15.29 GMT
Why did Sam Bankman-Fried give so many interviews after FTX collapsed?
Mark Cohen, Bankman-Fried’s defense attorney, again flirted with the suggestion that Binance’s handling of FTX led to the collapse of the exchange along with Alameda Research, its sister hedge fund – an attempt to bolster Bankman-Fried’s argument. that the former crypto mogul did what he could to save both companies. As of November 7, 2022, Bankman-Fried said he had contacted Binance about a possible acquisition of FTX.
“Later that day, they signed a letter of intent to acquire FTX,” Bankman-Fried said.
“What happened in that regard?” Cohen said.
“About a day later, [they] “I retired,” Bankman-Fried said.
“Have you spoken to other investors?” Cohen pressed.
“Yes,” Bankman-Fried said.
Bankman-Fried was also asked about his participation in media interviews; The government alleged he tried to use public statements to misrepresent the health of his companies.
“I felt like it was the right thing for me to do — to try to talk about what happened,” he said.
Bankman-Fried’s direct testimony just ended. The cross-examination is scheduled to begin soon.
Updated at 15.29 GMT
15.23 GMT
Bankman-Fried Announces Details of FTX’s Bankruptcy Date
Days after Binance’s sale of FTT, the cryptocurrency issued by FTX, and CoinDesk’s report on the multi-billion-dollar hole in Alameda Research’s balance sheet, a rush of customer withdrawals occurred, Bankman-Fried said.
As of November 7, 2022, customer withdrawals were around $4 billion. “That meant we were on the verge of a liquidity crisis.” The next day, customer withdrawals continued “at that pace.” There was this liquidity crisis.
Before the withdrawals, Alameda had about $5 billion to $10 billion in liquidity. But between November 7th and 8th, the crypto market experienced another crash.
Alameda’s assets “lost massively in value.” Within 12 hours, the financial transaction tax fell by 80 percent and Solana by almost 50 percent. This decline, in addition to the 70 percent decline in Alameda’s assets earlier in the year, led to a deepening crisis.
“That meant Alameda was still solvent, but the margin of error was very small,” Bankman-Fried said. “We risked a solvency crisis.”
Although there were hedging measures in September, they did not work, said Bankman-Fried. The hedges were for a general market – general crashes. But “unfortunately, this crash was not a broad crash.”
“On November 7th and 8th, 2022, Bitcoin basically didn’t move,” he recalled. “Stocks basically didn’t move at all.”
“The safeguards that would have been helpful against that [earlier] Preventing and protecting against crashes had virtually no effective benefit here,” he added.
Updated at 15:23 GMT
15.07 GMT
Do you blame Binance?
While the questioning from Bankman-Fried’s lawyer delves into the collapse of FTX, it appears that the questioning from the defense is trying to cast suspicion on Binance’s handling of the exchange. Binance, the world’s largest crypto exchange, has dumped more than $500 million in FTT – FTX’s native cryptocurrency – just days after CoinDesk broke news that Alameda Research’s stake in the token put it at risk.
Cohen suggested that FTX may have angered Binance CEO Changpang Zao when it tried to raise money in the fall of 2022 by courting sovereign wealth fund investors such as Saudi Arabia. Binance, the largest cryptocurrency exchange in the world at the time, was headquartered in the Middle East. During a trip to the region, Bankman-Fried also noted that he views Alameda and FTX as solvent.
Bankman-Fried responded: “The relationship between FTX and Binance was frosty at this point – traveling to the Middle East ran the risk that I would upset Binance by entering their turf.”
The deterioration of Binance’s relationship with FTX partially led to FTX’s demise. Caroline Ellison testified that Binance’s actions actually contributed to the collapse of the exchange and its sister hedge fund. Zhao infamously tweeted in November 2022 that his company, which held more than $2 billion in FTX equity in the form of Binance’s own stablecoin and FTT, would sell “any remaining FTT on our books.” The move was seen as a vote of no confidence in FTX’s stability and led to a broader sell-off.
