Sam Bankman-Fried directed money from his Alameda Research hedge fund be used to make political donations after he learned the fund owed $US13 billion ($A21 billion) to customers of his FTX cryptocurrency exchange, a former executive has testified.
Nishad Singh, the third former member of Bankman-Fried's inner circle to testify against him at his fraud trial, said he learned about the shortfall in September 2022 and confronted Bankman-Fried in an hour-long conversation on the balcony of the $US35 million Bahamas penthouse they shared.
Singh said Bankman-Fried assured him he would raise more funds and cut costs. But in the meantime, Singh said he continued to receive transfers from Alameda and allow Bankman-Fried associates to use the money to donate to US Democratic candidates and causes in what he called a "straw donor" scheme.
"There was an enormous hole," said Singh, FTX's former engineering chief. "Alameda sending me money to spend ... necessarily deepened that hole."
Prosecutors say Bankman-Fried looted billions of dollars in customer funds to prop up Alameda, buy real estate and donate more than $US100 million to US political campaigns to burnish his influence.
He has pleaded not guilty, and argues that while he made mistakes running FTX, he did not steal funds.
The testimony from Singh, who pleaded guilty in February to wire fraud and conspiracy to violate campaign finance laws, gave the jury the most vivid insight so far into how Bankman-Fried spent the money prosecutors say was stolen.
Prosecutors showed a spreadsheet from March 2023 detailing $US1.1 billion in FTX endorsement deals, which included the naming rights to the Miami Heat's basketball arena, as well as arrangements with NFL quarterback Tom Brady, model Gisele Bundchen, basketball star Steph Curry and comedian Larry David.
They showed jurors a photograph of Bankman-Fried at the 2022 NFL Super Bowl with singer Katy Perry, actor Orlando Bloom and Michael Kives - a former aide to Hillary Clinton who ran an investment firm called K5 that Singh said Bankman-Fried called a "one-stop shop" to gain access to influential people.
Singh said another FTX executive had told him the deals were meant to help spur user growth. But Singh said the deals "reeked of excess and flashiness" and that he urged Bankman-Fried to cancel them once he learned about the shortfall in customer funds.
Bankman-Fried's lawyers are expected to cross-examine Singh on Tuesday. Prosecutors have said they could rest their case as soon as October 26, at which point Bankman-Fried would have the chance to make a defense case.
Australian Associated Press