NEW YORK -- Sam Bankman-Fried continued to fumble on the stand Tuesday, as prosecutors expressed incredulity at the idea that he took an $8 billion hole in Alameda Research’s balance sheet in stride.
It was the defendant's fourth – and likely final – day testifying in his ongoing criminal fraud trial over the collapse of the FTX cryptocurrency exchange.
Assistant U.S. Attorney Danielle Sassoon continued her questioning of the FTX founder, touching on Bankman-Fried’s close relationship with the Bahamas government, including Prime Minister Phillip Davis, and FTX’s use of Alameda’s subsidiaries including North Dimension to access banking services.
For example, Sasson asked about Bankman-Fried’s “cozy relationship” with Bahamian regulators, noting that Prime Minister Davis and his wife received tickets to a game at the FTX arena in Miami. Bankman-Fried said he recalled the couple visiting a game, but not how they got the tickets or where they were seated. Sassoon refreshed his memory quickly by pulling up a message from a chat in which Bankman-Fried said they were sitting in FTX’s seats.
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 being spent, so much as they were being used. Sasson rejoined by asking if he meant they were being "used" by being spent on investment. He said that was correct.
Bankman-Fried also continued to claim a fuzzy memory of the details of the last few years. When asked about what he said to Alameda employees after he learned $8 billion were missing, 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?” Sasson shot back at him. Another time she asked “Did you call in your lieutenants and ask ‘who spent $8 billion?'”
Bankman-Fried was also asked about FTX’s token, FTT, and if in November 2022, after the collapse of his exchange, he thought that the asset was illiquid.
“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 former FTX engineering director Nishd Singh, among others, that if they sold their FTT, “there wouldn’t be a huge amount of liquidity.”
This developing story will be regularly updated throughout the day.
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 quickly sought to puncture that narrative, grilling Bankman-Fried about his involvement in FTX and its sister company Alameda, his public statements and whether he was permitted to use FTX customer funds, one of the key issues at the heart of the criminal case.
AUSA Sassoon: You gave the Bahamas Prime Minister floor side seats at the Miami Heat Arena?
SBF: I don't remember that.
AUSA: Here's a message where you say he is in FTX's court side seats with his wife.
— Inner City Press (@innercitypress) October 31, 2023
The trial entered its fifth week on Monday, but looks set to conclude within the next few days. After the defense rests, the prosecutors plan to call two last witnesses.
Once they're done, Judge Lewis Kaplan intends to hold a charge conference, where the attorneys will debate what's become a contentious part of the trial: what instructions the judge should provide to the jurors to help them determine, beyond a reasonable doubt, whether Bankman-Fried committed fraud and conspired to commit fraud.
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Jury deliberations may begin as soon as the end of this week, but seem likely to stretch into next week.
Read all of CoinDesk's coverage here.
Edited by Marc Hochstein.