Updated at 15:07 GMT
14.28 GMT
Bankman-Fried’s defense blames Caroline Ellison
Just moments after Bankman-Fried returned to the witness stand for further direct examination, it appeared that his lawyer, Mark Cohen, was trying to show that the entrepreneur was doing his best to make FTX better and safer – yet again placed the blame on ex-girlfriend and Alameda CEO Caroline Ellison, as he did during her cross-examination.
On Friday, Cohen and Bankman-Fried discussed hedging, particularly their claim that Ellison did not take positions that would have protected Alameda from the cryptocurrency’s dramatic spring 2022 crash that would have put the hedge fund at risk.
“I called a meeting with Caroline and told her that I was very worried about Alameda,” Bankman-fried testified. “I said I was very concerned that the amount was down from $40 billion to $10 billion compared to last year and that, as far as I could tell, it still didn’t address the risk of a market collapse was secured.”
He feared that Alameda could default if the market collapsed again.
There was another meeting on the same topic in September of the same year. Bankman-Fried said he asked about Alameda’s lack of coverage.
“What did she say?” Cohen asked.
“Um, she started crying,” Bankman-Fried said. “She agreed that Alameda should have hedged.” Ellison admitted that she shouldn’t have made some of the investments and “offered to resign,” Bankman-Fried said.
Bankman-Fried said he told Ellison it was her decision to move on. He remembered saying, “Maybe I hadn’t communicated clearly enough to her about the coverage beforehand.”
Bankman-Fried said they “urgently” need to introduce safeguards. The two had another conversation this month, he said. Eventually, Alameda planted hedges, although not as large as he would have liked, he said.
“I checked the status of Alameda’s coverage and was told that Alameda had a backup in place following our previous conversation,” he said. Bankman-Fried said he hoped it would be a larger number.
“After a back-and-forth on the table, Caroline finally agreed that Alameda should have hedged more than it did…”
Bankman-Fried’s lawyers call Caroline Ellison the architect of the FTX collapse
Updated at 14.35 GMT
13.55 GMT
In an earlier statement, Bankman-Fried admitted to “major mistakes.”
Sam Bankman-Fried admitted to managerial mistakes at the helm of FTX, his former multi-billion dollar cryptocurrency empire, on his first day of testimony before a jury.
“I made a series of small mistakes and a series of big ones,” Bankman-Fried, 31, said as he shared his version of the rise and fall of crypto trading platform FTX. The biggest mistake, in his opinion, is not setting up a dedicated risk management team.
Sam Bankman-Fried testifies in his crypto fraud trial without the jury present
“There were significant oversights,” he said.
When asked by his lawyer Mark Cohen whether he had defrauded anyone or stolen customer funds, Bankman-Fried replied: “No, I haven’t.”
Bankman-Fried told the jury that he didn’t know much about cryptocurrencies before launching FTX. “I had absolutely no idea how they worked,” he told Cohen. “I just knew they were things that could be traded.” But he continued that he saw an opportunity to advance the cryptocurrency system.
Read more about Bankman-Fried’s statement here:
Sam Bankman-Fried admits “major errors” in testimony in crypto fraud trial
Updated at 13.55 GMT
13.40 GMT
Sam Bankman-Fried takes the witness stand for direct examination
Sam Bankman-Fried has taken the stand. Monday’s testimony continues to be questioned by the defense to cast doubt on the statements of previous witnesses. Bankman-Fried has denied allegations made by Caroline Ellison, his ex-girlfriend and CEO of Alameda Research, that he directed FTX executives to commit crimes. He denies “misappropriating and embezzling” funds from FTX customers, as prosecutors allege in their indictment.
Apparently he had a haircut this weekend. He wears a light gray suit and a purple tie.
Cross-examination is expected to begin this week after Bankman-Fried’s defense concludes. We saw a preview of federal prosecutors’ non-jury testimony Thursday, which found Bankman-Fried’s confidence in the witness stand has waned.
