Ep. 91: SBF Trial Briefing, Day 9: Nishad Singh testifies, talks excessive spending and SBF being a fame f*cker

[00:00] This is Voice Club. Another day, another weird Airbnb. Here we are. This is day nine. [00:06] of [00:07] the SBF trial. Sadly, me as a court reporter had to take a little break because we're in Austin, Texas with Kraken for an event with Williams and F1 and Alex Albin. A totally different scene. A very different scene. A very different scene. But we didn't want to leave you all hanging. Yesterday was a big day at 500 Pearl. So I'll be back in action on Friday with firsthand reporting. [00:37] where we're just going to give you some of the highlights that we've pulled together from the interwebs. [00:40] Did you miss your friends at... [00:42] Did you miss your journalist friends? [00:46] I did really miss being there and it was a really big day. So I'm sad that I wasn't there for sure. Give us the breakdown. We're going to talk about. [00:54] Big day yesterday. [00:55] Pulling out three highlights. [00:57] or three threads that really went through the conversation yesterday. The first one is... [01:02] Who testified? So Nishad Singh... [01:04] took the stand. We're going to tell you a little about who he is and the context for his role in this whole shenanigan. Then the second piece being part of what was so damning about Nishad's day yesterday in court was that it painted a really different picture of SPF than the [01:21] maybe not different. It painted a really telling picture of SPF and who he was as a leader as he was making certain decisions in these key moments in time. And then the third being this excessive spending story, which is outrageous. So we're going to talk about those. One thing to note, there was also a customer of FTX that testified at the beginning of the day yesterday, pretty straightforward testimony, essentially giving context for his experience. He lost $500,000

[01:51] happened and then Nishad took the stand. So... [01:54] just wanted to make sure that we touch on that because it is the reality of people. And so Nishad saying, I found him to be the most sympathetic character ever. [02:05] of this story this far. He's 27 years old. He was the director of engineering at FTX. He worked at FTX, I believe, five years. He knew SBF personally because his brother was friends with SBF or went to school with him or something like that. So they had a personal connection. High school, I think. Oh, high school. Oh, wow. And he clearly had... [02:26] a moral compass. [02:27] In his experience of working there and, [02:32] a part of his motivation, I think of being at FTX was building a company with a real set of values and this like altruism. And I think like crypto values as well. And yeah, [02:45] A lot of the testimony was sort of those values and his idea of what they were building, rubbing up against SBF's personal values. [02:52] spending and the opulent way in which she was spending. So I felt like out of anyone, I, [03:00] believed him the most in his... [03:04] conflict of how to move forward and what best to do when he did end up finding out. He didn't find out that there was a hole and that they had been borrowing or stealing customer funds until September of 2022. So really late in the timeline of everything that was happening, he finally found out.

[03:21] And up until then, over the course of the prior year, he had been really upset with the spending generally. So there was quite a bit that he had sort of had conflict with SBF even leading up to him finding out that. [03:32] I don't know. [03:33] blatant and rampant fraud happening across the organization. Yeah, I think one important thing to note about Nishad is he also took a plea deal with government in addition to Caroline Ellison and Gary Wong. So, you know, do with that what you will, but he also has a deal with the government to cooperate. Yes, and he pled guilty in that same deal to wire fraud, commodities fraud, securities fraud, money laundering, and campaign finance violations. Out of anybody I understand [04:03] to then all of a sudden committing crimes. Talk about somebody who found himself in a position and then didn't know what to do out of anybody that seemed most... [04:12] clear how he got there in a really sad way. [04:15] So the big, big headline from yesterday was all about the money. [04:23] that was going out the door from FTX on political campaign donations, sponsorships and celebrity endorsements and real estate and venture investments. A lot of money out and [04:37] Not a lot of money in. Not as much money in. So a couple of points that were made yesterday. There was $1.1 billion spent on sponsorships between the Miami Heat arena and celebrity endorsements like Tom Brady, Steph Curry, Blair David. The list goes on. A big part of the sort of celebrity side of this story is a relationship with Michael Kives and this firm called K5. Michael Kives was kind of like SBF's Sherpa.

