Welcome back everyone. I am Cass PNC and I'm joined as
usual by my partner in crime, Mr. Bennett Tomlin.
How are you today? I'm doing well.
How are you, Cass? Fine.
We're joined by a special guest who has been at the courthouse
in some way, shape or form of the past week, going and
watching the Sam Bankman free trial.
Sam Kessler from Coindesk. How are you?
Hello hello long time first time.
This is pretty cool. Thanks, Cass and Bennett.
We haven't recorded since any of the defense's witnesses have
taken the stand, so I wanted to get us kicked off with those
individuals if we could and what they were supposed to
accomplish. For the defense we were talking
about the the, I guess it was the data scientist guy.
Joseph Pimbley. So there was him in crystal
Rawl. Who's a Bahamian attorney?
Who worked for works for for Sam?
Yeah, well, let's start with let's start with Pimbley,
because it sounds boring in terms of what he was sent there
to accomplish. Actually, can you explain what
his goal was for the defense? Sounds boring.
And it was boring, remarkably, compared to the rest of this
trial. But essentially, Pimbley is a,
you know, data analyst who was hired on the behalf of Sam's
team to kind of come in and assemble some documents that
show. I mean it's hard to know exactly
how they're they plan to use these document or you know these
these these data. But essentially charts showing
that Alameda liquidity and FTX liquidity was at a certain level
over the course of 2021 through 2022, the fall of the exchange
that, you know, makes it look like there was more money on
hand than, you know, what prosecutors would probably
allege. Yeah.
And we were all just kind of stunned at the prices this guy
was able to get from the, I guess I essentially the Bankman
Freed family. I I would assume that that's
who's ultimately paying this man's bills.
He did 73 hours of work or something and got paid $50,000,
which is I think all of us are kind of just wishing we had
rates like that. Unfortunately, it sounds like he
didn't help win any hearts or minds in terms of people there
or the jury. I would, I would presume.
Yeah, I mean, it's hard to get into the mind of the jury.
But I mean the way that this went was essentially he
presented these documents and then the prosecution came up.
And the the main, I guess thrust of the prosecution's questions
or if you want to call it argument to the jury with their
questions to Pimly was was essentially, hey, where did
these numbers come from? Oh, they came from Sam and his
lawyers. So the database that.
That you, based all of your analysis on came directly from
the client and then there were, you know, several more questions
after that. And I think they actually
belabored that too much and might have actually lost some
sway with with the jury as a result of that, you know,
extensive questioning. Yikes.
I know. I know.
The second one was you mentioned Christina Roll.
No. So it's funny you, said
Christina Roll. It is Chris.
There is a Christina role and there is no relation.
And there was a point made. Please.
Yeah, go ahead. What was that point?
Because that was what I was going to say too.
What was the point that was made in court?
So. Christina Role is a very
important Bahamian regulator kind of behind the the country's
embrace of crypto and crystal Role is a unrelated, which she
made very clear because Role in her telling is a very common
name there. She's an unrelated lawyer who
works for Sam and accompanied him when he talked to the
Securities Commission of the the Bahamas, I think if I'm getting
the name of the agency correctly, yeah.
And and just to add some color some color to what you just said
is that but from what I heard role is actually the most common
Bahamian surname out there like the first or second most common
Bahamian surname and which like I'm I don't know that's just all
of these weird little things that I'm that I'm fascinated.
By there were three roles in her testimony alone that she had to
distinguish. So I heard that that also was a
pretty unsuccessful defense tactic, insofar as her role in
all of this was only post collapse, which kind of negates
a bit of what she's saying and why why it matters that.
Can you expand on that for me? I.
Mean with a lot of this stuff, they're asking a lot of
questions that are they being lawyers from both sides?
That can seem disjointed. And sometimes it's because they
want to enter things into the record, sometimes it's because
they want to tee up. Other questions that they're
going to ask Sam during his testimony, which we'll talk
about in a little bit. And I think that her main goal
was to corroborate the timeline and substance of his meetings
with Bahamian regulators. One kind of contentious thing is
just that, you know, Sam. Essentially froze a bunch of
money or took a bunch of frozen money and gave it to, you know,
the Bahamas to in a very, you know, bad summary of how how
that worked. But, you know, it can seem like
a sort of cynical thing that he was willing to kind of kowtow to
the Bahamians in order to, in the view of prosecutors, I'm
sure, get preferential treatment there.
