried in March 2022. An accounting expert testified that some of the funding to K5 could be traced back to FTX customer funds.
KATY PERRY’S INSTAGRAM
Bankman-Fried’s interactions with celebrities was a major theme in his trial this week, as prosecutors sought to describe to the jury how the FTX executive pursued relationships with singers, actors, models and athletes. Those often resulted in multi-million dollar sponsorship deals. Prosecutors showed an Instagram post from Katy Perry in February 2022, featuring Bankman-Fried hanging out with the singer at the 2022 NFL Super Bowl.
SKYBRIDGE INVESTMENT AGREEMENT
Peter Easton, an accounting professor at the University of Notre Dame, testified that FTX customer funds were used to fund a variety of investments, including at SkyBridge Capital, the asset management firm founded by Scaramucci, former White House communications director for Donald Trump. Prosecutors showed an excerpt of the investment agreement between Alameda Research and SkyBridge dated September 2022, two months before FTX filed for bankruptcy. The agreement functions as further proof that spending on investments was consistent, despite the negative balance Alameda was facing during that time.
INVITATION FROM SCARAMUCCI
In late September, Scaramucci sent an email to Bankman-Fried and offered to introduce him to a potential investor at an upcoming Pittsburgh Steelers game. FTX filed for bankruptcy just nine days before the game. The email exchange offers a glimpse into Bankman-Fried’s attempts to court potential investors, while financial troubles were brewing at Alameda and FTX.
SAUDI CONNECTIONS
Bankman-Fried also secured meetings with investors from Saudi Arabia in September 2022, less than two months before FTX’s collapse. His calendar invitation showed he had scheduled a dinner with Yasir Al Rumayyan, the head of Saudi Arabia’s Public Investment Fund, at The Pierre hotel in New York. The following day, Scaramucci’s team facilitated a meeting for Bankman-Fried with Saudi minister of investment Khalid A. Al-Falih. Read the emails here.
PRESDIENT CLINTON MEETING
According to a calendar invite, Bankman-Fried also had a meeting scheduled with former President Bill Clinton at the New York Hilton Midtown in September 2022, two months before FTX’s collapse. Clinton was also a speaker at FTX’s Crypto Bahamas event in April 2022.
ALAMDEA’S $9 BILLION MISSING FUNDS
Professor Easton, an forensic accounting expert, testified that in June 2022, $11.3 billion in FTX customer funds were supposed to be held at Alameda Research, but only $2.3 billion were actually in bank accounts. That means $9 billion of customer funds were missing from bank accounts, Easton said.
Easton showed a chart breaking down the spending allocation of Alameda, as he tried to explain what happened to the $9 billion in FTX customer funds that were missing in June 2022, five months before the exchange filed for bankruptcy. The funds were ultimately traced to a variety of destinations, including investments, political contributions, charity donations and real estate, he said.
POLITICAL DONATIONS
Prosecutors highlighted political donations made by Bankman-Fried using funds from Alameda. The above chart shows Bankman-Fried donated to Protect Our Future, a Democratic political action committee primarily funded by the former FTX billionaire, as well as One Nation, a nonprofit group aligned with Republican Senate leader Mitch McConnell. Bankman-Fried has been accused of using customer money to fund political donations in order to sway crypto-friendly regulation in Washington, DC.
BANK STATEMENTS AND WIRE TRANSFERS
Easton said he studied Alameda’s bank statements, wire transfers, crypto wallets, and other documents for the government. Prosecutors showed an excerpt of Alameda’s bank statement from Silvergate Bank, a crypto-friendly financial institution that shut down operations in March this year. Easton said the bank statements were “extraordinarily important” in identifying when customer money was put into an Alameda account and when it was withdrawn from an Alameda account, contributing to his understanding of how customer funds were used.
This article was provided by Bloomberg News.
