Marc-Antoine Julliard typically trades cocoa beans. But in the spring of 2021, the London-based commodities broker decided to diversify into cryptocurrency trading. His platform of choice was FTX.
Two years later, Julliard stood as the prosecution’s first witness in the criminal fraud trial against FTX co-founder Sam Bankman-Fried, who’s accused of misusing billions of dollars in client money.
In testimony that lasted around 50 minutes on Wednesday, Julliard recounted his experience with FTX, including the “extremely anxious” feeling he had the day he unsuccessfully attempted to withdraw part of the $100,000 worth of crypto and cash he had stored on the site. He and thousands of other FTX customers were practically wiped out when the exchange went belly up late last year.
Like many others, Julliard said he he was under the impression that there were “strong financials behind the company.”
Julliard is the poster child for the case the prosecution laid out in its opening statement as it tries to prove to a jury that clients were led to believe the money they stored with FTX was safe. Prospective customers, Julliard said, were drawn in through savvy marketing, with no reason to believe that FTX would be repurposing their crypto funds.
In a trial that’s set to last six weeks, Bankman-Fried, a man once revered as the “white knight” of crypto, faces seven federal charges, including wire fraud, securities fraud and money laundering, that could put him in prison for the rest of his life.
A jury was seated shortly after 11:30 a.m. (though four of the 12 jurors were already looking to be dismissed). Opening statements began about an hour later. Julliard took the stand just before 2 p.m. to a packed courthouse in Manhattan.
As the lead witness, Julliard helped lay out the government’s narrative. Much of his decision to buy into FTX had to do with the celebrities and venture funds attached to the brand. He referenced an ad with supermodel Gisele Bündchen and Formula 1 marketing. He also pointed to prolific media coverage, which bolstered his trust in the company.
Julliard wasn’t an aggressive crypto trader. He said he never participated in margin trading, or borrowing money to make purchases, nor did he engage in a lending program offered by the company that allowed users to earn interest on idle crypto.
Defense wants customers to shoulder blame
The defense is trying to make clients accountable for what it says were their choices to buy and trade crypto.
“Sam didn’t defraud anyone,” said Mark Cohen, Bankman-Fried’s attorney, in his opening statement. Cohen called it a “hindsight case” brought by the government, and said that just because people lost money, doesn’t mean the 31-year-old Bankman-Fried committed fraud.
Bankman-Fried donned a fresh suit with a purple tie and a clean haircut — a much different look than the beach shorts, sandals and wild curls that helped define his image during crypto’s heyday. The entrepreneur, who Cohen described as a “math nerd that didn’t drink or party,” diligently took notes on his air-gapped laptop as he conversed with both of his attorneys and, during breaks, sometimes stood while emphatically motioning with his hands as he spoke to his counsel.
Throughout both sides’ opening statements, Bankman-Fried kept his eyes trained on the jury box. His head was turned 90 degrees to his right to watch those who will ultimately decide his fate. Bankman-Fried was joined in court by his parents, who are both being sued by FTX’s new management for having allegedly “exploited their access and influence within the FTX enterprise to enrich themselves…by millions of dollars.”
Cohen is projecting Bankman-Fried as a startup founder and equated running FTX and Alameda Research, his sister hedge fund, to “building a plane while flying on it.” He told the jury that there was no risk management in place. Specifically, he said the firm didn’t have a chief risk officer.
Far from the “cartoon of a villain” that the government presented, Cohen gave different explanations for his client’s supposedly illegal actions. One example dealt with the secret backdoor baked into FTX’s code that prosecutors say gave Alameda a way to borrow much needed capital.
Cohen said there was nothing secretive about this backchannel in the code base and said the special access to FTX was there because Alameda was initially set up as a market maker for the crypto exchange, which needed the liquidity, especially in its early days.
Cohen reminded the jury that the three insiders who will take the stand against Bankman-Fried have all signed cooperation agreements with the government.
A $10 billion fraud
The prosecution’s opening statement was delivered by Assistant U.S. Attorney Thane Rehn. Over the course of about a half hour, Rehn drove home the point that everyday investors were the ones who fell victim to FTX’s scheme. By the summer of 2022, he said, more than $10 billion had been stolen from thousands of FTX customers who had trusted custody of their crypto and cash to the platform.
Rehn said the evidence would show jurors how Bankman-Fried lied to FTX users, investors and lenders, and how he spent a good amount of the money he stole for his own good. Rehn referenced campaign contributions, for example, as one way that Bankman-Fried looked to curry favor on Capitol Hill.
Rehn called Alameda a “second, smaller and more secretive company” founded and controlled by Bankman-Fried that was integral to the defendant’s alleged scheme.
The government also teed up its star witness, ex-girlfriend and Alameda’s ex-CEO, Caroline Ellison. She pleaded guilty in December to multiple charges and has been cooperating with the U.S. attorney’s office in Manhattan for months.
Rehn plans to show that Bankman-Fried installed his girlfriend at the top of his hedge fund, though he remained the one calling the shots behind the scenes.
Noticeably absent was the mention of Ellison’s co-CEO Sam Trabucco, who was a classmate of Bankman-Fried at MIT. Trabucco left FTX in Aug. 2022, and has stayed relatively under the radar.
Also central to the government’s case is the alleged coverup to hide Bankman-Fried’s crimes. Those tactics include backdating contracts and using encrypted messaging apps set to auto-delete to avoid a paper trail.
“This man stole billions of dollars from thousands of people,” Rein said, as he closed his statement.
The prosecution’s second witness was Adam Yedidia, who met Bankman-Fried in college at the Massachusetts Institute of Technology. The pair remained good friends.
Yedida detailed his experience working first as a trader at Alameda for two months in 2017, and later as a software engineer for FTX beginning in January 2021. He said he resigned from FTX the day before the exchange filed for bankruptcy after a fellow developer told him that Alameda had used FTX customer deposits to pay back creditors.
Speaking quickly and deliberately with an air of practiced nonchalance, Yedida testified that he hadn’t talked to Bankman-Fried or seen him in person since Nov. 2022.
When asked why he was appearing under an immunity order, Yedida said he was concerned that as an FTX developer, he “may have unwittingly written code that contributed to a crime.”
Prosecutors got through a half hour of testimony before breaking for the day. The government will continue its questioning of Yedida at 9:30 A.M. on Thursday.
FTX co-founder Gary Wang will also be taking the stand this week for the government.
