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Special Episode: The Trial of Sam Bankman-Fried · What's Your Problem?

• 0:15
  Speaker 1: Pushkin. Hey, it's Jacob. As you may recall, I interviewed
• 0:21
  Speaker 1: Sam Bankman Freed on this show back in twenty twenty two.
• 0:25
  Speaker 1: Sam was a crypto mega billionaire when I interviewed him.
• 0:29
  Speaker 1: Several months later, his company blew up and he was
• 0:32
  Speaker 1: indicted on fraud charges. Right now, Sam is on trial
• 0:37
  Speaker 1: in federal court in New York City. Michael Lewis, who
• 0:41
  Speaker 1: hosts another podcast here at Pushkin, just wrote a book
• 0:44
  Speaker 1: about Sam Bankman Freed, and his podcast is covering the
• 0:48
  Speaker 1: trial really closely. On Tuesday of this week, I sat
• 0:51
  Speaker 1: in as a guest host for Michael Lewis and I
• 0:54
  Speaker 1: interviewed Lydia jeen Kott, who has been covering the trial
• 0:57
  Speaker 1: for Pushkin. I found the conversation really interesting and it
• 1:01
  Speaker 1: brought back some of the key themes I talked about
• 1:04
  Speaker 1: with Sam Bankman Freed when he came on this show.
• 1:07
  Speaker 1: So for this week's episode of What's Your prob we
• 1:09
  Speaker 1: are bringing you my conversation with Lydia Jean Coott about
• 1:13
  Speaker 1: the trial of Sam Bankman Freed. I hope you like it.
• 1:24
  Speaker 1: So I am delighted to be here today. It's week
• 1:28
  Speaker 1: two of the Sam Bankman freed trial, and today was
• 1:31
  Speaker 1: a very big day. Caroline Ellison, who of course was
• 1:35
  Speaker 1: the co CEO of Alameda Research and SBF's former girlfriend,
• 1:40
  Speaker 1: she took the stand today and Lydia Jean you of
• 1:42
  Speaker 1: course were there.
• 1:44
  Speaker 2: Yes, I came to the courthouse bright and early, and
• 1:47
  Speaker 2: it was a day that reporters were particularly excited for.
• 1:51
  Speaker 2: There are a lot of us, and I interviewed a
• 1:53
  Speaker 2: few as we were waiting for the court doors to open,
• 1:56
  Speaker 2: And I'm going to play some of that tape for
• 1:57
  Speaker 2: you right now.
• 2:00
  Speaker 3: I'm Sam Kessler, I'm an editor at Coindesker.
• 2:03
  Speaker 2: What are you looking forward to learning from Caroline Ellison's testimony?
• 2:06
  Speaker 3: Aside from the testimony itself, it's going to be really
• 2:08
  Speaker 3: interesting to see the line of questioning that, particularly the
• 2:12
  Speaker 3: defense decides to follow, and they're also going to maybe
• 2:16
  Speaker 3: touch on things around drug use and whether that makes
• 2:19
  Speaker 3: her an unreliable narrator. All that is going to be
• 2:21
  Speaker 3: really fascinating to see.
• 2:23
  Speaker 4: I'm Lose Lopato. I'm a senior reporter at the Verge.
• 2:26
  Speaker 4: I am super curious about why she did this, Like,
• 2:30
  Speaker 4: I don't know that she's going to talk about that,
• 2:32
  Speaker 4: but she didn't have equity and the boys did. I've
• 2:37
  Speaker 4: had some like lousy ex boyfriends in my time, but
• 2:40
  Speaker 4: nothing on the scale.
• 2:41
  Speaker 3: What's your name, I'm Kevin Dugan with New York magazine
• 2:44
  Speaker 3: The Sex.
• 2:48
  Speaker 1: I want all the details.
• 2:50
  Speaker 3: I want all the stories, all the spine tingling kind
• 2:54
  Speaker 3: of sensation of all the sex that happened in the Bahamas. Yeah,
• 2:57
  Speaker 3: that's really what I'm looking forward to.
• 2:58
  Speaker 1: Most, Lady Jean, I don't want the details of the sex.
