Former FTX CEO Sam Bankman Fried, who is facing fraud charges in the failed cryptocurrency exchange, walks outside the Manhattan Federal Courthouse in New York City, US, on March 30, 2023.
Amanda Perobelli | Reuters
FTX founder Sam Bankman Fried told jurors in his criminal trial on Friday that he committed no fraud at the cryptocurrency exchange, which went out of business late last year.
Mr. Bankman Freed expedited jurors to consider whether portions of the defendant’s planned testimony related to legal advice he received while running FTX will be admissible in court. The day after his death, he gave a speech in a New York courtroom.
On Friday morning, defense attorney Mark Cohen asked Bankman Fried if she had defrauded anyone.
“No, I didn’t,” Bankman Freed replied.
Mr. Cohen then asked if he had received his client’s funds, to which Mr. Bankman Freed replied, “No.”
Banker Mann Fried, 31, faces seven charges including wire fraud, securities fraud and money laundering, which could result in life in prison if convicted. Bankman Fried, the son of two Stanford law professors, has pleaded not guilty in the case.
The four-week trial was highlighted by testimony from multiple members of FTX’s top leadership team and executives from sister hedge fund Alameda Research before the defendants took the stand. They all named Bankman Fried as the mastermind behind a scheme that used FTX customers’ funds for everything from venture investments and expensive condos in the Bahamas to covering cryptocurrency losses in Alameda.
A courtroom sketch depicting Sam Bankman Freed being questioned by attorney Mark Cohen.Judge Lewis Kaplan in court
Artist: Elizabeth Williams
Prosecutors briefed the former manager of the Bankman Freed business about the specific actions of his boss that caused billions of dollars in losses for customers last year. Several witnesses, including Caroline Ellison, ex-girlfriend of Alameda owner Bankman Freed, have pleaded guilty to multiple charges and are cooperating with the government.
The judge’s decision to send the jury home Thursday allows Bankman Fried and her defense team to preview the best legal material for Judge Kaplan.
“Major oversight”
Bankman Fried acknowledged on Friday that not having a risk management team or chief regulatory officer was one of the company’s biggest mistakes. That led to “significant oversights,” he said.
Mr. Cohen talked about Mr. Bankman Fried’s background and how he became interested in virtual currencies. The defendant said he studied physics at the Massachusetts Institute of Technology and graduated in 2014. He then worked as a trader on Jane Street’s international desk for more than three years, managing tens of billions of dollars in trades a day. There he learned the basics such as arbitrage trading.
In the fall of 2017, Bankman Fried founded Alameda Research.
“This was the time when cryptocurrencies first started appearing in public,” Bankman Fried testified.
He said people were excited to see it. Bitcoin, which went from $1,000 to $10,000 in two months. Banks and brokerages are not yet involved, he said, and there is likely to be significant demand for arbitrage providers.
Bankman Fried said he had “no idea” how cryptocurrencies worked. “I knew they were replaceable.”
Our first office in Alameda was airbnb in Berkeley, California, he said. Although it was listed as a 2 bedroom, we used the sofa in the living room as the 3rd bed and the attic as the 4th bed.
He started FTX in 2019. FTX’s trading volume has increased significantly from millions of dollars per day to tens of millions of dollars that year, and then hundreds of millions of dollars in 2020. By 2022, the amount rose from up to $10 billion to $15 billion. The trading volume per day is US dollars.
Bankman Fried said that while Alameda is allowed to borrow from FTX, it is his understanding that the funds come from margin transactions, collateral from other margin transactions, and assets that earn interest on the platform. Stated.
At FTX, there were no general restrictions on what could be done with borrowed funds as long as the company believed its assets were greater than its liabilities, Bankman Fried testified.
Special borrowing permission was granted to parts of Alameda after regular liquidations failed in 2020, he said. The risk engine was buckling under the weight of growth. Settlements that should have been in the thousands turned into trillions. Alameda closed the position and suddenly went underwater.
This incident highlighted a larger concern that Alameda’s potential for false liquidations could have dire consequences for users.
Bankman Freed said he spoke with FTX engineering director Nishad Singh and co-founder Gary Wang. Both men first testified on behalf of the prosecution. They suggested creating an alert prompting users to deposit additional collateral or delaying it, Bankman Fried said. Such a feature has since been implemented, he said, adding that he learned it was a “allow negative” feature.
Banker Mann Freed testified that he did not know how much Alameda could borrow or what the theoretical limit was. He said that as long as the net asset value on the exchange is positive and the borrowing size is reasonable, it would be fine for Alameda to increase its credit line so it can continue to fill orders. Mr. Bankman Freed added that he now believes that what Mr. Singh and Mr. Wang did was increase the line of credit.
hard to sell
Bankman Fried will have a tough time convincing a jury after the government presents a mountain of damning evidence.
The prosecution also entered the following supporting documents: Encrypted signal messages and other internal documents that appear to show Bankman Freed orchestrating the disbursement of FTX customer funds.
The defense’s case, made up of Bankman Fried’s testimony and the testimony of two other witnesses who took the stand Thursday morning, will largely determine whether the jury believes the defendants did not intend to commit fraud. It’s on.
Following a Cohen-led interrogation Thursday, Bankman Fried pointed much of the criminal charges to Dan Friedberg, FTX’s chief regulatory officer, and Fenwick, an outside attorney who advised the cryptocurrency exchange. It seemed that Mr. & West was the one. Bankman Fried has been involved in a number of cases, including everything from company-wide auto-deletion policies on messaging apps like Signal to the opening of Alameda’s North Dimension bank account, which was funneled with billions of dollars’ worth of FTX customer funds. Mr. Friedberg talked about his active involvement in things.
The former FTX chief also said that hundreds of millions of dollars in personal loans to him and other founders of the platform were structured by promissory notes drafted by his in-house legal team and consulted in conjunction with general counsel and Friedberg. Ta. After receiving his lawyer’s blessing, SBF said he was “relieved.”
— CNBC’s Dawn Giel contributed to this report
clock: Sam Bankman Freed testifies in criminal case
