0:08

Caitlin, it is the end of the first week

0:11

of Sam Bankman-Fried's trial. It has been

0:13

a week of incredibly

0:15

early mornings

0:15

and then hours

0:18

spent on uncomfortable courtroom

0:20

benches. But we

0:22

have a jury in this case now and we

0:25

have heard opening arguments from the prosecution

0:28

and defense. And now we're

0:30

hearing from witnesses. We've had several witnesses already.

0:33

And right now on the stand, we have a key witness,

0:35

a star witness. Yes. Right now we

0:38

are hearing from Gary Wong. And

0:41

Wong has known Sam Bankman-Fried

0:43

for years. They co-founded companies together.

0:45

They became billionaires together. But

0:48

now Wong has pleaded

0:49

guilty and is cooperating with the

0:51

government. And Bankman-Fried has pleaded

0:54

not guilty. So they found themselves

0:56

in very different

0:57

parts of the courtroom. And

1:01

Wong's testimony has been explosive.

1:04

He's revealed just how big

1:06

the mess really was at FTX Nalameda.

1:10

Yeah. And we still haven't heard much from the

1:12

defense's class examination. But Wong has

1:15

said a lot and a

1:17

lot of it has surprised me.

1:24

From the Journal, this is the trial of crypto's

1:26

golden boy. I'm Rachel Humphries. And

1:28

I'm Caitlin Ostroff.

1:35

Coming up, the first key witness.

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2:29

So, Kate, and we are in the midst now

2:32

of witnesses at this stage of the trial.

2:35

What would you say

2:36

the jury is listening for from these witnesses?

2:39

So, remember, the jury is tasked with deciding

2:42

whether Bankman Freed is guilty or

2:44

not guilty of charges that the government

2:46

has brought against him, including fraud and conspiracy.

2:50

And so it's their job to sit

2:52

there, listen to all of the witnesses, look

2:54

at all of the evidence, and eventually

2:57

decide whether Bankman Freed

2:59

is guilty beyond a reasonable doubt

3:02

or not guilty. And they're

3:04

starting to hear from witnesses

3:05

this week.

3:07

We've heard from a person

3:09

who invested on FTX,

3:12

and we heard from a former FTX

3:14

employee. And so we're

3:16

starting to hear from people who had

3:19

some interaction with FTX and Bankman

3:21

Freed. And that's taken us through the end

3:23

of this week with Gary Wong, the

3:26

former chief technology officer of FTX.

3:29

And Wong and Bankman

3:31

Freed go back a pretty long way, don't they?

3:34

Yeah, I think more so than others. We've heard

3:36

some thus far. So they didn't know

3:38

each other going back all the way to high school,

3:41

and they actually met at what was called a mass

3:43

camp. There's literally a camp designed

3:45

for people who are just like these masked savants. And

3:48

so that's where he and Bankman Freed originally

3:50

met. And years after mass

3:52

camp, Wong became one of the founders

3:55

of FTX, and he was in charge of overseeing

3:58

a lot of the code that FTX...

3:59

kicks spot on.

4:01

After the collapse, he pleaded guilty to FOD

4:04

and agreed to cooperate with classic heroes, but he

4:06

could still face time in jail. And we

4:09

had Wong's testimony

4:10

start on Thursday. Yeah.

4:13

And I noticed that on the

4:15

benches that we sit on at the back of the courtroom,

4:17

all the reporters kind of like bristled in

4:19

anticipation just before Wong

4:21

came in because he's a guy

4:24

who didn't do interviews who we've

4:26

never heard speak before, kind of

4:28

been this like silent figure.

4:30

And he walked in, took the stand

4:33

and fairly early on was asked to point

4:35

out Bankman Freed in the room and he had to kind of stand

4:38

up and crane around to see Bankman

4:40

Freed. And I just thought it was like

4:43

kind of a moment. These are two people who've been friends

4:45

for so long. I'm not

4:47

sure if they've seen each other for a while. And wow,

4:49

like what a scene to be in to like

4:51

see each other again. It was so awkward watching

4:54

him kind of like crane and point Bankman

4:56

Freed. It was so weird to win

4:58

us. Yeah. And then almost as soon as the prosecution

5:00

began its examination of him, one

5:03

of the first questions they asked him was, did

5:06

you commit financial crimes? And

5:08

he said, yes. And he was asked

5:10

who he committed them with. And one of the names he mentioned

5:13

was Bankman Freed. And I thought that felt

5:15

like a real moment.

5:16

And Wong brought up some new details that

5:19

we didn't know about yet regarding how

5:21

FTS set up the code that allowed

5:23

Alameda to borrow money from FTS. Yes,

5:26

he did. And that gave

5:27

the courtroom an opportunity to

5:29

see a lot of the code, which was a big moment

5:31

for you, Caitlin, because you

5:33

love code. And for me, it was just another

5:36

moment of confusion. We

5:38

should add that I'm a little bit of an amateur programmer,

5:40

which is why. Explains it.

5:42

And we also in our pre-trial

5:44

episodes, we talked about this code that

5:46

allowed Alameda to borrow up to $65

5:49

billion from FTX. But

5:52

before the trial began, we

5:53

didn't know when these

5:55

privileges had begun. And this is

5:57

what Wong talked about today. Wong

6:00

said that one bit of code that gave Alameda

6:02

special privileges was written, according to him,

6:05

in July 2019. Now, that's

6:07

just months after FTX was

6:10

founded.

