Former FTX CEO Denies Defrauding Customers in Testimony
In the ongoing trial against Sam “SBF” Bankman-Fried, defense attorneys questioned the former FTX CEO for the first time. Bankman-Fried denied allegations of defrauding FTX customers and taking their funds while he was in charge of the crypto exchange. He claimed to have had limited knowledge about digital assets when he launched Alameda Research, a crypto hedge fund.
Bankruptcy and Allegations
Bankman-Fried stated that FTX declared bankruptcy and that many people were harmed as a result. The defense attorney asked about Alameda’s operations in Hong Kong and how it could have affected the hedge fund’s risk at FTX. The allegations against Bankman-Fried involve claims that he directed Alameda to use FTX customer funds without their knowledge. He currently faces seven criminal charges.
Market Maker Role and Risk Management
According to reports from the courtroom, Bankman-Fried explained that Alameda acted as a market maker for FTX. If an account went negative, they would start selling off, but if late, they had backstop liquidity. He also mentioned increasing server capacity for the risk engine but highlighted the catastrophic consequences of erroneous liquidations.
Denying Knowledge of Feature Implementation
Bankman-Fried claimed to have told the former FTX chief technology officer to stop liquidations of Alameda’s account. He suggested that the “allow negative” feature may have been implemented without his prior knowledge. However, the technology officer testified that Bankman-Fried had instructed him to implement the feature in 2019.
Closing Arguments and Future Trials
The trial is expected to conclude within a few business days, with closing arguments from both the prosecution and defense. Bankman-Fried is scheduled to face five more criminal counts in a second trial starting in March 2024. He has pleaded not guilty to all charges in both cases.
Hot Take: Bankman-Fried Asserts Innocence in Defrauding Customers
In his testimony, Sam “SBF” Bankman-Fried denied defrauding FTX customers and claimed limited knowledge about digital assets when he launched Alameda Research. The trial will soon come to a close, and Bankman-Fried is set to face additional charges in a separate trial next year. The outcome of the ongoing trial will have significant implications for the crypto industry, as it involves allegations against a prominent figure in the space. Regardless of the verdict, this case serves as a reminder of the importance of transparency and trust in the cryptocurrency ecosystem.
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