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Sam Bankman-Fried stated he was “very stunned” in October 2022 to study concerning the $8bn of buyer deposits his personal buying and selling agency Alameda Analysis owed to his FTX crypto alternate, giving new particulars in testimony on Friday of the businesses’ dramatic collapse.
In a day of gruelling testimony, Bankman-Fried provided his account of FTX’s implosion, acknowledging he had made “errors” however implying that his closest workers and pals had stored him at nighttime concerning the scale of the opening till weeks earlier than his crypto empire got here crashing down.
The previous crypto entrepreneur instructed jurors in New York that he solely understood “items” of the complete monetary state of his firms, as he took the stand in federal courtroom to defend himself in opposition to accusations that Alameda drained buyer cash from FTX, resulting in the alternate’s chapter final November.
Bankman-Fried, the one-time paper billionaire who faces many years behind bars if convicted on the fraud fees in opposition to him, will probably be cross-examined by prosecutors subsequent week. He has pleaded not responsible.
Carrying a gray go well with and purple tie, he calmly talked the jury by way of the founding of his two firms — FTX and an affiliated buying and selling agency, Alameda Analysis — with school pals from MIT and former colleagues at New York buying and selling agency Jane Avenue Capital. The jury has heard testimony from a few of them, together with Gary Wang, Nishad Singh and Caroline Ellison, who’re co-operating with the prosecution.
The witnesses had testified to a number of conversations with the previous chief government within the months earlier than the businesses collapsed through which they mentioned the $8bn legal responsibility created as a result of Alameda had obtained FTX buyer deposits into its financial institution accounts earlier than the alternate arrange its personal accounts.
He contradicted these accounts, saying he solely discovered the scale of the hole when he appeared it up in a brand new model of the corporate database — which he was given entry to in October 2022. Till then, he thought Alameda’s whole money owed to FTX had been round $2bn, he stated.
Even after the invention, he stated he nonetheless thought Alameda would “be good for it” for the reason that buying and selling agency “had loads of asset worth to have the ability to cowl the legal responsibility”.
Earlier within the day Bankman-Fried stated he believed Alameda might do “something” with cash it borrowed from FTX offered “dangers had been being managed”, whether or not it was to “purchase muffins” or “pay enterprise bills”.
His declare that he didn’t have a full image of his personal firms’ funds till weeks earlier than their demise has been crucial to his defence. Friday’s testimony added new specifics to his account.
His lieutenants had testified that he directed them to extend the raid on buyer cash in June 2022 with a view to repay Alameda’s third-party lenders within the midst of the broader crypto crash. He stated it was Ellison who urged it “most likely made sense” to repay the loans, and that he had assented with out realizing concerning the $8bn legal responsibility.
Defence lawyer Mark Cohen additionally tried to indicate the onslaught of choices and data his shopper had confronted as chief government of the fast-growing alternate. Bankman-Fried stated that he labored 12 hours on a “mild day” and 22 hours on a “heavy day”, and obtained a whole lot of Sign chats. He stated he aimed to have solely 60,000 unread emails, however “I didn’t normally succeed”.
Bankman-Fried testified that secret particular privileges that Alameda loved on FTX had been created by Wang and Singh to assist the buying and selling agency present liquidity on the alternate — and that he didn’t know the small print on the time.
He additionally solid blame for Alameda’s collapse on Ellison. He testified that he had urged her to hedge the buying and selling agency’s debt-fuelled bets on rising crypto costs. He stated she instructed him she was “wanting into doing so” however by no means did — in the end costing the agency about $10bn.
He stated it had been Ellison’s concept to ship Alameda’s lenders a stability sheet that hid its huge money owed to FTX, one in all seven various variations prosecutors had proven to the jury. He stated he had solely “briefly” mentioned the doc along with her.
The testimony briefly touched upon Bankman-Fried’s “on-again, off-again” relationship with Ellison, which he stated ended for good in 2022 as a result of “she needed extra from [the relationship] than I used to be capable of give”.
He added that he didn’t “have the time or the power” to dwell as much as Ellison’s expectations, and that relationships had been “not one thing I’ve been nice at”.
He had given a preview of his testimony, with out the jury current, on Thursday, answering questions on plenty of points so the decide might resolve whether or not the matters had been admissible as proof as a part of the defence’s case.
On Friday morning, Choose Lewis Kaplan, who’s overseeing the case, dominated that Bankman-Fried couldn’t reply questions designed to elicit testimony through which he claims he was following the recommendation of legal professionals when implementing sure insurance policies at FTX and Alameda.
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