Sam Bankman-Fried Trial: Week 1 in Summary

Direct from inside the SDNY Courtroom: Barbara Frieds' Breakdown, and a Defense in Shambles

This week, I started a major new project, something I’ve never done before. For the next six (or so) weeks, I’ll be reporting on the Sam Bankman-Fried trial from the Southern District of New York courthouse in downtown Manhattan. I’m there for the great U.K. crypto publication Protos, and I’m incredibly grateful for the opportunity (though I’ll still be looking for other gigs when the trial concludes).

(AI Illustration)

In a way it has all worked out for the best. Though CoinDesk is sending a large team to the trial, as a columnist, I would have at best been in the courthouse for a few days if I hadn’t been laid off. But Protos is sending me every single day, and by my rough count there are only a dozen or so other reporters who will have that privilege – most reporters are only dropping in intermittently, and some only came for the first few days of the trial.

And of course, I know the case better than most reporters. So my reporting at Protos, where I am filing daily, will be one of the best ways to keep up with the trial. In addition to those updates for Protos (links below), I’ll be writing a weekly column for Laura Shin’s Unchained, including a look last week at the elite entanglements that put an entire class on trial alongside SBF.

In this newsletter, you’ll get some analysis, but also tidbits too weird to be published anywhere else. Tidbits like … what’s going on with Barbara Fried’s mouth? And is the defense team really floundering as badly as they seem to be? Read on for the answers, or at least some speculation.

Much of the first week was taken up with jury selection, but the in-court breaking stories have begun. Most notably, that includes Gary Wang’s Friday testimony, which established that Alameda Research had been given special privileges on FTX, and begun tapping customer funds, as early as late 2019. The takeaway from that revelation is that FTX was essentially never a successful business, as figures like Michael Lewis would like to maintain, since it was built on theft.

In the Flesh

New subscribers may be slightly confused by the title of this newsletter: Flesh/Markets.

Fundamentally, the name is an attempt to capture the fact that abstractions, whether markets or laws, merely conceal the squirming complexity of the life they describe. That complexity, which often amounts to unkowability, is never entirely contained by the words or numbers that claim to describe it.

That’s very clear in the texture and nuance of courtroom proceedings: they often make it into public discourse in the form of transcripts, filings, and judgments. But the entire thing actually takes place in person, slowly, and with a lot of details that don’t make it onto paper – but which still inform and influence the course of events. In particular, the impression the defense team makes on the jury has a powerfully determining effect, and is only barely captured in the words exchanged.

For this trial, that fleshy reality also includes seeing Sam Bankman-Fried’s parents watch the evidence build against their son. The parents have been in court for the duration so far, and I expect they’ll continue.

I wound up standing behind the Bankman-Fried parents in the security line to get into court on Friday, and this sort of chance interaction is frequent in the micro-world of the courthouse. One veteran courthouse reporter told me about bumping into Elizabeth Holmes in the bathroom while covering that trial.

We’ve already seen the Bankman-Fried parents having to evade cameras as they leave the courtroom, which given their age and slight frailty, is the first moment I’ve felt real sympathy for what they’re going through.