WEBVTT - Special Episode: The Trial of Sam Bankman-Fried

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<v Speaker 1>Pushkin. Hey, it's Jacob. As you may recall, I interviewed

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<v Speaker 1>Sam Bankman Freed on this show back in twenty twenty two.

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<v Speaker 1>Sam was a crypto mega billionaire when I interviewed him.

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<v Speaker 1>Several months later, his company blew up and he was

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<v Speaker 1>indicted on fraud charges. Right now, Sam is on trial

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<v Speaker 1>in federal court in New York City. Michael Lewis, who

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<v Speaker 1>hosts another podcast here at Pushkin, just wrote a book

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<v Speaker 1>about Sam Bankman Freed, and his podcast is covering the

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<v Speaker 1>trial really closely. On Tuesday of this week, I sat

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<v Speaker 1>in as a guest host for Michael Lewis and I

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<v Speaker 1>interviewed Lydia jeen Kott, who has been covering the trial

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<v Speaker 1>for Pushkin. I found the conversation really interesting and it

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<v Speaker 1>brought back some of the key themes I talked about

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<v Speaker 1>with Sam Bankman Freed when he came on this show.

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<v Speaker 1>So for this week's episode of What's Your prob we

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<v Speaker 1>are bringing you my conversation with Lydia Jean Coott about

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<v Speaker 1>the trial of Sam Bankman Freed. I hope you like it.

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<v Speaker 1>So I am delighted to be here today. It's week

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<v Speaker 1>two of the Sam Bankman freed trial, and today was

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<v Speaker 1>a very big day. Caroline Ellison, who of course was

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<v Speaker 1>the co CEO of Alameda Research and SBF's former girlfriend,

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<v Speaker 1>she took the stand today and Lydia Jean you of

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<v Speaker 1>course were there.

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<v Speaker 2>Yes, I came to the courthouse bright and early, and

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<v Speaker 2>it was a day that reporters were particularly excited for.

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<v Speaker 2>There are a lot of us, and I interviewed a

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<v Speaker 2>few as we were waiting for the court doors to open,

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<v Speaker 2>And I'm going to play some of that tape for

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<v Speaker 2>you right now.

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<v Speaker 3>I'm Sam Kessler, I'm an editor at Coindesker.

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<v Speaker 2>What are you looking forward to learning from Caroline Ellison's testimony?

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<v Speaker 3>Aside from the testimony itself, it's going to be really

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<v Speaker 3>interesting to see the line of questioning that, particularly the

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<v Speaker 3>defense decides to follow, and they're also going to maybe

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<v Speaker 3>touch on things around drug use and whether that makes

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<v Speaker 3>her an unreliable narrator. All that is going to be

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<v Speaker 3>really fascinating to see.

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<v Speaker 4>I'm Lose Lopato. I'm a senior reporter at the Verge.

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<v Speaker 4>I am super curious about why she did this, Like,

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<v Speaker 4>I don't know that she's going to talk about that,

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<v Speaker 4>but she didn't have equity and the boys did. I've

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<v Speaker 4>had some like lousy ex boyfriends in my time, but

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<v Speaker 4>nothing on the scale.

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<v Speaker 3>What's your name, I'm Kevin Dugan with New York magazine

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<v Speaker 3>The Sex.

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<v Speaker 1>I want all the details.

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<v Speaker 3>I want all the stories, all the spine tingling kind

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<v Speaker 3>of sensation of all the sex that happened in the Bahamas. Yeah,

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<v Speaker 3>that's really what I'm looking forward to.

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<v Speaker 1>Most, Lady Jean, I don't want the details of the sex.

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<v Speaker 2>Well, good news for you. There wasn't a lot of sex,

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<v Speaker 2>and there was a lot of spreadsheets what happened.

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<v Speaker 1>I mean, this is like truly a high drama moment, right,

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<v Speaker 1>Like you have this romantic history, you have this executive history,

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<v Speaker 1>and you have this alleged crime. So like, what's the

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<v Speaker 1>like Caroline walking into the courtroom moment.

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<v Speaker 2>Yeah, so the courtroom was packed and the prosecutor said

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<v Speaker 2>that they were going to call their next witness, Caroline Allison.

