Unchained

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The Chopping Block: A Rough Week 3 for SBF, DCG Troubles, Fees at Uniswap - Ep. 559 Oct 21, 2023

Show notes

Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest news. This week, the four discuss – and disagree about – Uniswap’s new fees, SBF trial week 3, and DCG potentially being taken out by the NY Attorney General.

Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform.

Show highlights:

What happened recently on the criminal trial against Sam Bankman-Fried, including testimonies from Caroline Ellison, Nishad Singh
why Robert doesn't like the cartoonist and how Tarun is friends with a stenographer
how Nishad Singh confirmed what everyone suspected about the cross-collateral risk engine at FTX
why Haseeb believes that the NYAG's lawsuit against DCG, Genesis, and Gemini is "brutal"
how DCG resembles the Roman Empire, according to Haseeb
what Robert thinks about the introduction of the Uniswap Labs new fees, considering he was in a similar situation with Compound Labs'
how can companies that build open-source protocols monetize their efforts
whether the implementation of the fees will reduce the total volume for Uniswap

Hosts

Haseeb Qureshi, managing partner at Dragonfly
Robert Leshner, founder of Compound
Tom Schmidt, general partner at Dragonfly
Tarun Chitra, managing partner at Robot Ventures

Disclosures

Links

Previous coverage by Unchained on the trial of Sam Bankman-Fried:

Uniswap:

Unchained: Uniswap Labs to Charge 0.15% Fee on Certain Tokens

NYAG lawsuit:

Unchained: NY Attorney General Sues Crypto Firms Gemini, Genesis, and DCG for Over $1 Billion Fraud

Reddit:

Unchained: Reddit to Discontinue Community Points Citing Scalability and Regulatory Issues, Sparking Community Backlash

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Another Bad Week for Sam Bankman-Fried in His Criminal Trial - Ep. 558 Oct 20, 2023

Show notes

Sam Enzer, a partner at the law firm Cahill Gordon & Reindel, told Laura that compelling evidence from Sam Bankman-Fried’s inner circle had increased the difficulty for the fallen FTX CEO to convince a jury of his innocence. Former FTX head engineer Nishad Singh said that he became suicidal after understanding the full magnitude of FTX’s misuse of customer funds, while ex-chief legal counsel Can Sun helped show how SBF allegedly lied to lawyers.

Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform.

Show highlights:

Sam (Enzer’s) thoughts on how the trial is going for the defense
what Nishad Singh's emotional testimony revealed about SBF
how Singh felt "betrayed" by Bankman-Fried, who may have been a big brother figure to him
why the defense went much harder after Singh in its defense than it did the other members of the inner circle
whether the jury felt empathy with Singh about his suicidal feelings
what the rationale was behind the order of the witnesses
why Sam believes that the accounting professor Peter Easton's testimony was "damning" for the defense
whether the testimony of former FTX general counsel proved that SBF lied to his own lawyers
why the communications between SBF and his lawyer, which are generally privileged, were divulged in court
why Sam believes that it's likely that SBF will testify, although he would advise him not to

Thank you to our sponsors!

Guest

Sam Enzer, partner at Cahill Gordon & Reindel.
Previous appearances on Unchained:
Why These Lawyers Say It's Over for SBF-But His Only Hail Mary Is to Testify
SBF Trial: How Sam Bankman-Fried’s Lawyers Might Try and Win His Case
SBF’s Lawyers Could Be Annoying the Judge. How Might That Impact the Trial?

Links

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SBF Trial, Day 12: Former FTX General Counsel Speaks Out Against SBF Oct 20, 2023

Show notes

On the 12th day of the SBF Trial, former FTX General Counsel Can Sun testified about a $7 billion deficit in customer funds. Sun, who was responsible for crafting FTX's terms of service, expressed shock at the deficit and revealed that Sam Bankman-Fried had asked him for legal justifications. Sun also mentioned that Nishad Singh, a key witness and former head of engineering at FTX, looked emotionally drained days before the company's collapse.

Sun's testimony took a dramatic turn during a meeting with Bankman-Fried and others, where it was confirmed that FTX lacked sufficient funds to cover customer withdrawals. This meeting solidified Sun's suspicions that Alameda Research had misappropriated FTX customer deposits.

The day concluded with Robert Boroujerdi of Third Point stating that Bankman-Fried had omitted significant details that would have altered the firm’s decision to invest $60 million in the now failed crypto exchange. That investment is now worth zero. The trial will resume in a week, adding more suspense to this unfolding legal drama.

