SBF Blames Lawyers for FTX Collapse During Fraud Trial Testimony

As we reported yesterday, Former FTX CEO Sam Bankman-Fried took the stand yesterday in his criminal fraud trial, claiming that lawyers approved the policies that ultimately led to the crypto exchange’s shocking collapse.

Keypoints

• SBF took the stand in his criminal trial, claiming he acted in good faith based on legal approval of his decisions at FTX. He says lawyers blessed policies around document retention, auto-deletion of messages, and FTX’s banking arrangement with Alameda.
• However, SBF struggled during cross-examination by prosecutors, frequently saying he didn’t recall specifics or conversations with lawyers. The judge had to repeatedly urge him to directly answer questions posed to him.
• An FBI agent testified there were over 300 Signal groups SBF participated in, many with auto-delete enabled. This suggests extensive digital communications that may lack retention.
• Prosecutors aggressively questioned SBF about the alleged misuse of customer funds, pushing him to identify where legal agreements allowed such actions. SBF couldn’t clearly point to provisions allowing this.
• SBF placed responsibility on lawyers like Dan Friedberg for policies like auto-deletion on Signal and the FTX/Alameda payment agent agreement. He claimed these lawyers approved the policies.
• The jury was not present during SBF’s first day of testimony. The judge wanted to review what SBF said before deciding what testimony can be presented to the jury.
• SBF’s testimony tried to deflect responsibility to lawyers who ostensibly approved his decisions. But prosecution questioning exposed uncertainties and lack of recall on SBF’s part.
• The trial is nearing its end, with closing arguments and jury deliberations expected soon after the final witnesses testify. The outcome remains uncertain.

Appearing before Judge Lewis A. Kaplan without a jury present, SBF asserted that FTX’s legal team sanctioned the company’s sketchy financial practices. He stated that lawyers blessed FTX’s document retention policies, use of auto-deleting messaging apps like Signal, and an arrangement that allowed customer funds to be transferred to Bankman-Fried’s trading firm Alameda Research.

However, SBF faltered during intense questioning from federal prosecutors, frequently citing foggy recollection of conversations with attorneys. Judge Kaplan had to repeatedly prompt the former billionaire to directly address questions posed to him.

SBF specifically named former FTX general counsel Dan Friedberg and law firm Fenwick & West as the architects of many controversial policies. He claimed reliance on their legal advice in implementing decisions that prosecutors argue led to FTX customer losses exceeding $8 billion.

But SBF struggled when prosecutors pressed him to identify provisions in FTX-Alameda agreements permitting alleged misuse of client funds. SBF was unable to clearly point to clauses allowing such activity, despite taking minutes to review documents.

While SBF’s testimony attempted to offload responsibility onto lawyers, prosecutors managed to expose uncertainties and convenient lapses in memory. SBF’s credibility faces its biggest test under rigorous cross-examination still to come once the jury returns.

FTX’s collapse has rocked the crypto world, wiping out billions in customer funds. SBF’s fraud trial heads into its final phase, but the outcome remains uncertain as jurors prepare to weigh his version of events against prosecution evidence. The verdict could determine whether SBF’s stunning rise and fall ends with prison time.