6:10

And that

6:12

code was referred to by Wong in

6:14

court as the ability for Alameda

6:16

to go negative. Basically,

6:18

he said they could be in debt to

6:20

FTX. Yeah. And in

6:22

this specific day that that code

6:24

was changed successfully, July 31st, 2019. And

6:28

the reason that we're calling out that

6:30

date is because shortly thereafter, the government

6:34

showed a tweet that Bankman Fried had written

6:37

that same day, actually, in which he

6:39

told someone that Alameda's

6:41

account was, quote, just like everyone

6:43

else's on FTX. And

6:47

at the moment that the press saw that tweet

6:49

and they saw the date on it, there's

6:51

this gasp on the

6:53

benches where they were like, they were

6:55

so surprised.

6:58

And then according to Wong, there

7:00

was also this code that allowed Alameda

7:02

to

7:03

borrow money. And by late 2019,

7:06

early 2020, Wong said Alameda

7:08

was already tapping customer money.

7:11

And Wong went on to say, over time, the

7:13

limit for how much Alameda could borrow

7:15

changed. He said initially it was

7:18

a few million. Then he said it

7:20

grew to a few hundred million. Then

7:22

Wong said it went beyond one million.

7:25

And then he said it was set to 65 billion.

7:30

What I was really looking to try and get more info on

7:32

and didn't really get answered was why

7:35

Alameda needed these privileges on FTX.

7:38

And

7:38

there wasn't really a clear cut answer

7:41

that we got to that. And so it's possible

7:43

maybe we get more info, but

7:45

it's one of the things I'm still wondering about.

7:50

And while Wong said that

7:52

Alameda never borrowed the full 65 billion

7:56

dollars that it had access to, they

7:58

did borrow what wound up being an eye

8:00

watering amount of money. And we're

8:02

going to talk about how much that was after

8:04

the break.

8:13

Today

8:30

in court we learned a lot from Wong's testimony about what was

8:32

going on inside FTX

8:51

last

8:56

year in the lead up to the collapse. And

8:58

we started in June of 2022. That summer crypto

9:02

prices were crashing, tons of

9:04

companies were going broke. Emma

9:17

Wong testified that after adding everything up

9:19

he came up with a number. And that was

9:32

$11 billion. Emma Right.

9:35

And Wong testified that he told Bankwenfried

9:38

about that $11 billion debt.

9:41

And he said Bankwenfried didn't seem shocked.

9:43

And he even testified that after that Bankwenfried

9:46

directed Caroline Ellison to actually

9:48

have Alameda repay the money that it

9:50

owed to its other lenders despite

9:53

the $11 billion debt.

9:55

And after that the prosecution moved

9:57

on

9:57

to asking Wong about events of November

9:59

2022 when FTX

10:00

collapsed and they began

10:03

by asking him about what happened on

10:05

Sunday November 6th.

10:06

Yeah, so Wong testified

10:09

that November 6th is when he found

10:11

out that customers were trying to pull

10:13

swaths of money off the exchange.

10:16

This was after the Coindesk article

10:18

that we spoke about in our pre-trial episodes

10:21

came out with some information on

10:23

the ties between FTX and Alameda.

10:25

Wong testified that

10:28

he talked to Bankman Freed and Bankman

10:30

Freed told him that there's another account

10:32

that's not reflected in your calculations determining

10:35

how much money and crypto FTX

10:37

has. Wong

10:40

said that Bankman Freed said that this was an old

10:42

Alameda account, but it had been given a different

10:45

name. In that account

10:47

Wong said owed eight billion

10:49

dollars to FTX. Yeah,

10:51

and again, that was a bit of a moment I felt

10:53

in the courtroom and then went on

10:55

to ask about the very next

10:56

day. Yeah, and then the government

10:59

showed a tweet that Bankman Freed had sent

11:01

out from the day after November 7th where

11:04

he was trying to reassure customers saying

11:06

that FTX was fine, that the assets

11:08

were fine, but Wong testified

11:10

that that was a law. And

11:14

we did get some cross-examination

11:16

from the defense today of Wong

11:18

and that is going to continue into Tuesday.

11:21

And they seem to be struggling

11:23

a little bit. Judge Kaplan

11:25

is getting frustrated with how

11:27

they are often repeating the prosecution's

11:29

questions and

11:31

he's given them a bit of a telling off. Maybe

11:34

they have a strategy they pull out on Tuesday.

11:37

We're not sure, but after that

11:39

we may

11:40

get a star witness. Yeah,

11:42

and that's Caroline Ellison.

11:44

She is the witness that

11:46

everyone has been waiting to hear

11:48

from. And there's

11:51

a lot of anticipation about what she might

11:53

say and being the CEO

11:56

of Alameda Research, but also Bankman

11:58

Freed's former romantic. partner, you know,

12:01

she could wind up being a major

12:03

turning point in this whole trial.

12:24

That's all for today, Saturday, October

12:26

7th. The trial of Kryptos Golden

12:27

Boy is part of the journal, which is

12:29

a co-production of Spotify and The Wall Street

12:32

Journal. I'm Caitlin

12:33

Ostroff. And I'm Rachel Humphries. Thanks for

12:35

listening. Check

12:38

back here for trial updates.