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When Sam Bankman-Fried’s cryptocurrency trade collapsed in November, one in all his oldest buddies despatched him a message of assist.
“I like you, Sam,” mentioned Adam Yedidia, a university classmate of Mr. Bankman-Fried’s who went on to work for him on the trade, FTX. “I’m not going anyplace. Don’t fear.”
Inside days, Mr. Yedidia had resigned from FTX. And final week, at Mr. Bankman-Fried’s fraud trial in federal court docket in Manhattan, Mr. Yedidia confirmed as much as testify for the prosecution, and recounted the dialog to the jury.
Mr. Bankman-Fried’s trial has provided a vivid window into some of the dramatic company collapses in current historical past, a $10 billion implosion that touched the worlds of Washington politics, Wall Road finance and Silicon Valley investing. However the case additionally has a deeply private undercurrent: the speedy unraveling of a detailed social group that has ended up pitting good friend towards good friend.
At FTX’s headquarters within the Bahamas, Mr. Bankman-Fried lived and labored with an internal circle of greater than half a dozen buddies, together with a former lover, a confidant from highschool math camp and a childhood buddy of his youthful brother. Not less than 4 of these allies have turned towards him and agreed to cooperate with the federal government, after both pleading responsible or receiving immunity from prosecution.
Within the courtroom, the non-public dynamics between Mr. Bankman-Fried and his buddies have grow to be a significant element of the case. Prosecutors have proven images of Mr. Bankman-Fried socializing with Mr. Yedidia and different onetime confidants, in search of to attract out testimony in regards to the relationships on the coronary heart of FTX. On the witness stand, Mr. Bankman-Fried’s outdated allies have largely prevented him.
“You possibly can anticipate that at closing, this is likely one of the issues that the US goes to harp on: These have been individuals who have been shut private buddies of S.B.F.,” mentioned Daniel Silva, a former federal prosecutor. “It instantly establishes their credibility as somebody who was there when it occurred.”
Mr. Bankman-Fried, 31, is charged with orchestrating an unlimited conspiracy to siphon as a lot as $10 billion from FTX’s buyer accounts to finance political contributions, actual property purchases and different lavish spending. He has pleaded not responsible to seven counts of fraud, conspiracy and cash laundering, and faces what would quantity to a life sentence if convicted.
Thus far, three members of his internal circle — Mr. Yedidia, the FTX co-founder Gary Wang and Mr. Bankman-Fried’s former girlfriend, Caroline Ellison — have testified towards him. Not less than one different ally — the FTX govt Nishad Singh, a childhood good friend of Mr. Bankman-Fried’s youthful brother, Gabe — is slated to testify.
Mr. Bankman-Fried is hardly the primary defendant to have shut associates activate him. However hardly ever has a bunch as tightknit as FTX’s management dissolved so shortly, and the sheer variety of buddies turned foes stands out, authorized specialists mentioned.
Former associates usually play a key position in organized-crime circumstances, however “to have these sorts of shut relationships — former girlfriend, a former greatest good friend — will not be as typical,” mentioned Paul Tuchmann, an ex-prosecutor who now works in personal follow.
By most accounts, Mr. Bankman-Fried by no means had many buddies, even earlier than FTX’s fall turned him into a global pariah. However as an undergraduate on the Massachusetts Institute of Expertise, he grew to become connected to a few of his roommates in a bunch home for Epsilon Theta, a fraternity that attracted a nerdy set of scholars, together with Mr. Yedidia and Mr. Wang.
Mr. Bankman-Fried finally employed Mr. Yedidia to work as a developer at FTX. They lived collectively in a five-bedroom penthouse within the Bahamas, the place Mr. Yedidia was joined by his fiancée, Andrea Lincoln, whom Mr. Bankman-Fried additionally employed.
Throughout Mr. Yedidia’s testimony, prosecutors confirmed the jury {a photograph} of him and Mr. Bankman-Fried consuming collectively. They have been shut sufficient that Mr. Bankman-Fried confided in Mr. Yedidia about his on-and-off relationship with Ms. Ellison, who was chief govt of FTX’s sister hedge fund, Alameda Analysis.
“The defendant advised me that he and Caroline had had intercourse and requested if it was a good suggestion for them thus far,” Mr. Yedidia testified. “I mentioned no.”
Mr. Yedidia mentioned he had resigned from FTX after a colleague advised him that Alameda had used FTX buyer funds to repay its collectors. He began working with the federal government as early as December, and acquired immunity from prosecution in trade for his testimony.
He was not the final to leap ship.
This week, Ms. Ellison testified that she had begun cooperating with federal prosecutors after the Federal Bureau of Investigation raided her mother and father’ dwelling, seizing digital units from her, her mom and her boyfriend, who was staying on the home on the time. She has pleaded responsible to fraud and conspiracy.
Over greater than 11 hours on the witness stand, Ms. Ellison recounted intimate particulars of her relationship with Mr. Bankman-Fried. They began sleeping collectively within the fall of 2018, she mentioned, after which dated formally for elements of 2020, 2021 and 2022. Throughout tense durations, they exchanged lengthy Google paperwork discussing features of their turbulent relationship.
“I form of needed extra,” Ms. Ellison testified, “however usually felt like he was distant or not listening to me.”
Partly due to her proximity to Mr. Bankman-Fried, she mentioned, she internalized a few of his attitudes about danger, and have become comfy mendacity to enterprise companions and the general public, although she knew it was flawed.
Mr. Wang, who met Mr. Bankman-Fried at a math camp in highschool, has additionally pleaded responsible. He testified that the FTX founder had instructed him and Mr. Singh to create a secret backdoor within the trade’s code that allowed nearly limitless quantities of buyer cash to be transferred to Alameda.
Mr. Wang additionally recounted conversations by which he questioned Mr. Bankman-Fried in regards to the cash Alameda was borrowing.
“I wasn’t positive which interpretation was appropriate, and I trusted his judgment,” Mr. Wang mentioned.
His testimony reached an emotional climax when prosecutors introduced {a photograph} of him posing with Mr. Bankman-Fried at M.I.T. The picture reveals Mr. Wang smiling, with Mr. Bankman-Fried subsequent to him in a navy blue Epsilon Theta T-shirt.
The image was projected to the gallery, the place Mr. Bankman-Fried’s mother and father have sat day by day of his trial. When she noticed the picture, his mom, Barbara Fried, put her head in her fingers and stifled a sob.
Matthew Goldstein contributed reporting.
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