Can Sun, previous FTX standard counsel, took the stand on Thursday to testify on behalf of the prosecution’s circumstance versus Sam Bankman-Fried. Solar has a non-prosecution arrangement in trade for his cooperation.
The Yale law faculty grad joined FTX at the end of August 2021 and stayed until early November 2022 shortly right after the crypto trade collapsed. Ahead of going in-property at the exchange, Sunlight worked for Fenwick & West where he also suggested FTX as exterior counsel.
After in-house, Sun’s position consisted of many legal capabilities like acquiring regulatory licenses for the trade and dealing with how FTX addressed shopper property — or so he believed, he testified. Bankman-Fried had allegedly advised him that FTX purchaser deposits were being unequivocally “safeguarded, segregated and guarded.”
When requested by prosecutors no matter whether he ever authorised FTX’s use of client assets, Sunlight replied, “no, certainly not” and explained he was advised the buyer money were being held in a different account that did not include things like FTX’s have proprietary cash, and he was not mindful Alameda was receiving FTX client deposits.
“In all my conversations with Sam, it was constantly stated that customer belongings had been “safeguarded, segregated and guarded,” Sun reported.
During Sun’s testimony, prosecutors highlighted the phrases of provider which did not permit the exchange to touch client funds. (Sunshine testified he had worked on the TOS but that it was largely concluded by the time he joined.) 1 provision mentioned that “none of the electronic property in your accounts are the residence of, or shall or, may well be loaned to FTX trading” there was yet another that said buyers “control the digital property held in your account.”
Bankman-Fried wore a grey match that bunched up on his shoulders and neck as he sat. He spent most of the working day typing on his notebook or passing notes to his legal staff. His mother and father sat in the same bench they’ve occupied given that the commence of trial.
When the terms of services were brought up in proof, Bankman-Fried’s mother, Barbara Fried looked up the ceiling, took notes, looked at the watch and then again at her son on rotation. She also set her head in her hands and pressed her thumb to her temple, rubbed her eyes a number of occasions and looked back at Bankman-Fried for the duration of the prosecution’s testimony.
Sunlight learned that Alameda was not exempt from vehicle liquidation, which allowed the trading business to go “infinitely destructive,” on FTX’s system in August or September 2022. “I was stunned … [it] went against anything we advised regulators and buyers.” He added that he was instructed that Alameda’s liquidation exemption had under no circumstances been triggered — which other witnesses like FTX co-founder Gary Wang have testified to not be genuine. Irrespective, Sunlight asked for it to be eliminated, and he was instructed that Bankman-Fried and Nishad Singh, head of FTX engineering, stated “no.”
In its place, Sunlight testified that he got the connected parties to concur that it would be made clear to customers and regulators that the Alameda’s privileges would be improved to delayed liquid mechanisms. It was accredited by FTX’s authorized staff, but it under no circumstances created it through the enterprise side at the time of FTX’s collapse in November, Sunlight reported.
During cross-examination, Sunshine said he imagined about resigning in excess of the scenario, but he did not know at the time that it was the very same mechanism Alameda employed to take FTX cash.
Documenting loans
All through Sun’s time at FTX, he was also responsible for documenting financial loans for FTX. There were above 30 loans he documented in which Alameda loaned money to Bankman-Fried, Wang and Singh. He testified that he thought Alameda would make private financial loans to the 3 people today and inject cash into FTX for money. “I experienced no plan shopper funds were being becoming utilised,” Sun said.
Solar created a spreadsheet that kept track of the extra than 30 financial loans created to Bankman-Fried, Wang and Singh the financial loans totaled above $two.17 billion. “If they ended up not on my spreadsheet, I was not mindful of them,” Sunlight claimed.
Sunlight also gained a personalized loan of $two.3 million as section of a “management incentive program” to get him to shift to the Bahamas from Hong Kong, soon following he joined the corporation. He also received a bonus of $3.5 million in January 2022, about five months following joining FTX.
November talks with Apollo
On Nov. seven, 2022, 4 times before FTX submitted for individual bankruptcy, Sunlight joined a simply call with Apollo World Management, Ramnik Arora of FTX Ventures, and some others in an attempt to raise funds from the firm and “help clear up the liquidity problem that FTX had for customer withdrawals.”
Just after an initial call, Apollo requested for FTX’s money statements and Sunshine and related events shared it with them. “I was stunned mainly because it showed FTX was shorter $7 billion.”
Solar explained he asked questions about how it was calculated — he said the spreadsheet was messy — and he “did not get straight responses,” but rather just “vague answers” from Singh and Bankman-Fried. Looking back at that instant, Solar recalls Bankman-Fried was there “typing away” on his laptop, barely talking. Though Singh was “pale and gray” and looked like his “soul [was] plucked away from him,” Solar claimed.
Right after sharing the quantities with Apollo, Bankman-Fried instructed Sunshine that the agency questioned for lawful justification for missing resources and allegedly asked Sunlight to arrive up with a single. Sunlight proposed three “theoretical arguments,” but “there ended up no legal justifications for money missing.”
Sunlight testified he went on a wander that evening with Bankman-Fried all over an condominium at the luxury resort, The Albany, the place a lot of FTX workers lived. All through that discussion, Sunlight explained to Bankman-Fried that none of the theoretical arguments would justify why the FTX money were missing Sunlight testified that SBF replied “yup, yup” and “got it.”
Throughout a dialogue with Singh later on that evening, Sun mentioned the former engineer disclosed to him that Alameda’s “no liquidation” strategy was how the business withdrew the billions of pounds in buyer deposits.
Sun resigned from the company the subsequent day.
