“So, it’s your testimony that your supervisees told you to stop asking questions?” asked a prosecutor. “Did you call in your lieutenants and ask ‘who spent $8 billion?'”
NEW YORK — Facing pointed questions from prosecutors on Tuesday, Sam Bankman-Fried seemed to struggle to find the words he wanted to say, especially when questioned about his apparent nonchalance about an $8 billion hole in Alameda Research’s balance sheet – money allegedly pilfered from customers of his FTX crypto exchange.
It was the defendant’s fourth – and final – day testifying in his criminal fraud trial over the collapse of FTX, which was once valued at $32 billion.
Bankman-Fried was the last witness from either the defense or the prosecution. Just before Judge Lewis Kaplan released the jury for the day, Mark Cohen, Bankman-Fried’s lawyer, mounted a brief rebuttal, giving time for the defendant to clarify certain answers he gave to the government’s questions.
Whether those clarifications will be enough to sway the jury could be seen as soon as Friday. Closing arguments in Bankman-Fried’s trial are set to begin on Wednesday and are expected to take around a day. Then, the jury will finally be ready to deliberate – something that could take several days given the complexity of this case, which has already stretched into its fifth week.
Grilling SBF again
Assistant U.S. Attorney Danielle Sassoon began her second day questioning the FTX founder on Tuesday by touching on his close relationship with the government of the Bahamas, where FTX was based, and its prime minister, Philip Davis. The prosecutor also zeroed in on FTX’s use of Alameda subsidiaries like “North Dimension” to access banking services – a relationship that, in the view of prosecutors, gave Alameda improper access to FTX users’ funds.
Sassoon took particular aim at what she characterized as Bankman-Fried’s “cozy relationship” with Bahamian regulators, noting that Davis and his wife received tickets to a game at the FTX Arena in Miami (now known as the Kaseya Center). Bankman-Fried said he recalled the couple visiting a game, but not how they got the tickets or where they sat. Sassoon then pulled up a message from a chat in which Bankman-Fried said they used FTX’s seats.
Sassoon appeared to insinuate that this relationship was improper: She pulled up Bankman-Fried’s correspondence with a Bahamian regulator where Bankman-Fried offered to open up withdrawals to Bahamian customers. The offer, which he ultimately followed through on, took place while withdrawals were frozen for customers from other countries.
Getting pedantic about FTX customers’ money
In a particularly testy exchange toward the close of her cross-examination, Sassoon asked Bankman-Fried if he ever informed FTX customers that their funds were going to Alameda, the hedge fund he founded before starting FTX, or that they were being spent.
“I don’t recall giving directions,” he replied multiple times.
Later in the line of questioning regarding Alameda’s alleged spending of FTX customer assets, Bankman-Fried said he wouldn’t say the funds were spent, so much as they were used. Sassoon rejoined by asking if that meant they were being used to fund investments. He said that was correct.
Bankman-Fried also continued to claim a fuzzy memory about the details of the last few years. When asked what he said to FTX engineers (and key government witnesses) Gary Wang and Nishad Singh after he learned $8 billion had gone missing as the result of a computer bug, Bankman-Fried said they told him they were busy and that he should stop asking questions.
“So, it’s your testimony that your supervisees told you to stop asking questions?” Sassoon shot back at him. Another time she asked, “Did you call in your lieutenants and ask ‘who spent $8 billion?'”
Sassoon eventually moved to FTX’s November 2022 collapse, when the exchange and Alameda filed for bankruptcy because FTX didn’t have enough money to satisfy customers’ withdrawal requests.
Earlier in his testimony, Bankman-Fried defended a tweet thread from Nov. 7 – a few days before FTX filed for bankruptcy – in which he told users “assets are fine.” This was technically accurate, he reasoned, because he believed Alameda still had enough money on hand to refund FTX customer deposits.
But Sassoon challenged a key piece of this claim. She asked about FTX’s token, FTT, which formed a large portion of Alameda’s balance sheet. Sassoon tried to force a confession from Sam: Didn’t he know, by November 2022, that FTT was illiquid (meaning it wasn’t worth nearly as much as Alameda accounted for)?
“I don’t think I would’ve said that,” he responded.
In response, Sassoon pulled up a text from a “small group chat” on the Signal messaging app in which he told colleagues, including former Alameda CEO Caroline Ellison and Singh, the former FTX engineering director, that if they sold their FTT, “there wouldn’t be a huge amount of liquidity.”
Bankman-Fried has so far tried to present an alternative explanation of how one of the world’s better-known trading platforms collapsed, suggesting it grew too quickly and without sufficient oversight or risk planning. However, prosecutors – led by Sassoon – have sought to puncture that narrative, grilling Bankman-Fried about his involvement in FTX and its sibling (Alameda), his public statements and whether he was permitted to use FTX customer funds, a key issue at the heart of the criminal case.