SBF defense focuses closing arguments on client's good will and mistakes

Sam Bankman-Fried's defense team presented its closing arguments in court Wednesday, telling the jury that things aren't really what they seem.

Driving the news: The prosecution, SBF's attorney Mark Cohen said, was setting up their client to be something like a villain in a Hollywood movie, rather than what he was: a bright startup founder whose cryptocurrency businesses spun out of his control.

Details: "What we've been trying to present to you, and I'll discuss today, is more of a real-world perspective," Cohen told jurors.

• "And in the real world, unlike the movie world, things can get messy." It was a refrain he would revisit throughout his nearly three hours of remarks.
• SBF had built excellent companies with excellent products, he told the jury, until they were overwhelmed by the events of 2022 — when cryptocurrency markets turned against anyone still holding significant amounts of digital assets.

Catch up fast: SBF is facing seven criminal counts of fraud, conspiracy and money laundering in connection with operations at his cryptocurrency exchange FTX and his trading firm Alameda Research.

• Both firms went bankrupt in November 2022 after it became known that billions of dollars in customer funds were missing from the exchange, after being invested and spent by Alameda.

What they're saying: "Good faith is a complete defense to all the charges in the case," Cohen told the jury Wednesday. "The government bears the burden of establishing a lack of good faith."

• He then presented an alternative perspective on decisions FTX executives made, one where business decisions went wrong but no one had intended to hurt customers.

Zoom in: Features of FTX's code that allowed Alameda to borrow large amounts of money, even when in the negative, could all be traced back to moments in the exchange's history where doing so made good business sense, Cohen said.

• The "allow_negative" function, he noted, had been created in FTX's early days, so that the hedge fund could make markets in assets no one else wanted to trade in — giving other users a good experience on the exchange.
• Alameda's $65 billion line of credit had been created so that the firm could readily absorb losses when a user found an edge case in their margin trading system that allowed losses to get out of hand.

"This was all done in response to specific issues, to business issues, and done to help customers, not to hurt them," Cohen told jurors.

Meanwhile, he defended Alameda's use of FTX customer funds, specifically of money deposits, such as dollars, a major part of the government's misappropriation charges.

• Cohen noted that the prosecution had never discussed the fact that there was "no restriction on fiat currency in FTX's terms of service.
• Yes, but: The prosecution did, however, discuss any number of other ways SBF had made statements to the effect that his firms never made use of its customers' funds for investments or business functions.

When SBF deleted his famous Nov. 7, 2022, tweet while his exchange was cratering, saying "FTX is fine. Assets are fine," Cohen argued that doing so actually demonstrated good faith.

• The day before, Cohen said, the founder had believed that FTX had a positive net asset value.
• But that was based on FTX's token, FTT, having a respectable value. Shortly thereafter, it plummeted.
• "What does that mean? It means assets are not fine. So what does he do? He takes the tweet down," Cohen argued. In other words, he deleted it to prevent misleading the public.

Making deals to put FTX's name on sports stadiums, sports teams and official uniforms was not reckless spending, Cohen said, but in fact a reasonable way to promote the brand in a unique way, with prices that were affordable in light of a company making high revenues.

Scene from the court: Cohen had a much softer and more solicitous presentation than prosecutor Nicolas Roos, who presented arguments before him.

• SBF's parents skipped the prosecution's case but returned to listen to Cohen's defense.

Be smart: The defense has no burden of proof in a criminal trial, as it noted to the jury multiple times Wednesday. It simply needs to create reasonable doubt in the prosecution's case.

The bottom line: "What matters is Sam's state of mind. ... What matters is what Sam believed in good faith at the time," Cohen told the jury.

• Hindsight it irrelevant to a conviction, he said. Cohen hopes the jury can believe that each of his client's mistakes made sense in the moment.

What we're watching: The prosecution gets one last turn on the microphone, to rebut the defense's closing argument. It's possible that the jury renders a verdict in the case as soon as Thursday.

Go deeper: FTX founder knew he should not use customer funds: Prosecution