If the ongoing Sam Bankman-Fried trial is not enough to showcase how the former FTX chief was in over his head self-managing two giant crypto firms, his latest testimony would probably move the needle past the breaking point.
In an unexpected twist that ratcheted up the intrigue surrounding his high-profile crypto fraud trial, Bankman-Fried did not make his scheduled appearance before the jury on Thursday. Instead, he testified without the jury present, allowing Judge Lewis Kaplan to determine the admissibility of his testimony.
“We’re in the home stretch,” remarked Kaplan as he dismissed the jurors for the day, acknowledging that it might have been surprising for them to have the rest of the afternoon off.
The 31-year-old former CEO of the now-defunct cryptocurrency exchange FTX, which collapsed amid the industry’s 2022 crash, made a bold move by deciding to testify in his own defense. This choice opens the door for prosecutors to cross-examine him, a departure from his prior silence during the three-week trial, during which former members of his inner circle accused him of orchestrating criminal activities, including diverting customer funds from FTX to his hedge fund, Alameda Research, and deceiving investors and lenders.
In this courtroom session, Bankman-Fried offered a glimpse of his strategy for addressing the jurors. He indicated that he intends to clarify FTX’s encryption and data retention practices and provide explanations for seemingly questionable financial transactions.
During questioning, Bankman-Fried faced the kind of inquiries he is likely to encounter during cross-examination. His responses often seemed uncertain, creating an impression of ambiguity about his interactions with lawyers.
“I’m going beyond my tether here. Part of the problem is that the witness has an interesting way of responding to questions,” Judge Kaplan remarked at one point.
A pivotal moment during the proceedings occurred when Bankman-Fried, responding to his lawyer and the prosecutor, suggested that the company’s terms of service permitted Alameda to use FTX customer funds.
“I should say, I am not a lawyer, I am just trying to answer based on my recollection… At the time FTX, certain customers thought accounts would be sent to Alameda,” Bankman-Fried said.
At one point, Bankman-Fried was asked by Assistant U.S. Attorney Danielle Sassoon if he believes he should not embezzle customer assets, which earned an objection from his lead defense attorney Mark Cohen.
After Judge Kaplan sustained the objection, Bankman-Fried still went on and responded in the negative, which seems to have earned the ire of his own legal team.
“You don’t have to answer after sustained. Haven’t you been here for four weeks?” Cohen admonished him.
Sassoon also aggressively questioned Bankman-Fried, pressing him on his discussions with FTX lawyers regarding the utilization of the auto-delete feature on the Signal messaging app. Bankman-Fried stated that he had engaged in conversations with the lawyers back in 2020 when he initially began using the messaging app, but these discussions were not part of a formal policy discourse.
Following Bankman-Fried’s elusive responses, Sassoon directly inquired whether he had sought approval to enable the auto-delete feature on Signal. To this, Bankman-Fried responded, “I’m not certain if I specifically sought approval for that. No.”
Bankman-Fried’s testimony follows 12 days of prosecution testimony in federal court in Manhattan, including statements from his former business partners and his ex-girlfriend.
The prosecution has accused Bankman-Fried of misappropriating FTX assets for his personal gain. He is facing seven counts of wire fraud and conspiracy to launder money, charges that could result in lengthy prison sentences if he is found guilty. He has pleaded not guilty to the allegations that he misused FTX customer funds for a $40 million Bahamas penthouse, celebrity endorsements, and $100 million in political contributions.
Federal prosecutors relied on Caroline Ellison, Bankman-Fried’s former girlfriend and the CEO of Alameda Research, a hedge fund closely tied to FTX, as a key witness. Ellison testified that Bankman-Fried orchestrated billions of dollars in fraudulent activities, that his seemingly unassuming appearance was a calculated facade, and that their troubled personal relationship had a detrimental impact on their joint business ventures.
The co-founder of FTX, Gary Wang, and Ellison, both entered guilty pleas in agreements with federal prosecutors for wire, securities, and commodities fraud. They testified against Bankman-Fried, asserting that their former colleague was well aware of an $8 billion discrepancy in FTX’s balance sheet. Both Ellison and Wang claimed that they had acted on Bankman-Fried’s instructions in committing these crimes.
As the trial resumed on Thursday morning in federal court in Manhattan, federal prosecutors presented their final planned witness, FBI agent Marc Troiano.
Bankman-Fried’s decision to testify in his own defense mirrors his approach during the media blitz that followed the FTX collapse. In November 2022, during his first interview after the exchange’s demise, he was asked whether his lawyers recommended speaking out. Bankman-Fried responded, “No, they are very much not… I have a duty to talk; I have a duty to explain what happened.”
Information for this briefing was found via The Guardian and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
