In a dramatic turn of events, Robert Boroujerdi, the managing director at Third Point, testified at Sam Bankman-Fried’s trial on Thursday, which has shed new light on the alleged fraud and money laundering case. Boroujerdi’s testimony has raised serious allegations regarding investor fraud and the misrepresentation of financial data by FTX, a cryptocurrency exchange.
Key Takeaway
The testimony from Third Point’s managing director at Sam Bankman-Fried’s trial highlights the serious allegations of investor fraud and misrepresentation of financial data by FTX. This testimony, along with previous witnesses, strengthens the government’s case against the defendant, potentially resulting in severe consequences for Bankman-Fried.
Background
Third Point, an institutional alternative asset manager, had shown interest in investing in FTX, prompted by the increasing popularity and growth of cryptocurrencies. Boroujerdi, responsible for identifying investment opportunities for the firm, engaged in discussions with Bankman-Fried and his team to explore potential investment options.
The Testimony
Boroujerdi’s testimony revealed that Third Point had relied heavily on the financial data provided by FTX to make investment decisions. However, they were not made aware of undisclosed expenses and the interrelationships between FTX and its sister company, Alameda. This lack of transparency raised concerns about preferential treatment and the potential withdrawal of customer funds by Alameda.
Despite this lack of information, Third Point proceeded with an initial investment of $35 million in FTX’s Series B capital raise in July 2021. This round saw participation from over 60 investors, including prominent names such as Sequoia Capital, SoftBank Group Corp, and Alan Howard. FTX’s valuation soared to $18 billion, reaching a peak of $32 billion.
Boroujerdi clarified that had Third Point been aware of the true nature of the relationship between FTX and Alameda, they would not have invested. The testimony highlighted the potential harm that FTX and Alameda’s collapse caused to investors, with Boroujerdi stating that the firm’s investment in FTX now holds no value.
Implications
Boroujerdi’s testimony aligns with the previous testimony from Matt Huang, co-founder and managing partner of Paradigm, a crypto investment firm. Huang stated that the red flags surrounding FTX’s operations would have influenced their decision to invest. Paradigm had invested $278 million into FTX, now stating that the investment holds no value.
These testimonies not only shed light on the alleged fraud committed by Bankman-Fried but also strengthen the government’s case against him. The trial will resume on October 26, with the government planning to present three additional witnesses, including an FBI agent, an investor, and a customer.