But I think part of her goal, Crystal Rolls goal with her
testimony, was to kind of communicate, hey, if he didn't
do these things that the Bahamas wanted him to do.
He would have gone to prison or faced severe penalties.
I mean that gets us through the 1st, the the first expert
witnesses. Do you have any more questions
about them, Bennett? No, my first questions start on
Bankman Freed. Then let's jump into the the
weird circumstances of you called it a mock trial.
I mean, I I guess I don't really.
It's all on record still, but it is without a jury present, and
everyone seemed a little stunned by that.
Essentially, without going into the legal details, because a
nobody you know wants to get super deep into that and BI
don't understand it as a journalist, not a lawyer.
You know, part of Sam's defense strategy rested on using his
lawyers and the advice that he received from counsel while at
FTX to kind of. Make the point that at least he
if he didn't have bad counsel, that he at least was following
the advice of counsel. And that is a kind of important
legal distinction. And they wanted to present
essentially this evidence that right or wrong, he got counsel
while he was at FTX and Alameda and that's what he followed.
Which led him to think that certain business decisions that
the prosecutors say were fraudulent were legal.
And the judge, in deciding whether to admit this argument,
this kind of argument into court, did this weird thing
where he dismissed the jury and held a hearing which essentially
was like a mock trial where Sam and his, well, Sam was
questioned by his lawyers. They did their direct, you know,
questioning and you know, focus specifically on.
These sorts of questions, this weird legal Gray area.
And then he was also crossed, meaning the prosecutors got to
question him as well, not in front of a jury, but he was
still underoath. So it's kind of this confusing
thing to help the judge ostensibly make a decision on
what to admit. Yeah, And I think the technical
name for it is evidentiary hearing.
I called it a mock trial because that's more evocative than
evidentiary hearing, but we should probably be, you know?
Slightly more accurate, and after this, the only piece that
I believe was admissible from this advice of counsel defense
was that Sam Bankman Freed did receive advice from Daniel
Friedberg on document retention, and that part was going to be
allowed into the trial. Did I appropriately understand
the results of that evidentiary hearing?
Yeah, I think that's a a fair summary.
I mean, and a key thing backing up from the results is that Sam.
And his team really kind of threw Dan Friedberg.
I mean, whether he threw himself under the bus or, you know,
however you want to look at it, he was a huge focus of that
section of testimony. And yeah, that might backfire.
It might have backfired for him. I this I wrote a piece yesterday
or whenever this it'll when this comes out it'll be last week.
But I wrote a piece saying that this is Sam Bangman Freed's
kamikaze defense. And I think that like that is
what that's what that that evidentiary hearing made me feel
was like this guy is going to. And I just want to run through
some of the things he said. And you know these aren't exact
ways that he said them. But the the some of the things
he said that I'm like, oh, if regulators or three letter
agencies want to deal with this, there might be something here
for them. The first one that springs to
mind, he talked about Jane St. and he said that they typically
told employees to delete chats and use signal.
The New York Times test. I'm like, OK, well, that's
probably not something Jane St. wants in court from someone
underoath. Keep in mind that as as we're
saying here like this, while there was no jury present, he
still couldn't lie. This was essentially to get a
he. Can't legally lie.
It's against the law for him to lie, and we know that.
If anything, Bankman Freed loves the law.
I mean, he can also forget. He can forget.
And he did that a lot. He's doing a great.
Job he might remember on Monday, so we'll see.
The other thing I wanted to bring up was that he Definitely
through Ken Son and Friedberg under the bus and tried to make
it about them and how they were culpable and he wasn't culpable.
They put the contracts in front of him.
It wasn't his fault, blah blah blah blah blah.
And then definitely like trying to get Caroline, Gary Nashad and
all of his other Co workers involved in some way, shape or
form. I'm honestly a little surprised
he didn't throw his parents under the bus at this point, but
like, it it feels like anyone who he's ever known, he's
looking to at least implicate them, if not get off because of
them, Right? Like, which is just.
I don't know. It's wild to see that play out
in real life. And it's a weird needle to
thread too, because it's like, hey, it's their fault, but also
nothing was wrong. And kind of trying to to, you
know, make both of those things true in a lot of these cases can
prove difficult and at least vague and weird from the
standpoint of a jury, I'd imagine.
When they brought up Daniel Friedberg, the prosecution took
a couple of different tacks in their attempt to suggest he was
a less than stellar lawyer when he was hired by FTX.