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<v Speaker 2>You could tell the reporters are all really excited. You know,

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<v Speaker 2>usually when there's an intermission, people start to talk, but

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<v Speaker 2>no one was talking. Everyone was looking at the door.

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<v Speaker 2>Someone whispered that it was a bit like a weird

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<v Speaker 2>wedding since we were waiting for her, walked down the aisle.

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<v Speaker 1>Oh, very good.

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<v Speaker 2>Someone went like, don don done, And then the door

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<v Speaker 2>opened and she walked through. She was wearing like a

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<v Speaker 2>reddish pinkish dress. She had on a blazer. She's really small,

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<v Speaker 2>she's even shorter than I am. She was holding a

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<v Speaker 2>water bottle and she walked really confidently down the aisle

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<v Speaker 2>as everyone was watching, to the witness stand and then

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<v Speaker 2>she sat down. The prosecutor immediately had her admit that

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<v Speaker 2>she had committed Finngel crimes, and she said that she

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<v Speaker 2>had committed them with Sam.

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<v Speaker 1>And just to be clear, she's already previously pleaded guilty

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<v Speaker 1>to these crimes.

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<v Speaker 2>Right exactly, she has. And then the prosecutor had her

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<v Speaker 2>point out Sam. She was sitting down, and then she

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<v Speaker 2>kind of stood up and she looked all over the

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<v Speaker 2>courtroom for him. She was looking in the jury box,

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<v Speaker 2>she was looking in the where the reporters were sitting.

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<v Speaker 2>It was a full thirty seconds, and it was the

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<v Speaker 2>longest thirty seconds ever. And then finally she found him

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<v Speaker 2>and she pointed at him when she finally saw him,

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<v Speaker 2>and I couldn't see his face, but people in the

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<v Speaker 2>overflow room said that they kind of smiled at each other,

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<v Speaker 2>and then the prosecutor said, can you say what Sam

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<v Speaker 2>was wearing? And she said he was wearing a suit?

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<v Speaker 2>And she laughed a little bit and sat down.

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<v Speaker 1>So I have a couple questions about that, one like,

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<v Speaker 1>wasn't he just sitting at the defense table or whatever? Like,

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<v Speaker 1>was she putting on a show? Did she act actually

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<v Speaker 1>not know where he was? What was going on there?

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<v Speaker 2>I don't think she was putting on a show. I

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<v Speaker 2>think it must be really overwhelming. Was probably her first

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<v Speaker 2>time in this courtroom. It was really packed. There are

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<v Speaker 2>a lot of people there. I'm assuming that that walk

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<v Speaker 2>down the aisle when we're all staring at her was

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<v Speaker 2>pretty terrifying, and I'm thinking it probably took her a

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<v Speaker 2>few seconds to orient herself. People have also speculated that

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<v Speaker 2>she hasn't seen him since he got his hair cut,

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<v Speaker 2>and she's never seen him in a suit.

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<v Speaker 1>Okay, I have another question about that. Why do prosecutors

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<v Speaker 1>do this? I mean I've seen it in like the

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<v Speaker 1>movies or whatever. You know, is he in the courtroom

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<v Speaker 1>with us? Can you point him out? But like Sam

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<v Speaker 1>Agrinfried was like there were pictures of him on TV

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<v Speaker 1>and in magazine, like, we all know who he is

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<v Speaker 1>and what he looks like. Is there some legal reason

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<v Speaker 1>they do it? Is it theater? I don't know.

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<v Speaker 2>There's a lot of pointing in court. Also, I learned

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<v Speaker 2>that our opening statements, it's really common to point at

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<v Speaker 2>the defendant.

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<v Speaker 1>Okay, so she's there, she's identified, Sam Bankman freed. We

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<v Speaker 1>got our drama. Like, are there a few key moments,

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<v Speaker 1>whether they are emotional moments or kind of substantive moments

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<v Speaker 1>in terms of, you know, the case itself that stand

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<v Speaker 1>out to you of what happened today? Like what are

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<v Speaker 1>the most important things that happen?

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<v Speaker 2>Yeah, Well, the prosecution started pretty early by having Caroline

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<v Speaker 2>talk about her romantic relationship with Sam and to characterize

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<v Speaker 2>a little bit what it was like. And she said that,

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<v Speaker 2>and I'm quoting from my notes that there is a

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<v Speaker 2>general theme where I would want more, but he was

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<v Speaker 2>being distant and not paying attention. So she kind of

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<v Speaker 2>characterized their on and off again romantic relationship as one

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<v Speaker 2>where Sam kind of had an upper hand. She also

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<v Speaker 2>said that Sam was her boss and that at times

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<v Speaker 2>made things awkward.