Catch up on Unchained’s previous coverage:

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SBF Trial, Day 11: How Alameda Got FTX Into a $9 Billion Hole Oct 19, 2023

Show notes

The courtroom was abuzz on Wednesday as financial and technical experts took the stand in the ongoing criminal trial against Sam Bankman-Fried. Accounting professor Peter Easton, a standout witness, presented a detailed analysis showing that Alameda had spent customer funds on VC investments, real estate, and political and charitable donations. Easton, who had previously worked on high-profile cases like Enron and Worldcom, said that by the end, the gap between what FTX owed to customers and what it had on hand was $8.8 billion.

The defense, led by attorney David Lisner, attempted to challenge Easton's methods. Lisner questioned the accounting of the fiat@ftx internal account, which tracks customer deposits. Easton admitted to lumping amounts owed to customers from FTX’s bank accounts with what was owed to customers from Alameda's bank accounts, giving the defense an opportunity to question his accuracy.

The day also saw other witnesses, including a former FTX lobbyist and a Google employee, both of whose relevance was questioned by Judge Kaplan. The judge criticized the prosecution for wasting time with witnesses who seemed to offer little to the case.

Catch up on Unchained’s previous coverage:

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SBF Trial, Day 10: Defense Tries But Fails to Undercut Nishad Singh's Credibility Oct 18, 2023

Show notes

On day 10 of the Sam Bankman-Fried trial, SBF’s defense team tried to discredit Nishad Singh, a key witness for the prosecution. Despite their efforts, Singh's testimony about FTX's financial mismanagement and Bankman-Fried's questionable ethics remained largely unchallenged. The defense's line of questioning focused on Singh's memory and inconsistencies in his statements, but prosecutors were quick to counter these points in their redirect.

FBI Agent Richard Busick presented an analysis of Bankman-Fried's phone locations, revealing his connections to influential political figures like former U.S. President Bill Clinton and New York City Mayor Eric Adams.

Can this information impact the jury's perception of Bankman-Fried as the trial continues to unfold?

Catch up on Unchained’s previous coverage:

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SBF Trial, Day 9: Nishad Singh Describes Former FTX CEO as a Bully and Big Spender Oct 17, 2023

Show notes

The third week of the criminal trial against Sam Bankman-Fried began Monday. Nishad Singh, one of three key witnesses for the prosecution, testified about the alleged misuse of customer funds and a toxic work environment at FTX, created by Sam Bankman-Fried. Singh's account echoed earlier testimony by former Alameda CEO Caroline Ellison and former FTX CTO Gary Wang and raised questions anew about the company's venture investments, excessive spending on sponsorships, and attempts to deceive regulators. Singh also described his growing concerns about Bankman-Fried's lavish spending, even as the company faced mounting financial difficulties.

Catch up on Unchained’s previous coverage:

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Why These Lawyers Say It's Over for SBF--But His Only Hail Mary Is to Testify - Ep. 557 Oct 16, 2023

Show notes

Samson Enzer, partner at Cahill Gordon & Reindel, and Greg Strong, partner at DLX Law, dissect the second week of the criminal trial of Sam Bankman-Fried. At this point, the prosecution’s star witness, former Alameda Research CEO Caroline Ellison, has testified, as well as another prominent insider, co-founder Gary Wang. Both Enzer and Strong believe that it’s already over for the defense, but agree that the only thing that could turn it around is testimony from SBF himself—but that runs the risk of the defendant significantly increasing his sentence.

Find out how they thought the more salacious details of Ellison’s testimony, concerning alleged bribes to Chinese government officials, would affect the jury, and why Enzer believes introducing that testimony may have been risky for the government.

Show highlights:

Whether the prosecution gave the defense any fodder for its failed entrepreneur theory
How SBF and Ellison’s romantic relationship could affect the jury’s deliberations
The jury’s reaction to Ellison saying SBF’s belief was that “don’t lie, don’t steal” didn’t fit into his philosophy of utilitarianism
Why the defense didn’t object to the mention of alleged bribes to Chinese government officials the first time
Why the defense attorney complained about photos shown of SBF and his hair
How the jury might react to the testimony involving alleged Chinese government bribes, Thai prostitutes, and Saudi prince
How Ellison crying in her testimony could affect the jury
Why the defense didn’t ask Ellison about not hedging
Why the cross-examination of Gary Wang was limited in its success for the defense
What caused a moment of tension between Zac Prince and the defense
Why Greg and Sam think SBF shouldn’t testify, but believe it’s his only, very risky, chance
If convicted, how many years do they think SBF’s prison sentence will be?