Do you have any thoughts on that particular part?
That's kind of why I mention. That this could backfire because
prosecutors asked the question were something to the effect of
Were you aware that Daniel Friedberg was taking illegal
narcotics with employees of Alameda and FX?
That was fucking. Crazy.
The last question. Yeah, it was wild.
I I mean, and there's other questions that kind of come up
to that line. I want to add in here that while
we're discussing this, the judge admonished Danielle Sassoon for
saying that and said like how like kind of like was just
shocked that she had decided to bring this up.
She knew better, essentially. And that clearly, whether or not
that's true, which I'm not going to weigh in on, it didn't need
to be a part of this trial. So I just wanna make sure that
the audience understands that there was pushback on this and
it wasn't just allowed to go into evidence or whatever.
Yeah, I mean, I think it was almost like a warning to Sam and
the judge. It's like, all right if you
wanna kind of bring this in. You know, the gloves are off.
And this, I mean, one other thing that they said that was in
my mind, a little bit more substantive was, and this is
where the Better Call Saul analogy comes in, is they kind
of try to bring up this narrative where Sam was looking
for a lawyer who would kind of just give him a green flag for
whatever he wanted to do. There were questions like, oh,
you know, did you tell such and such that you didn't like
lawyers or that, you know, if you had a lawyer, you wanted one
who would, you know, give you, you know, a green light for, for
whatever? And it kind of reminds me of the
Breaking Bad thing, where it's like.
Do you want a lawyer or do you want a criminal lawyer, a
criminal lawyer or a criminal lawyer?
Not saying that's at all. This is in court.
They're trying to make arguments, paint pictures and
not saying that's at all what happened here.
But they did kind of invoke a similar sort of a refrain.
And. That testimony, yeah.
And they did also take their time during the questioning to
mention Daniel Friedberg previous role at Excapsa, the
parent company and software provider for like Ultimate Bet
during the entire God Mode scandal where people there could
see the cards of people playing in the games.
Allowing poker players to cheat for the record, Daniel Friedberg
is not the only prominent cryptocurrency lawyer to work at
XSCAPSA during that period, with their Chief Compliance Officer
being 1. Stuart Hogner, who is now the
General Counsel, of course Forbid from X and Tether Small
World, just wanted that extra bit of context that the
prosecutors brought up during that evidentiary heating hearing
mentioned. Is well in the context of Daniel
Friedberg. Yeah, so anyway, it was crazy.
I mean, to sum it up, it didn't go well for Sam.
By the way, I don't know if we like made that clear enough, but
at least in my read, I think the most stunning part of this God,
even reflecting on this makes me just.
I just, it hurts my brain is he started a line of questioning
and then the defense asked him asked him a question and SBS
lawyer Cohen objected. And then the judge said
sustained like, like, OK, this is, you know, like, yeah, the
objection is good. Like don't answer this question.
To which Sam then answered the question.
And so his own lawyer goes, why did you answer this question?
Haven't you been here for four weeks?
I I should say no. I I should say this is where
there is like one benefit. To being like one of the few
benefits to waking up early and being in that courtroom is that
was kind of a lighter moment. So what you're talking the the
question was something to the effect of did you embezzle money
and you know and you know Cohen Sam's lawyer objected the you
know the judge said sustained and.
Sam was like, no. And everybody laughed and that
was like, with a smile, Cohen said.
Hey, you know, you've been here for weeks.
You know, you don't have to answer that.
And Sam, like, laughed. And he was like, yeah, I just
kind of thought I should answer that one.
And the judge was smiling too. So anyway, But yeah, plays
differently. Sure.
And it is also idiot. It still is idiotic, right?
Because you should be listening to your lawyer.
Like, what in God's name are you doing?
Holy crap. Which just leads everyone to
believe, I think, that Sam Bankman Freed is absolutely
taking the stand against the advice of his lawyers, probably
against the advice of his his parents, and that he still
believes that he can talk his way out of this.
Or at least, as I, as I pointed out, drag everyone down with
him. On a very basic level, was there
anything new that you learn from Bankman Freed's testimony about
how Alameda FTX worked that you thought was insightful or
valuable? There are some things and I
can't say that they were all brand new to everybody, but at
least color for me. So there was some stuff that he
brought up around a hack or it wasn't really a hack, but you
know this mobile coin exploit where you know somebody was
essentially able to borrow a ton on margin.
