Robert Boroujerdi, the managing director at Third Point, recently provided testimony in the ongoing trial of Sam Bankman-Fried. The government aims to prove the defendant's guilt on charges related to fraud and money laundering, involving seven counts.
A former head of global securities research at Goldman Sachs, Boroujerdi revealed that despite accessing FTX’s confidential "data room" containing strategic plans and financial statements, the relationship between FTX and its affiliate, Alameda, wasn't disclosed.
Established in 1995 by billionaire Daniel Loeb, Third Point manages assets for pension funds, endowments, and affluent clients. Boroujerdi’s role involves identifying investment opportunities, and this led him to FTX.
During Q1-Q2 of 2021, initial communications between Boroujerdi and Bankman-Fried revolved around possible investments in the crypto exchange. By March, they had their first virtual meeting, where discussions about FTX's financial growth and plans took place. However, Third Point claims it wasn't fully informed of undisclosed expenses.
At a subsequent meeting, Bankman-Fried described Alameda’s relationship with FTX as independent and impartial. He admitted owning a stake in Alameda but downplayed its significance. Boroujerdi expressed concern about exchanges showing preference, emphasising transparency in operations.
Yet, Third Point, under the belief that Alameda was just another trading firm on FTX's platform, invested $35 million in FTX's Series B funding in July 2021, contributing to its then $18 billion valuation. This round attracted 60+ investors, including names like Sequoia Capital and SoftBank Group Corp.
Boroujerdi later discovered funds meant for FTX’s expansion were allegedly transferred to Alameda. Had they known, Third Point wouldn't have contributed. They invested a total of $60 million in FTX, which Boroujerdi now values at "Zero." Nevertheless, Third Point’s recent investor note remains optimistic about its portfolio.
Similarly, Matt Huang of Paradigm, a crypto investment firm, testified earlier, expressing regret over investing in FTX after red flags appeared. Paradigm poured $278 million into FTX over two rounds and currently values this investment at zero.
Both testimonies highlight the potential harm caused to investors by the suspected dealings of FTX and Alameda, potentially bolstering the government's case against Bankman-Fried.
The trial resumes on October 26. The prosecution plans to present testimonies from an FBI agent, an investor, and a customer. Defense attorney, Mark Cohen, hinted at a brief defence, leaving ambiguity about whether Bankman-Fried would take the stand.
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