What does Sam Bankman-Fried think he did?

In the criminal fraud trial of Sam Bankman-Fried, it’s all over bar the shouting. Both prosecution and defense made their closing statements in a marathon court day on Wednesday, and the jury will begin deliberations by the end of today.

Those closing statements were the respective legal teams’ final pitches to the jury. In a legal sense, the prosecution bore the burden of proving the charges against Bankman-Fried beyond a reasonable doubt. Its closing statements, delivered with vigor and precision by Assistant US Attorney Nicolas Roos, rose to that challenge by reviewing reams of documents and testimony showing that Bankman-Fried directed a group of co-conspirators to funnel FTX customer funds to Alameda Research, whose profits almost entirely belonged to Bankman-Fried.

The mood in the courtroom was somber, and almost all jurors and alternates were attentive. Notably, both of Bankman-Fried’s parents were absent from the courtroom for the prosecution’s closing, presumably sequestered in private chambers that they’ve been given use of throughout the trial. They reappeared, though, to watch the defense team make its final plea for their son’s freedom.

The defense, in a legal sense, had an easier job than the prosecution: they only needed to raise a reasonable doubt in the jury’s mind that Bankman-Fried is guilty. But that was a larger challenge than it might seem, given the evidence the jury has seen over the last few weeks. That has included testimony from Bankman-Fried’s former lieutenants that he specifically directed them to deceive investors. It also included reams of evidence that Bankman-Fried himself had made knowingly false statements about the safety of customer funds on FTX, and about Alameda’s special privileges on the exchange.

The defense has leaned heavily into efforts to discredit those witnesses or otherwise cast doubt on the prosecution’s tactics. In its closing argument, that included reiterating that figures like Caroline Ellison had plea deals with the government, and suggesting that they were trying to, in Cohen’s words, “get out from under” the FTX disaster by throwing Bankman-Fried to the wolves. Cohen also claimed the prosecution was unfairly painting Bankman-Fried as a “monster, a villain,” with its emphasis on his spending and lifestyle.

What’s been harder to find in defense arguments, though, is a coherent alternate explanation for what happened. There has been little dispute that $8 billion went missing — so how is it possible that no crime was committed?

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“Good Faith is a complete defense”

It was only really with Bankman-Fried’s own testimony in recent days, and with Wednesday’s closing defense statement, that a true narrative and rationale for the defense came into focus.

At its core is the claim that, at every step of the path from FTX’s founding to its catastrophic failure, Bankman-Fried was acting in “good faith.” As Cohen laid out the legal theory on Wednesday, if Bankman-Fried actually believed that his representations were true when he made them and also believed that all of his actions were legal and in the best interests of customers, no crime was committed.

Cohen delivered the various elements of this defense in a far more muted style than Roos brought to the prosecution’s closing. While Roos delivered much of the prosecution’s case in a conversational and extemporaneous tone, Cohen remained firmly stationed behind his podium, largely reading from a script in a tone that could be uncharitably characterized as some mix of tired and defeated.

To make his good-faith case, Cohen argued in part that Bankman-Fried’s expenditures and risk-taking were all reasonable business decisions, even if his judgment turned out to be faulty after the fact. Some of this was picayune, such as arguing the cost of the FTX Arena naming rights and other marketing spending as a reasonable percentage of FTX’s revenue.

More substantively, Cohen argued that some decisions that the government had characterized as evidence of criminal motive were, instead, strategic business choices. For instance, in the fall of 2021, Bankman-Fried knew Alameda Research’s trading accounts were on the order of $3 billion in debt to FTX customers, but still insisted Alameda should borrow several billion more dollars to sink into venture capital investments. Caroline Ellison thought this was a very bad idea, and Bankman-Fried overrode her. Cohen didn’t dispute the facts of this key moment, but characterized it as a difference of “business judgment” between Bankman-Fried and Ellison.

