On Thursday, Sam Bankman-Fried had the opportunity to testify at his criminal trial in New York. Due to the judge’s decision to dismiss the jurors for the day, Bankman-Fried was able to present some of his testimony as a demonstration. The judge will then determine which parts of his testimony will be admissible.
31-year-old Bankman-Fried is scheduled to testify on Friday regarding his account of how his cryptocurrency company, which was once worth billions of dollars, rose to prominence in the industry before ultimately crashing. Prosecutors claim that his excessive spending on investments, donations, and luxurious living led to billions of dollars in losses.
In his testimony on Thursday, which lasted almost three hours after the jurors had been dismissed, Bankman-Fried attempted to demonstrate that the presence of lawyers during his decision-making regarding the use of customer funds gave him the belief that he was acting within the bounds of the law.
The Assistant U.S. Attorney, Danielle Sassoon, questioned him with the type of inquiries he may encounter during cross-examination. This often resulted in hesitant responses from Bankman-Fried, who appeared unsure about the conversations he had with lawyers.
Not long before she completed her task, Sassoon questioned Bankman-Fried about his decision to hire a general counsel who had previously worked at a company involved in a scandal related to insider trading.
Bankman-Fried expressed his desire to hire a general counsel who would be at ease with the company taking calculated risks. He also made it clear that he did not want the top lawyer to restrict the company’s risk-taking.
Sassoon inquired if he knew about his general counsel participating in illegal drug activity with Bankman-Fried employees.
“Objection!” exclaimed defense lawyer Mark Cohen.
Judge Lewis A. Kaplan replied, “Sustained.” The judge stated that a ruling will be made on Friday.
Bankman-Fried’s potential testimony brought a sizeable audience to the courthouse in lower Manhattan on Thursday. Among those present were Bankman-Fried’s parents and Michael Lewis, the author of a newly released book about Bankman-Fried. Additionally, there were dozens of crypto enthusiasts and onlookers in three overflow rooms.
On Thursday, it appeared that Bankman-Fried was ready to begin his testimony in front of the jury after lunch. However, the judge changed the schedule and stated that he would like to first make decisions on what Bankman-Fried can discuss before his testimony begins. The judge had initially planned to hold a hearing and make these decisions on Friday.
Kaplan informed the jurors that they were in the final phase and dismissed them for the day, stating that he understood it was an unexpected break for them. He mentioned that they could expect to receive the case within the first few days of the upcoming week.
The prosecution has been building their argument since the beginning of October, using witness testimonies and numerous pieces of evidence such as financial documents.
Following the conclusion of the prosecution’s case on Thursday, the defense team promptly requested that Kaplan dismiss the charges against Bankman-Fried due to insufficient evidence presented by the prosecution. However, the judge denied this request.
The California business owner has entered a plea of not guilty to allegations of conspiring to redirect billions of dollars from his customers and investors towards high-risk investments, lavish real estate purchases, celebrity-driven promotional efforts, and substantial political and philanthropic contributions.
During his testimony on Thursday, Bankman-Fried appeared visibly uneasy. He flinched, avoided eye contact, and continuously apologized. He frequently restated the prosecutor’s questions, stating, “I would not phrase it in that manner.”
Frequently, he seemed unaware of the operations of his businesses and requested nonexistent or unavailable documents.
During a difficult conversation, Sassoon inquired about the contents of a document that enabled Bankman-Fried to borrow or use customer funds. Bankman-Fried took several minutes to silently study the document before vaguely describing his approach to utilizing the funds.
Cohen objected, stating that he had already answered the question, when the prosecutor attempted to ask it again.
Sassoon stated, “Your honor, he did not respond to the inquiry.”
The judge concurred.
During a three-week trial, Bankman-Fried had chosen to stay silent while several of his top associates testified against him as part of cooperation agreements with the government. These associates had previously pleaded guilty to criminal charges.
During their statement, the leaders maintained that Bankman-Fried instructed them to utilize billions of dollars from FTX clients’ accounts, which were then channeled through Alameda Research, a hedge fund he established in 2017, two years prior to launching the FTX cryptocurrency exchange.
Bankman-Fried was taken into custody in the Bahamas and transferred back to the United States in December, following the collapse of his enterprises.
At first, he was released on a $250 million bond based on his own recognizance and was instructed to stay at his parents’ residence in Palo Alto, California. His parents are both professors at Stanford University.
In August, Kaplan rescinded the bail and ordered Bankman-Fried to be jailed after finding evidence that he had attempted to sway possible witnesses for the trial.
Those testifying against Bankman-Fried have included Caroline Ellison, his former girlfriend who was chief executive of Alameda before it was publicly revealed that billions of dollars were missing last November.
During the trial, she admitted that the downfall of the businesses brought her a sense of relief because she no longer had to deceive. She placed the responsibility on Bankman-Fried for influencing her ethical principles and rationalizing actions that she was aware were unethical and unlawful.
She also acknowledged altering financial statements in an attempt to conceal that Alameda had borrowed approximately $10 billion from FTX clients by June 2022. This inconsistency was exposed when clients hurried to withdraw their deposits in November after learning that their funds were at risk.