FTX founder Sam Bankman-Fried arrives at the U.S. federal courthouse in New York City to submit his not guilty plea on March 30, 2023. Bankman-Fried faced this week tough questioning from prosecutors who sought to paint him as the mastermind behind a massive fraud at FTX.
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FTX founder Sam Bankman-Fried arrives at the U.S. federal courthouse in New York City to submit his not guilty plea on March 30, 2023. Bankman-Fried faced this week tough questioning from prosecutors who sought to paint him as the mastermind behind a massive fraud at FTX.
Ed Jones/AFP via Getty Images
With the trial turning against him, Sam Bankman-Fried took what could be the biggest gamble of his life: The disgraced founder of the cryptocurrency exchange FTX testified in his own defense.
It did not go well.
Taking the stand was always going to be a risky move — one few criminal defendants make. And less than a minute into an unyielding cross-examination by the prosecution, it was clear why.
Time and time again, the U.S. government’s lawyers pointed to contradictions between what Bankman-Fried said in public and what he said — and did — in private, as they continued to build a case that he orchestrated one of the largest financial frauds in history.
For Bankman-Fried, the stakes are high. He’s been charged with seven criminal counts, including securities fraud, and if he is found guilty, he could spend the rest of his life in prison.
Here are four takeaways from Bankman-Fried’s testimony, which spanned three days, from Friday to Tuesday.
It was brutal at times
Veteran prosecutor Danielle Sassoon, a former clerk with the late Justice Antonin Scalia, is known to be an effective litigator, and in her cross-examination of the defendant, she delivered.
For almost eight hours, the assistant U.S. Attorney for the Southern District of New York asked Bankman-Fried a litany of incisive questions. She moved quickly, and whenever the defendant hesitated, she dug in.
Bankman-Fried seemed to have a difficult time remembering key conversations and meetings. “I don’t recall,” he said repeatedly.
The co-founder of FTX and the crypto trading firm Alameda Research went from giving curt “yep” and “no” answers — to rambling. On several occasions, Judge Lewis Kaplan admonished the defendant for not paying attention.
“Please answer the question,” Kaplan told Bankman-Fried repeatedly.
And with each passing hour, Bankman-Fried seemed to get more and more irritated. He often disagreed with how Sassoon characterized his past comments — in trial testimony, but also in media reports.
At times, he seemed resigned. Bankman-Fried slumped in front of the microphone, and when the prosecutor asked him to read his prior statements aloud, he did so with unmistakable reluctance.
New York Times journalist Andrew Ross Sorkin talks to Bankman-Fried on stage at the 2022 New York Times DealBook event in New York City on Nov. 30, 2022. Bankman-Fried talked frequently with the media and in other venues. Those words are now coming back to bite him.
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New York Times journalist Andrew Ross Sorkin talks to Bankman-Fried on stage at the 2022 New York Times DealBook event in New York City on Nov. 30, 2022. Bankman-Fried talked frequently with the media and in other venues. Those words are now coming back to bite him.
Thos Robinson/Getty Images for The New York Times
Confronting his own words
Bankman-Fried was the public face of FTX. He appeared on magazine covers and at big business conferences, and he frequently hung out with celebrities including Tom Brady.
He also didn’t retreat from the spotlight after FTX and Alameda Research imploded.
Bankman-Fried did media interviews even after his companies collapsed and he was indicted. He opined on X, formerly known as Twitter. He even tried to start his own e-mail newsletter.
That tendency to talk came back to bite him. Big time.
Sassoon’s goal was to demolish Bankman-Fried’s claims that he was someone who simply struggled to keep up with the speed and magnitude of FTX’s growth, and failed to recognize the extent of its troubles — including the misuse of FTX customer money.
The seasoned prosecutor sought to paint Bankman-Fried as something else entirely, as someone who directed his subordinates to funnel billions of dollars from FTX’s users to Alameda Research, to plug holes in the company’s balance sheet, and to fund lavish expenses.
