As the trial of Sam Bankman-Fried quickly approaches, Department of Justice prosecutors are adding to their roster of witnesses who plan to testify against the FTX founder. In their latest court filing, prosecutors said on Saturday that they plan to call FTX customers to the stand to detail how the exchange's collapse cost them millions of dollars.
FTX, once one of the world's largest crypto exchanges, declared bankruptcy in November shortly after it was revealed that firm didn't back user deposits one to one and instead was using customer money to cover up shortfalls at its associated trading firm, Alameda Research. The ensuing fallout led to a slew of criminal charges against Bankman-Fried and his circle of insiders—and nearly $9 billion owed to FTX customers.
Witness wrangling
Since the exchange's collapse, the DOJ has been working to flip former FTX executives. Three of Bankman-Fried's top deputies agreed to cooperate with prosecutors—former Alameda CEO and one-time girlfriend Caroline Ellison, along with ex-engineering chief Nishad Singh and CTO Gary Wang. A fourth, former FTX co-president Ryan Salame, pleaded guilty but indicated he would invoke his Fifth Amendment right against self-incrimination.
While Bankman-Fried's defense team and prosecutors have been sparring over which expert witnesses will be allowed to testify, the latest court filing outlines additional witnesses the DOJ is planning to call.
The first group includes "multiple" FTX customers, including both retail customers—who prosecutors say lost tens of thousands of dollars on the failed exchange—as well as institutional customers—who prosecutors say lost millions.
According to the filing, the customers transferred the funds to the exchange with the "expectation and understanding that FTX would custody their assets separate from those of the company, would not transfer customer assets to Alameda Research, and would not use their assets for FTX’s or Alameda’s own expenses."
In a separate filing, prosecutors said one of the customers is a young male in Ukraine who lost a substantial portion of his life savings, which he transferred to the exchange after Russia invaded Ukraine last year. Prosecutors requested that he be allowed to testify remotely, as he isn't legally allowed to leave the country. Bankman-Fried's lawyers are trying to challenge the request.
Prosecutors said they also plan to call FTX investors as witnesses to describe their understanding of how the exchange claimed it managed customer funds according to investor pitches. The testimony, according to the filing, will demonstrate that a "reasonable investor would find the misrepresentation important in making an investment decision."
Finally, prosecutors said they plan to call witnesses who entered guilty pleas—likely Ellison, Singh, and Wang. Additionally, they plan to call witnesses who will testify "pursuant to grants of immunity"—a key bucket of individuals associated with FTX who have yet to be revealed.
The trial is set to begin Tuesday with jury selection.