• 3:04
  Speaker 2: Well, good news for you. There wasn't a lot of sex,
• 3:07
  Speaker 2: and there was a lot of spreadsheets what happened.
• 3:10
  Speaker 1: I mean, this is like truly a high drama moment, right,
• 3:14
  Speaker 1: Like you have this romantic history, you have this executive history,
• 3:17
  Speaker 1: and you have this alleged crime. So like, what's the
• 3:20
  Speaker 1: like Caroline walking into the courtroom moment.
• 3:23
  Speaker 2: Yeah, so the courtroom was packed and the prosecutor said
• 3:26
  Speaker 2: that they were going to call their next witness, Caroline Allison.
• 3:29
  Speaker 2: You could tell the reporters are all really excited. You know,
• 3:32
  Speaker 2: usually when there's an intermission, people start to talk, but
• 3:35
  Speaker 2: no one was talking. Everyone was looking at the door.
• 3:37
  Speaker 2: Someone whispered that it was a bit like a weird
• 3:40
  Speaker 2: wedding since we were waiting for her, walked down the aisle.
• 3:42
  Speaker 1: Oh, very good.
• 3:44
  Speaker 2: Someone went like, don don done, And then the door
• 3:46
  Speaker 2: opened and she walked through. She was wearing like a
• 3:49
  Speaker 2: reddish pinkish dress. She had on a blazer. She's really small,
• 3:53
  Speaker 2: she's even shorter than I am. She was holding a
• 3:55
  Speaker 2: water bottle and she walked really confidently down the aisle
• 3:58
  Speaker 2: as everyone was watching, to the witness stand and then
• 4:02
  Speaker 2: she sat down. The prosecutor immediately had her admit that
• 4:08
  Speaker 2: she had committed Finngel crimes, and she said that she
• 4:10
  Speaker 2: had committed them with Sam.
• 4:13
  Speaker 1: And just to be clear, she's already previously pleaded guilty
• 4:16
  Speaker 1: to these crimes.
• 4:17
  Speaker 2: Right exactly, she has. And then the prosecutor had her
• 4:22
  Speaker 2: point out Sam. She was sitting down, and then she
• 4:25
  Speaker 2: kind of stood up and she looked all over the
• 4:28
  Speaker 2: courtroom for him. She was looking in the jury box,
• 4:31
  Speaker 2: she was looking in the where the reporters were sitting.
• 4:33
  Speaker 2: It was a full thirty seconds, and it was the
• 4:36
  Speaker 2: longest thirty seconds ever. And then finally she found him
• 4:42
  Speaker 2: and she pointed at him when she finally saw him,
• 4:44
  Speaker 2: and I couldn't see his face, but people in the
• 4:46
  Speaker 2: overflow room said that they kind of smiled at each other,
• 4:49
  Speaker 2: and then the prosecutor said, can you say what Sam
• 4:53
  Speaker 2: was wearing? And she said he was wearing a suit?
• 4:56
  Speaker 2: And she laughed a little bit and sat down.
• 4:58
  Speaker 1: So I have a couple questions about that, one like,
• 5:04
  Speaker 1: wasn't he just sitting at the defense table or whatever? Like,
• 5:07
  Speaker 1: was she putting on a show? Did she act actually
• 5:09
  Speaker 1: not know where he was? What was going on there?
• 5:11
  Speaker 2: I don't think she was putting on a show. I
• 5:13
  Speaker 2: think it must be really overwhelming. Was probably her first
• 5:17
  Speaker 2: time in this courtroom. It was really packed. There are
• 5:21
  Speaker 2: a lot of people there. I'm assuming that that walk
• 5:23
  Speaker 2: down the aisle when we're all staring at her was
• 5:25
  Speaker 2: pretty terrifying, and I'm thinking it probably took her a
• 5:28
  Speaker 2: few seconds to orient herself. People have also speculated that
• 5:31
  Speaker 2: she hasn't seen him since he got his hair cut,
• 5:33
  Speaker 2: and she's never seen him in a suit.