Bankman-Fried bought luxury real estate, and FTX used private planes to ferry Amazon packages from the United States to The Bahamas, where FTX was based.
And Sassoon sought repeatedly to point out contradictions between Bankman-Fried’s public statements and his private comments and actions.
Jurors got glimpses of another side of Bankman-Fried, like when Sassoon showed him describing a group that included FTX customers as “dumb motherf******s.”
Above all, Sassoon was prepared. When Bankman-Fried said he couldn’t remember something, she would confront him with the evidence in the form of an email, or a tweet, or an excerpt from an interview.
Caroline Ellison, the former head of Alameda Research, leaves Manhattan Federal Court in New York City after testifying during Bankman-Fried’s trial on Oct. 10, 2023. Ellison was among the prosecutors’ witnesses who testified that Bankman-Fried had directed them to commit crimes.
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Caroline Ellison, the former head of Alameda Research, leaves Manhattan Federal Court in New York City after testifying during Bankman-Fried’s trial on Oct. 10, 2023. Ellison was among the prosecutors’ witnesses who testified that Bankman-Fried had directed them to commit crimes.
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Nonetheless, Bankman-Fried lays out his defense
Despite the withering cross-examination from Sassoon, Bankman-Fried did get to lay out his defense when he was questioned, much more gently, by his lawyer, Mark Cohen.
At the start of the direct examination, Cohen asked Bankman-Fried if he defrauded anyone or took any customer funds. “No,” he said. “I did not.”
Bankman-Fried also told the court that he made “a number of small mistakes and a number of larger mistakes.” The biggest one, he said, was not having “a dedicated risk management team.”
“We didn’t have a chief risk officer,” Bankman-Fried said. “We had a number of people who were involved to some extent in managing risk, but no one dedicated to it, and there were significant oversights.”
He blamed his top lieutenants at FTX and Alameda for mismanaging things, including Caroline Ellison, a former girlfriend and CEO of Alameda, who had testified he had directed her to commit crimes.
Bankman-Fried, for example, said that when Ellison led Alameda, she failed to hedge the firm’s investments adequately, which made it vulnerable to steep market downturns.
On the witness stand, Bankman-Fried also claimed he learned about problems with FTX’s financials as he went along and said he didn’t know the extent to which FTX and Alameda were actually working together.
It was a colorful scene
All in all, it was a spectacle.
Bankman-Fried’s testimony was the most anticipated of the trial, and hours before the sun rose on his first day of taking the stand on Friday, the area in front of the courthouse in Lower Manhattan was crowded with an odd mix of journalists, curious onlookers, and crypto enthusiasts. The first reporter showed up just after midnight to secure a seat in the courtroom.
So many people showed up that the court reportedly prepared three overflow rooms to accommodate the crowd,
Author Michael Lewis speaks at an IMF and World Bank event in Washington, D.C., on Oct. 9, 2016. Lewis, who’s just written a book about Bankman-Fried, was one of the well known people who attended the former FTX CEO’s testimony.
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Author Michael Lewis speaks at an IMF and World Bank event in Washington, D.C., on Oct. 9, 2016. Lewis, who’s just written a book about Bankman-Fried, was one of the well known people who attended the former FTX CEO’s testimony.
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The testimony also attracted an array of celebrities including actor Ben McKenzie. The former star of “The O.C.” and “Gotham” is now a “crypto skeptic” and the co-author of a bestseller about cryptocurrency.
Michael Lewis, the best-selling author who has just penned a book about Bankman-Fried, was also there. Wearing Hoka running shoes and a down jacket, he followed the proceedings in one of the overflow rooms before he snagged a seat in the courtroom itself — not in the rows of reporters, but in a seat near Bankman-Fried’s friends and family.
And crypto influencer Tiffany Fong, who has gained some celebrity during the trial after she interviewed Bankman-Fried for hours when he was under house arrest, has summarized each day’s proceedings in video digests.
This story originally appeared on NPR
