Emails, Chat Logs, Code and a Notebook: The Mountain of FTX Evidence
Snippets of computer code. More than six million pages of emails, Slack messages and other digital records. And a small black notebook, filled with handwritten observations.
For months, federal prosecutors building the criminal case against fallen cryptocurrency executive Sam Bankman-Fried have assembled a vast and unusually varied array of evidence. The documents include crypto transaction logs and encrypted group chats from Mr. Bankman-Fried’s collapsed exchange, FTX, as well as strikingly personal reflections recorded by a key witness in the case.
The mountain of evidence ranks among the largest ever collected in a white-collar securities fraud case prosecuted by the federal authorities in Manhattan, according to data provided by a person with knowledge of the matter. In the 2004 securities fraud prosecution of Martha Stewart, for example, prosecutors produced 525,000 pages of evidence to the defense team, but the numbers have increased significantly in recent years.
The diversity and growing volume of materials in the FTX case underscore the legal challenges facing Mr. Bankman-Fried, 31, who is charged with 13 criminal counts, including allegations that he misappropriated billions of dollars in customer money, defrauded investors and violated campaign finance laws. He has pleaded not guilty.
With the trial set for October, prosecutors have gathered evidence ranging from phones and laptops to the contents of Mr. Bankman-Fried’s Google accounts, which amounted to 2.5 million pages alone. At a hearing in March, Nicolas Roos, a federal prosecutor investigating FTX, said the government had obtained a laptop crammed with so much information that the FBI’s technicians were struggling to decipher all of it.
“It is a massive amount to sift through, and sometimes you can find incredibly useful information,” said Moira Penza, a former federal prosecutor who’s now in private practice. “It is a real challenge.”
Typically, the evidence in a criminal case remains largely secret until right before trial. But in Mr. Bankman-Fried’s case, interviews and a review of recent court filings have offered an early glimpse of the idiosyncratic array of records that the FTX prosecutors have collected.
The investigation began in November, after FTX’s collapse sent the crypto market into turmoil. Almost as soon as the exchange folded, prosecutors started gathering documents, sending subpoenas to FTX employees and seeking records from the political campaigns that Mr. Bankman-Fried financed.
The requests were often broad. One person who got a subpoena said prosecutors had wanted every document related to FTX and dispatched a group of data experts who took days to extract the information from a set of devices.
While much of what prosecutors have gathered is typical corporate fare, other material points to the unusual personal dynamics at FTX.
The black notebook, described as a diary, belonged to Mr. Bankman-Fried’s on-and-off girlfriend, Caroline Ellison, a former top lieutenant in his business empire, three people familiar with the matter said.
Ms. Ellison, who was chief executive of FTX’s sister company, the hedge fund Alameda Research, also recorded observations about Mr. Bankman-Fried in a series of electronic documents that have circulated among lawyers in the case, three people with knowledge of the matter said. At times, two of the people said, Ms. Ellison expressed personal and professional resentment toward Mr. Bankman-Fried.
Lawyers and representatives for Mr. Bankman-Fried and Ms. Ellison either declined to comment or did not respond to requests for comment on the evidence in the case. A spokeswoman for federal prosecutors in Manhattan declined to comment on the discovery process.
Ms. Ellison is expected to be a crucial witness. She has pleaded guilty to fraud charges along with two other top executives, Gary Wang and Nishad Singh, and agreed to cooperate with the prosecutors pursuing Mr. Bankman-Fried. In the days after FTX collapsed, she confessed to Alameda employees that she, Mr. Bankman-Fried, Mr. Wang and Mr. Singh had used FTX customer funds to fill holes in Alameda’s accounts. She also dated Mr. Bankman-Fried and lived with him in a penthouse in the Bahamas, where the exchange was based.
Any personal writings from her or other witnesses might be useful to defense lawyers during cross-examination, Ms. Penza said.
“The biggest risk with a cooperator is the defense will be able to say here she is cooperating to save herself from a long prison term,” she said. “But modern juries are not likely to take at face value the evidence they are testifying because of a vendetta or a failed romance.”
Many of FTX’s corporate records, including emails, Slack messages and transaction logs, were held by Sullivan & Cromwell, the law firm that took control of the exchange after it declared bankruptcy.
In a recent court filing, Mr. Bankman-Fried’s lawyers argued that the prosecutors had relied on Sullivan & Cromwell to serve as their de facto agent in obtaining documents from the company. The lawyers claimed that by “outsourcing” this process to the firm, prosecutors were avoiding their legal responsibility to turn over potentially helpful evidence to Mr. Bankman-Fried’s defense team.
The detective work by Sullivan & Cromwell — which has submitted bills totaling $55 million to the bankruptcy court — is already proving beneficial to prosecutors. In a January court filing, Sullivan & Cromwell displayed an excerpt from FTX’s underlying code base, showing a feature that allowed Alameda to borrow virtually unlimited amounts of money from the exchange.
In an email to Sullivan & Cromwell lawyers that month, Mr. Roos requested FTX transaction logs for accounts owned by Mr. Bankman-Fried, Ms. Ellison, Mr. Wang, Mr. Singh and two other people, whose names were redacted, according to court records. He also sought records of a group chat on the encrypted messaging app Signal, titled “Donation Processing,” where FTX executives discussed campaign finance matters.
Prosecutors have also seized evidence directly from executives in Mr. Bankman-Fried’s orbit. Last month, the FBI executed a search warrant at the $4 million Maryland home of Ryan Salame, a high-ranking FTX executive who donated tens of millions of dollars to Republican candidates, including George Santos, the recently indicted congressman from Long Island, NY
The agents took Mr. Salame’s mobile phone as well as a phone belonging to his girlfriend, Michelle Bond, a crypto lobbyist, two people with knowledge of the matter said. Ms. Bond ran unsuccessfully for Congress last year as a Republican in another district on Long Island.
Throughout the year, prosecutors have been turning over their evidence to Mr. Bankman-Fried’s lawyers, a process known as discovery.
At the hearing in March, Mr. Roos gave a detailed update on the process, explaining to the judge overseeing the case, Lewis A. Kaplan, that prosecutors had obtained four laptops, including the device so large that it was proving complicated to analyze. That laptop belonged to Mr. Wang, two people with knowledge of the matter said.
Lawyers for Mr. Wang, Mr. Salame and Ms. Bond did not respond to requests for comment.
Mr. Roos also said the government had handed over to the defense team nearly one million documents obtained from witnesses and other third parties in the case.
“We have produced 927,000,” he said. “So that leaves, quick math, maybe 110,000.”
“Bedtime reading,” Judge Kaplan replied.