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NEW YORK – Sam Bankman-Fried’s first appearance on the witness stand in his own trial resulted in the former crypto executive making a statement that at times appeared to frustrate the judge who will decide whether the jury can hear it.
“The witness has what I call an interesting way of answering questions,” U.S. District Judge Lewis A. Kaplan once said.
Bankman-Fried was scheduled to officially begin testifying Thursday in his federal trial on fraud charges. But Kaplan chose to hear some of Bankman-Fried’s statements at a hearing without the jury present after prosecutors argued that parts of what the defendant wanted to say were not relevant to the case.
Kaplan’s decision to let Bankman-Fried speak at a hearing means he may make the same statement twice, depending on what the judge ultimately decides. Kaplan said he would make a decision Friday morning before Bankman-Fried officially begins testifying to the jury.
During Thursday’s hearing, Bankman-Fried spoke coherently and precisely under questioning from defense attorney Mark Cohen. Bankman-Fried said FTX’s lawyers approved the majority of its decisions. The defendant spoke with his usual manners, smiling often, moving his head and sometimes answering the defense’s questions with his characteristic “yes.”
But when it came time for Bankman-Fried to answer questions from federal prosecutor Danielle Sassoon, he responded with the uncertainty of a man who may or may not be responsible for the loss of billions of dollars in customer deposits.
His answers under prosecution cross-examination included: “I don’t remember”; “Perhaps I have”; “I wouldn’t put it that way, but I think the answer to the question you want to ask is yes.”
“Kaplan and the government even used the word ‘evasive’ to describe his efforts to answer some of their questions,” said Carl Tobias, a professor at the University of Richmond School of Law. “If the judge criticizes SBF for his avoidance of the jury, he will have great difficulty countering that.”
Sam Bankman-Fried’s legal jeopardy increases as his defense fails
Prosecutors have accused Bankman-Fried of orchestrating one of the largest financial fraud cases in history, accusing him of using billions of dollars in stolen customer funds from his crypto trading platform FTX to fund risky investments, dark money political donations and lavish personal spending . He is charged with seven crimes, including fraud and money laundering, and could spend decades in prison if found guilty.
On Thursday, lawyers for both sides questioned Bankman-Fried about details of his deleted messages on Signal, an encrypted communications platform, and the parameters of FTX’s terms of service.
According to Bankman-Fried, FTX’s lawyers agreed that automatic deletion of signals messages, including those about company balance sheets, was permitted under company policy. Bankman-Fried said the terms and conditions drawn up by an FTX lawyer allowed Alameda to service the loans criticized by prosecutors.
On several occasions, Bankman-Fried said his statements were corroborated by the company’s data retention policy and he wished he had them in front of him as a reference in court. What happened next seemed to surprise Bankman-Fried – Sassoon gave him a printed copy of an FTX data retention policy.
The policy presented was “different than the one” he was referring to, said Bankman-Fried, whose hands shook as he held the papers handed to him by Sassoon.
During further questioning on Thursday, Bankman-Fried explained certain cryptocurrency terminology.
When Bankman-Fried testifies before the jury starting Friday, it will likely take five hours to answer the defense team’s questions, Cohen told Kaplan. That would take about as long as it took to question key witnesses Caroline Ellison and Gary Wang at the start of the trial.
As Bankman-Fried’s defense team prepared to present its case this week, it signaled that it would focus on proving that the defendant acted “in good faith” and never intended to defraud customers . Cohen, Bankman-Fried’s lead attorney, outlined the strategy in a letter to Kaplan on Wednesday, writing that the former executive relied on the advice of lawyers when making key decisions for his crypto empire.
Former federal prosecutors monitoring the case said Bankman-Fried would have a hard time convincing jurors to take his word rather than that of his top lieutenants, all three of whom testified that their ex-boss and close friend knowingly instructed her to carry out the case. Fraud at the heart of the case. Government lawyers presented reams of documentary evidence supporting their key witnesses, and defense attorneys appeared to be struggling to make sense of the prosecution’s case.
Legal experts said Bankman-Fried probably concluded that with hopes of an acquittal fading, he needed to take the stand to shake up the trial, even if it was dangerous.
“Given that Bankman-Fried is losing this case badly, it’s kind of a Hail Mary to take a stand,” said Renato Mariotti, a former federal prosecutor specializing in financial crimes. “Unfortunately for [him]he could be down by more than a touchdown.”
Newmyer reported from Washington.