Thank you to our sponsors!

Guests:

Sam Enzer, partner at Cahill Gordon & Reindel.
Previous appearances on Unchained:
SBF Trial: How Sam Bankman-Fried’s Lawyers Might Try and Win His Case
SBF’s Lawyers Could Be Annoying the Judge. How Might That Impact the Trial?
Greg Strong, partner at DLx Law

Links

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SBF Trial, Day 8: Former BlockFi CEO Adds Credibility to Fraud Charges Oct 13, 2023

Show notes

On the eighth day of the SBF trial, former BlockFi CEO Zac Prince took the stand, serving as a strong witness for the defense, while offering a detailed look into how Alameda Research's borrowing from FTX differed from traditional crypto lending, and the impact of FTX’s and Alameda’s collapse on BlockFi, which subsequently filed for bankruptcy.

The defense team tried to pin BlockFi’s loans to Alameda on BlockFi executives ignoring advice from its own credit team, but Prince twice corrected defense attorney Mark Cohen that, for the document in question, the executives did follow the advice of their credit team. The defense also tried to raise the notion that BlockFi would have declared bankruptcy no matter what had happened with FTX and Alameda, but Prince also held his ground that the collapse of SBF’s empire resulted in BlockFi’s own bankruptcy.

Catch up on Unchained’s previous coverage:

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How Heated Sidebars During the SBF Trial Could Impact the Jury’s Decision - Ep. 556 Oct 13, 2023

Show notes

The second week of Sam Bankman-Fried’s criminal trial is underway, bringing emotional testimony from SBF’s ex-girlfriend and former Alameda CEO Caroline Ellison, along with some surprising stories about alleged bribes to Chinese officials and discussion about reaching out to the Saudi Crown Prince for help. Ari Redbord, Global Head of Policy at TRM Labs, discusses why the question of who was actually in charge is so critical to the case, the defense’s strategy to discredit Caroline Ellison, and why sidebars in the courtroom can get so heated.

Show highlights:

Why Caroline Ellison is a critical witness on a "number of levels," according to Ari
What a software developer at FTX revealed about whether SBF was directing trades
Why a lawyer’s body language is something the jury looks out for
Why there have been so many sidebars in the trial and why they can sometimes get heated
The reason why the lawyers, particularly the defense team, have been so repetitive with their questions
Considering the long prison sentence SBF is facing, why Ari "doesn't understand" SBF’s decision to push forward with the trial
Whether, after three days of testimonies, Ellison has come out as a credible witness for the jury
Why the defense is facing an "uphill fight" and whether testimony from SBF would serve as a final Hail Mary for them

Thank you to our sponsors!

Guest

Ari Redbord, Global Head of Policy at TRM Labs.
Previous appearances on Unchained:
Is TRM Labs Blocking Addresses From DeFi Protocols? Ari Redbord Says Yes
The Legal and Regulatory Fallout From Terra’s Collapse: Who Will Pay?
How Much Prison Time Is FTX’s Sam Bankman-Fried Facing?

Links

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SBF Trial, Day 7: In SBF Trial, Did the Defense Lose Its Opportunity With the Star Witness? Oct 13, 2023

Show notes

Day seven of Sam Bankman-Fried’s criminal trial saw the defense team unable to discredit Caroline Ellison, despite multiple attempts. The defense's questions often seemed aimless, failing to draw any substantial conclusions. Ellison remained steadfast, revealing that SBF had plans to buy Telegram around the time Alameda "borrowed" $14 billion of FTX customer money.

Defense attorney Mark Cohen tried to portray Ellison as the one in charge of Alameda, but she clarified that SBF was the ultimate decision-maker. Ellison also disclosed that she had considered resigning from Alameda but was persuaded by SBF to stay, emphasizing his control over the firm.

The day continued with testimony from Christian Drappi, a former Alameda employee, who corroborated Ellison's account. Zac Prince, founder of the bankrupt crypto lending firm BlockFi, briefly took the stand, setting the stage for his testimony to continue the next day.

Catch up on Unchained’s previous coverage: