Defense rests in fraud trial
FTX founder wraps testifying, faces prosecutors
NEW YORK — In his final hours testifying at his criminal fraud trial Tuesday, Sam Bankman-Fried faced the prosecution’s grilling with a straightforward defense: He may have been too disengaged as a boss but was no fraudster.
The former crypto mogul wrapped up his risky gambit testifying in his defense by insisting he did not know about the alleged fraud at the core of the government’s case against him until last fall, just two months before his business empire collapsed.
In his retelling, he only learned that his hedge fund, Alameda Research, had spent $8 billion in customer deposits from his crypto trading platform, FTX, by overhearing a conversation among his employees in September 2022. He said when he confronted them, he was told to stop asking questions and that they were busy.
“I don’t know if this is right or wrong or for better or worse, I wasn’t particularly trying to dole out blame for it,’’ BankmanFried said, speaking near the end of two days of questioning from federal prosecutor Danielle Sassoon.
Bankman-Fried’s version of events diverged starkly from the story that three of his former top deputies told in the opening weeks of the trial. They said they committed financial crimes at his direction in testimony they provided under cooperation agreements with the prosecution.
Bankman-Fried said Tuesday that he didn’t seek to hold any Alameda employees accountable after learning they spent billions of dollars in FTX customer deposits. Asked by Sassoon if he had fired anyone from the trading firm whom he believed to be responsible, he said, “No.’’
Sassoon also hammered Bankman-Fried on his relationship with Bahamian government officials, which she described as “cushy,’’ showing the jury private messages where Bankman-Fried said he let the Bahamian prime minister use FTX’s courtside Miami Heat tickets.
Bankman-Fried even joked in a group chat with his associates that one of his top lieutenants, Ryan Salame, was effectively a member of the Bahamian government.
The questioning followed a rough Monday for BankmanFried, during which he struggled through a four-hour grilling by Sassoon. On Tuesday he continued to attempt to parry questions about his conduct and square the inconsistencies between public and private comments by insisting he couldn’t remember key details.
But Sassoon continued to marshal prosecutors’ trove of records to elicit some damaging admissions. This included evidence suggesting the former crypto mogul cultivated a humble, do-gooder persona that obscured an appetite for luxury and a disdain for colleagues, followers, and policymakers.
Sassoon noted on Monday that Bankman-Fried spent roughly $15 million on private jet travel, and she got him to acknowledge authorizing private planes to fly Amazon packages to FTX’s offices in the Bahamas. Another revelation: Private messages in which Bankman-Fried dismissed government regulators with a vulgarity and disparaged a subset of his followers as “dumb [expletives]” even as he publicly courted their trust.
Under her questioning, Bankman-Fried conceded on Tuesday that his hedge fund, Alameda Research, enjoyed special privileges trading on FTX — despite his repeated public assurances it did not — including a $65 billion line of credit and an exemption from auto-liquidation rules imposed on other customers. And he admitted that he often risked the health of his businesses to maximize potential profits — an underlying theme to his testimonies and the trial at large.
Federal prosecutors have accused Bankman-Fried of orchestrating one of the largest financial frauds in history by stealing as much as $10 billion in FTX customer money to pay for risky venture investments, lavish real estate purchases, and dark-money political contributions. He has pleaded not guilty to seven counts of fraud and conspiracy. If convicted, he faces decades in prison.
In a rebuttal testimony led by his attorney after the cross-examination, Bankman-Fried tried to paint a more benign picture of his behavior. He said the Alameda account used only $2 billion of its line of credit at most, and he justified private jet travel as a reasonable business expense, saying commercial flights from the Bahamas were often delayed.
He even made a joke about the photo Sassoon showed the jury of him sleeping on a private jet, calling it “very flattering.’’
After the defense’s rebuttal, Judge Lewis A. Kaplan sent the jury home. Kaplan and the lawyers will spend the rest of Tuesday discussing the instructions read to jurors before deliberations, which could begin as soon as Thursday.