Sam Bankman-Fried, the co-founder of FTX, told a New York court he was aware that Alameda Research hadn’t taken steps to properly hedge its risk even as he approved billions of dollars of investments before both companies collapsed last year.
Assistant US Attorney Danielle Sassoon used Bankman-Fried’s past interviews and other statements to undermine his attempts to distance himself from decisions at the hedge fund, which was affiliated with his FTX crypto platform. She focused on money Alameda paid out in the summer of 2022.
“At the time Alameda repaid its lenders you knew that Alameda had not hedged?” Sassoon asked Tuesday. “I knew around then,” he replied. “I can’t remember the exact date.”
Bankman-Fried faces decades in prison on charges that he directed the transfer of FTX customer money into Alameda for investments, political donations and expensive real estate before both companies filed for bankruptcy. The 31-year-old made the risky decision to testify in his own defense, in hopes of countering the testimony of five former FTX officials — including some of his closest friends — who took the stand to incriminate him.
Bankman-Fried’s performance on Monday started out much better than when he last faced questions from Sassoon, outside the presence of the jury, in a hearing on Thursday. Mostly gone were the overlong, evasive answers, replaced mostly with “yes” or “no” — frequently, a clipped “yep” or “nope.”
But as the afternoon progressed and Sassoon’s questioning got closer to FTX’s November 2022 failure, the phrase “not sure” became much more prevalent, earning him at least a half a dozen admonitions from the judge to answer questions more directly.
“From the early days of FTX, Alameda was allowed to exceed normal borrowing limits on FTX, yes or no?” Sassoon asked.
“I’m not sure,” he replied.
Sassoon, who will wrap up cross-examination Tuesday, confronted Bankman-Fried with many of his public and private statements that contrasted with the story he’d like the jury to believe about his role in the collapse of the FTX crypto exchange.
After asking Bankman-Fried about his claimed support for some regulation of the crypto industry, Sassoon pulled out a Twitter direct-message exchange between him and a Vox reporter in which he had said ”f**k regulators.”
“You wanted your followers to think consumer protection was important to you?” Sassoon asked.
“Yep,” Bankman-Fried answered.
Sassoon tried to paint Bankman-Fried as a story teller who shaped his direct testimony after months of reviewing the government’s evidence against him.
Over several hours, Sassoon methodically led Bankman-Fried through dozens of comments he made on Twitter, in press interviews, before Congress and on Slack.
Earlier Monday, just before his lawyers finished their questioning, he tried to explain why he gave a raft of interviews in the days and weeks after FTX’s failure.
“I felt like I wanted to apologize about what happened,” he said.
His parents Barbara and Joe took notes from the public gallery while author Michael Lewis, who recently published a book about Bankman-Fried and FTX, sat behind them. Ben McKenzie, the actor best known for playing Ryan in “The O.C.” and who published a book critical of crypto earlier this year, was also in the courtroom.
Bankman-Fried’s testimony has been a major inflection point in the trial, with reporters lining up all night in the cold and rain to secure one of 20-odd press seats inside the 26th-floor courtroom.
At other times the prosecutor tried to challenge his public image, questioning the reasons behind his disheveled hair and outfits.
“You think of yourself as a smart guy?” she asked. “In many ways, not all ways,” he replied.
“You thought highly of yourself?” she asked. “I did,” he said.
--With assistance from Ava Benny-Morrison.
Author: Bob Van Voris, Yueqi Yang and Chris Dolmetsch