FTX co-founder Sam Bankman-Fried’s (SBF) defense team tried to place blame on his ex-girlfriend, Caroline Ellison, and Binance CEO Changpeng Zhao (CZ) for the collapse of the cryptocurrency exchange. Mark Cohen, SBF’s lawyer, argued during the opening statements that SBF did not defraud anyone and acted in good faith, shifting responsibility for the alleged misconduct onto CZ, media reports said.
Cohen contested the portrayal of SBF as a “cartoon villain,” describing him as a math nerd who abstained from drinking and partying. The defense asserted that SBF believed loans from FTX to its sister hedge fund Alameda Research were permitted and that he acted with integrity.
The prosecution claims that SBF orchestrated the secret diversion of customers’ fiat and crypto deposits to Alameda. Allegedly, fiat funds were deposited into a Silvergate bank account owned by Alameda, not FTX, and crypto was taken from FTX customers’ accounts using a hidden backdoor in FTX’s systems.
Cohen explained that the Alameda account at Silvergate was created because FTX lacked an account for accepting dollars in its early days. He argued that poor risk management, particularly under Ellison’s leadership after SBF relinquished his role as CEO of Alameda to her, led to the lender’s bankruptcy.
Highlighting Alameda’s losses, Cohen stated that Bankman-Fried believed the fund’s bank accounts no longer held FTX client funds. However, he emphasized that SBF maintained his belief in the solvency of both Alameda and FTX during the market downturn. The defense contended that the situation changed when CZ’s tweet in early November raised concerns about both firms, triggering a “run on the bank at FTX.”
Ellison and two other executives close to SBF have entered plea deals admitting to fraud in conspiracy with SBF. Cohen concluded by suggesting that their testimony, now aligned with the government, should not undermine the defense’s case, and he will ultimately ask the jury to find Sam not guilty.