And when these token prices shot up there, they were essentially
able to borrow against worthless tokens and really kind of
imperil the the the site or the platform rather.
And so the he give like a bit of a step by step that's not worth
getting into around that situation.
And that was at least interesting color.
There was also some stuff about the allowing negative feature
and why they implemented it. We can get to this.
I don't know. His timeline did not really
square with what we saw in evidence earlier in the trial,
but his rationale for why it happened was at least somewhat
interesting. But the broadly, and I don't
want to be get anything wrong here.
There was no smoking gun, if that's even the word in this
context. That was like, hey, you know,
you think this, but it's actually this.
I think what you're kind of getting at there, that there
wasn't really anything that made his story like a different
explanation that reasonably explained how the things
happened without implicating him.
It's kind of the impression I kept getting from his testimony.
Like in the course of it, he repeatedly.
Referred to the margin facility that FTX has as he did in his
pre in his media tour pre arrest.
But my understanding was that the analysis done by the people
after the fact pointed out that the hole in FTX was larger than
like the total amount of funds people had in the margin
facility. And so it still seems to me like
he's. Pointing at some love let
defenses that have already been blown up and pretending they're
still standing. Am I missing something in that?
No, you're not missing I I'd suggest too that people read Liz
Lopatos piece on Fridays testimony in The Verge because I
think she does the best breakdown that I've seen.
Of just like point by point kind of some of these things that
you're talking about Bennett broadly.
I think what he did on Friday was he just put together
different timelines and kind of made himself seem you know he
painted the picture of this guy who's more of an advisor than he
was a boss you know a person pulling the strings he I mean
none of this was surprising either this is what he was going
to do. But he also, you know, made it
look like certain deputies of his were the ones behind not
just key decisions but, you know, actions that at least
plausibly I I some. Of.
I could understand where it's like, hey, I told these people
to do you know one thing and then they went off and did it in
a way that I didn't expect. And I'm kind of actually
fascinated by this because it as you're talk, you keep mentioning
thankfully I'm not the one having to mention Liz Lopato a
bunch of this episode. Sam is doing it for me.
Do you do that? But frequently she's come up in
every single episode that we've that we've done so far.
In her piece, she talks about one of I'm so glad she brought
this up because someone asked Sam Bankman freed years ago, or
maybe a year or two ago, whatever it was about why he had
chosen the name Alameda Research.
And he very explicitly explained that the reason he had chosen
the name Alameda Research was because it sounded not like
we're trading cryptocurrencies and shit coins because banks
don't like if you're doing that. And they didn't want to lose
their banking, so they were going to make sure that banks
thought they were just a research firm.
And so that sounds a lot more like bank fraud than what his
explanation was. Can you tell me what his
explanation was? I mean that was in the the Lewis
book as well for for all this been said on both ends about
that. I think that's kind of the
general accept, generally accepted history of what went on
there, called it out. Me to research cuz it sounds
more legit and not cryptoey. And in his telling it's like we
kind of named it after a town in California and it was better
than the other name, which was like wireless mouse, which it is
anyway. That's his story.
It's much more it seems a lot less pointed.
His choice to rename things. It wasn't all about distancing
himself from crypto and hiding what they were doing.
Though he did, even in his telling and the stand mentioned
like I think he said we didn't want it to be called Sam's
crypto trading firm, we wanted it to be under the radar.
So he is still kind of hinting at the same thing, right?
Right when he said that it was like with an eye towards
competitors, which was interesting though.
Where it wasn't about like banking relationships and so on,
at least my recollection was that it was about like
competitors and such, but Bennett, correct?
Me And that lines up a little bit with kind of Michael Lewis's
telling of his leaving of Jane Street, right?
He believed that there was this massive inefficiency in the
crypto market. And he kind of anticipated, if
you take as literal the descriptions in that portion of
Lewis's book, he thought he only had perhaps 12 months, perhaps
18 months, something to potentially like take advantage
of this inefficiency before other firms started moving in.
So that at least fits with what other people have said about him
at some level. I mean, coincidentally, I was
actually seated next to to Michael Lewis yesterday morning.
Like during the open of his, you know, Sam's whole, you know,
testimony in front of jurors and at least.
You know, my Michael Lewis did not seem surprised by anything
that Sam said, which kind of I I should have said that before,
which kind of goes to what we're talking about now, but also what
you were asking earlier around whether we've learned anything.
Super, super, super new. This is kind of the narrative
that he's laid out, with the exception of some of these weird
things, like this naming of Alameda Research where they're
reframed. For for a jury.