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<v Speaker 1>And what do you think is going on there? I mean,

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<v Speaker 1>I kind of get it, but like, what's the point

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<v Speaker 1>of that part of it?

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<v Speaker 2>Well, there's something that lawyers do called taking this sting out,

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<v Speaker 2>where they bring up things that they think the defense

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<v Speaker 2>is going to bring out on Cross and they say

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<v Speaker 2>it during direct So that way it kind of makes

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<v Speaker 2>it seem less bad because I'm sure that on Cross

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<v Speaker 2>the defense is going to say something like you dated

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<v Speaker 2>Sam and it didn't go that loud.

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<v Speaker 1>So the prosecution is just preempting the you're just the

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<v Speaker 1>bitter ex girlfriend kind of defense.

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<v Speaker 2>And they're also setting something else up, I think where

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<v Speaker 2>they talked about Sam and Caroline's professional relationship and they

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<v Speaker 2>talked about how in that relationship, Sam also had the

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<v Speaker 2>upper hand. Caroline talked about how her job at Alameda

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<v Speaker 2>was really the second job she's ever had before that

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<v Speaker 2>she worked at Jane Street with Sam, and she felt

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<v Speaker 2>really insecure and not prepared for that job, and she

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<v Speaker 2>checked in with Sam about all of the important decisions

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<v Speaker 2>that she made, and they made it sound like he

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<v Speaker 2>was very involved and he was overseeing what was happening

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<v Speaker 2>at Alameda, so any crimes that were happening at Alameda,

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<v Speaker 2>by extension, Sam would also know about uh huh, and

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<v Speaker 2>sign off on. They really emphasized that he was signed

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<v Speaker 2>off on everything that Caroline did.

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<v Speaker 1>That makes sense because I mean, clearly, very bad things

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<v Speaker 1>happened with FTX and Alameda, and the key question is

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<v Speaker 1>did Sam do them? Everybody else has admitted to doing them.

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<v Speaker 1>Did Sam do them? And the prosecution is trying to

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<v Speaker 1>prove that yes, he did. Okay, so they got there,

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<v Speaker 1>both their personal and their professional relationship. What else?

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<v Speaker 2>She also give us some interesting insight into Sam as

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<v Speaker 2>a person. They asked her about what his goals were

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<v Speaker 2>for himself for FTX, and she said that he was

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<v Speaker 2>very ambitious and that actually he told her one time

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<v Speaker 2>that there was a five percent chance that he believed

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<v Speaker 2>that he might be president one day.

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<v Speaker 1>You know, I'll say, when I interviewed him, like the

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<v Speaker 1>hubris was striking, which I mean, I guess that's probably

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<v Speaker 1>true for everybody. It's not like, oh my insight, but

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<v Speaker 1>it really is striking. When I interviewed him is when

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<v Speaker 1>he talked about helping trillions of people, not just the

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<v Speaker 1>billions of people who are alive today, but he said

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<v Speaker 1>the trillions or even hundreds of trillions who might someday live.

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<v Speaker 1>But then it was like, look, therapy, who have had

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<v Speaker 1>a huge impact on the world, why shouldn't it be me?

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<v Speaker 1>And like similarly, like rich people get to be president,

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<v Speaker 1>like it was super rich, maybe it could have been Yeah.

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<v Speaker 2>Yeah, I talked to some reporters who were like, there

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<v Speaker 2>was a time where it wasn't that crazy to think

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<v Speaker 2>that there is a five percent chance that he would

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<v Speaker 2>become president. The prosecutors also asked her about Sam's approach

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<v Speaker 2>to risk, and she said something that I found really interesting,

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<v Speaker 2>which is, imagine if you flipped a coin, and if

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<v Speaker 2>the coin landed on tails, the world would be destroyed,

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<v Speaker 2>and if the coin landed on heads, the world would

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<v Speaker 2>be twice as good as it is now. Sam would

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<v Speaker 2>believe in flipping the coin.

