He was in a real pickle.
Sam Bankman-Fried confessed that his crypto hedge fund could have trouble covering an $8 billion debt while playing “padel” tennis -— a racquet sport similar to pickleball — at a luxury Bahamian resort where he lived in a $35 million penthouse, a former close colleague testified at the accused fraudster’s Manhattan trial Thursday.
Former FTX developer Adam Yedidia testified that he raised concerns about the massive sum that Bankman-Fried’s trading firm, Alameda Research, owed to his cryptocurrency exchange FTX in June or July 2022, just a few months before it went under.
“It was a very large debt, and I wanted to know that Alameda could pay it,” Yedidia, 31, recalled in Manhattan federal court of the powwow at the Albany luxury resort, whose investors include Justin Timberlake and Tiger Woods.
Bankman-Fried then admitted that his companies were “not bulletproof anymore,” while he “looked nervous,” Yedidia testified.
Yedidia also revealed that he warned Bankman-Fried, 31, against dating Caroline Ellison — the former CEO of Alameda Research and his ex-girlfriend, who is now expected to be the feds’ star witness against him.
Gary Wang, the crypto exchange’s co-founder and Bankman-Fried’s former college roommate at MIT, meanwhile admitted Thursday that Bankman-Fried directed him to write computer code allowing Alameda to have the “special privilege” of withdrawing essentially “unlimited” user funds on FTX — all while consumers were left in the dark.
The revelations came during day two of the former billionaire’s blockbuster trial in Manhattan federal court — and as Bankman-Fried sat calmly typing away on his internet-free laptop at the defense table.
Federal prosecutors allege the missing funds Yedidia brought up after the “padel” match with the crypto mogul had in fact been stolen from FTX customers’ accounts, leaving them unable to withdraw digital assets they were led to believe they owned.
A few months later, as pressure mounted on FTX as customers demanded to withdraw their funds and Yedidia texted Bankman-Fried a message of support.
“I said, I love you, Sam. I’m not going anywhere, don’t worry,” Yedidia recalled texting using the encrypted app Signal.
But Yedidia ended up resigning from the embattled company days later.
“What changed?” federal prosecutor Danielle Sassoon asked Thursday.
“I learned that Alameda had used FTX customer deposits to repay its loans to creditors,” Yedidia said.
“What Alameda did seemed like a flagrantly wrong thing to have done.”
Bankman-Fried attorney Christian Everdell tried to poke holes in the prosecution’s narrative of the accused fraudster living the high life — pointing out his modest de-facto uniform of a T-shirt and shorts and that he shared the ritzy Bahamas digs with nine other people.
“This was essentially dorm living?” Everdell asked Yedidia, who went to MIT with Bankman-Fried.
“It was like a dorm in that I was living with others, but it was not like a dorm in that it was luxurious,” Yedidia replied.
The FTX co-founder, Wang, pleaded guilty to his role in the scheme and is testifying as part of a cooperation agreement with prosecutors.
He is set to resume his testimony Friday morning.
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