In the ongoing trial of Sam Bankman-Fried, the defense attorney, Mark Cohen, engaged in a cross-examination of star prosecution witness Caroline Ellison.
However, the cross-examination seemed to miss the intended mark as Cohen bumbled and failed to deflect blame from his client, Bankman-Fried.
Topics Covered in Cross-Examination
Cohen questioned Ellison about her role in the collapse of FTX and her involvement with Alameda, a sister company. During the questioning, Ellison appeared comfortable on the stand and provided extensive responses, often volunteering more information than Cohen requested. However, Cohen did not effectively assign blame to her for FTX’s downfall.
Cohen inquired about Ellison’s leadership at Alameda and whether decisions were made independently of Bankman-Fried’s input. She confirmed that she and her co-CEO had made decisions without Bankman-Fried during periods when he was absent.
Ellison also discussed her company’s accounting and mentioned that Alameda had encountered difficulties with accounting firms in 2021 and 2022. Her involvement in preparing Alameda’s balance sheets became a central point of discussion, as these financials played a significant role in the FTX controversy.
Background on the Sam Bankman-Fried Trial
The trial centers on Sam Bankman-Fried, the founder of FTX, and the collapse of the exchange in the previous year. Caroline Ellison, Bankman-Fried’s former girlfriend, is a key witness in the case. The trial also highlights the importance of Alameda, a related company, and the financial issues that contributed to FTX’s demise.
Repetitive and Meandering Cross-Examination
During the cross-examination, Cohen’s questioning often repeated information that Ellison had already shared with federal prosecutors in her previous testimony. His questions spanned various topics, from the terms of Ellison’s agreement with prosecutors to Alameda’s decision-making process. However, these questions lacked a clear common thread beyond Ellison’s role at Alameda.
Cohen’s approach led to multiple objections from the prosecution and warnings from the judge, who expressed exasperation with the repeated questioning. Despite these warnings, Cohen persisted in his line of questioning, which resulted in frustration from both the judge and the prosecution.
Ellison’s Reaction and Frustration
Ellison also showed signs of frustration during the cross-examination, particularly during a confusing part when Cohen questioned her about the trading firm’s borrowing practices. At one point, she asked for more specific questions, suggesting that the line of inquiry lacked clarity.
Cohen’s letter to the judge, sent in parallel with the hearing, indicated his intention to focus on the contractual terms of service in relation to FTX customers’ rights, arguing that expectations and understandings were less critical than the actual terms of service. This suggests his strategy for future questioning of witnesses.
Sam Bankman-Fried Defense Strategy
In his opening statement, Cohen had argued that Ellison was responsible for FTX’s collapse, emphasizing that Bankman-Fried had relied on her as the CEO of Alameda.
The prosecution challenged this narrative during their direct questioning of Ellison, highlighting discussions about Alameda’s financial position and the decisions made by Bankman-Fried that resulted in FTX’s financial difficulties.
Testimony of Alameda Engineer Christian Drappi
Following Ellison’s testimony, Alameda software engineer Christian Drappi took the stand. He discussed a significant all-hands meeting at Alameda, which was secretly recorded after FTX’s liquidity crisis came to light. This recording was shared with the jury to bolster Ellison’s credibility. In the recording, Ellison admitted to using FTX customers’ money, which has legal implications.
Drappi’s testimony shed light on the circumstances surrounding the recording. And the concerns it raised among Alameda employees and FTX creditors.