When the cryptocurrency exchange FTX was at its peak, Sam Bankman-Fried, the founder, communicated extensively with the public through tweets, TV interviews, and testimonies in Congress. Now, as he testifies at his fraud trial in Manhattan, his previous words have come back to haunt him.
During the trial, a federal prosecutor, Danielle Sassoon, bombarded Bankman-Fried with questions about inconsistencies between his public statements and his management of his crypto empire before its collapse in November. Bankman-Fried, dressed in a light gray suit and purple tie, answered with simple “yeps” or “nos,” avoiding the long-winded statements he usually gave. He often claimed that he couldn’t remember much of what he had said publicly, including statements about FTX’s handling of customer deposits and conflicts of interest in his businesses.
This cross-examination revealed cracks in Bankman-Fried’s claims and potentially damaged his credibility with the jury. Sassoon displayed statements that appeared to show him saying one thing in public but acting differently in private. She also presented private messages where Bankman-Fried used an expletive to dismiss regulators. These inconsistencies could seriously impact his fate, as a jury of nine women and three men will decide whether he is guilty or not.
Bankman-Fried’s testimony was the most anticipated moment of the trial, shining a spotlight on hubris and excessive risk-taking in the crypto industry. Once the face of crypto’s efforts to attract the public, he is now widely compared to notorious fraudsters like Elizabeth Holmes.
Taking the stand was a risky move for Bankman-Fried because criminal defendants generally avoid testifying to prevent prosecutors from questioning them. However, because the trial had been damaging to Bankman-Fried, he had few other options to salvage the case.
In December, federal prosecutors charged Bankman-Fried with orchestrating a scheme to steal up to $10 billion from FTX’s customers. They claimed he spent the money on extravagant projects, including venture capital investments, political contributions, and luxury real estate purchases in the Bahamas, where FTX was based. He was also accused of creating a secret back door in FTX’s code that allowed his hedge fund, Alameda Research, to seize billions of dollars in customer funds.
Bankman-Fried pleaded not guilty to seven counts of fraud, conspiracy, and money laundering. If convicted, he could face a life sentence.
After FTX’s collapse, three of Bankman-Fried’s closest associates pleaded guilty to fraud and testified against him at the trial. They claimed they lied and stole at his direction for years.
Bankman-Fried testified on Friday, portraying himself as a hardworking founder overwhelmed by his responsibilities. He denied committing fraud and blamed his colleagues for many of the issues leading to FTX’s collapse.
During the prosecution’s questioning on Monday, Sassoon focused on Bankman-Fried’s comments in interviews, congressional testimony, and Twitter. She brought up inconsistent statements about his unkempt hair and highlighted his frequent use of private planes to suggest that his humble lifestyle was a PR performance. She revealed that the private flights cost a total of $15 million.
Sassoon also questioned Bankman-Fried about his previous interviews where he asserted that Alameda had no special privileges as a customer on FTX. Prosecution witnesses contradicted these claims, stating that Bankman-Fried channeled billions of dollars to Alameda.
At one point, Sassoon presented Bankman-Fried with a copy of “Number Go Up,” a book about crypto, containing an interview where he seemingly admitted that Alameda had special privileges. However, he denied that the book refreshed his memory.
Bankman-Fried made some concessions during the cross-examination, acknowledging that Alameda had a $65 billion line of credit with FTX. He also admitted that FTX had a $150 million credit line with another firm. However, he repeatedly claimed he couldn’t remember various statements attributed to him in articles.
When asked about the importance of safeguarding customer funds, Bankman-Fried hesitated and eventually said he couldn’t remember. Sassoon then showed the jury a tweet where he had written, “And, as always, our users’ funds and safety come first.”
Bankman-Fried’s testimony is expected to continue on Tuesday. The courtroom was filled with spectators, including his parents and top federal prosecutor Damian Williams.