Sam Bankman-Fried on the witness stand faces grilling by the feds in Manhattan fraud trial
2023/10/30
Former FTX CEO Sam Bankman-Fried arrives for a bail hearing at Manhattan Federal Court on Aug. 11, 2023, in New York City.
- Michael M. Santiago/Getty Images North America/TNS
NEW YORK — Sam Bankman-Fried — the one-time millennial magnate accused of siphoning billions from customers of his bankrupt cryptocurrency exchange — ducked dozens of questions during a grilling by the feds while he was on the witness stand Monday.
Facing more than a century in prison if convicted, Bankman-Fried decided last week to take the unusual step of testifying in his own defense. Lawyers typically advise against it because of the risks defendants face on cross-examination.
The 31-year-old Palo Alto, California, man was the subject of glowing magazine profiles for planning to give away 99% of his wealth before facing allegations it was all stolen in late 2022. He testified before Congress about making digital currency trading more accessible and transparent than traditional markets for everyday folk.
Assistant U.S. Attorney Danielle Sassoon held Bankman-Fried’s feet to the fire about a litany of public statements before and after his precipitous downfall when he assured customers of his crypto trading platform FTX that their financial safety was tantamount.
“Mr. Bankman-Fried, (it’s) fair to say that you wanted FTX’s customers to trust you?” Sassoon asked.
“That would have been ideal, yeah,” Bankman-Fried replied.
The Massachusetts Institute of Technology grad’s alleged scheme has been characterized by Manhattan U.S. Attorney Damian Williams as one of the largest financial frauds in history.
Prosecutors say that as he touted himself as a “savior of the cryptocurrency industry,” FTX customer deposits were being siphoned to his sister hedge fund Alameda Research to bankroll risky venture investments, buy real estate in the Bahamas, where FTX was based, court celebrity endorsements and funnel $100 million to politicians in both parties to further his agenda in Washington.
The money was allegedly funneled through two mechanisms: bank accounts secretly controlled by Alameda in which FTX customers were directed to deposit their funds, and through a hidden portal built into the exchange’s code allowing Alameda to withdraw as much as it wanted.
Convicted FTX co-founder and cooperator Gary Wang previously told jurors Bankman-Fried directed him to write code giving Alameda a $65 billion line of credit without requiring it to put up collateral like other customers. Bankman-Fried acknowledged Alameda was the only customer able to borrow such a large amount.
Responding to most of Sassoon’s questions with a curt, “Yep!” or “I don’t recall,” a nonchalant Bankman-Fried denied he’d made trading decisions at Alameda, though acknowledged he wasn’t “walled off,” as he’d claimed publicly.
“Sitting here today, Mr. Bankman-Fried, do you deny that Alameda was the only FTX customer that accepted FTX customer fiat deposits directly into its own bank accounts?” Sassoon asked.
“I’m not sure,” he said, later adding, “I’m not confident” when asked if he could identify a single other one.
Asked whether he recalled saying that FTX and Alameda were completely separate, Bankman-Fried said, “I’m not sure about the exact phrasing.”
Bankman-Fried’s indirect answers, in which he often responded by rewording prosecutor Sassoon’s questions, prompted Judge Lewis Kaplan to interject more than once, at one point ordering him to “just answer the question instead of trying to ask the question.”
After Bankman-Fried founded FTX in 2019, it took off at lightning speed, becoming the world’s second-largest crypto trading platform worth $32 billion at its peak.
When Alameda’s balance sheets were leaked and rumors began circulating about the state of FTX in November 2022, a surge of customers sought to withdraw their money in vain. They tried to withdraw $1 billion on Nov. 6. By the next day, that number had quadrupled.
Bankman-Fried said it wasn’t a lie when he posted “assets are fine” on Twitter Nov. 7, 2022, in a maligned tweet he soon deleted. But he acknowledged knowing the situation had reached crisis levels by the next day.
His lawyers described what happened as market forces outside of his control and cast blame on Alameda CEO and his on-again-off-again girlfriend, Caroline Ellison, 28, for not adequately hedging.
Ellison, who pleaded guilty to wire fraud and related charges shortly after her ex’s arrest, told jurors Bankman-Fried continuously directed her to secretly pay off Alameda’s debts and had her draw up misleading balance sheets when lenders asked to see the books.
The jury has also heard from FTX head of engineering Nishad Singh, who, like Wang and Ellison, is cooperating in the hopes of receiving a lenient prison term. They all said “SBF” directed them to carry out crimes.
Bankman-Fried has pleaded not guilty to seven counts, including wire fraud and conspiracy to commit money laundering. He also faces civil charges from the Securities and Exchange Commission and potentially a second trial.
Bankman-Fried acknowledged once describing FTX as the most regulated crypto exchange. Asked about remarks he made after its collapse, when he told a Vox reporter, “F–k regulators,” he told the jury, “I said that once.” He acknowledged privately saying his public comments about regulations were just a PR strategy and that he’d called “a specific subset” of crypto Twitter, including FTX customers, “dumb motherf—–s.”
