The second day of Sam Bankman-Fried trial began with the continuation of the jury selection process, which was concluded within a few hours — allowing the trial to start in full with both the prosecution and the defense presenting their opening arguments.

The Department of Justice (DOJ) presented strong allegations against the FTX founder. The prosecution painted a picture of SBF as an individual who intentionally deceived investors and used his connection with Alameda to “steal customers’ funds.”

Central to the prosecution’s argument were accusations that he gave misleading assurances to FTX customers, investors, and lenders about the security of their assets — all the while using Alameda to misappropriate funds and curry favor with politicians in Washington, D.C.

In stark contrast, the defense depicted Bankman-Fried as a young, enterprising individual who made poor business decisions that eventually did not pan out despite his best intentions. SBF’s lawyers vehemently denied any allegations of covert transactions between FTX and Alameda or any schemes designed to defraud customers.

The defense further argued that every transaction was transparent and legitimate, particularly during the turbulent times of the crypto market downturn and the subsequent fall of FTX in November 2022.

Notably, the defense also highlighted the role of Binance in the chain of events leading to FTX’s financial implosion. The lawyers contended that SBF believed FTX’s loaning funds to Alameda was a legitimate business transaction with the market maker and dismissed any notion of clandestine dealings between the two entities.

Three key individuals — Caroline Ellison, Gary Wang, and Nishad Singh — were mentioned as potential witnesses who could provide insider information regarding SBF’s involvement in FTX’s operations and the alleged infractions, as all three held executive leadership roles within the company.

However, the defense questioned all three witnesses’ credibility due to their cooperation agreement with the government, which mandates them to testify against SBF.

Further, the defense argued that FTX clients, especially those engaged in margin trading, were well-informed about the potential risks. The lawyers emphasized that “there was no theft” and added that leading a company into bankruptcy is not a crime.

The jury listened to testimonies from two witnesses on the first day —  a former FTX client, Mark Julliard, and Adam Yedidia, who had a professional association with SBF.

Julliard, a French trader, testified about his decision to trust FTX with his assets — specifically four Bitcoins amounting to roughly $100,000 as of press time. He attributed his confidence in FTX to its marketing campaigns and the backing of prominent venture capital firms.

He believed that these VC firms had conducted due diligence on FTX. During cross-examination, prosecutors underscored that Julliard used FTX solely for spot trading and wasn’t aware that the exchange was utilizing client funds for trading with Alameda Research.

Meanwhile, Yedidia, who had personal and professional ties to SBF, provided insights into his tenure at Alameda and FTX. Discussing his background, Yedidia mentioned his education at MIT, where he first encountered Bankman-Fried.

He worked briefly at Alameda in 2017 and later joined FTX in 2021. His association with FTX even had him living in the Bahamas on FTX’s $30 million property. Prosecutors presented old FTX ads during Yedidia’s testimony to indicate the platform’s emphasis on being a trusted crypto investment avenue, showcasing partnerships with celebrities like Tom Brady and Larry David.

In other news…

Jury selection concludes despite impartiality challenges:

The jury for the trial of ex-FTX CEO Sam Bankman-Fried was finalized on the morning of Oct. 4, with the opening statements scheduled for later that day.

Inner City Press, a New York-based independent news source, disclosed from within the courtroom that 12 primary jurors and six alternates were confirmed on the trial’s second day.

In selecting the jury, candidates underwent a thorough screening to detect any possible biases or conflicts of interest. The diversity in professions and backgrounds of the potential jurors underscored the case’s far-reaching societal implications, suggesting a wide-ranging scope of the investigation.

Bankman-Fried can’t use unclear U.S. crypto regulations as defense

The U.S. Department of Justice (DOJ) stated in a letter sent to Judge Lewis Kaplan that SBF cannot use the unclear regulatory landscape in the U.S. as a defense in his trial.

The DOJ emphasized that the actual violations center around the misappropriation of customer assets. It also pointed out that the existence or absence of specific regulations doesn’t negate potential fraudulent activities or misleading statements to customers.