• 5:36
  Speaker 1: Okay, I have another question about that. Why do prosecutors
• 5:41
  Speaker 1: do this? I mean I've seen it in like the
• 5:42
  Speaker 1: movies or whatever. You know, is he in the courtroom
• 5:44
  Speaker 1: with us? Can you point him out? But like Sam
• 5:47
  Speaker 1: Agrinfried was like there were pictures of him on TV
• 5:50
  Speaker 1: and in magazine, like, we all know who he is
• 5:51
  Speaker 1: and what he looks like. Is there some legal reason
• 5:53
  Speaker 1: they do it? Is it theater? I don't know.
• 5:56
  Speaker 2: There's a lot of pointing in court. Also, I learned
• 5:59
  Speaker 2: that our opening statements, it's really common to point at
• 6:01
  Speaker 2: the defendant.
• 6:02
  Speaker 1: Okay, so she's there, she's identified, Sam Bankman freed. We
• 6:06
  Speaker 1: got our drama. Like, are there a few key moments,
• 6:09
  Speaker 1: whether they are emotional moments or kind of substantive moments
• 6:12
  Speaker 1: in terms of, you know, the case itself that stand
• 6:15
  Speaker 1: out to you of what happened today? Like what are
• 6:16
  Speaker 1: the most important things that happen?
• 6:18
  Speaker 2: Yeah, Well, the prosecution started pretty early by having Caroline
• 6:23
  Speaker 2: talk about her romantic relationship with Sam and to characterize
• 6:27
  Speaker 2: a little bit what it was like. And she said that,
• 6:31
  Speaker 2: and I'm quoting from my notes that there is a
• 6:34
  Speaker 2: general theme where I would want more, but he was
• 6:37
  Speaker 2: being distant and not paying attention. So she kind of
• 6:40
  Speaker 2: characterized their on and off again romantic relationship as one
• 6:43
  Speaker 2: where Sam kind of had an upper hand. She also
• 6:47
  Speaker 2: said that Sam was her boss and that at times
• 6:49
  Speaker 2: made things awkward.
• 6:51
  Speaker 1: And what do you think is going on there? I mean,
• 6:54
  Speaker 1: I kind of get it, but like, what's the point
• 6:57
  Speaker 1: of that part of it?
• 6:58
  Speaker 2: Well, there's something that lawyers do called taking this sting out,
• 7:01
  Speaker 2: where they bring up things that they think the defense
• 7:04
  Speaker 2: is going to bring out on Cross and they say
• 7:06
  Speaker 2: it during direct So that way it kind of makes
• 7:10
  Speaker 2: it seem less bad because I'm sure that on Cross
• 7:12
  Speaker 2: the defense is going to say something like you dated
• 7:15
  Speaker 2: Sam and it didn't go that loud.
• 7:17
  Speaker 1: So the prosecution is just preempting the you're just the
• 7:20
  Speaker 1: bitter ex girlfriend kind of defense.
• 7:24
  Speaker 2: And they're also setting something else up, I think where
• 7:27
  Speaker 2: they talked about Sam and Caroline's professional relationship and they
• 7:32
  Speaker 2: talked about how in that relationship, Sam also had the
• 7:35
  Speaker 2: upper hand. Caroline talked about how her job at Alameda
• 7:39
  Speaker 2: was really the second job she's ever had before that
• 7:41
  Speaker 2: she worked at Jane Street with Sam, and she felt
• 7:44
  Speaker 2: really insecure and not prepared for that job, and she
• 7:49
  Speaker 2: checked in with Sam about all of the important decisions
• 7:51
  Speaker 2: that she made, and they made it sound like he
• 7:54
  Speaker 2: was very involved and he was overseeing what was happening
• 7:58
  Speaker 2: at Alameda, so any crimes that were happening at Alameda,
• 8:02
  Speaker 2: by extension, Sam would also know about uh huh, and
• 8:05
  Speaker 2: sign off on. They really emphasized that he was signed
• 8:08
  Speaker 2: off on everything that Caroline did.
• 8:10
  Speaker 1: That makes sense because I mean, clearly, very bad things
• 8:13
  Speaker 1: happened with FTX and Alameda, and the key question is
• 8:16
  Speaker 1: did Sam do them? Everybody else has admitted to doing them.
