FTX founder Sam Bankman-Fried has admitted he ‘deeply regrets not taking a deeper look’ into the spending of $8 billion in customer deposits by his sister firm Alameda Research, on the last day of his testimony in court.
The alleged crypto fraudster periodically smirked and frowned in response to questions about the collapse of his bitcoin empire in November 2022 by prosecutor Danielle Sassoon, and gave a slew of evasive answers.
He is accused of committing one of the biggest financial frauds in American history – by using FTX customer deposits to prop up risky investments in fledgling hedge fund Alameda, which he ran with his ex-girlfriend Caroline Ellison.
The 31-year-old billionaire has pleaded not guilty to two counts of fraud and five counts of conspiracy. He has acknowledged making mistakes which led to FTX’s bankruptcy – harming customers and employees – but denied stealing customers’ money.
On Tuesday, he was probed on how much he knew about the $8 billion ‘hole’ in his company finances, who was responsible for it, and his ‘cozy’ relationship with Bahamian officials.
Disgraced FTX founder Sam Bankman-Fried (pictured) is back in court for another day of cross-examination in his $10 billion fraud case
Bankman-Fried pictured in a courtroom sketch during his grilling on October 31
Bankman-Fried struggled to answer a barrage of questions about who was behind the movement of customer money from FTX to Alameda, and he frequently stole glances at the 12 jurors who will decide his fate.
He could face decades behind bars if convicted.
The crypto boss said he doesn’t ‘remember anything about particular employees’ involved in sending the FTX customer deposits to Alameda, and that no-one was fired over the disappearance of $8 billion in customer money.
But he also disagreed with Sassoon’s summary of his position being that ‘as CEO of Alameda, some unknown people just spent $8 billion without your knowledge’.
Bankman-Fried insisted, ‘that’s not my testimony’ – but didn’t offer an alternative narrative during the cross-examination.
The billionaire conceded that he didn’t pay enough attention to the day-to-day transactions of his companies. ‘I deeply regret not taking a deeper look,’ he told the court.
‘When I was CEO of Alameda, I was concerned with Alameda overall risk management and it’s overall portfolio,’ Bankman-Fried added.
‘As CEO of FTX I was paying attention – although not nearly as closely as I should have been – to the risk management of Alameda accounts with FTX specifically.’
Crypto’s former golden boy admitted to knowing about the $8 billion liability in October 2022, and sharing a tweet the following month to ‘reassure’ FTX customers that their funds were safe.
Bankman-Fried appeared in court charged with two counts of fraud and five counts of conspiracy on Monday as he was cross-examined by prosecutors
Bankman-Fried’s parents pictured walking to a Manhattan federal courthouse on October 30
He also said he remembered ‘liking’ replies from some customers saying they would not withdraw funds.
Sassoon also grilled Bankman-Fried on what she called his ‘cozy’ relationship with officials in the Bahamas, where the cryptocurrency exchange was based.
The crypto boss said he could not remember whether he offered to pay the Bahamas’ $11.6 billion national debt, or gave the prime minister and his wife courtside seats at a Miami Heat basketball game at the team’s home arena, then named for FTX.
Sassoon then showed Bankman-Fried a text message in which he told co-workers the couple sat courtside at a game.
The prosecutor also asked about Bankman-Fried’s decision to let FTX customers in the Bahamas withdraw funds after withdrawals for others had been halted.
Bankman-Fried said he thought Bahamian regulators had suggested allowing it.
Earlier in the trial, former FTX executive Gary Wang, who pleaded guilty to fraud and agreed to cooperate with prosecutors, said Bankman-Fried sought to transfer control of funds to the Bahamas after FTX’s Nov. 11, 2022, U.S. bankruptcy because he thought authorities might let him stay in charge.
Prosecutors began grilling him on Monday, and he gave evasive answers throughout the hearing, saying he thought his company was ‘okay’ before the collapse.
They attacked his credibility by highlighting public statements he made before and after the FTX cryptocurrency exchange he founded filed for bankruptcy late last year when it could no longer process withdrawals.
Sassoon confronted Bankman-Fried with instances in which he’d promised customers that their assets would be safe and that they could demand those assets to be returned at any time.
Repeatedly, Bankman-Fried answered the series of questions by saying ‘Yep.’
The California entrepreneur shot to fame from 2017 to 2022 as he created the Alameda Research hedge fund and FTX, building a cryptocurrency empire that became worth tens of billions of dollars.
For a time, he seemed to be transforming the emerging industry by conforming to his publicly stated vision of a more regulated and safe environment for users.
FTX founder Sam Bankman-Fried is sworn in as he testifies in his fraud trial on October 27
Through her line of questioning, Sassoon tried to show that Bankman-Fried’s public statements were false and that he promised customers that their accounts were safe while he looted them.
At the same time, he was spending lavishly on real estate, celebrity-laden promotions, investments and political contributions, she said.
In one instance, Sassoon asked him if he’d used profanity in speaking about regulators — even as he was trying to convince Congress to bring more legitimacy to the cryptocurrency industry by setting up a regulatory framework.
‘I said that once,’ he answered when she offered a specific example.
And when Sassoon asked if his pursuit of regulations was just an attempt at garnering positive public relations, he answered: ‘I said something related to that, yes.’
Before cross-examination began on Monday, Bankman-Fried testified that he believed his companies could withstand the daily withdrawal of billions of dollars in assets until several days before they could not.
Bankman-Fried was arrested last December on fraud charges.
Initially freed on a $250 million personal recognizance bond to live with his parents in Palo Alto, California, he was jailed in August when Judge Lewis A. Kaplan became convinced that he had tried to tamper with potential trial witnesses.
He began testifying on Thursday. Kaplan has told jurors that the trial might be completed as early as this week.