Sam Bankman-Fried takes the stand in his fraud trial

Joe Bankman and Barbara Fried are both tenured Stanford law professors and live in California. They have been spotted at their son's Manhattan trial, and feature prominently in the case.

In September, a lawsuit against Bankman and Fried claims the couple discussed with their son transferring a $10 million cash gift and a $16.4 million luxury property in the Bahamas to them, even as the company was on the verge of insolvency. 

Despite Bankman-Fried’s assertions that his parents weren’t involved in “any of the relevant parts” of FTX, the lawsuit claims that his parents played a role from the beginning.

Bankman, a renowned tax attorney, repeatedly described FTX as a “family business,” the filing states. 

It describes Bankman as having broad oversight of the company as early as 2018, both as an unofficial adviser and later as a paid employee. 

The lawsuit also accuses Bankman of helping cover up fraud, including one instance in which he “failed to investigate … a whistleblower complaint that threatened to expose the FTX Group as a house of cards.”

Fried, an expert in legal ethics, never held a formal position within her son’s crypto empire, but the lawsuit claims she also played a role as an adviser, particularly when it came to Bankman-Fried’s copious political contributions. She described herself as her son’s “partner in crime of the noncriminal sort,” the lawsuit claims. 

As a result of the lawsuit against Bankman and Fried, Stanford University has said it will be returning gifts it received from FTX “in their entirety."

The decision to call Sam Bankman-Fried is seen by some legal experts as a Hail Mary for a defense that has so far struggled to counter the prosecution’s narrative.

In opening statements, lead defense lawyer Mark Cohen told jurors that Bankman-Fried never committed fraud. He echoed his client’s previous public statements, saying that he made honest mistakes that are common in startups. Bankman-Fried and his co-founders, he said, were “building the plane as they were flying it,” and that some things were “overlooked” in the process.

“The decision to call your client as a witness is always fraught, but sometimes it’s the right one,” said Andrew George, a defense attorney with Baker Botts. “SBF’s team has made a judgment that his risk from not testifying outweighs his risk from testifying.”

The key, he added, will be ensuring that Bankman-Fried can come across to the jury as credible, and maintain that credibility under questioning from prosecutors.

The prosecution has just called its final witness in the case, FBI Agent Marc Troaiano, who was assigned to review Signal group chats recovered from devices belonging to Caroline Ellison and Gary Wang — former executives of Alameda and FTX who turned against Bankman-Fried and cooperated with prosecutors.

Judge Kaplan has dismissed one of the alternate jurors who came in sick this morning. 

The juror was throwing up, Kaplan said, and initially refused to leave because they didn't want to be dismissed from the case. Kaplan, however, worried the juror could be infectious, and "we just can't allow that." 

For the past three weeks, jurors have heard damning evidence from prosecutors that cast Sam Bankman-Fried as a criminal mastermind behind a multibillion-dollar fraud. Several witnesses, including his ex-girlfriend and other members of his inner circle, have cooperated with the prosecution and pleaded guilty in the hopes of receiving a lighter punishment.

Witnesses have told the jury that Bankman-Fried ordered them to siphon funds from customer deposits in FTX, a site where people could buy and sell crypto. Those ill-gotten funds, they said, were moved through a secret portal in FTX’s code that gave Alameda a virtually unlimited line of credit to place speculative bets on risky crypto assets and repay lenders.

Bankman-Fried founded both Alameda and FTX, and oversaw the operations of both even after he handed the title of Alameda’s CEO to Caroline Ellison, an Alameda trader who also dated Bankman-Fried off and on for two years.

The most damning testimony against Bankman-Fried came from ex-girlfriend Caroline Ellison, who offered rare insight into Bankman-Fried’s mindset as he built up both companies.

Her account conflicted with the public narrative Bankman-Fried touted as he built up Alameda and FTX, which he claimed were separate entities despite much of the staff sharing offices and even living together in a $35 million penthouse apartment in the Bahamas.

Among other things, Ellison testified that she personally, under Bankman-Fried’s orders, misled lenders and the public about the true relationship between Alameda and FTX. In one instance, she prepared multiple “dishonest” balance sheets to present to outsiders in order to mask “FTX borrows” — her shorthand within company communications for funds that Alameda was taking from FTX customers.

By November of last year, when both companies were collapsing, Ellison described an “overwhelming sense of relief” that the inevitable end was playing out. It was “overall the worst week of my life,” she testified, but said she was glad she wouldn’t have to lie anymore.