Again and again on Tuesday, Sam Bankman-Fried, the founding father of the failed FTX cryptocurrency trade, denied understanding that billions of {dollars} in buyer cash had been misappropriated till shortly earlier than his firm collapsed final yr, as a federal prosecutor grilled him for a second day in his prison fraud trial.
The 31-year-old onetime crypto mogul fumbled for a solution when the prosecutor, Danielle Sassoon, repeatedly requested whether or not he had instructed his workers to not spend FTX buyer cash on investments, expensive actual property and different expenditures. Mr. Bankman-Fried additionally couldn’t title any workers who might need licensed the usage of FTX buyer cash for that spending.
“I don’t recall giving any path,” Mr. Bankman-Fried stated 3 times concerning the spending of FTX buyer cash earlier than he concluded his testimony. Each side rested their case earlier than lunchtime on Tuesday, with closing statements set to unfold on Wednesday.
Mr. Bankman-Fried was on the stand for a third day testifying earlier than a jury in his personal protection for a trial that has come to represent the highs and lows of the volatile crypto industry. The entrepreneur has been accused of masterminding a yearslong fraud to steal as a lot as $10 billion from FTX’s clients after which funneling the cash to extravagant real-estate purchases and different spending, in addition to utilizing the funds to prop up a crypto buying and selling agency he additionally based, Alameda Analysis.
FTX, which was valued at $32 billion at its peak, imploded spectacularly final yr, leaving many purchasers unable to recuperate their deposits. Mr. Bankman-Fried has pleaded not responsible to seven counts of fraud, conspiracy and cash laundering. If convicted, he may face what quantities to a life sentence.
The primary few weeks of his trial had been crammed by a procession of prosecution witnesses who’ve pointed the finger squarely at Mr. Bankman-Fried and stated he directed them to commit crimes. Three of his closest associates — Caroline Ellison, Nishad Singh and Gary Wang — have pleaded responsible and agreed to cooperate with prosecutors.
The pileup of damaging testimony might have compelled the FTX founder’s hand in testifying, a dangerous transfer for a prison defendant. Taking the stand gave Mr. Bankman-Fried a possibility to say that he never intended to defraud anyone and that his enterprise selections had been made in good religion. Nevertheless it has additionally allowed prosecutors to zero in on his previous public statements and distinction them with what he did in non-public.
When Mr. Bankman-Fried initially took the stand on Friday, he took questions from his personal lawyer, Mark Cohen. Mr. Bankman-Fried denied that he had dedicated fraud or stolen from FTX’s clients, but additionally acknowledged that he had made errors, citing “important oversights” that harm the trade’s clients.
On Monday beneath cross-examination, Ms. Sassoon, the prosecutor, pressed Mr. Bankman-Fried concerning the inconsistencies between his public statements and the way he ran his crypto empire. He typically insisted that he couldn’t keep in mind a lot of what he had stated publicly.
On Tuesday, the cross-examination continued, specializing in the actions and statements Mr. Bankman-Fried made main as much as the implosion of FTX in November. Mr. Bankman-Fried, sporting the identical grey go well with and purple tie as in earlier days on the stand, testified in entrance of a crowded courtroom that included Damian Williams, the highest federal prosecutor in New York. Lacking from the gallery was Mr. Bankman-Fried’s mom, the Stanford legislation professor Barbara Fried, who had attended each earlier day of the trial.
Ms. Sassoon, the federal prosecutor, was relentless, asking Mr. Bankman-Fried concerning the failure of FTX, together with if among the cooperating witnesses had not instructed the reality about Alameda, the buying and selling agency, owing billions in buyer cash to the trade. Mr. Bankman-Fried beforehand testified that he didn’t be taught concerning the lacking funds till about October 2022, whereas different witnesses testified that he knew a lot earlier.
At one level, Ms. Sassoon requested Mr. Bankman-Fried if Adam Yedidia, a former FTX developer who testified on the trial, was mendacity when he stated in court docket that Mr. Bankman-Fried had instructed him in the summertime of 2022 that Alameda owed $eight billion to FTX clients.
“I don’t keep in mind him saying it in that approach,” Mr. Bankman-Fried replied.
Ms. Sassoon then requested if Ms. Ellison, who ran Alameda and was at one level Mr. Bankman-Fried’s girlfriend, was fallacious when she testified that she and Mr. Bankman Fried had conspired with others to misappropriate FTX buyer cash.
“You didn’t inform your workers ‘Don’t spend FTX buyer deposits?’” Ms. Sassoon requested at one level.
“I didn’t,” Mr. Bankman-Fried stated. “I deeply remorse not taking a greater look into it.”
Ms. Sassoon additionally requested Mr. Bankman-Fried if he remembered providing favors to authorities officers within the Bahamas, the place FTX was headquartered. He stated he didn’t recall giving the Bahamian prime minister, Philip Davis, and his spouse courtside tickets to the FTX Area in Miami. The jury was then proven screenshots of messages of him saying precisely that. (The sector has been renamed.)
The prosecution additionally displayed emails wherein Mr. Bankman-Fried supplied to open withdrawals for Bahamian clients after FTX had halted buyer withdrawals as folks tried to get their cash out from the trade final yr. FTX was beneath investigation by Bahamian regulators on the time.
Throughout a short redirect, Mr. Bankman-Fried tried to make clear that he didn’t know who at Alameda had licensed the spending of FTX buyer cash. FTX had about two dozen workers, he stated, and “I wasn’t significantly fascinated with attempting to dole out blame.”
After closing statements on Wednesday, jurors may begin deliberating a verdict for the case as quickly as Thursday.