Yeah, it just goes against hasn't that video actually been
entered into evidence of Sam saying what it was actually for,
which was essentially bank fraud?
Like I thought that that video had been entered into evidence
as an exhibit, and if so, it goes like if I was a juror I
would be like which one do I trust?
The. The version of Sam Bankman freed
that feels like he doesn't have to lie about it and is just
talking openly on a podcast or the one that's here underoath?
Like, I know which one I'm gonna believe, but I guess I'm not a
juror. So luckily I.
I guess I'm more sympathetic to to Sam view of this is it was
more it wasn't that he directly I think.
Disputed that video and why he named things the way he did.
It's just that, you know, he might have also chosen Alameda
because it was a town in California and he might have
also liked it better than wireless mouse.
So that's not necessarily a lie as much as it is a very
convenient, you know, excerpt of the the truth.
Fair enough. Yeah.
So those I do, I did want to bring that up just because it
seems like untrustworthy. Witness and I'm I'm wondering if
that is the sense that that is felt in the courtroom maybe just
from the journalist but I I assume journalists feel that way
just because they they remember the apology tour that he did
post collapse. But I I guess I'm, I'm wondering
if like there's a sense that this is the way it's coming
across in court as well. Everything is going to hinge on
the cross. When Danielle Sassoon, the very
capable prosecutor who will be asking him questions starting on
Monday, has a chance to kind of dig into his testimony.
And that's the most important thing, I do think though, if
we're to back up a little bit and just, you know, look at his
testimony from Friday, he in my view, did a pretty good job.
Of explaining things clearly, coming off as sympathetic and
like a kind person, if that's even a fair, you know,
characterization. But like he, you know, he was
very upbeat. He seemed confident.
He seemed poised. He didn't actually seem as
scripted as some others, even though he was clearly well
prepared. Like he was coached, But he
didn't seem to have his, you know, all of his things narrow,
like word for word, nailed down. I don't think he did a poor job,
but it almost doesn't matter because the cross is weird.
It's really. All of these.
And I also don't think, by the way, that the jury is going to
pick up on most of these little nuances and distinctions that
we've been talking about here because we've been following
this for a year on top of, you know, really scrutinizing these
transcripts in a way that I doubt the jury's able to do.
Were there any differences between Sam Bankman Freed's
testimony and those of other people in the inner circle that
you want to highlight or draw attention to?
The first one that was pretty glaringly different from.
Previous testimony centered around the quote UN quote
special privileges. I don't think that's the word
that Sam ever used in his testimony, but the prosecutors
used to describe these privileges that Alameda had on
the FTS exchange that other market makers and customers
clients of FTX did not have. The key one being this allow
negative feature which altogether kind of allowed
Alameda to withdraw. Infinite money you know not get
liquidated. You know I don't know if that
was all grouped under this allow negative thing, but it it it all
kind of grew into this like big set of you know basket of
capabilities for Alameda. Samsung firm briefly in the shod
and Gary Wang's telling they in 2019 implemented a version of
this allow negative feature that feature.
Was to kind of accomplish the in even in their you know testimony
more innocuous role of backstopping certain bad bugs or
things that could happen with liquidity providers market
makers. On FTX.
It was like this weird kind of like fix patch sort of a thing
that whether you believe that or whatever is besides the point.
But anyway, they say it started in 2019 and then over the years
the capabilities of this Cape, this, you know, function were.
Expanded so much that you know, Alameda could withdraw
infinitely, pull out infinite lines of credit, so on and so
forth. But anyway, that's the allow
negative feature in Sam's telling.
He instructed Wang and Sing to implement a fix for a bug on the
exchange, which he expected to be, you know, a sort of flag or
something like that. That would allow Alameda, or
rather FX, to take action if Alameda balance dropped below 0.
So he thought it would be a a flag or an alert, he said.
But. You know his deputies went off
and implemented this thing that he says is the allow negative
feature. But the timeline This was years
after 20/19 his timeline. I'm wondering what?
You think the explanation is for such a large discrepancy in the
timeline cause the the timeline differs by like a year plus,
right? Like, how is there such a large
discrepancy between what Gary Wong and Nishad Singh think and
when this happened and these meetings that occurred with Sam
versus what Sam recollects as happening way later and with?
Under totally different circumstances, so he could have
misremembered. He could have, which we can
probably throw that one out of the way.
