Sam Bankman-Fried's Testimony Takes a Troubling Turn on Fourth Day
Sam Bankman-Fried's credibility takes a hit as his four-day stint on the stand concludes in his criminal fraud trial, raising questions about his involvement and his connections to influential individuals
Sam Bankman-Fried, the defendant in a criminal fraud trial, has concluded four days of testimony, stepping down from the stand.
Afternoon on Tuesday, Judge Lewis Kaplan dismissed the jury for the day and announced the conclusion of the evidence presentation in this case. Closing arguments are scheduled to commence at 9:30 am ET on Wednesday.
Tuesday's testimony delivered devastating blows to his defense, which rests on Bankman-Fried's claim of honest mistakes made during his time as a startup founder.
According to prosecutors, the ex-billionaire Bankman-Fried exploited his crypto exchange, FTX, as a personal cash cow. He allegedly utilized customers' funds to enrich himself and his family, acquiring luxurious beachfront properties in the Bahamas and channeling millions into political campaigns in the United States.
Bankman-Fried, aged 31, stated during his testimony on Tuesday that he was aware since 2020 that FTX customer funds were being held in a bank account under the control of Alameda Research, an affiliated hedge fund. However, he claims that he cannot remember instructing Alameda employees to protect those funds.
In response, the government argues that Bankman-Fried knowingly misrepresented crucial elements of his business to investors, customers, and members of Congress. Bankman-Fried has pleaded not guilty to seven charges of fraud and conspiracy.
Friends in high places
The defense's decision to have him testify is perceived as a desperate attempt given their difficulties in undermining the statements made by numerous top-level executives who were once part of Bankman-Fried's intimate circle.
US Assistant Attorney Danielle Sassoon intensified her relentless cross-examination on Tuesday morning, emphasizing Bankman-Fried's apparent close rapport with key figures in the Bahamian government.
Sam Bankman-Fried, the CEO and founder of FTX Cryptocurrency Derivatives Exchange, addresses attendees at the annual membership meeting of the Institute of International Finance (IIF) in Washington, DC, USA, on Thursday, October 13, 2022.
SBF is incessantly talking, much to the frustration of lawyers.
During his testimony, Bankman-Fried mentioned participating in a dinner event with the prime minister of an island nation. He was accompanied by former US president Bill Clinton and former UK Prime Minister Tony Blair.
In November of last year, when FTX faced a liquidity crisis and suspended customer withdrawals, Bankman-Fried made a proposition to allow all Bahamian customers to withdraw their funds. Bankman-Fried confirmed that he indeed facilitated these withdrawals, albeit for a limited time.
Bankman-Fried was also questioned about whether he explicitly instructed Alameda employees not to utilize the customer deposits from FTX. He stated that he does not recall issuing such instructions. Furthermore, when he became aware in the autumn of 2022 that Alameda was indebted to FTX for $8 billion, no disciplinary actions were taken against anyone.
Uninvolved in Alameda
Mark Cohen, Bankman-Frieds lead attorney, gave him a chance Tuesday morning to clarify some of his testimony regarding the relationship between FTX and Alameda.
SBF stated that following his departure as Alameda CEO, he significantly scaled back his involvement with the company. Despite being a majority owner, he only received occasional updates on financials and participated in a number of venture investments. His active engagement primarily revolved around decision-making concerning hedging, which he perceived as a critical existential threat for the company.
Caroline Ellison, the previous CEO of Alameda Research LLC, arrives at a New York court on Thursday, October 12, 2023. Ellison, who was previously in a relationship with Sam Bankman-Fried, co-founder of FTX, testified to a New York jury on Wednesday about her collaboration with Bankman-Fried in misleading lenders and customers to establish his highly valuable cryptocurrency empire, as well as their unsuccessful endeavors to avoid a catastrophic downfall. Stephanie Keith/Bloomberg/Getty Images
It was Bankman-Frieds decision to raid billions from sister crypto company, star witness testifies
He was not involved in day-to-day trading, he said.
I had minimal involvement in those core operations."
When questioned about the hypothetical scenario where FTX and Alameda had never overlapped, Bankman-Fried acknowledged that the companies would have had significantly improved systems in place.
"In retrospect, our oversight of that was very poor."
This story is developing. It will be updated.
