The criminal trial against Sam Bankman-Fried, the founder of FTX, is underway in Manhattan. Prosecutors have compared one of the defense's arguments to a scene from the movie "Dumb and Dumber," where actor Jim Carrey says IOUs are "as good as money." The prosecutors took issue with several jury instructions provided by the defense, including one that stated if FTX customers received a credit to transact on the exchange, it does not establish that they were deprived of property.
The government's case centers around the billions of dollars that FTX allegedly siphoned out of customer accounts to cover up losses at sister hedge fund Alameda Research and for personal expenses like a $35 million property in the Bahamas and political donations. Customers were unable to retrieve much of their money as FTX and Alameda were collapsing simultaneously.
The defense argues that clients still had a credit to the funds they deposited, even if the money was being used for other purposes. Prosecutors argue that a credit to obtain funds at a later date is not the same or as valuable as the money itself. They compare it to a briefcase filled with paper instead of money in the movie "Dumb and Dumber."
Bankman-Fried, who has pleaded not guilty, faces seven criminal fraud charges and could face life in prison if convicted. The trial has featured testimony from former close friends and top executives at FTX and Alameda who have turned on Bankman-Fried. The trial is scheduled to resume next week and extend into November.
Judge Lewis Kaplan has held sidebar meetings with both sides to discuss their demeanor in the courtroom. He recently criticized the prosecution and defense for their expert witnesses and warned both sides to do better and communicate more with each other.
The prosecution is expected to wrap up its case in the coming days.