FTX Founder Testifies in Fraud Trial

Sam Bankman-Fried, the founder of now-defunct cryptocurrency exchange FTX, testified at his fraud trial, seeking to distance himself from any wrongdoing. Bankman-Fried stressed that the exchange’s lawyers were involved in key decisions central to the case.

Defense’s Standpoint

According to Bankman-Fried’s testimony, he acted in good faith while running FTX. He stated that FTX’s lawyers were instrumental in crafting the company’s document-retention policies, setting up a system for FTX customers to deposit funds into an Alameda bank account, and designing loans that he and other executives took from Alameda.

However, he struggled to point out specific instances where lawyers approved his actions during cross-examination by prosecutors. U.S. District Judge Lewis Kaplan noted that some of Bankman-Fried’s responses didn’t directly answer the prosecutors’ questions.

Accusations and Charges

Bankman-Fried is accused of stealing billions of dollars from unsuspecting customers and has pleaded not guilty to two counts of fraud and five counts of conspiracy. If convicted, he could face decades in prison. Prosecutors allege that the misappropriated funds were used to support his crypto-focused hedge fund, Alameda Research, make speculative venture investments, and donate more than $100 million to U.S. political campaigns.

Testimony in Court

During the trial, the 31-year-old former billionaire testified in a confident tone, often delivering lengthy responses to questions from his defense lawyer. He is expected to testify to the jury soon. Judge Kaplan will decide whether jurors can hear his testimony about the involvement of FTX’s lawyers.

Prosecutors’ Claims

Prosecutors claim that Bankman-Fried encouraged employees to use encrypted messaging platforms such as Slack and Signal, and auto-delete their communications to conceal their activities. They also allege he stole funds by having FTX customers deposit money into accounts controlled by Alameda, which then lent money to FTX executives.

Insights from Legal Experts

Legal experts suggest that Bankman-Fried has little to lose by testifying to the jury, given weeks of testimony against him by insiders painting a negative picture of his character. His lawyers have argued that three of his former colleagues, who have pleaded guilty and agreed to cooperate with prosecutors, tailored their testimony to implicate Bankman-Fried in the hopes of receiving lenient sentences. Bankman-Fried has maintained that while he made mistakes running FTX, he never intended to steal funds.

The defense’s first two witnesses were Krystal Rolle, Bankman-Fried’s lawyer in the Bahamas, and database expert Joseph Pimbley.