Repeatedly Tuesday, Sam Bankman-Fried, founder of the failed FTX cryptocurrency exchange, denied knowing that billions of dollars in customer money were misappropriated until shortly before his company collapsed last year, as a federal prosecutor alleged. Had interrogated him for a second. day in his criminal fraud trial.
When the prosecutor, Danielle Sassoon, asked repeatedly whether he told his employees not to spend FTX clients’ money on investments, expensive real estate and other expenses, the 31-year-old crypto mogul stumbled for an answer. Mr. Bankman-Fried could not name any employees who authorized the use of FTX client funds for that expense.
“I don’t recall giving any instructions,” Mr. Bankman-Fried said three times about the spending of FTX client funds before ending his testimony. Both sides rested their case before lunchtime on Tuesday, with closing statements due to appear on Wednesday.
Mr Bankman-Fried was on the stand for the third day to testify before a jury in his own defense in a trial that has become a symbol of the ups and downs of the volatile crypto industry. The entrepreneur is accused of stealing $10 billion from FTX’s customers and then spending the money on extravagant real-estate purchases and other expenses, as well as using the funds to promote a crypto trading firm. Has been accused of masterminding. Established, Alameda Research.
FTX, which was valued at $32 billion at its peak, suffered a massive collapse last year, leaving many customers unable to get their deposits back. Mr Bankman-Fried has pleaded not guilty to seven counts of fraud, conspiracy and money laundering. If found guilty, he could be sentenced to life imprisonment.
The first few weeks of his trial were filled with a procession of prosecution witnesses who pointedly pointed the finger at Mr Bankman-Fried and said he had directed him to commit the crimes. Three of his closest associates – Caroline Ellison, Nishad Singh and Gary Wang – have pleaded guilty and agreed to cooperate with prosecutors.
The pile of damaging testimony would have forced the FTX founder to testify, a risky move for a criminal defendant. Taking the stand gave Mr Bankman-Fried the opportunity to say that he never intended to deceive anyone and that his business decisions were made in good faith. But it has also allowed prosecutors to focus on his past public statements and compare them to statements he has made in private.
When Mr. Bankman-Fried initially took the stand on Friday, he referred questions to his lawyer, Mark Cohen. Mr. Bankman-Fried denied that he defrauded or stole from FTX’s customers, but also acknowledged that he had made mistakes, citing “significant omissions” that caused losses to the exchange’s customers. Has happened.
During cross-examination on Monday, prosecutor Ms Sassoon pressed Mr Bankman-Fried about discrepancies between his public statements and the way he runs his crypto empire. He often insisted that he did not remember much of what he had said in public.
Cross-examination continued on Tuesday, focusing on actions and statements made by Mr Bankman-Fried leading up to the FTX implosion in November. Mr. Bankman-Fried, wearing the same gray suit and purple tie as in previous days, testified before a packed courtroom that also included Damien Williams, New York’s top federal prosecutor. Missing from the gallery was Mr. Bankman-Fried’s mother, Stanford law professor Barbara Fried, who had attended every previous day of the trial.
Ms. Sassoon, the federal prosecutor, was persistently asking Mr. Bankman-Fried about the failure of FTX, including whether some cooperating witnesses had not told the truth about Alameda, the trading firm on which the exchange’s clients were traded. Billions of money were outstanding. , Mr. Bankman-Fried previously testified that he did not learn about the missing money until October 2022, while other witnesses testified that they knew much earlier.
At one point, Ms. Sassoon asked Mr. Bankman-Fried whether Adam Yedidia, the former FTX developer who testified at the trial, was lying when he told the court that Mr. Bankman-Fried told him in the summer of 2022 that Alameda FTX owes $8 billion to customers.
Mr. Bankman-Fried replied, “I don’t remember him saying it that way.”
Ms. Sassoon then asked whether Ms. Ellison, who ran Alameda and was once Mr. Bankman-Fried’s girlfriend, was wrong when she testified that she and Mr. Bankman-Fried conspired with others to misappropriate FTX clients’ money. A conspiracy was hatched.
“You didn’t tell your employees ‘don’t spend FTX client deposits?’” Ms. Sassoon asked at one point.
“I didn’t,” said Mr. Bankman-Fried. “I deeply regret not taking a better look at it.”
Ms Sassoon also asked Mr Bankman-Fried if he remembered offering benefits to government officials in the Bahamas, where FTX is headquartered. He said he did not remember giving Court tickets to the Bahamian Prime Minister, Philip Davis, and his wife to the FTX Arena in Miami. The jury were then shown screenshots of his messages which said exactly this. (The name of the arena has been changed.)
Prosecutors also displayed emails in which Mr. Bankman-Fried offered open withdrawals to Bahamian customers after FTX froze customer withdrawals as people tried to withdraw their money from the exchange last year. At the time, FTX was under investigation by Bahamian regulators.
During a brief redirect, Mr. Bankman-Fried attempted to clarify that he did not know who authorized the spending of FTX client funds at Alameda. FTX had about two dozen employees, he said, and “I wasn’t particularly interested in trying to assign blame.”
After closing statements Wednesday, jurors can begin deliberating a verdict in the case as soon as Thursday.