[05:07] in the celebrity world. And there's a couple stories about different parties that SPF was invited to or attended that had like Katy Perry, Orlando Bloom, Hillary Clinton, like... Corey Gambles. At one point, I can't remember in doing some of this research, somebody was like, a man named Corey Gambles. And I was like, incredible. Corey Gambles is the longtime boyfriend of Kris Jenner, for those who don't know. Insane. Just absolutely hilarious that [05:37] Yeah, there was kind of this like gilded celebrity circle that Sam... [05:43] found himself in through his relationship with Michael and that he paid to play for that relationship. Yeah. He paid $200 million into the K5 firm. It's very unclear to me if this was like a venture firm, if this was a PR firm, it doesn't really what firm it is, is very unclear. What exactly is your venture? Exactly. Michael Kive's a very connected guy. It's essentially how all the celebrity endorsements came across Sam Bankman-Fried's desk and he paid for that privilege. [06:13] Two things here. So if there were any question in the mind of the jury, if Sam... [06:18] was this truly sort of maverick, altruistic, different thinker who had this set of morals that guided him to do these things that... [06:28] seem unethical, but he had his own ethical premise to do them. That sort of story that I think was rampant in the media prior to the fall and then sort of SBF tried to hold on to post-fall was

[06:40] basically destroyed today with his blatant desire to be in front of celebrities, around wealth, to spend in excess in the way that he did. And all I could think is that line from Olivia Rodrigo, where she says, fame fucker. Like that's what SPF is. And that isn't some like Sherpa, all good, I'm going to spend all my money on charitable donations. That's not the same character. And so [07:10] actions and then what he set his values were. Yeah, I do just want to put in here as a marketer, brand endorsement for an arena is a totally appropriate thing to spend on. And I do think there's some conflating in the telling of this testimony that, oh, buying the naming rights to an arena is in and of itself irresponsible. It's not. It's actually not. It's a totally appropriate thing for a certain caliber brand to do. So I just want to put that out there as a [07:40] that it works. It does work. And, like, he spent a stupid amount of money on it in a time when they had no money, so that's why it's wrong. But, like, the concept of celebrity endorsements and naming rights for Arena is not. So I just, like, [07:53] For all of crypto Twitter that's being super snarky about that today. That's dumb. Yeah. I think you have to look at it in the context of the story, which obviously we're doing here. But it's the fact that they had $950 million in revenue and they had $1.5 billion in endorsement deals. Like the math, just not math. Silly, silly, silly. And those $1.5 billion was already when they were $8 billion in the whole on customer funds. So...

[08:15] the money that's going out to the arena or going to Tom Brady or any of these celebrities is customer funds. It's not marketing budget. The other thing here is that there were two other ways that these funds were being used that became clear today that we've heard time and time again. But [08:31] really came to life through actual spreadsheets and line items. One is venture investments that were illiquid venture investments. So $1.5 billion into Bitcoin miner Genesis digital assets in early 2022. So in the same time when they were using customer funds, again, $500 million into AI startup Anthropic, which we're going to probably talk about a lot in the coming weeks because that investment has 10X. And so what's going to happen with that investment is a question mark. [09:01] to K5. So a ton of venture investments that are absolutely illiquid that he was putting on the balance sheet as liquid assets. And then the other aspect of this is the real estate investment. So insanely opulent spending around real estate. So not only the $30 million penthouse that they were all living in, but... [09:18] spreadsheet that showed all of these real estate investments that were all across the Bahamas, his parents, all of this line item after line item. And that's the first time that anybody had actually seen spreadsheets around the venture investments and the real estate investments that just sort of highlighted how out of hand the spending was. I will say that there is speculation that the $500 million investment into Anthropic and the return on that investment could be potentially what makes...

[09:46] FTX customers and investors whole because there will be like a windfall essentially from that investment that will could be potentially used to cover the losses which is an absolutely wild turn of events for both Anthropic and for FTX customers. Insane and actually the judge last week when I was there said essentially we're not going to talk about Anthropic anymore on this trial because it was becoming so much a part of the story and that one is going to be something [10:16] sentencing and also a lot of it will happen in the bankruptcy proceedings, not in SBF's trial. So essentially all of the successive spending that Nishad really walked through and his own timeline of the events. [10:30] demonstrated a damning character testimony for SPF. And I don't know that you, I don't know that anybody believes that this guy's like... [10:38] a good guy with a different way of thinking after going through the spreadsheets. [10:41] Yeah. There was a conversation that was talked about yesterday about a [10:46] balcony conversation. This was the day that Nishad confronted SBF about the hole, the $13 billion hole in the balance sheet. And SBF allegedly said, right, that we are a little short on deliverables. And then he went on to talk about how the idea of the hole in the balance sheet has been taking up about 5% to 10% of his productivity, which I think just really paints him as like a callous person that knew what was happening and didn't give a shit, basically.

[11:16] conversation on the balcony of a $30 million, like palatial apartment. Yeah. Also, one more thing was that it was around this time that they were putting together [11:25] fake books and spreadsheets for the CFTC. [11:28] which is Commodity Futures Trading Commission. [11:32] So that was the first time that the jury and everybody following the case has heard there was explicit actions to mislead regulators, which that hadn't been revealed thus far. There it is. Day nine. Thanks for listening.