Prosecutors Claim Bankman-Fried Lied to Investors and Customers
- Assistant U.S. Attorney Danielle Sassoon claimed Bankman-Fried lied to FTX’s investors and users about the safety of their funds.
- Bankman-Fried admitted that his support for crypto regulation was a publicity stunt.
Former FTX CEO and founder Sam Bankman-Fried (SBF) returned to the witness stand on Monday as his criminal trial continues. The 31-year-old faced intense cross-examination from the prosecutors, who treated him to a series of tough but expected questions.
Prosecutors quizzed the former crypto billionaire on whether or not he had lied to investors, users, Congress, and the public. In response to multiple questions from Assistant U.S. Attorney Danielle Sassoon, Bankman-Fried said that he could not recall informing FTX users that his exchange was a secure trading platform. SBF also denied assuring users of any protection or that Alameda Research did not have certain privileges on FTX.
However, Bankman-Fried’s claims in court failed to rhyme with his tweets and public comments. Sassoon fiercely challenged SBF over his public comments before and after FTX’s collapse and his role in Alameda.
Interestingly, Bankman-Fried adopted a calmer and more careful approach in responding to Monday’s probes. His responses were initially limited to “yes” or “no”. Many believe the crypto entrepreneur disliked responding to these questions.
Sassoon’s questions sought to prove that Bankman-Fried was dishonest to investors and customers about Alameda’s access to FTX, his role in the company, and the safety of customers’ assets. She produced several records that highlighted his remarks, both public and private, that Alameda followed “the same rules as other traders.”
Bankman-Fried Disliked Regulators
Sassoon also probed Bankman-Fried for his true sentiments toward crypto regulations. Prior to FTX’s collapse, Bankman-Fried was one of the few crypto executives who supported attempts to regulate the crypto industry. However, it appears the FTX founder had a dislike for regulators.
Sassoon asked the SBF whether he could recall his tweets in support of regulating blockchain technology to safeguard users. Bankman-Fried said, “I don’t remember.” Sassoon then asked, “But in private, you said, fuck regulators, right?” to which Bankman-Fried admitted.
The former FTX CEO said, among other things, that he thought a “subset of people” on Crypto Twitter were “dumb motherfuckers.” Interestingly, Bankman-Fried testified before the U.S. House Financial Services Committee in 2021 on crypto regulations.
However, the former crypto billionaire admitted that his testimony was simply a PR stunt. Bankman-Fried also confessed that his campaign for crypto regulations was a strategy against former rival Binance. SBF hoped regulators would go after Binance to help FTX grab some of the exchange’s market share.
Bankman-Fried’s criminal trial is expected to wrap up early next week. The case has been centered around the prosecutor’s claim that the former FTX founder “misappropriated and embezzled” billions of dollars from FTX into Alameda for his gain, including $100 million in political donations and a $40 million apartment in the Bahamas, which he shared with Ellison and other senior FTX employees.
Some former FTX executives, such as Caroline Ellison, Bankman-Fried’s ex-girlfriend, have testified against him. Ellison admitted to committing crimes while serving as Alameda’s CEO. However, she claimed her actions were under SBF’s supervision.
Another FTX executive, Gary Wang, claimed that Bankman-Fried was aware of the unauthorized money transfer that caused FTX to experience an $8 billion deficit when clients tried to withdraw their funds.