Sam Bankman-Fried Wraps up Testimony as Fraud Trial Nears End – The trial of the most notorious entrepreneur in the cryptocurrency world is approaching its conclusion, as closing arguments are scheduled to commence this Wednesday. On Tuesday, Sam Bankman-Fried, the creator of the now-defunct cryptocurrency exchange FTX, concluded his testimony in a Manhattan federal court and left the witness stand shortly before noon as his cross-examination ended.
During his Tuesday testimony, prosecutors questioned him about the allocation of $8 billion in customer funds by Alameda Research, the affiliated hedge fund to FTX. On 7 November last year, Bankman-Fried tweeted and deleted, “FTX has enough to cover all client holdings” – though he admitted in a Signal chat that he knew there would still be an $8bn shortfall even if FTX liquidated its assets, prosecutors showed with chat records.
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Bankman-Fried’s defense team concluded their case following the conclusion of the government’s questioning, and federal prosecutors choose not to summon any rebuttal witnesses. The commencement of closing arguments is scheduled for Wednesday. During Monday’s proceedings, the prosecution extensively questioned Bankman-Fried about his public image.
Specifically inquiring whether his disheveled appearance and the perception of being a boy-genius were deliberate tactics to attract investors and customers. Additionally, they scrutinized his numerous appearances in the media. He balked at the questions, replying multiple times with: “I don’t recall.” Assistant US attorney Danielle Sassoon often answered his remarks with quotes from interviews and emails illustrating that he did, in fact, recall an event.
On Tuesday, in the redirect phase, Bankman-Fried’s defense aimed to clarify the apparent gaps in his memory. He revealed that he had conversed with as many as 50 journalists following the downfall of FTX. Bankman-Fried’s testimony commenced three days earlier, beginning with an evidentiary hearing to determine which lines of questioning would be permissible in front of the jury.
Judge Lewis Kaplan ruled against most of the proposed lines of questioning by his defense team, which included Bankman-Fried’s assertion that he was acting based on advice from FTX’s lawyers regarding the use of his customers’ funds. He believed his actions were in accordance with the law and aligned with FTX and Alameda’s terms of service.
The prosecution contends that he utilized these customer funds for personal purposes, such as high-risk investments, a $40 million Bahamas penthouse, endorsements from A-list celebrities, private jets, and $100 million in political contributions. He is also accused of using FTX customers’ cryptocurrency and cash to cover an $8 billion deficit in Alameda’s budget when the market experienced a significant decline in 2022, causing a sharp drop in the hedge fund’s asset value.
During the proceedings on Tuesday, prosecutors questioned him regarding his use of private jets. Bankman-Fried tried to rationalize the frequency of his private flights from the Bahamas to Washington by stating that he needed to meet with senators and regulators. Bankman-Fried faces seven counts of wire fraud and conspiracy to launder money in connection with the cryptocurrency exchange’s downfall.
Prosecutors claim that he unlawfully appropriated and misappropriated billions of dollars from his customers. Should he be found guilty, he could be sentenced to several decades in prison. However, he has entered a plea of not guilty. Individuals who were once part of the inner circle of the former cryptocurrency mogul have become witnesses against him during his trial.
Caroline Ellison, his former girlfriend and the former chief executive of Alameda Research, provided crucial and detailed testimony, admitting to committing crimes at his behest, making her a key witness for the prosecution. Gary Wang, a co-founder of FTX, stated that Bankman-Fried showed no surprise upon learning about the budget deficit at Alameda Research. Both Ellison and Wang have pleaded guilty to charges of fraud and conspiracy related to their involvement in the collapse of FTX and Alameda.