Former FTX CEO Sam Bankman-Fried Testifies in Fraud Trial
This week, Sam Bankman-Fried, the former CEO of FTX, took the stand in his criminal fraud trial. His defense team aimed to justify his actions in running FTX. Prosecutor Danielle Sassoon also had the opportunity to cross-examine Bankman-Fried.
Bankman-Fried Believed Taking Customer Funds Was Legal
Bankman-Fried’s defense lawyer questioned him about his simultaneous leadership of FTX and Alameda Research. Bankman-Fried stated that he was the CEO of both firms at the time and clarified that FTX did not have a bank account. When asked if he thought it was legal to mix FTX customer funds with Alameda Research, Bankman-Fried replied affirmatively.
Bankman-Fried Did Not Intentionally Commit Fraud
The defense argued that Bankman-Fried did not intentionally commit fraud but made mistakes while scaling operations at FTX and Alameda Research. The heavy reliance on FTX customer funds by Alameda Research contributed to FTX’s collapse. During the trial, Bankman-Fried admitted to not thoroughly reading FTX’s terms of service.
Prosecutor Danielle Sassoon Questions Bankman-Fried
Sassoon questioned Bankman-Fried about disappearing messages on Signal, implying wrongdoing. She asked when he discussed auto-deletion of messages with his lawyers, leading to a long pause from Bankman-Fried. He mentioned discussing it around the spring of 2021 but couldn’t recall seeking approval for it.
Bankman-Fried also struggled to explain specific conversations related to formal documents sent over Signal and conversations about shutting down Alameda Research. He denied recalling previous statements about Signal messages auto-deleting and conversations about an $11 billion hole in the balance sheet.
Hot Take: Bankman-Fried’s Defense Relies on Lack of Intent
The defense’s argument hinges on Bankman-Fried not intentionally committing fraud but rather making mistakes due to the chaotic startup environment. However, the prosecutor has challenged Bankman-Fried’s memory and raised questions about his knowledge of certain actions. As the trial continues, it remains to be seen how the jury will interpret the evidence and arguments presented.
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