The good faith defense also relies on several more far-fetched claims, though. Those include that Bankman-Fried honestly misunderstood basic elements of his own company’s policies, and was totally ignorant of specific important facts about FTX’s financial situation at crucial moments.

Most fundamental to this good faith defense, and perhaps most challenging to convincingly establish, is that Bankman-Fried genuinely believed that Alameda Research had the full right to borrow any and all funds, fiat and crypto, that customers deposited or custodied with FTX. Bankman-Fried has further claimed to have believed that money borrowed through FTX’s margin lending program could be withdrawn from the exchange and used for any purpose of the borrower’s choosing — including, Bankman-Fried agreed during his testimony, for “muffins.”

Read more: Sam Bankman-Fried’s lawyers can’t stop making mistakes

In a good example of the fragility of most elements of the defense’s good-faith arguments, though, the prosecution in its closing showed jurors margin lending agreements that specifically prohibited removing margin loan funds from FTX or using them for any purpose other than trading.

Bankman-Fried’s lawyers say FTX customers knew the risks

In perhaps the most farfetched leg of the defense, Cohen argued that the FTX’s terms of service included “no restriction on fiat currency” use by the exchange. In other words, Cohen argued that all FTX customers implicitly understood their fiat deposits to be, in effect, unrestricted loans to FTX rather than property over which they retained control.

Bankman-Fried’s claimed ignorance of details of FTX’s finances is another major pillar of the defense. These claims in particular require rather elaborate theories of what happened. For instance, Cohen discussed the infamous spreadsheet in which Caroline Ellison prepared seven alternate versions of Alameda’s balance sheet, for the purpose of obtaining a loan.

Google metadata has shown clearly that Bankman-Fried viewed the document. So to claim that Bankman-Fried was not party to defrauding lenders, Cohen had to argue to Ellison that his client only viewed one of the seven tabs, and approved its use without looking at it closely. “It seemed reasonable [for Bankman-Fried] to rely on a balance sheet prepared by Caroline,” Cohen told the jury.

This is just one part of the near-total ignorance of FTX’s finances that Bankman-Fried must have kept until November 7, 2022, if certain actions of that day are to be maintained as anything other than fraud against his customers. Specifically, Cohen addressed a November 7 tweet by Bankman-Fried including the claim that “FTX is fine. Assets are fine.”

To claim this was not deceptive, the defense again fell back on Bankman-Fried’s ‘good faith’ misunderstanding of Alameda’s borrowing privileges on FTX. As Cohen argued, Bankman-Fried believed that “assets were fine” in the sense that Alameda’s borrowing of FTX customer assets was collateralized by a huge mixed bag of assets, ranging from FTT and Serum tokens to Robinhood shares.

Read more: Sam Bankman-Fried’s defense team failed to crack Caroline Ellison

Jurors have already been presented with an inconsistency here, though: as with the restrictions on use of funds, various FTX policies have made it clear that all margin collateral had to be held on the exchange. In fact, Bankman-Fried himself laid out that policy in testimony before Congress. On-exchange collateral was fundamental to the vaunted automated ‘risk engine’ that was heavily touted as protecting customers against clawbacks. Bankman-Fried and his team have tried to argue that Alameda was not the only entity allowed to borrow against off-exchange collateral, subject to manual rather than automated oversight. But these efforts have been glancing and unsupported by strong evidence.

Furthermore, a ‘good faith’ defense of Alameda’s borrowing must claim that assets including a trove of Robinhood shares were valid collateral for Alameda, despite the fact that they were no longer technically Alameda’s property: those shares had by November 2022 been transferred to a holding company controlled by Bankman-Fried. Bankman-Fried’s extremely loose understanding of corporate property structures is just one of the many convolutions, and even contradictions, in the defense’s theory of events.

Following a few procedural formalities, today jurors will begin deliberations. How long it takes them to reach a verdict may depend heavily on whether they seriously entertain Bankman-Fried’s side of the story, or if the prosecution has already thoroughly rebutted his protestations of ignorance.