Federal prosecutors claimed Sam “SBF” Bankman-Fried “doubled down” on the use of customers’ funds when he purchased Binance’s $2 billion stake in FTX in 2021. According to U.S. government attorneys, Bankman-Fried paid for the buyout with funds from FTX customers.

The prosecution is delivering its closing arguments on Nov. 1 at the Southern District Court of New York, where Bankman-Fried’s trial has been taking place since Oct. 3. Jurors in the case reportedly heard from ​​Assistant U.S. Attorney Nicolas Roos:

“The defendant had a choice: come clear or double down? He doubled down. Here’s when he doubled down. He used customer money to buy back FTX’s stock from Binance. […]. It cost $2 billion.”

In 2019, Binance invested in FTX through a strategic partnership. Two years later, in 2021, Bankman-Fried sought to buy back FTX’s shares, paying its competitor $2.1 billion in Binance’s stablecoin (BUSD) and in FTX Token (FTT).

Additionally, prosecutors went through other payments and purchases allegedly made by FTX with customer funds, including millions of dollars in political donations, luxury real estate in the Bahamas, and venture capital investments.

“He spends on K5 – here is the payment document, signed by the defendant. Nishad Singh said it was a bad idea. The guy who ran K5 hung around with celebrities,” Roos said in reference to K5 Ventures, a venture capital fund focused on early-stage startups.

K5 entities received $700 million in investment from FTX in 2022. Alameda Research, FTX’s sister company, also invested $300 million in K5 Global. According to prosecutors, FTX’s customer deposits were the source of the funds. Roos continued:

“The defendant knows Alameda can’t repay the debt. Nishad sees the giant hole and freaks out. The defendant, not so much. He has come to terms with it. He wanted to use the money. He did use the money. He had the arrogance to think he’d get away with it.”

Bankman-Fried’s defense has argued that FTX’s own funds — whose revenue swelled from $89 million in 2020 to $1.02 billion in 2021 — were used for venture investments, political contributions, and property purchases. According to his defense team, the $8 billion gap between FTX and Alameda Research was caused by a lack of risk management and trading mistakes by Alameda.

Bankman-Fried faces seven counts of fraud and conspiracy to commit fraud, and could spend up to 115 years in prison if found guilty. The defense is expected to deliver its closing arguments on Nov. 2, just before the jury renders its final verdict.

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