He could have lied, like outright.
He could have instructed, you know, either about the timeline
or about his role. He might have directed them to
do exactly what the feature ultimately allowed, which was
these infinite withdrawals, or which is much more sympathetic,
But I think it's also. Possible is like I, I, I I don't
know I I struggle with whether this makes sense.
But I do think it might be possible that there was this
kind of allow negative function in the code that they did
implement in 2019 which was this more innocuous thing.
And that what Sam was talking about on the stand on Friday was
the expansion of the capabilities of the allow
negative function, not the allow negative function itself.
And so there is some. You know, I, I, I you think
they'd be more explicit about that if that was the case.
But I think you are exactly right that there was one version
of it and then it got built on the form the other one.
And I think that matches up with all of the timelines given so
far except for Sam pretending he didn't know when this feature
was implemented. Because when FTX started,
Alameda research was approximately 50% of the total
volume. Was the backstop liquidity
provider for any trades that went wrong and supposedly like
that was like was only supposed to then step in and it would
then be covered by the backstop insurance fund which as
previously testified about did not actually exist and was just
a random number they were putting in.
This functioned for a while until the mobile coin issue
where someone was able to take out this massive position in
Alameda Then as the backstop liquidity provider had to step
in at an unreasonable price when they got liquidated.
Sam Bankman Freed then testified about telling Gary Wang and
Nashad Singh to go in and add in additional speed bumps related
to erroneous liquidation. So I think what Sam Bankman
Freed is talking about is Alameda Research's exemption
from auto liquidation was I think added after Mobilecoin.
But I think the allow negative feature based on all the
testimony so far pre dates that and goes back to Alameda's
institution as the primary market maker in the backstop
liquidity provider for FTX. And So what changed at this
point is the exemption from automatic liquidation and it was
important for Alameda Research to be exempted from automatic
liquidation because they were still at this point the entire
backstop liquidity provider. And so there were cases where if
Alameda Research's own position was liquidated, they would end
up on the bad side, on both the bad sides of that trade having
to effectively step in to fill their own false liquid, their
own bad liquidation, right. And so by exempting Alameda
Research from liquidation, you make it so Alameda Research
never has to step in to fill in for Alameda Research's own bad
trade. But that means the bad trade can
now balloon because you've already implemented this allow
negative related to all these other activities Alameda is
doing, and then you end up after a variety of other bad decisions
with an $8 billion hole. You just did a much.
More thorough and better job explaining that whole, you know,
thing that I said was kind of new to me in this testimony,
which was explained the rationale behind this feature.
And I actually do find that as a sort of believable thing,
whether or not what he knew about things, what he directed
or didn't direct, you know, all those elements of his testimony,
whether those things are true. But I do think I can see a world
where it was a more benign sort of a thing that came about in
result. You know of these problems with
how the exchange was architected?
Well, I was going to have a bit of a digression about the risk
engine. I I just think it's interesting.
At least we who have been following this know, have been
following FTX since before collapse know that this risk
engine, this you know cross margining system was supposed to
be the state-of-the-art thing that worked on FTX.
And for some reason really no other major exchanges and the
fact that that was essentially false advertising, it seems at
this point, that thing. That you just explained Bennett
actually undermines other pieces of, you know, Sam's cage case,
which is that this was an up, you know, upright, you know,
very straightforward, trustworthy business, 'cause if
that stuff is true, then the the the system did not work like he
advertised it to have worked. Well, yes.
And like in that very same vein, in his testimony to Congress
when he was effectively advocating for the DCCPA, we can
discuss what he was actually doing.
He talked about how he specifically said Alameda was
not exempted from any of the, like normal margin processes on
FTX as part of his testimony before the Agricultural
Committee or whoever it was at the time.
And so like him now saying, oh, I told them to put in speed
bumps related to liquidation. That's I imagine could come up
on cross. And like, I think more directly
speaking to it, we're like there might be more benign
explanations for certain decisions made, like the allow
negative could have been a choice made because of
legitimate difficulties in moving certain assets and it may
have been made with good intentions.
However, my trouble with Sam Bankman Freedom, whenever he
starts trying to make it seem that way is like Often,
companies that are providing financial services are governed
by a set of rules that only very barely touch on what your
intentions are when you're doing certain things, and very often
describe what actions you're supposed to take.
And at a basic level, you know, allowing your company to
withdraw more assets than they have, regardless of whether or
not you intend to do it, or intend to do it a lot, or only
intend to do it for a couple days while you send money over
to Circle and Tether or whatever.
