E-mails, chat logs, code and a notebook: the mountain of FTX evidence

E-mails, chat logs, code and a notebook: the mountain of FTX evidence

Computer code fragments. Over six million pages of emails, Slack messages and other digital records. And a little black notebook, full of handwritten observations.

For months, federal prosecutors building the criminal case against late cryptocurrency executive Sam Bankman-Fried have assembled a vast and unusual array of evidence. The documents include cryptographic transaction logs and encrypted group chats from Mr. Bankman-Fried, FTX, as well as impressive personal reflections recorded by a key witness in the case.

The mountain of evidence is among the largest ever collected in a white-collar securities fraud case prosecuted by federal authorities in Manhattan, according to data provided by a person with knowledge of the matter. In Martha Stewart’s 2004 securities fraud case, for example, prosecutors produced 525,000 pages of evidence for the defense team, but numbers have increased significantly in recent years.

The diversity and growing volume of material in the FTX case underscores the legal challenges facing Bankman-Fried, 31, who is charged with 13 criminal charges, including accusations that he misappropriated billions of dollars in client money, defrauded investors and violated campaign finance. laws. He pleaded not guilty.

With the trial scheduled for October, prosecutors have gathered evidence ranging from phones and laptops to the contents of Bankman-Fried’s Google accounts, which total 2.5 million pages alone. At a hearing in March, Nicolas Roos, the federal prosecutor investigating FTX, said the government obtained a laptop crammed with so much information that FBI technicians were struggling to decipher it.

“It’s a huge amount to sift through, and sometimes you can find incredibly useful information,” said Moira Penza, a former federal prosecutor who now works in private practice. “It is a real challenge.”

Typically, evidence in a criminal case remains largely secret until shortly before the trial. But in the Bankman-Fried case, interviews and a review of recent court cases offered a glimpse into the idiosyncratic set of records that FTX prosecutors collected.

The investigation began in November after the FTX collapse sent the crypto market into turmoil. Once the exchange closed, prosecutors began gathering documents, sending subpoenas to FTX officials, and seeking records from Bankman-Fried-funded political campaigns.

Orders were generally ample. One person who received a subpoena said prosecutors wanted all documents related to the FTX and sent a group of data specialists who took days to extract the information from a set of devices.

While much of what prosecutors have gathered is typical corporate fare, other material points to FTX’s unusual personal dynamics.

The black notebook, described as a diary, belonged to Bankman-Fried’s on-again, off-again girlfriend Caroline Ellison, a former lieutenant in his business empire, said three people familiar with the matter.

Mrs. Ellison, who was chief executive of FTX’s sister company, hedge fund Alameda Research, also filed remarks about Mr. Bankman-Fried in a series of electronic documents circulated among lawyers in the case, three people with knowledge of the matter said. Sometimes, said two of the people, Mrs. Ellison has expressed personal and professional resentment toward Mr. Bankman-Fried.

The lawyers and representatives of Mr. Bankman-Fried and Mrs. Ellison declined to comment or did not respond to requests for comment on the evidence in the case. A spokesman for federal prosecutors in Manhattan declined to comment on the discovery process.

It is expected that Mrs. Ellison is a crucial witness. She pleaded guilty to fraud charges along with two other top executives, Gary Wang and Nishad Singh, and has agreed to cooperate with prosecutors pursuing Mr. Bankman-Fried. In the days after the FTX collapsed, she confessed to Alameda officials that she, Mr. Bankman-Fried, Mr. Wang and Mr. Singh had used funds from FTX clients to fill holes in Alameda’s accounts. She also dated Mr. Bankman-Fried and lived with him in a penthouse in the Bahamas, where the exchange was based.

Any personal writings from her or other witnesses could be helpful to defense attorneys during cross-examination, Penza said.

“The biggest risk with a cooperator is that the defense will be able to say here that they are cooperating to save themselves from a long prison term,” she said. “But modern juries are unlikely to take what they are witnessing seriously because of revenge or a failed romance.”

Many of FTX’s corporate records, including emails, Slack messages and transaction records, were held by Sullivan & Cromwell, the law firm that took over the exchange after it declared bankruptcy.

In a recent court case, Bankman-Fried’s attorneys argued that prosecutors relied on Sullivan & Cromwell to act as their de facto agent in obtaining company documents. The attorneys claimed that by “outsourcing” this process to the firm, the prosecutors were avoiding their legal responsibility to deliver potentially useful evidence to Mr. Bankman-Fried.

The detective work of Sullivan & Cromwell – which has filed bills totaling $55 million to the bankruptcy court – is already proving beneficial to prosecutors. In a January court filing, Sullivan & Cromwell displayed an excerpt of FTX’s underlying codebase, showing a feature that allowed Alameda to borrow virtually unlimited amounts of money from the exchange.

In an email to Sullivan & Cromwell attorneys that month, Mr. Roos requested FTX transaction records for accounts owned by Mr. Bankman-Fried, by Mrs. Ellison, from Mr. Wang, from Mr. to the court records. He also sought records of a group chat on Signal’s encrypted messaging app titled “Donation Processing” where FTX executives discussed campaign finance issues.

Prosecutors also obtained evidence directly from executives in Bankman-Fried’s orbit. Last month, the FBI executed a search warrant on the $4 million Maryland home of Ryan Salame, a high-ranking FTX executive who donated tens of millions of dollars to Republican candidates, including George Santos, the recently indicted congressman Long Island, NY.

Agents took Salame’s cell phone, as well as a phone belonging to his girlfriend, Michelle Bond, a crypto lobbyist, said two people with knowledge of the matter. Bond ran unsuccessfully for Congress last year as a Republican in another Long Island district.

Throughout the year, prosecutors turned their evidence over to Bankman-Fried’s lawyers, a process known as discovery.

At the March hearing, Roos gave a detailed update on the case, explaining to the judge overseeing the case, Lewis A. Kaplan, that prosecutors obtained four laptops, including the device so large it was proving difficult to analyze. That laptop belonged to Wang, two people with knowledge of the matter said.

Lawyers for Wang, Salame and Bond did not respond to requests for comment.

Roos also said the government had provided the defense team with nearly a million documents obtained from witnesses and third parties in the case.

“We produced 927,000,” he said. “So that leaves, quick math, maybe 110,000.”

“Reading before bed,” replied Judge Kaplan.


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