Sam Bankman-Fried, the former FTX mogul facing criminal fraud and conspiracy charges, took the stand in SBF trial on Friday, emphasizing that the collapse of the FTX crypto exchange was a result of mistakes rather than wrongdoing.
During his testimony, he sought to deflect blame onto his deputies and clarify his role in key decisions made at the exchange. This trial is a pivotal moment in the legal battle surrounding FTX’s downfall.
Bankman-Fried’s Request to Alameda Research
Bankman-Fried acknowledged in court that he had asked Alameda Research, a hedge fund closely tied to FTX and run by his on-and-off girlfriend Caroline Ellison, to hedge its risks.
However, when questioned by his defense lawyer about whether Ellison followed his advice to mitigate risks and reduce the multi-billion-dollar hole, Bankman-Fried curtly replied, “no.”
SBF Trial: Acknowledgment of Mistakes
Bankman-Fried openly admitted to making mistakes during his tenure at FTX, with the most significant error being the absence of a risk manager. He acknowledged that these mistakes had consequences, stating that “a lot of people got hurt” as a result.
Mark Cohen, Bankman-Fried’s defense lawyer, spent a considerable portion of Friday’s testimony providing context for the early days of FTX and Alameda Research. The defense aimed to present a more favorable narrative, portraying the companies as legitimate and well-intentioned businesses. They aimed to explain the motivations behind controversial business decisions made during that period.
Explanations and Blame-Shifting
Bankman-Fried offered explanations for certain features of the FTX exchange, such as the “allow-negative” feature, which allowed Alameda to avoid liquidation and maintain a negative balance. He shifted blame for the system’s implementation onto his former colleagues, Gary Wang and Nishad Singh, who he said acted on his vague guidance.
Throughout his testimony, Bankman-Fried stressed that he “supervised” Wang and Singh but maintained that they had autonomy in making decisions. He described himself more as an adviser than a direct decision-maker.
Defense Strategy and Contradictions in SBF Trial
Bankman-Fried’s defense strategy included discrediting the testimony of former colleagues, and portraying events at Alameda and FTX in a more positive light than presented by prosecutors. He also refuted claims about his clothing choices, stating that his casual attire was for comfort rather than a deliberate image-building tactic.
Discussion of FTX’s Marketing and Legal Actions
The testimony delved into FTX’s marketing budget, including the purchase of naming rights to the Miami Heat’s arena, which Bankman-Fried defended as a reasonable expense. He also clarified that he did not intend to be the public face of FTX, but ended up in that role due to his initial interviews as CEO.
Judge’s Ruling In SBF Trial
The judge ruled that Bankman-Fried’s defense could include testimony about the role of FTX lawyers in deleting internal communications. However, the defense was restricted from presenting a broader narrative about the involvement of FTX lawyers in various aspects of the company’s operations.
Sam Bankman-Fried’s testimony marked a critical moment in his trial, as he attempted to shift blame to subordinates, and provide context for the actions taken during his leadership of FTX. The trial will continue as jurors are tasked with deciding his fate on fraud and conspiracy charges.