By Luc Cohen

NEW YORK (Reuters) – Sam Bankman-Fried’s fraud trial has given an unprecedented window into how a group of graduates from elite U.S. universities in their late 20s and early 30s tried, and ultimately failed, to avert one of the biggest and swiftest corporate meltdowns ever.

Now, the 31-year-old former billionaire’s fate could hinge on how jurors view his actions in the 10 days before the FTX cryptocurrency exchange’s collapse nearly one year ago.

During the monthlong trial in Manhattan federal court, jurors have seen social media posts made by Bankman-Fried during that week assuring panicked FTX customers their funds were safe. They have also seen internal text messages showing Bankman-Fried and other executives discussed a shortfall in funds and debated how to spin the events.

Prosecutors say Bankman-Fried used customer funds to pay lenders to his Alameda Research hedge fund, and that his false assurances to anxious customers in November 2022 were a critical part of his fraud scheme.

The jury deliberations, set to begin on Thursday, will take place behind closed doors. But the 10-day window before FTX’s Nov. 11, 2022, bankruptcy declaration could be a significant part of their discussions.

FTX’s death spiral began on Nov. 2 when crypto news outlet CoinDesk published an Alameda balance sheet showing it held large quantities of FTT, FTX’s in-house token – suggesting close ties between the exchange and a trading firm that Bankman-Fried said on Twitter was treated like any other customer.

Nothing happened at first, testified Caroline Ellison, Alameda’s former CEO and Bankman-Fried’s on-and-off girlfriend. But on Nov. 6, FTX’s chief engineering officer Nishad Singh wrote her and Bankman-Fried on encrypted messaging application Signal to say FTX customers had withdrawn $1.25 billion over the past day.

“Oof,” Bankman-Fried replied, in a message jurors saw.

The Massachusetts Institute of Technology graduate testified net withdrawals rarely exceeded $50 million before then.

‘THIS MIGHT SPELL DOOM’

Later that day, Changpeng Zhao, chief of rival crypto exchange Binance, wrote on Twitter that his exchange had decided to sell its stockpile of FTT “due to recent revelations that have came to light.”

With withdrawals piling up, former FTX chief technology officer Gary Wang testified that Singh – a 2017 graduate of the University of California at Berkley – knocked on the door to his bedroom in the $35 million penthouse apartment they shared with seven other FTX and Alameda employees in the Bahamas, where the exchange was based.

FTX could not process the withdrawals fast enough, and Wang testified that Singh needed his help to speed its systems up.

“I was very concerned that this might spell doom,” Singh – who, alongside Wang and Ellison, pleaded guilty to fraud charges and agreed to cooperate with prosecutors – testified.

Wang, a 30-year-old MIT graduate, said Bankman-Fried asked him that day to figure out how much additional money FTX needed to satisfy customer withdrawals.

Wang ran some calculations, and then told Bankman-Fried the answer: $8 billion.

“That sounds correct,” Bankman-Fried responded, with a neutral demeanor, according to Wang.

Bankman-Fried then created a Signal group of executives to discuss “potential fundraising,” Ellison testified. Early on Nov. 7, Bankman-Fried sent tables estimating customer funds at $12 billion, about $8 billion more than the $3.9 billion in cash FTX could pull together within a week.

In a message seen by jurors, Bankman-Fried suggested four options: call venture capitalists, send a “confident tweet thread,” halt withdrawals, or reduce the values of deposits.

“What we need is a few billion of USD,” Bankman-Fried wrote in a document shared with the group. “We will take whatever we can get.”

‘FTX IS FINE’

Later that morning, Bankman-Fried posted on Twitter, “FTX is fine. Assets are fine … FTX has enough to cover all client holdings. We don’t invest client assets (even in treasuries).”

Ellison, Wang and Singh each testified that the post on the platform now known as X was misleading.

Testifying in his own defense, Bankman-Fried said he thought the post was accurate at the time and deleted it a day later after a plunge in the value of cryptocurrencies held by Alameda.

After posting the tweet, Bankman-Fried turned to raising capital. Can Sun, FTX’s former general counsel, testified that around 1 p.m. he was asked to join a call with private equity firm Apollo, which asked to see FTX’s financial statements before potentially providing emergency capital.

Sun said he was “shocked” when the spreadsheet he received showed FTX was short $7 billion. He sent it to Apollo anyway. He said Bankman-Fried later told him Apollo had asked for a “legal justification” for the missing funds.

That evening, he told Bankman-Fried there was no justification.

“Sam basically said something like, got it. He was not surprised at all,” Sun testified.

There would be no bailout from Apollo. Late on Nov. 7, Bankman-Fried reached out to Zhao – whose tweet less than two days earlier accelerated the run on FTX – and struck an initial deal for Binance to acquire FTX.

“I was extremely relieved,” said Ellison, a 28-year-old Stanford graduate. “If the deal went through, it would mean that all of FTX customers would get their money back.”

But the deal fell through on Nov. 9. Singh, who testified that he was suicidal at the time, returned to the U.S. that day. Ellison moved back to her parents’ house on Nov. 11, when FTX declared bankruptcy. Wang left the Bahamas on Nov. 16.

All three would have their first meetings with federal prosecutors by the end of the month.

(Reporting by Luc Cohen in New York; Editing by Noeleen Walder and Daniel Wallis)

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