• 8:19
  Speaker 1: Did Sam do them? And the prosecution is trying to
• 8:21
  Speaker 1: prove that yes, he did. Okay, so they got there,
• 8:24
  Speaker 1: both their personal and their professional relationship. What else?
• 8:28
  Speaker 2: She also give us some interesting insight into Sam as
• 8:31
  Speaker 2: a person. They asked her about what his goals were
• 8:35
  Speaker 2: for himself for FTX, and she said that he was
• 8:39
  Speaker 2: very ambitious and that actually he told her one time
• 8:42
  Speaker 2: that there was a five percent chance that he believed
• 8:44
  Speaker 2: that he might be president one day.
• 8:47
  Speaker 1: You know, I'll say, when I interviewed him, like the
• 8:50
  Speaker 1: hubris was striking, which I mean, I guess that's probably
• 8:52
  Speaker 1: true for everybody. It's not like, oh my insight, but
• 8:55
  Speaker 1: it really is striking. When I interviewed him is when
• 8:58
  Speaker 1: he talked about helping trillions of people, not just the
• 9:01
  Speaker 1: billions of people who are alive today, but he said
• 9:03
  Speaker 1: the trillions or even hundreds of trillions who might someday live.
• 9:07
  Speaker 1: But then it was like, look, therapy, who have had
• 9:09
  Speaker 1: a huge impact on the world, why shouldn't it be me?
• 9:11
  Speaker 1: And like similarly, like rich people get to be president,
• 9:14
  Speaker 1: like it was super rich, maybe it could have been Yeah.
• 9:17
  Speaker 2: Yeah, I talked to some reporters who were like, there
• 9:19
  Speaker 2: was a time where it wasn't that crazy to think
• 9:22
  Speaker 2: that there is a five percent chance that he would
• 9:23
  Speaker 2: become president. The prosecutors also asked her about Sam's approach
• 9:27
  Speaker 2: to risk, and she said something that I found really interesting,
• 9:31
  Speaker 2: which is, imagine if you flipped a coin, and if
• 9:36
  Speaker 2: the coin landed on tails, the world would be destroyed,
• 9:40
  Speaker 2: and if the coin landed on heads, the world would
• 9:42
  Speaker 2: be twice as good as it is now. Sam would
• 9:45
  Speaker 2: believe in flipping the coin.
• 9:47
  Speaker 1: You know, it's funny you should mention that because again,
• 9:50
  Speaker 1: before he got indicted, he was on this podcast that
• 9:53
  Speaker 1: I like called Conversations with Tyler, with this kind of
• 9:55
  Speaker 1: economist public intellectual, Tyler Cowen, and there was a similar
• 9:59
  Speaker 1: thing in that interview where Tyler Cowan said said, if
• 10:04
  Speaker 1: there was a fifty one to forty nine percent chance
• 10:07
  Speaker 1: of a similar thing, either the universe twice as good
• 10:09
  Speaker 1: as the universe gets destroyed, do you take the bet?
• 10:12
  Speaker 1: And Sam said every time? And Tyler kwn was like, yeah,
• 10:16
  Speaker 1: but if you keep taking it every time, you're clearly
• 10:19
  Speaker 1: going to end with the destroyed universe. And Sam was like,
• 10:23
  Speaker 1: or a really awesome universe And I.
• 10:26
  Speaker 2: Was like what.
• 10:26
  Speaker 1: And then when everything blew up, that was what I
• 10:29
  Speaker 1: thought back to. There was another interview where this other
• 10:33
  Speaker 1: smart person, Matt Levine, sort of gets Sam to say
• 10:36
  Speaker 1: that what he was doing was kind of a Ponzi scheme.
• 10:38
  Speaker 1: Was basically a Ponzi scheme. But to me, the more
• 10:41
  Speaker 1: Sam thing was that I'll keep taking the bet. And
• 10:45
  Speaker 1: it seems like that is a sort of perfect metaphor
• 10:48
  Speaker 1: for what he did, or at least a very good
• 10:50
  Speaker 1: metaphor for what he seems.
• 10:51
  Speaker 3: To have done.