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<v Speaker 1>You know, it's funny you should mention that because again,

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<v Speaker 1>before he got indicted, he was on this podcast that

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<v Speaker 1>I like called Conversations with Tyler, with this kind of

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<v Speaker 1>economist public intellectual, Tyler Cowen, and there was a similar

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<v Speaker 1>thing in that interview where Tyler Cowan said said, if

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<v Speaker 1>there was a fifty one to forty nine percent chance

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<v Speaker 1>of a similar thing, either the universe twice as good

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<v Speaker 1>as the universe gets destroyed, do you take the bet?

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<v Speaker 1>And Sam said every time? And Tyler kwn was like, yeah,

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<v Speaker 1>but if you keep taking it every time, you're clearly

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<v Speaker 1>going to end with the destroyed universe. And Sam was like,

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<v Speaker 1>or a really awesome universe And I.

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<v Speaker 2>Was like what.

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<v Speaker 1>And then when everything blew up, that was what I

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<v Speaker 1>thought back to. There was another interview where this other

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<v Speaker 1>smart person, Matt Levine, sort of gets Sam to say

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<v Speaker 1>that what he was doing was kind of a Ponzi scheme.

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<v Speaker 1>Was basically a Ponzi scheme. But to me, the more

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<v Speaker 1>Sam thing was that I'll keep taking the bet. And

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<v Speaker 1>it seems like that is a sort of perfect metaphor

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<v Speaker 1>for what he did, or at least a very good

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<v Speaker 1>metaphor for what he seems.

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<v Speaker 3>To have done.

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<v Speaker 2>Yeah, I underlined in my notebook, like this is the

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<v Speaker 2>crux of the story is he flipped a coin and

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<v Speaker 2>it landed the wrong way.

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<v Speaker 1>For a while, it landed the right way right. That's

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<v Speaker 1>how you get to be worth many tens of billion

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<v Speaker 1>dollars when.

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<v Speaker 3>You're not thirty.

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<v Speaker 2>I would never flip that coin. I would not only

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<v Speaker 2>not flip that coin, I would leave the I would

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<v Speaker 2>leave the house.

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<v Speaker 1>That's why we're making podcasts, low risk, low return. Presumably

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<v Speaker 1>the prosecutors called Caroline Ellison because you know, they're trying

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<v Speaker 1>to convict Sam of a bunch of crime. So so

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<v Speaker 1>you know what was sort of the crime part of

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<v Speaker 1>her testimony?

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<v Speaker 2>Yes, okay, So remember that the crime that Sam is

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<v Speaker 2>accused of is using money that FTX customers thought that

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<v Speaker 2>they had safely deposited onto the FTX cryptocurrency exchange and

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<v Speaker 2>instead investing it through his investment firm, Alameda. Caroline is

0:11:47.516 --> 0:11:52.716
<v Speaker 2>the head of Alameda, and she said that when Alameda

0:11:53.156 --> 0:11:56.436
<v Speaker 2>used FTX customer funds, it was at Sam's direction.

0:11:57.076 --> 0:12:00.276
<v Speaker 1>Uh huh. So like that's the core, that's it, Like,

0:12:00.396 --> 0:12:00.956
<v Speaker 1>that's the.

0:12:00.836 --> 0:12:02.156
<v Speaker 2>Thing, that's the thing.

0:12:02.276 --> 0:12:05.836
<v Speaker 1>Yeah, that's like a good portrait of the day. One

0:12:05.876 --> 0:12:08.516
<v Speaker 1>of the things I've been interested in listening to the

0:12:08.556 --> 0:12:11.796
<v Speaker 1>other episode episodes you did with Michael and with Jacob Weisberg,

0:12:11.956 --> 0:12:15.436
<v Speaker 1>was what's the jury doing? Who was asleep today? I

0:12:15.476 --> 0:12:18.676
<v Speaker 1>find it striking that jurors are asleep, Like, were there

0:12:18.756 --> 0:12:21.196
<v Speaker 1>jurors asleep today? How many? Was it the same? Was

0:12:21.196 --> 0:12:22.796
<v Speaker 1>it the juror who works the overnight shift?