“Mr. Bankman-Fried, would you agree you know how to tell a good story?” Sassoon asked Bankman-Fried at one point.
“I don’t know,” he replied. “It depends what metric you use.”
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© New York Daily News
NEW YORK — Sam Bankman-Fried — the one-time millennial magnate accused of siphoning billions from customers of his bankrupt cryptocurrency exchange — ducked dozens of questions during a grilling by the feds while he was on the witness stand Monday.
Facing more than a century in prison if convicted, Bankman-Fried decided last week to take the unusual step of testifying in his own defense. Lawyers typically advise against it because of the risks defendants face on cross-examination.
The 31-year-old Palo Alto, California, man was the subject of glowing magazine profiles for planning to give away 99% of his wealth before facing allegations it was all stolen in late 2022. He testified before Congress about making digital currency trading more accessible and transparent than traditional markets for everyday folk.
Assistant U.S. Attorney Danielle Sassoon held Bankman-Fried’s feet to the fire about a litany of public statements before and after his precipitous downfall when he assured customers of his crypto trading platform FTX that their financial safety was tantamount.
“Mr. Bankman-Fried, (it’s) fair to say that you wanted FTX’s customers to trust you?” Sassoon asked.
“That would have been ideal, yeah,” Bankman-Fried replied.
The Massachusetts Institute of Technology grad’s alleged scheme has been characterized by Manhattan U.S. Attorney Damian Williams as one of the largest financial frauds in history.
Prosecutors say that as he touted himself as a “savior of the cryptocurrency industry,” FTX customer deposits were being siphoned to his sister hedge fund Alameda Research to bankroll risky venture investments, buy real estate in the Bahamas, where FTX was based, court celebrity endorsements and funnel $100 million to politicians in both parties to further his agenda in Washington.
The money was allegedly funneled through two mechanisms: bank accounts secretly controlled by Alameda in which FTX customers were directed to deposit their funds, and through a hidden portal built into the exchange’s code allowing Alameda to withdraw as much as it wanted.
Convicted FTX co-founder and cooperator Gary Wang previously told jurors Bankman-Fried directed him to write code giving Alameda a $65 billion line of credit without requiring it to put up collateral like other customers. Bankman-Fried acknowledged Alameda was the only customer able to borrow such a large amount.
Responding to most of Sassoon’s questions with a curt, “Yep!” or “I don’t recall,” a nonchalant Bankman-Fried denied he’d made trading decisions at Alameda, though acknowledged he wasn’t “walled off,” as he’d claimed publicly.
“Sitting here today, Mr. Bankman-Fried, do you deny that Alameda was the only FTX customer that accepted FTX customer fiat deposits directly into its own bank accounts?” Sassoon asked.
“I’m not sure,” he said, later adding, “I’m not confident” when asked if he could identify a single other one.
Asked whether he recalled saying that FTX and Alameda were completely separate, Bankman-Fried said, “I’m not sure about the exact phrasing.”
Bankman-Fried’s indirect answers, in which he often responded by rewording prosecutor Sassoon’s questions, prompted Judge Lewis Kaplan to interject more than once, at one point ordering him to “just answer the question instead of trying to ask the question.”
After Bankman-Fried founded FTX in 2019, it took off at lightning speed, becoming the world’s second-largest crypto trading platform worth $32 billion at its peak.
When Alameda’s balance sheets were leaked and rumors began circulating about the state of FTX in November 2022, a surge of customers sought to withdraw their money in vain. They tried to withdraw $1 billion on Nov. 6. By the next day, that number had quadrupled.
Bankman-Fried said it wasn’t a lie when he posted “assets are fine” on Twitter Nov. 7, 2022, in a maligned tweet he soon deleted. But he acknowledged knowing the situation had reached crisis levels by the next day.
His lawyers described what happened as market forces outside of his control and cast blame on Alameda CEO and his on-again-off-again girlfriend, Caroline Ellison, 28, for not adequately hedging.
Ellison, who pleaded guilty to wire fraud and related charges shortly after her ex’s arrest, told jurors Bankman-Fried continuously directed her to secretly pay off Alameda’s debts and had her draw up misleading balance sheets when lenders asked to see the books.
The jury has also heard from FTX head of engineering Nishad Singh, who, like Wang and Ellison, is cooperating in the hopes of receiving a lenient prison term. They all said “SBF” directed them to carry out crimes.
Bankman-Fried has pleaded not guilty to seven counts, including wire fraud and conspiracy to commit money laundering. He also faces civil charges from the Securities and Exchange Commission and potentially a second trial.
Bankman-Fried acknowledged once describing FTX as the most regulated crypto exchange. Asked about remarks he made after its collapse, when he told a Vox reporter, “F–k regulators,” he told the jury, “I said that once.” He acknowledged privately saying his public comments about regulations were just a PR strategy and that he’d called “a specific subset” of crypto Twitter, including FTX customers, “dumb motherf—–s.”
“Mr. Bankman-Fried, would you agree you know how to tell a good story?” Sassoon asked Bankman-Fried at one point.
“I don’t know,” he replied. “It depends what metric you use.”
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© New York Daily News
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