• 10:52
  Speaker 2: Yeah, I underlined in my notebook, like this is the
• 10:54
  Speaker 2: crux of the story is he flipped a coin and
• 10:57
  Speaker 2: it landed the wrong way.
• 10:58
  Speaker 1: For a while, it landed the right way right. That's
• 11:00
  Speaker 1: how you get to be worth many tens of billion
• 11:03
  Speaker 1: dollars when.
• 11:04
  Speaker 3: You're not thirty.
• 11:05
  Speaker 2: I would never flip that coin. I would not only
• 11:07
  Speaker 2: not flip that coin, I would leave the I would
• 11:09
  Speaker 2: leave the house.
• 11:11
  Speaker 1: That's why we're making podcasts, low risk, low return. Presumably
• 11:16
  Speaker 1: the prosecutors called Caroline Ellison because you know, they're trying
• 11:20
  Speaker 1: to convict Sam of a bunch of crime. So so
• 11:23
  Speaker 1: you know what was sort of the crime part of
• 11:24
  Speaker 1: her testimony?
• 11:26
  Speaker 2: Yes, okay, So remember that the crime that Sam is
• 11:31
  Speaker 2: accused of is using money that FTX customers thought that
• 11:36
  Speaker 2: they had safely deposited onto the FTX cryptocurrency exchange and
• 11:41
  Speaker 2: instead investing it through his investment firm, Alameda. Caroline is
• 11:47
  Speaker 2: the head of Alameda, and she said that when Alameda
• 11:53
  Speaker 2: used FTX customer funds, it was at Sam's direction.
• 11:57
  Speaker 1: Uh huh. So like that's the core, that's it, Like,
• 12:00
  Speaker 1: that's the.
• 12:00
  Speaker 2: Thing, that's the thing.
• 12:02
  Speaker 1: Yeah, that's like a good portrait of the day. One
• 12:05
  Speaker 1: of the things I've been interested in listening to the
• 12:08
  Speaker 1: other episode episodes you did with Michael and with Jacob Weisberg,
• 12:11
  Speaker 1: was what's the jury doing? Who was asleep today? I
• 12:15
  Speaker 1: find it striking that jurors are asleep, Like, were there
• 12:18
  Speaker 1: jurors asleep today? How many? Was it the same? Was
• 12:21
  Speaker 1: it the juror who works the overnight shift?
• 12:23
  Speaker 2: I think the jurors just like the journalists were actually
• 12:26
  Speaker 2: really interested in what Caroline had to say. And she
• 12:30
  Speaker 2: also sounded I had heard her on an interviews before,
• 12:34
  Speaker 2: and she sounded much more confident. I think her voice
• 12:37
  Speaker 2: was deeper, So I wondered whether she got some voice coaching,
• 12:41
  Speaker 2: and I wonder if that was part of why she
• 12:43
  Speaker 2: was able to keep the juror's attention. It was honestly
• 12:46
  Speaker 2: a very technical testimony. They showed a lot of spreadsheets
• 12:49
  Speaker 2: and balance sheets, and I was surprised. I kept looking
• 12:52
  Speaker 2: over at the jury, but I personally did not witness
• 12:55
  Speaker 2: a single sleeping jury today.
• 12:57
  Speaker 1: That is a real testament to how Compella and Caroline
• 13:01
  Speaker 1: Ellison must have been. So how did the day end?
• 13:04
  Speaker 1: Where did you get to in the trial? Today?
• 13:06
  Speaker 2: The prosecution didn't finish asking Carol questions, so they're going
• 13:10
  Speaker 2: to continue with that, and then I think we're all
• 13:13
  Speaker 2: really interested to see what's going to come out on
• 13:15
  Speaker 2: cross examination.
• 13:17
  Speaker 1: I'm very curious to hear what comes out in cross examination.
• 13:21
  Speaker 1: We'll be back in a minute with one last thing. Ladya, Gene,
• 13:30
  Speaker 1: we're back. Can you please give me one last thing?
• 13:33
  Speaker 2: Our one last thing today is about Gary Wong's testimony.
