Bankman-Fried Fails to Provide a Convincing Response in Tuesday’s Testimony
- Sam Bankman-Fried took the stand on Tuesday, where he failed to provide convincing answers to the prosecutor’s questions.
- Both the defense and prosecutors will present their closing statements on Wednesday morning.
Reports emerged last week that former FTX CEO Sam Bankman-Fried (SBF) had decided to take the stand in his defense. Many believe the move could have fatal consequences, as that would leave him open for prosecutors to cross-examine. His testimony on Tuesday left more loopholes in his defense as he faced his toughest day in court.
Bankman-Fried has built his argument that the FTX collapse was caused by a series of unintended mistakes. However, his testimony on Tuesday poked fingers at those claims. Bankman-Fried denied knowing that billions of dollars of FTX customer funds were moved to Alameda until October 2022. However, other FTX executives claimed the former CEO was aware of the situation long before the November collapse.
Bankman-Fried said he “deeply” regretted not looking at FTX’s balance sheet to discover the hole. The former crypto mogul testified that when he questioned his deputies about the hole, they “told me they were busy and I should stop asking questions because it was distracting.”
Defense attorney Mark Cohen asked Bankman-Fried why he did not fire any employees after discovering the $8 billion hole. Bankman-Fried claimed he was less interested in pointing fingers at others and more concerned with how he could change things and move on.
Bankman-Fried struggled to answer when federal prosecutor Danielle Sassoon asked if he had instructed FTX employees not to use customer funds for investments, expensive real estate, or other expenses. Additionally, the 31-year-old Bankman-Fried was unable to identify any employees who may have authorized spending FTX customer funds.
Sassoon also questioned Bankman-Fried’s relationship with Philip Davis, the prime minister of the Bahamas, where FTX and Bankman-Fried’s closest associates were based. She asked SBF if he had proposed to pay off the over $11 billion national debt for the Bahamas, to which Bankman-Fried said he couldn’t recall having the conversation. Sassoon claimed Bankman-Fried previously joked that former FTX executive Ryan Salame was a representative of the Bahamian government.
Sassoon also stated that FTX allowed only Bahamians to withdraw shortly after its collapse. Interestingly, Bankman-Fried offered little or no detailed explanation for most of these claims. Since the defense has no other credible witnesses, Bankman-Fried has to convince the jury that he was not deliberately diverting customer funds from FTX to fund his lifestyle and other purposes.
Where does Bankman-Fried stand?
Both prosecutors and defense rested their cases before lunchtime on Tuesday and are expected to present their closing remarks on Wednesday morning. However, Tuesday left Bankman-Fried more vulnerable than exonerated.
Bankman-Fried has two problems: One is that, in terms of substance, he fails to provide answers to some of the DOJ’s questions. Secondly, he doesn’t seem to be a very convincing or reliable witness. He’s still answering some really simple questions with rambling, overly cautious responses. Judge Lewis Kaplan had to remind him several times to respond to the issue that was posed and to use affirmative or negative language.
Bankman-Fried could face decades behind bars if convicted of fraud.