[1/3]Indicted FTX founder Sam Bankman-Fried leaves the United States courthouse in New York City, U.S., July 26, 2023. Portal/Amr Alfiky/File Photo Acquire LICENSE RIGHTS
NEW YORK (Portal) – FTX founder Sam Bankman-Fried, testifying in his own defense at his fraud trial on Friday, said “a lot of people were hurt” when the cryptocurrency exchange collapsed last year, but stressed that he Have not defrauded anyone or anyone stealing billions of dollars from customers.
Bankman-Fried answered his own attorney’s questions on the first day of his testimony before a jury in attendance and admitted to making “mistakes,” such as his cryptocurrency-focused hedge fund Alameda Research, which was a key prosecution witness.
The 31-year-old former billionaire’s answers were consistent with his long-standing position that he overlooked some aspects of his business as an entrepreneur who built a fast-growing company from the ground up but never set out to steal from people.
“We thought we might be able to develop the best product on the market,” Bankman-Fried said during his six hours of testimony in federal court in Manhattan. “It turned out basically the opposite. Many people were injured – customers, employees – and the company went bankrupt.”
Bankman-Fried pleaded not guilty to two counts of fraud and five counts of conspiracy. If convicted, he could face decades in prison.
Prosecutors accuse Bankman-Fried of using FTX customer funds to support Alameda, making speculative venture investments and donating more than $100 million to U.S. political campaigns. He is also accused of attempting to defraud Alameda’s lenders and FTX investors.
Bankman-Fried responded to defense attorney Mark Cohen’s questions in a calm voice, saying he believes the funds used for sponsorships and real estate did not come from FTX’s customers, as prosecutors allege, but from the company’s revenue or capital , which it received from equity investors. He said he borrowed money from Alameda, which he owned, to make political donations.
Bankman-Fried sought to distance himself from certain actions that he said three of his closest former colleagues – each of whom pleaded guilty to fraud and testified against him in court – took without his direct involvement.
While they testified that he directed them to take certain actions that encouraged the theft of customer funds and lying to investors and lenders, Bankman-Fried portrayed himself as an aloof CEO who trusted his subordinates.
“seemed sensible to me”
Ellison, Bankman-Fried’s former girlfriend, testified on Oct. 11 that he directed her to falsify Alameda’s financial statements to keep lenders in check during a crypto market crash in June 2022.
Bankman-Fried testified Friday that although Ellison provided him with a spreadsheet that she planned to send to a lender, he did not look at it in detail.
“I remember looking at it and saying it seemed reasonable to me,” said Bankman-Fried, who occasionally glanced at the jury during her testimony.
FTX’s former chief technology officer, Gary Wang, testified that Bankman-Fried instructed him to make changes to FTX’s computer code that would grant Alameda special privileges, such as a $65 billion credit line and a Exemption from automatic liquidation if his positions lose value enabled the theft of funds.
Bankman-Fried testified that he asked Wang and Nishad Singh, FTX’s chief engineering officer, to prevent Alameda from being accidentally liquidated, but was unaware at the time that his colleagues had introduced a feature that allowed Alameda to to show a negative balance.
Bankman-Fried was arrested in December 2022, a month after FTX filed for bankruptcy following a wave of withdrawals from customers who became increasingly concerned about the safety of their funds.
On Friday, Bankman-Fried tried to place much of the blame for Alameda’s failure on Ellison. He testified that he was concerned that Ellison had failed to hedge against downturns in the crypto market, saying that while she was a good manager, she did not focus on “risk management.”
He also rejected her statement that he believes his typical unkempt appearance is an important part of FTX’s image. He said he wore t-shirts and shorts on the FTX run because they were “comfortable” and didn’t cut his hair because he was “busy and lazy.” Bankman-Fried presented the jury with a clean look, dressed in a dark suit.
Bankman-Fried was questioned Thursday by both sides without the jury present as the judge assessed what parts of his testimony would be admissible. Prosecutors will get their first chance to question Bankman-Fried in front of the jury when they cross-examine him next week. Cohen said he would complete the direct investigation Monday morning.
Reporting by Jody Godoy and Luc Cohen in New York; Edited by Will Dunham and Daniel Wallis
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