0:12:23.876 --> 0:12:26.796
<v Speaker 2>I think the jurors just like the journalists were actually

0:12:26.836 --> 0:12:30.396
<v Speaker 2>really interested in what Caroline had to say. And she

0:12:30.716 --> 0:12:34.596
<v Speaker 2>also sounded I had heard her on an interviews before,

0:12:34.756 --> 0:12:37.876
<v Speaker 2>and she sounded much more confident. I think her voice

0:12:37.916 --> 0:12:40.516
<v Speaker 2>was deeper, So I wondered whether she got some voice coaching,

0:12:41.116 --> 0:12:42.956
<v Speaker 2>and I wonder if that was part of why she

0:12:43.076 --> 0:12:45.996
<v Speaker 2>was able to keep the juror's attention. It was honestly

0:12:46.036 --> 0:12:49.796
<v Speaker 2>a very technical testimony. They showed a lot of spreadsheets

0:12:49.796 --> 0:12:52.876
<v Speaker 2>and balance sheets, and I was surprised. I kept looking

0:12:52.876 --> 0:12:55.916
<v Speaker 2>over at the jury, but I personally did not witness

0:12:55.916 --> 0:12:57.396
<v Speaker 2>a single sleeping jury today.

0:12:57.956 --> 0:13:01.116
<v Speaker 1>That is a real testament to how Compella and Caroline

0:13:01.116 --> 0:13:03.676
<v Speaker 1>Ellison must have been. So how did the day end?

0:13:04.556 --> 0:13:06.436
<v Speaker 1>Where did you get to in the trial? Today?

0:13:06.556 --> 0:13:10.116
<v Speaker 2>The prosecution didn't finish asking Carol questions, so they're going

0:13:10.196 --> 0:13:13.076
<v Speaker 2>to continue with that, and then I think we're all

0:13:13.116 --> 0:13:15.276
<v Speaker 2>really interested to see what's going to come out on

0:13:15.356 --> 0:13:16.276
<v Speaker 2>cross examination.

0:13:17.556 --> 0:13:20.916
<v Speaker 1>I'm very curious to hear what comes out in cross examination.

0:13:21.196 --> 0:13:30.316
<v Speaker 1>We'll be back in a minute with one last thing. Ladya, Gene,

0:13:30.316 --> 0:13:32.836
<v Speaker 1>we're back. Can you please give me one last thing?

0:13:33.276 --> 0:13:35.796
<v Speaker 2>Our one last thing today is about Gary Wong's testimony.

0:13:36.196 --> 0:13:39.036
<v Speaker 1>Okay, you and Michael talked about Gary Wong. He's the

0:13:39.076 --> 0:13:41.756
<v Speaker 1>guy who doesn't talk right. If there's one thing to remember,

0:13:41.796 --> 0:13:44.076
<v Speaker 1>he's co founder, but mainly is the really quiet guy.

0:13:44.636 --> 0:13:46.676
<v Speaker 1>And then when he talked, apparently said on the show,

0:13:46.676 --> 0:13:47.516
<v Speaker 1>we talked really fast.

0:13:47.596 --> 0:13:48.236
<v Speaker 5>It's kind of interest.

0:13:48.356 --> 0:13:50.916
<v Speaker 2>Yes, the guy get it over with once he took

0:13:50.956 --> 0:13:55.156
<v Speaker 2>the stand, did actually talk. And today was cross examination, okay,

0:13:55.236 --> 0:13:59.116
<v Speaker 2>and everyone was really impressed with how the defense lawyers did.

0:13:59.676 --> 0:14:02.836
<v Speaker 2>I think up until now they seemed really nervous. I think,

0:14:02.876 --> 0:14:05.116
<v Speaker 2>I said earlier one of their hands seemed to be shaking,

0:14:05.676 --> 0:14:09.996
<v Speaker 2>and today they moved very quickly. They hardly got interrupted

0:14:09.996 --> 0:14:14.596
<v Speaker 2>by the prosecution. They seemed very confident, and they did

0:14:15.636 --> 0:14:18.716
<v Speaker 2>kind of leave me feeling a little bit different about

0:14:18.796 --> 0:14:20.636
<v Speaker 2>Gary's testimony than I did earlier.

0:14:20.796 --> 0:14:23.636
<v Speaker 1>Interesting, So those are like the vibes, which is interesting.

0:14:23.676 --> 0:14:26.076
<v Speaker 1>What was the substance of the cross examination?

