FTX co-founder Sam Bankman-Fried faces seven federal charges in a criminal trial taking place in Manhattan. The former crypto exchange exec is accused of misappropriating billions of dollars of customer funds for real estate, donations, political contributions and investments.
The current state of play: Bankman-Fried took the stand Friday for a full day of direct examination from his attorneys. This morning, he’s expected to once again face his team before the prosecution begins its cross-examination. After SBF wraps up his testimony, the defense’s case is pretty much wrapped, which means the jury can mull over the case before delivering a verdict. Read more here.
1:40 pm ET: I don’t recall…
Bankman-Fried’s overall demeanor is roughly the same as last week, though he is talking slower and is more engaged. He doesn’t seem nervous, despite facing the prosecution’s questioning.
Temp check: Throughout lead prosecutor Danielle Sassoon’s cross-examination, Bankman-Fried peppered in a lot of “I don’t recall…” or “I don’t remember…” in his answers.
Judge Lewis Kaplan stopped Bankman-Fried multiple times during his direct examination to remind him of the question he was meant to answer.
So far, during the cross, Kaplan has only had to remind Bankman-Fried once, but we’ll see how that plays out as the day progresses.
Bankman-Fried is also answering more questions with a short “yes” or “no.” During last week’s mock hearing, SBF bored some reporters to death with his long, convoluted answers. It probably helps that Sasson is helpfully including the phase “yes or no” into most of her questions.
The government’s cross-examination began today with a summation of who knew what, and when.
In short, Sasson would ask Bankman-Fried when he knew certain details about Alameda or FTX’s liabilities, and then juxtapose his answers with cheerful tweets about the exchange’s safety and how much FTX cared about user assets and regulation.
This line of questioning came to a head when Sassoon brought up the FTX key principles document submitted to Congress by Bankman-Fried — the document itself noted both the importance of safeguarding user assets and a push for crypto regulation.
In her next breath, Sassoon then showed the court a screenshot of Bankman-Fried’s Twitter DMs with a Vox reporter where he said the regulatory push was “really just for PR.”
Do you recall saying, “fuck regulation?” Sassoon asked Bankman-Fried.
“Just once,” he replied.
The last part of the cross-examination before a long-awaited lunch (the overflow room participants were beginning to crane their heads to look at the clock in the back of the room) covered Bankman-Fried’s many, many public statements about Alameda’s lack of special privileges.
But Bankman-Fried successfully refused to agree with almost anything Sassoon asked him on this topic — his strategy seemed to be an insistence that any public statement about Alameda having no “special privileges” was only in regards to front-running.
Even though Sassoon showed tweets, emails and other written statements from both FTX and Bankman-Fried about Alameda being just like all other users, Bankman-Fried maintained — even though the word “front-running” was conspicuously absent from all of these communications — that all denial of special privileges was only about front-running.
Bankman-Fried’s storytelling abilities also made it into testimony.
When Sassoon asked whether the former FTX CEO’s abilities to “tell a story” and raise over $1 billion from investors meant he was a good storyteller, Bankman-Fried said — to much laughter — ”depends on what metric.”
12:00 pm ET: Cross-examination will begin in 3, 2, 1…
The defense officially rested their case, meaning that prosecutors will begin their cross-examination before the court breaks for lunch.
Here are some morning highlights. Oh, and an update on scheduling: Court may be in session Friday since it’s unclear if everything will be wrapped in a nice, clean bow by Thursday. Womp womp.
Once again, the court gets an idea of how busy Bankman-Fried was during his time as FTX’s CEO.
The point was made during his direct on Friday when defense attorney Mark Cohen led a line of questioning that revealed SBF aimed for “inbox 60,000” instead of inbox zero and worked more than 20 hours a day. Bankman-Fried also admitted that he “probably traveled too much” for work, and spent 100 days traveling in 2022.
This line of reasoning backs up the aforementioned defense that SBF and his team have sought to create — Bankman-Fried didn’t know the ins and outs of his empire. The government posed a different case, pointing to SBF as having control through their witness testimonies.
The defense touched on another subject that it had broached during its open arguments: SBF wanted former Alameda CEO Caroline Ellison to hedge her bets, but she didn’t listen.
According to SBF’s testimony, Ellison — back in June through September 2022 — agreed that Alameda should have hedged. She also allegedly offered to step down.
Fast forward to November, and SBF testifies that he was working and living at the Conch Shack in the Albany up until FTX filed for bankruptcy. He claims he was working “22, 23 hours a day,” adding that other employees lived and worked there as well, though it’s not clear who. His comment about working 22 or 23 hours a day earned a laugh from the overflow room.
Bankman-Fried also touched on a subject initially brought forth by former FTX attorney Can Sun: the Apollo calls.
ICYMI, FTX and SBF tried to secure an emergency line of credit when things started to go south. Sun hopped on the phone with Apollo, which asked for a balance sheet. Then, SBF — according to both Sun and Bankman-Fried — also hopped on the phone with them. The line of credit did not happen.
Bankman-Fried got very technical in his answers to Cohen’s questions concerning Apollo, at one point pausing for a big sip of water. Either he was getting too in the weeds in his answers or parched from speaking a lot.
When asked if he spoke with journalists after Nov. 11, SBF said “yes,” leading to laughter from journalists in the overflow.
9:55 am ET: Guess who’s back
Sam Bankman-Fried is taking the stand once more Monday morning as his attorneys wrap up their direct examination. Technically, today marks SBF’s third day on the stand — though only his second in front of a jury.
On Friday, some of SBF’s testimony contradicted the testimony of previous witnesses, including former Alameda CEO Caroline Ellison.
Bankman-Fried claims he only received one of the seven balance sheets Ellison alleged she made for lenders. SBF testified that he believed the balance sheet was “reasonable” to send to lenders.
SBF also claims that the lack of a haircut was actually due to him being “busy and lazy” and not because he believed his hair was “an important part of FTX’s narrative and image.” Ellison claimed the latter in her testimony on Oct. 12.
Either way, SBF must have changed his tune about his hair now that he’s facing a (longer) potential stint behind bars. To wit: he appeared in court with shorter hair on when his trial started.
Bankman-Fried also denied defrauding anyone after taking the stand Friday morning.
Much of Bankman-Fried’s testimony so far has relied on claims that yes, he was the head honcho but didn’t know what was going on until it was too late. He’s quick to throw part of the blame on Ellison, pointing out that he believed they should’ve hedged to prevent massive losses.
The defense is also missing documents — such as the document retention policy — that SBF claims he followed when setting Signal group chats and Slack messages to auto-delete.
Bankman-Fried is the final witness for the defense’s case. According to courtroom discussions last week, the defense and prosecution believe that the testimony from the former FTX CEO could last into the middle of this week with his cross-examination (and possible redirect from the defense’s side) and then both sides will be prepared to deliver closing arguments.
Following that, the jury will begin deliberations.
If you’re keeping track of how long the trial’s lasting: This timeline suggests the jury gets the case Thursday, Friday or possibly next Monday.
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Source: https://blockworks.co/news/sam-bankman-fried-trial-day-15