The trial of the former CEO of the defunct crypto exchange FTX, Sam Bankman-Fried (SBF), continued on October 19 with the witness testimony of Can Sun, a former General Counsel at FTX. During direct examination, Sun provided details that further implicated the defendant as the prosecution rested its case.

Sun gave further details into what transpired in the days leading to FTX’s filing for bankruptcy. While on the stand, he stated that he had learned that $7 billion was missing from the accounts when the exchange was scrambling to raise funds following the liquidity crunch it faced due to the bank run on the exchange.

During that period, Sam Bankman-Fried and FTX had reached out to Binance to help out with both parties even signing a non-binding Letter of Intent (LOI). From Sun’s testimony, SBF and FTX also reached out to Apollo Global Management. However, nothing materialized as they couldn’t ‘legally justify’ the reason for the missing funds.

Sun walked the court through how SBF had asked him to come up with a justification, to which he replied and told him that there were no legal justifications he could come up with except theoretical explanations such as Section 9 of the company’s terms of service, which bordered on escheatment. Still, he noted that there were no facts to back it up. 

He made this known to SBF, which the defendant acknowledged. What was most surprising to Sun was the response that he got from SBF following the discussion. According to him, the defendant didn’t seem surprised about the whole development as all he said to Sun was, “Got it,” instead of a more elaborate response. 

In a court document filed on October 19, the prosecution stated that its proposed instruction to the jury regarding disclaimers in contracts is “more appropriate” following Cam Sun’s testimony. According to them, the evidence provided by Sun supports why the instruction should be included. 

The Prosecution, in its proposed instruction, had warned the jury to avert its mind from any clause in the investment contract or a disclaimer (like the terms of service) as they could not render any “misrepresentation, including any oral misrepresentation, immaterial as a matter of Law.”

The reason for the prosecution’s apprehension is that the defense could argue that investors and customers were meant to be aware of the company’s terms of service, which likely stated that they could lose their funds due to the highly volatile nature of cryptocurrencies. 

Meanwhile, the prosecution succeeded in calling its last two witnesses on October 19. The trial is set to continue on October 26, with the defense opening its case. So it remains to be seen how Sam Bankman-Fried and his lawyers will proceed or whether or not they will open a defense at all. 

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