Key questions emerge in Bankman-Fried trial

STORY: The parents of disgraced FTX founder Sam Bankman-Fried arrived for the second day of his trial in Manhattan Wednesday, where lawyers and prosecutors clashed over the question of why their son's exchange collapsed due to 'massive' fraud – or whether he simply made mistakes. Sitting in court in a suit, tie, and uncharacteristic trim haircut, Bankman-Fried was portrayed by his attorney on Wednesday as a "math nerd" who overlooked risk management in building FTX, but did not steal customer money. While prosecutor Thane Rehn said Bankman-Fried committed “fraud on a massive scale”, took more than $10 billion from unsuspecting customers, and "doubled down" to plug losses at his hedge fund Alameda Research, when its crypto investments began to lose steam last year. Three other central questions were raised as points of contention in the trial, which may last up to six weeks. One, was the collapse of FTX due to fraud – or a smear job? Defense lawyer Mark Cohen said the Bahamas-based FTX was a casualty of a broader downturn across the cryptocurrency sector, and public attacks from rivals such as Binance and the crypto press led to a run on FTX. The prosecutor said that was an “excuse” for fraud. Another point of contention… were ties with Alameda nefarious or business as usual? The jurors also heard from the prosecution that Bankman-Fried stole customer funds in two ways, by duping FTX customers into sending money intended for their trading accounts to Alameda, and through a "secret special privilege" embedded in FTX software that let Alameda make unlimited withdrawals. Cohen said prosecutors had misconstrued instances of Alameda performing functions for FTX, and disagreed the software was nefarious. The prosecution and defense also clashed over the role of Caroline Ellison, Alameda chief executive and Bankman-Fried’s on-and-off romantic partner, whether she was to blame for some of the wrongdoing, or just a “front” for Bankman-Fried to carry out his actions at Alameda Research. Prosecutors are expected to call Ellison, and two former members of Bankman-Fried's inner circle – executives Nishad Singh and Gary Wang – to testify against him. All three have pleaded guilty and agreed to cooperate with prosecutors. Jurors can expect to hear from Wang by the end of the week.