• 13:36
  Speaker 1: Okay, you and Michael talked about Gary Wong. He's the
• 13:39
  Speaker 1: guy who doesn't talk right. If there's one thing to remember,
• 13:41
  Speaker 1: he's co founder, but mainly is the really quiet guy.
• 13:44
  Speaker 1: And then when he talked, apparently said on the show,
• 13:46
  Speaker 1: we talked really fast.
• 13:47
  Speaker 5: It's kind of interest.
• 13:48
  Speaker 2: Yes, the guy get it over with once he took
• 13:50
  Speaker 2: the stand, did actually talk. And today was cross examination, okay,
• 13:55
  Speaker 2: and everyone was really impressed with how the defense lawyers did.
• 13:59
  Speaker 2: I think up until now they seemed really nervous. I think,
• 14:02
  Speaker 2: I said earlier one of their hands seemed to be shaking,
• 14:05
  Speaker 2: and today they moved very quickly. They hardly got interrupted
• 14:09
  Speaker 2: by the prosecution. They seemed very confident, and they did
• 14:15
  Speaker 2: kind of leave me feeling a little bit different about
• 14:18
  Speaker 2: Gary's testimony than I did earlier.
• 14:20
  Speaker 1: Interesting, So those are like the vibes, which is interesting.
• 14:23
  Speaker 1: What was the substance of the cross examination?
• 14:26
  Speaker 2: So to me, one of the most interesting things in
• 14:28
  Speaker 2: this trial is Sam tweeted shortly before FTX declared bankruptcy
• 14:33
  Speaker 2: FTX is fine. Assets are fine, And this has been
• 14:36
  Speaker 2: pointed over and over again to an example of Sam lying,
• 14:40
  Speaker 2: and on direct Gary said this was a lie because
• 14:43
  Speaker 2: FTX was not fine. Assets were not fine, right, But
• 14:46
  Speaker 2: the lawyers pointed out how Gary, in earlier conversations with
• 14:51
  Speaker 2: the prosecution, did not characterize this as a lie because
• 14:56
  Speaker 2: he said that depending on how you looked at it,
• 14:59
  Speaker 2: FTX maybe was fine and assets were fine. It just
• 15:03
  Speaker 2: depends whether you were talking about liquid or ill liquid assets,
• 15:06
  Speaker 2: uh huh.
• 15:07
  Speaker 1: Which is in fact a classic hard problem in financial crises.
• 15:12
  Speaker 1: Right liquid assets basically means assets you can turn into
• 15:14
  Speaker 1: cash right now, and ill liquid assets means, yes, we
• 15:17
  Speaker 1: have the money. Whatever I own a house, say, but
• 15:20
  Speaker 1: I just can't sell it and turn it into money
• 15:22
  Speaker 1: this minute. And so did he say on cross that, like,
• 15:25
  Speaker 1: maybe if you're considering I liquid assets, it would have
• 15:28
  Speaker 1: been reasonable to think that that FTX was fine.
• 15:31
  Speaker 2: He did seem to say that he said that Sam's
• 15:35
  Speaker 2: tweet was misleading since he was talking about ill liquid assets,
• 15:39
  Speaker 2: but he admitted that in early conversations with prosecutors he
• 15:42
  Speaker 2: did not call this tweet a lie. And I found
• 15:45
  Speaker 2: that cross examination to be really compelling.
• 15:48
  Speaker 1: Makes me only more interested to hear what happens when
• 15:51
  Speaker 1: Caroline Ellison undergoes cross examination. Thanks for having me, Lydia, Jen.
• 15:57
  Speaker 2: Bye Jacob talk to you soon.
• 16:01
  Speaker 5: This episode of Judging Sam was hosted by Jacob Goldstein.
• 16:04
  Speaker 5: Lydia gen Caught is our court reporter. Catherine Girardeau and
• 16:07
  Speaker 5: Nisha Venken produced this show. Sophie Crane is our editor.
• 16:11
  Speaker 5: Our music was composed by Matthias Bossi and John Evans
• 16:15
  Speaker 5: of stell Wagons Symphonette. Judging Sam is a production of
• 16:18
  Speaker 5: Pushkin Industries. Got a question or comment for me, There's
• 16:22
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