Your intent only matters up to a point, especially when there's 8
billion missing, absolutely. Also, one thing that I I feel
like isn't talked about enough or hasn't been talked about
enough since Friday is we do really need to allow for the
possibility or probability that many elements of the testimony
that we've heard up to this point from.
Either Gary Nashad or Caroline and others has also been either,
you know, embellished, manufactured for their own
benefit. Like.
It's not like Sam's the only one who has to testify in a certain
way to negate his own role in what happened.
I'd like to put. Push back on that a little bit
because I think the benefit of the arrangement that the
government has with those witnesses.
Is in that if they are caught lying, or if they didn't share
some information that they should have with the government,
they're liable to do a shit ton of prison time.
Because the government can still get them for any of that.
And so it almost makes you go like, well, they're going to,
they're going to give themselves up for everything that they
think they're even possibly close to having committed.
In terms of crimes and and I think that is where I I see it
as like it's hard to suggest that they're as unreliable as
Sam Bankman Friedman. Well, yeah.
And at a very basic level, all of them admit they committed
crimes. Like Nashad, Gary, Carolyn,
Ryan. They all say I did crimes.
I I do want to go back. To like something specific
though which is this bug feature or this, you know allow negative
feature that we're talking about, let's look at like the
kind of like Occam's razor version of this which is you
know Sam, Gary and Nashad in a room talking about things.
And I I think it it does make sense where they all kind of,
like have this vague sense of like how they were going to fix
this bug or they were like, hey, we need to let them go more
negative. Maybe it wasn't Sam who was
like, hey, this is the solution we need to do this thing.
But I I think it's easy to kind of like construe that
conversation however it went down as, hey, Sam told us to do
a thing, we did exactly that thing.
I can't imagine that it's that simple.
Or maybe I I mean maybe it is. But I I guess what I'm saying is
it's not about like, you know, it's not.
I shouldn't say that they they they.
It's likely that anybody outright, outright, outright
lied. But I do think that there's like
a way to believe and tell this story that does kind of
inculcate your your own, you know, role in in things.
It's Nashad Singh talking about how bad he feels while buying
his house, right? It's Carolyn Ellison.
Like being this. This was all such a relief to me
when I finally got to be honest about all this and all that,
right? And it's probably at some level,
true they did feel bad, or did feel relieved, or whatever.
But by presenting that story, or in like Carolyn's case, framing
her relationship with Sam in certain ways does, I agree,
probably make certain things seem more striking now just to
head. Back to Sam's testimony and you
know, these, you know, holes that you can kind of poke by
looking at past testimony. Sam makes it seem like he didn't
know about this whole or in Alameda and how it was using
essentially FTX customer funds in effect until October of 2022,
which was a month before it ultimately collapsed.
And that goes. In the telling of all the other
witnesses, he had a sense that things were, you know, going in
this direction since at least June, as early as at least June
of 2022. And that's just, you know,
reconciling that statement with what we've heard from past
witnesses is probably going to be a key point of focus for
prosecutors. The point?
Being, and This is why they needed those charts from Mr.
Pinsley that we spoke about earlier, is they kind of want to
make, you know, the prosecutors are going to want to show that
Sam knew that he was drawing money.
He knew about Alameda's finances.
And he knew that because of the levels of assets and liabilities
that you know, he had to be in effect drawing from customer
funds because Alameda just did not have enough and FTX did not
have enough of revenues to cover.
You know what he was drawing? Yeah, Which to me means I expect
we'll hear again about Alameda research using FTX customer
funds to buy back FTX equity before the series B1 before the
four 2069 round because that's way before all the other things.
And Carolyn already testified that that was using FTX customer
funds at Sam's explicit request. So I imagine we're going to hear
that in the cross issue that I've been coming.
Away with that, I've been noticing, is that and and you
can scroll through the comments section of any of our videos,
unfortunately, and see this is that there's this large swath of
the population. I'm not sure how much is
actually represented by the kind of weirdos that I interact with
on Twitter and on YouTube. There's this.
There seems to be this belief that.
Because of Sam's donations, because of his wealth, because
of his background, because of who his parents are, because of
who he knows he's going to get off.
He's not going to do any prison time.
And it's hard for me to reconcile that perspective with
the reality that I'm watching transpire in court.
