When Sam Bankman-Fried’s cryptocurrency exchange collapsed in November, one of his oldest friends sent him a message of support.
“I love you, Sam,” said Adam Yedidia, a college classmate of Mr. Bankman-Fried’s who went on to work for him at the exchange, FTX. “I am not going anywhere. Don’t worry.”
Within days, Mr. Yedidia had resigned from FTX. And last week, at Mr. Bankman-Fried’s fraud trial in federal court in Manhattan, Mr. Yedidia showed up to testify for the prosecution, and recounted the conversation to the jury.
Mr. Bankman-Fried’s trial has offered a vivid window into one of the most dramatic corporate collapses in recent history, a $10 billion implosion that touched the worlds of Washington politics, Wall Street finance and Silicon Valley investing. But the case also has a deeply personal undercurrent: the rapid unraveling of a close social group that has ended up pitting friend against friend.
At FTX’s headquarters in the Bahamas, Mr. Bankman-Fried lived and worked with an inner circle of more than half a dozen friends, including a former lover, a confidant from high school math camp and a childhood buddy of his younger brother. At least four of those allies have turned against him and agreed to cooperate with the government, after either pleading guilty or receiving immunity from prosecution.
In the courtroom, the personal dynamics between Mr. Bankman-Fried and his friends have become a vital component of the case. Prosecutors have shown photographs of Mr. Bankman-Fried socializing with Mr. Yedidia and other onetime confidants, seeking to draw out testimony about the relationships at the heart of FTX. On the witness stand, Mr. Bankman-Fried’s old allies have mostly avoided looking at him.
“You can anticipate that at closing, this is one of the things that the United States is going to harp on: These were people who were close personal friends of S.B.F.,” said Daniel Silva, a former federal prosecutor. “It immediately establishes their credibility as someone who was there when it happened.”
Mr. Bankman-Fried, 31, is charged with orchestrating a vast conspiracy to siphon as much as $10 billion from FTX’s customer accounts to finance political contributions, real estate purchases and other lavish spending. He has pleaded not guilty to seven counts of fraud, conspiracy and money laundering, and faces what would amount to a life sentence if convicted.
So far, three members of his inner circle — Mr. Yedidia, the FTX co-founder Gary Wang and Mr. Bankman-Fried’s former girlfriend, Caroline Ellison — have testified against him. At least one other ally — the FTX executive Nishad Singh, a childhood friend of Mr. Bankman-Fried’s younger brother, Gabe — is slated to testify.
Mr. Bankman-Fried is hardly the first defendant to have close associates turn on him. But rarely has a group as tightknit as FTX’s leadership dissolved so quickly, and the sheer number of friends turned foes stands out, legal experts said.
Former associates often play a key role in organized-crime cases, but “to have those kinds of close relationships — former girlfriend, a former best friend — is not as typical,” said Paul Tuchmann, an ex-prosecutor who now works in private practice.
By most accounts, Mr. Bankman-Fried never had many friends, even before FTX’s fall turned him into an international pariah. But as an undergraduate at the Massachusetts Institute of Technology, he became attached to some of his roommates in a group house for Epsilon Theta, a fraternity that attracted a nerdy set of students, including Mr. Yedidia and Mr. Wang.
Mr. Bankman-Fried eventually hired Mr. Yedidia to work as a developer at FTX. They lived together in a five-bedroom penthouse in the Bahamas, where Mr. Yedidia was joined by his fiancée, Andrea Lincoln, whom Mr. Bankman-Fried also hired.
During Mr. Yedidia’s testimony, prosecutors showed the jury a photograph of him and Mr. Bankman-Fried eating together. They were close enough that Mr. Bankman-Fried confided in Mr. Yedidia about his on-and-off relationship with Ms. Ellison, who was chief executive of FTX’s sister hedge fund, Alameda Research.
“The defendant told me that he and Caroline had had sex and asked if it was a good idea for them to date,” Mr. Yedidia testified. “I said no.”
Mr. Yedidia said he had resigned from FTX after a colleague told him that Alameda had used FTX customer funds to repay its creditors. He started working with the government as early as December, and received immunity from prosecution in exchange for his testimony.
From left, Caroline Ellison, who was Alameda’s chief executive; Mr. Wang; and Nishad Singh, a top FTX executive. All were close friends with Mr. Bankman-Fried.Credit…via the Office of the U.S. Attorney for the Southern District of New York
He was not the last to jump ship.
On Wednesday, Ms. Ellison testified that she had begun cooperating with federal prosecutors after the Federal Bureau of Investigation raided her parents’ home, seizing electronic devices and her journal. She has pleaded guilty to fraud and conspiracy.
Over eight hours on the witness stand this week, Ms. Ellison recounted intimate details of her relationship with Mr. Bankman-Fried. They started sleeping together in the fall of 2018, she said, and then dated officially for parts of 2020, 2021 and 2022. During tense periods, they exchanged long Google documents discussing aspects of their turbulent relationship.
“I sort of wanted more,” Ms. Ellison testified, “but often felt like he was distant or not paying attention to me.”
Partly because of her proximity to Mr. Bankman-Fried, she said, she internalized some of his attitudes about risk, and became comfortable lying to business partners and the public, even though she knew it was wrong.
Mr. Wang, who met Mr. Bankman-Fried at a math camp in high school, has also pleaded guilty. He testified that the FTX founder had instructed him and Mr. Singh to create a secret backdoor in the exchange’s code that allowed virtually unlimited amounts of customer money to be transferred to Alameda.
Mr. Wang also recounted conversations in which he questioned Mr. Bankman-Fried about the money Alameda was borrowing.
“I wasn’t sure which interpretation was correct, and I trusted his judgment,” Mr. Wang said.
His testimony reached an emotional climax when prosecutors presented a photograph of him posing with Mr. Bankman-Fried at M.I.T. The image shows Mr. Wang smiling, with Mr. Bankman-Fried next to him in a navy blue Epsilon Theta T-shirt.
The picture was projected to the gallery, where Mr. Bankman-Fried’s parents have sat every day of his trial. When she saw the image, his mother, Barbara Fried, put her head in her hands and stifled a sob.
Matthew Goldstein contributed reporting.