0:14:26.276 --> 0:14:28.116
<v Speaker 2>So to me, one of the most interesting things in

0:14:28.116 --> 0:14:32.476
<v Speaker 2>this trial is Sam tweeted shortly before FTX declared bankruptcy

0:14:33.076 --> 0:14:36.396
<v Speaker 2>FTX is fine. Assets are fine, And this has been

0:14:36.396 --> 0:14:39.516
<v Speaker 2>pointed over and over again to an example of Sam lying,

0:14:40.116 --> 0:14:42.876
<v Speaker 2>and on direct Gary said this was a lie because

0:14:43.036 --> 0:14:46.676
<v Speaker 2>FTX was not fine. Assets were not fine, right, But

0:14:46.876 --> 0:14:51.516
<v Speaker 2>the lawyers pointed out how Gary, in earlier conversations with

0:14:51.636 --> 0:14:55.996
<v Speaker 2>the prosecution, did not characterize this as a lie because

0:14:56.436 --> 0:14:58.836
<v Speaker 2>he said that depending on how you looked at it,

0:14:59.596 --> 0:15:03.316
<v Speaker 2>FTX maybe was fine and assets were fine. It just

0:15:03.356 --> 0:15:06.836
<v Speaker 2>depends whether you were talking about liquid or ill liquid assets,

0:15:06.916 --> 0:15:07.676
<v Speaker 2>uh huh.

0:15:07.436 --> 0:15:12.236
<v Speaker 1>Which is in fact a classic hard problem in financial crises.

0:15:12.316 --> 0:15:14.756
<v Speaker 1>Right liquid assets basically means assets you can turn into

0:15:14.796 --> 0:15:17.876
<v Speaker 1>cash right now, and ill liquid assets means, yes, we

0:15:17.996 --> 0:15:20.516
<v Speaker 1>have the money. Whatever I own a house, say, but

0:15:20.596 --> 0:15:22.476
<v Speaker 1>I just can't sell it and turn it into money

0:15:22.516 --> 0:15:25.476
<v Speaker 1>this minute. And so did he say on cross that, like,

0:15:25.796 --> 0:15:28.636
<v Speaker 1>maybe if you're considering I liquid assets, it would have

0:15:28.636 --> 0:15:31.156
<v Speaker 1>been reasonable to think that that FTX was fine.

0:15:31.676 --> 0:15:35.236
<v Speaker 2>He did seem to say that he said that Sam's

0:15:35.836 --> 0:15:39.156
<v Speaker 2>tweet was misleading since he was talking about ill liquid assets,

0:15:39.756 --> 0:15:42.876
<v Speaker 2>but he admitted that in early conversations with prosecutors he

0:15:42.916 --> 0:15:45.516
<v Speaker 2>did not call this tweet a lie. And I found

0:15:45.516 --> 0:15:47.436
<v Speaker 2>that cross examination to be really compelling.

0:15:48.716 --> 0:15:51.716
<v Speaker 1>Makes me only more interested to hear what happens when

0:15:51.796 --> 0:15:57.156
<v Speaker 1>Caroline Ellison undergoes cross examination. Thanks for having me, Lydia, Jen.

0:15:57.316 --> 0:15:58.676
<v Speaker 2>Bye Jacob talk to you soon.

0:16:01.116 --> 0:16:04.076
<v Speaker 5>This episode of Judging Sam was hosted by Jacob Goldstein.

0:16:04.476 --> 0:16:07.436
<v Speaker 5>Lydia gen Caught is our court reporter. Catherine Girardeau and

0:16:07.516 --> 0:16:11.276
<v Speaker 5>Nisha Venken produced this show. Sophie Crane is our editor.

0:16:11.636 --> 0:16:14.996
<v Speaker 5>Our music was composed by Matthias Bossi and John Evans

0:16:15.116 --> 0:16:18.556
<v Speaker 5>of stell Wagons Symphonette. Judging Sam is a production of

0:16:18.596 --> 0:16:22.036
<v Speaker 5>Pushkin Industries. Got a question or comment for me, There's

0:16:22.036 --> 0:16:26.676
<v Speaker 5>a website for that atr podcast dot com. That's atr

0:16:26.876 --> 0:16:31.876
<v Speaker 5>podcast dot com. To find more Pushkin podcasts, listen on

0:16:31.876 --> 0:16:35.676
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0:16:35.716 --> 0:16:39.516
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