I know that you have to be open to the idea that there's a
chance Sam Bankman, Freed doesn't do any prison time.
But can you kind of speak to how people feel about those odds in
the courtroom? And after watching this day in
and day out, things are not going.
Well, for Sam in court, my impression.
Is at. Least that I mean the concern.
That you hear about, you hear that maybe they could actually
file, you know, for for a mistrial because Judge Kaplan,
who is overseeing the case and have shot down a bunch of Sam's
proposed expert witnesses, frequently admonishes his
defense. You know, more so than the
prosecutors in court there. You know people think that if
there's any biased, it's. And I'm not backing this on
either end. But if there's any bias you you
hear in the courtroom, it's actually against Sam's team if
there's obviously some opaque. Pieces of our justice system
that I can't pretend to understand, but, you know, the
Southern District of New York, they are attack dogs.
They are known as, you know, some of the best, if not the
best prosecutors in the country. And the fact that they worked so
hard to get this case on some, you know, we can argue about
whether it even makes sense to be prosecuted in the Southern
District of New York. It's kind of a random place, but
you know, the fact that it's being prosecuted there with this
judge, with these, you know. Assistant AGS It's just yeah
that does not square cast with my read and just.
To push back on that jurisdictional issue, I do want
to bring up the point that we had Cynthia Cooper on the show.
Gosh, I don't know. Maybe it was a year ago now and.
She was an auditor for the company Worldcom, which
collapsed due to fraud and that was also tried in SDNY from what
I can remember and the reason being money like that's the
reason, I mean financial crimes. Are frequently they're the best
at this kind of a thing. I'm more just saying that, like,
these are the best at prosecuting this kind of a
thing. And they didn't put him in some
random courtroom somewhere. They, you know, found a way to
get him in the best courtroom or the worst, you know, for him.
I mean it's useful for. The Southern District of New
York that like jurisdictionally at a certain level such a huge
portion of dollar transactions happen to run through banks in
their jurisdiction. They end up getting to say,
yeah, look at there's our Nexus. It's right there to just about
anything they want. The Nexus is Wall.
Street baby, are you happy? It's coming to an end.
Are you sad? Are you?
Is it a bittersweet moment or are you done with this?
Yeah, I mean it's. Been crazy.
It's been a really professionally.
Positive experience for me. I mean, I can't say like just
meeting all these really brilliant people that I've been
reading for a long time, working with my great colleagues, seeing
our justice system and how it works for an extended period.
It's like watching the directors cut too of a movie.
Like that I've seen and know really, really well and now get
to kind of lift the curtain on. So for all those reasons, it's
positive, you know, But it is like you take a step back, you
know there say what you want about Sam Bagman free.
There's a guy's life that's kind of at stake here or a a a big
part of it. And if you'll, you know, the
atmosphere around it can feel a little bit odd at times.
Like 'cause it is fun being with your friends at like this kind
of a camp sort of setting almost like as we're waiting every
morning. But I'm excited and seeing his
parents like whatever role they had, like they can't be having.
Good time. So it's just, you know, it's a
lot of people, you know, one person hurt or several people
hurt, a lot of people, but they're getting hurt too.
And kind of just seeing it all play out, it's not really the
most uplifting environment. As for articles, please read our
coverage. We cover it live every single
day on Coin Desk. We have these articles that we
just flesh out with as much detail as we can.
And then we do a newsletter that you can also subscribe to on our
site where we kind of do some more of like a step back take of
what happened and what to expect.
I mentioned Liz Lovato's article.
Katie Baker's another awesome reporter who's been covering
this everyday for The Ringer. There's so many you know there.
There's tons of really, really great.
No need to show. For them, they can show
themselves. When they come on the podcast,
Oh yeah, they were. Literally on the podcast?
Well, no, we're. Fingers crossed that we get Liz
Lopato soon, but yes, Katie, Katie's been on and Liz has been
on before. Just before.
For the trial. Yes, yes, yes.
Thank you for coming on, Sam. It was a pleasure to have you.
And As for the I know there's an ongoing case cast coin versus
the Department of Justice and I will be taking the stand and the
gag order does not apply. You're.
You're suing the Department of Justice?
Sorry. I guess I'm that's how involved
in the that's how involved in my own case I am right now.
I have not taken the advice of lawyers of my lawyers.
She's already spoken against me. Yeah.
Anyway, thank you. Thank you.
Sam. It's been a pleasure to have you
on. Thank you guys this.
Is a lot of fun.