In a dramatic courtroom showdown, the trial of Sam Bankman-Fried, the former CEO of the defunct FTX crypto exchange, reached a turning point on October 19, with the riveting testimony of Can Sun, FTX’s former General Counsel. The revelations provided during this testimony further deepened the legal troubles of the defendant, Sam Bankman-Fried, as the prosecution concluded its case.

A Shocking Revelation

Can Sun shed light on the tumultuous days that led to FTX’s bankruptcy filing, disclosing that a staggering $7 billion had gone missing from the exchange’s accounts. This financial turmoil ensued following a bank run on the exchange, which left FTX scrambling to raise funds to cover the massive liquidity shortfall.

During this critical period, both Sam Bankman-Fried and FTX reached out to industry giants, including Binance and Apollo Global Management, seeking assistance. They even went as far as signing a non-binding Letter of Intent (LOI) with Binance. Unfortunately, none of these efforts materialized as the missing funds presented a perplexing challenge with no clear legal justification.

A Desperate Search for Legal Justifications

Can Sun detailed how Sam Bankman-Fried had tasked him with finding a plausible legal explanation for the missing funds. However, Sun explained that he could not identify any legitimate legal justifications, apart from theoretical notions such as Section 9 of the company’s terms of service, which touched upon the concept of escheatment. Even so, he stressed that there were no concrete facts to support such claims.

To Sun’s astonishment, Sam Bankman-Fried did not react with surprise or urgency upon hearing this information. Instead, the defendant’s response was shockingly succinct: “Got it.” This nonchalant reaction left Sun baffled, and it became a pivotal moment in the trial.

Prosecution’s Response

In a court document submitted on October 19, the prosecution argued that the proposed jury instruction regarding disclaimers in contracts was now “more appropriate” in light of Can Sun’s testimony. The prosecution emphasized that Sun’s testimony supported the necessity of including this instruction.

The proposed instruction warned the jury to disregard any clause in the investment contract or a disclaimer, such as the terms of service, as they could not consider any “misrepresentation, including any oral misrepresentation, immaterial as a matter of Law.”

The prosecution’s concern stemmed from the possibility that the defense might argue that investors and customers should have been aware of the company’s terms of service, which likely contained provisions addressing the potential loss of funds due to the inherent volatility of cryptocurrencies.

Trial Progress and Future Prospects

The prosecution successfully presented its final two witnesses on October 19, setting the stage for the defense to open its case on October 26. As the trial unfolds, the legal strategies and actions of Sam Bankman-Fried and his legal team remain a subject of intrigue, leaving us to wonder whether they will choose to present a defense at all.

In conclusion, the trial of Sam Bankman-Fried, the former CEO of the defunct FTX crypto exchange, has taken a startling turn with Can Sun’s gripping testimony. The missing $7 billion and the legal justifications surrounding it have added a layer of complexity to this high-stakes legal battle. The prosecution’s proposed jury instruction further underscores the intricacies of the case, setting the stage for a suspenseful continuation of the trial. The crypto community and legal observers are eagerly awaiting the defense’s response and the eventual outcome of this closely-watched courtroom drama.