FTX founder Sam Bankman-Fried said he “deeply regrets not taking a closer look at his sister company Alameda Research’s $8 billion in customer deposit spending.”
The suspected crypto fraudster regularly grinned and frowned as prosecutor Danielle Sassoon answered questions about the November 2022 collapse of his Bitcoin empire during his fourth day of testimony in Manhattan federal court.
He is accused of committing one of the largest financial frauds in American history – using FTX customer deposits to finance risky investments in the young hedge fund Alameda, which he ran with his ex-girlfriend Caroline Ellison.
The 31-year-old billionaire pleaded not guilty to two counts of fraud and five counts of conspiracy. He has admitted making mistakes that led to FTX’s bankruptcy and harmed customers and employees, but denied stealing customer funds.
On Tuesday he was asked how much he knew about the $8 billion “hole” in his company’s finances, who was responsible and his “cozy” relationship with Bahamian officials.
Disgraced FTX founder Sam Bankman-Fried (pictured) is in court for another day of cross-examination in his $10 billion fraud case
Bankman-Fried pictured in a courtroom sketch during his Oct. 31 hearing
Bankman-Fried struggled to answer a barrage of questions about who was behind the transfer of customer funds from FTX to Alameda.
The crypto boss said he “cannot recall anything” about specific employees involved in transferring FTX customer deposits to Alameda and that no one was fired over the disappearance of $8 billion in customer funds.
But he also disagreed with Sassoon’s summary of his position by saying that “as CEO of Alameda, some unknown people spent $8 billion without your knowledge.”
Bankman-Fried insisted, “That’s not what I said,” but offered no alternative account under cross-examination.
The billionaire admitted that he did not pay enough attention to the day-to-day transactions of his companies. “I deeply regret not paying closer attention,” he told the court.
“When I was CEO of Alameda, I was involved in overall risk management and Alameda’s overall portfolio,” Bankman-Fried added.
“As CEO of FTX, I paid particular attention to the risk management of Alameda accounts at FTX – although not nearly as closely as I should have.”
Crypto’s former golden boy admitted to knowing about the $8 billion liability in October 2022 and shared a tweet the following month to “assure” FTX customers that their funds were safe.
Bankman-Fried appeared in court Monday on two counts of fraud and five counts of conspiracy when he was cross-examined by prosecutors
Bankman-Fried’s parents were pictured going to a federal courthouse in Manhattan on Oct. 30
He also said he remembered the “like” replies from some customers who said they would not withdraw money.
Prosecutors began questioning the 31-year-old billionaire in a Manhattan court on Monday, and he gave evasive answers throughout the hearing, saying he thought his company was “fine” before the collapse.
They attacked his credibility by highlighting public statements he made before and after the cryptocurrency exchange he founded, FTX, filed for bankruptcy late last year when it could no longer process withdrawals.
Sassoon confronted Bankman-Fried with cases in which he had promised clients that their assets were safe and that they could request the return of those assets at any time.
Bankman-Fried repeatedly answered “yes” to the series of questions.
The Californian entrepreneur rose to fame from 2017 to 2022 when he founded hedge fund Alameda Research and FTX and built a cryptocurrency empire worth tens of billions of dollars.
For a time, he appeared to be transforming the nascent industry by following his publicly stated vision of a more regulated and safer environment for users.
FTX founder Sam Bankman-Fried will be sworn in as he testifies in his fraud trial on October 27th
Through her questioning, Sassoon sought to show that Bankman-Fried’s public statements were false and that he had promised his customers that their accounts would be safe while he plundered them.
At the same time, he spent heavily on real estate, celebrity endorsements, investments and political donations, she said.
In one instance, Sassoon asked him if he had used profanity when talking about regulators – even as he was trying to persuade Congress to give the cryptocurrency industry more legitimacy by creating a regulatory framework.
“I said that once,” he replied when she gave a specific example.
And when Sassoon asked if his push for regulations was just an attempt to create positive public relations, he replied: “I said something similar, yes.”
Before cross-examination began Monday, Bankman-Fried testified that he was confident his companies could withstand the daily withdrawal of billions of dollars in assets until they could no longer do so several days later.
Bankman-Fried was arrested last December on fraud charges.
He was initially released on a $250 million personal recognizance bond to live with his parents in Palo Alto, California. He was jailed in August when Judge Lewis A. Kaplan became convinced that he had tried to tamper with potential witnesses in the trial.
He began testifying on Thursday. Kaplan has told jurors the trial could potentially conclude as early as this week.