FTX founder testifies to judge
Jury sent home; ruling to come on what he can say
NEW YORK — Sam BankmanFried got a test run at testifying at his fraud trial Thursday when a judge sent jurors home so he could hear snippets of testimony and decide what the FTX founder will be allowed to tell the jury.
Bankman-Fried has decided to testify Friday to tell his version of how his multibillion-dollar cryptocurrency empire grew into a giant in the industry and then collapsed, causing billions of dollars in losses that prosecutors blame on his extravagant spending on investments, donations, and a lavish lifestyle.
It seemed on Thursday that Bankman-Fried was about to start his testimony before the jury after lunch when Judge Lewis A. Kaplan changed the plans, saying he’d prefer to make rulings on what Bankman-Fried can testify about before he starts. He had previously said he’d conduct a hearing and make those rulings on Friday.
“We’re in the home stretch,” Kaplan told jurors as he sent them home for the day, saying he knew it was a little surprise for them to have the rest of the afternoon off. He told them they were likely to get the case in the first few days of next week.
Since early October, prosecutors have presented their case through witnesses and dozens of exhibits including financial records.
After prosecutors rested Thursday, defense lawyers immediately asked Kaplan to acquit Bankman-Fried on the grounds that prosecutors had failed to present sufficient evidence. The judge rejected the request.
The California entrepreneur has pleaded not guilty to conspiracy charges accusing him of diverting billions of dollars from his clients and investors to make risky investments, buy luxury housing, engage in a star-studded publicity campaign, and make large political and charitable donations.
Bankman-Fried, 31, has remained quiet through a threeweek trial as several members of his executive inner circle have testified against him in cooperation deals they made with the government before pleading guilty to criminal charges.
In their testimony, the executives insisted that Bankman-Fried directed them to spend billions of dollars taken from the accounts of FTX customers and funneled through Alameda Research, a hedge fund he started in 2017, two years before he created the FTX cryptocurrency exchange.
Bankman-Fried was arrested in the Bahamas and extradited to the United States last December, a month after his businesses collapsed.
Initially, he was freed on a $250 million personal recognizance bond and required to remain at the Palo Alto, Calif., home of his parents, longtime Stanford University law professors.
Kaplan revoked the bail in August after concluding that Bankman-Fried had tried to influence potential trial witnesses and ordered him jailed.
Those testifying against Bankman-Fried have included Caroline Ellison, his former girlfriend who was chief executive of Alameda before it was publicly revealed that billions of dollars were missing last November.
She told jurors that the collapse of the businesses brought her “relief that I didn’t have to lie anymore” and she blamed Bankman-Fried for corrupting her moral compass by creating justifications for doing things that she knew to be wrong and illegal.
She also admitted doctoring financial balance sheets to try to hide that Alameda was borrowing about $10 billion from FTX customers by June 2022, a discrepancy that was revealed when customers rushed to withdraw deposits last November as word got out that their money was not safe.