Testifying is a risky undertaking and exposes him to potentially harsh questioning from federal prosecutors under cross-examination. His defense attorneys have portrayed him in their interviews as an overwhelmed “math nerd” who never expected to be rich or famous, and certainly had no intention of looting billions of dollars.
Updated at 13:50 GMT
13.39 GMT
“Math nerd” or crypto criminal? Key question in the trial against Sam Bankman-Fried
If there is a single question that has dominated the SBF fraud trial so far, it can be summarized as follows: Which version of this tech brother do you believe?
Prosecutors have described Bankman-Fried as the mastermind of a $10 billion fraud that was among the largest and most nefarious in American history. They say he selfishly wasted the money of customers who trusted FTX. He squandered the money on luxury real estate, ill-gotten influence, glamorous trips and the most iconic commercials, all while hiding a hidden mountain of debt, they allege.
In contrast, his lawyers did their best to portray him as a headstrong young genius – a “math nerd who didn’t drink or party,” according to his lawyers’ opening statement. They describe the motivation for his actions less as malice and more as inexperience in normal business operations.
Bankman-Fried’s decision to take the stand in his own defense will give jurors a chance to consider, in his own words, which version they should believe.
“Math nerd” or crypto criminal? Key question in the trial against Sam Bankman-Fried
Updated at 13:39 GMT
13.31 GMT
During the weeks-long crypto fraud trial, former business partners and members of Sam Bankman-Fried’s inner circle have taken the stand against him.
The prosecution’s key witness was Caroline Ellison, Bankman-Fried’s ex-girlfriend and former CEO of Alameda. She testified that he directed her to commit crimes and that he withdrew $10 billion in customer funds from FTX to prop up Alameda after a crypto market crash. She delivered impressive and detailed testimony against the failed crypto mogul.
Her allegations provide a clue to what Bankman-Fried is trying to refute when he takes the stand today.
Here is a summary of the five things we learned.
Caroline Ellison’s testimony against Sam Bankman-Fried: five key takeaways
Updated at 13:31 GMT
13.23 GMT
Sam Bankman FriedThe 31-year-old witness testifies in a New York courtroom today, his third day on the witness stand and his second before a jury. His first day as a witness was an evidentiary hearing where the judge dismissed the jury.
Bankman-Fried is charged with seven counts of wire fraud and conspiracy to commit money laundering following the collapse of his cryptocurrency exchange FTX. Prosecutors say the founder “misappropriated and embezzled” billions of dollars from unwitting FTX customers to make up a deficit at Alameda Research, a hedge fund affiliated with FTX. He also allegedly used the ill-gotten gains to make speculative investments, secure celebrity endorsements and donate to political campaigns.
Convictions for wire fraud can result in decades in prison. If convicted on multiple counts, Bankman-Fried faces life in prison.
He pleaded not guilty to all charges. You can read a detailed explanation here.
Sam Bankman-Fried trial: What is he accused of and will he face prison time?
Updated at 13:23 GMT
13.15 GMT
What is Sam Bankman-Fried accused of and is he facing prison time?
Sam Bankman FriedThe 31-year-old is testifying in a New York courtroom today, his third day of testimony and his second day before a jury.
Bankman-Fried is charged with seven counts of wire fraud and conspiracy to commit money laundering following the collapse of his cryptocurrency exchange FTX. Prosecutors say the founder “misappropriated and embezzled” billions of dollars from FTX customers to cover a deficit at Alameda Research, an FTX-affiliated hedge fund managed by his ex-girlfriend Caroline Ellison. Bankman-Fried also reportedly used the ill-gotten money for speculative investments, celebrity endorsements and political campaign donations.
Convictions for wire fraud can result in decades in prison. If convicted on multiple counts, Bankman-Fried could face life in prison.
He pleaded not guilty to all charges. You can read a detailed explanation here.
Updated at 13:00 GMT