Sam Bankman-Fried’s marathon four-day testimony in his criminal fraud trial has come to a close. The trial, which has revolved around charges that Bankman-Fried misappropriated funds from his crypto exchange FTX, took a challenging turn for the defendant, who maintained he made honest mistakes as a startup founder.
Potentially Damaging Testimony
On Tuesday, the prosecution delivered testimony that could seriously damage Bankman-Fried’s defense. The crux of the prosecution’s argument is that the former billionaire used FTX as his personal piggy bank, enriching himself and his family, purchasing luxury beachfront property in the Bahamas, and channeling millions into US political campaigns using customer funds.
During his testimony on Tuesday, Bankman-Fried admitted that he was aware as early as 2020 that FTX customer funds were held in a bank account controlled by FTX’s sister company, the hedge fund Alameda Research. However, he could not recall giving any specific directions to Alameda employees to protect these funds.
The government argues that Bankman-Fried knew he was misleading investors, customers, and lawmakers about key aspects of his business. He faces seven counts of fraud and conspiracy.
Hail Mary Defense
Bankman-Fried’s decision to testify is view as a last-ditch effort by a defense team that has struggle to undermine the testimony of several high-ranking executives from Bankman-Fried’s inner circle.
Assistant US Attorney Danielle Sassoon aggressively cross-examine Bankman-Fried, highlighting his close relationship with members of the Bahamian government. He mentioned attending a dinner with the Bahamian Prime Minister, Bill Clinton, and Tony Blair.
Sassoon also point out that in November of last year, when FTX froze customer withdrawals due to a liquidity crisis, Bankman-Fried allow withdrawals for Bahamian customers but only for a brief period.
Additionally, Bankman-Fried testified that he couldn’t recall instructing Alameda employees not to use FTX customer deposits. When he learned in the fall of 2022 that Alameda owed $8 billion to FTX, no one was terminated.
‘Uninvolved’ in Alameda
Sam Bankman-Fried lead attorney, Mark Cohen, gave him an opportunity to clarify his testimony concerning FTX’s relationship with Alameda. He explain that after stepping down as Alameda’s CEO, he significantly reduce his involvement with the firm. While he receive periodic financial updates as a majority owner, he claim to have play a role in “many” venture investments and made crucial decisions regarding hedging to mitigate what he perceive as an “existential risk” for the company.
The trial has taken an intense turn with Sam Bankman-Fried testimony, and the impending closing arguments could determine the fate of the case.