As the trial of Sam Bankman-Fried nears its conclusion, the disgraced crypto founder took the stand one final time on Tuesday to face cross-examination under Assistant U.S. Attorney Danielle Sassoon.
The first few hours of Sassoon’s scrutiny came on Monday, with Bankman-Fried claiming ignorance as she confronted him with past statements he’d made to reporters and coworkers, all revealing that he’d allowed Alameda, the trading firm for his exchange FTX, to have special privileges, eventually leading to the collapse of his crypto empire in November 2022.
$8 billion
On Tuesday, Sassoon took a different approach. The prosecution had spent several weeks calling key witnesses to the stand—all members of Bankman-Fried’s inner circle, including Alameda CEO Caroline Ellison, FTX CTO Gary Wang, and engineering chief Nishad Singh.
Each testified about the events that led to FTX’s collapse. When customers deposited money on to the crypto exchange, much of that capital was directed to Alameda, which in turn used the funds for its own purposes, from venture investments to luxury real estate. When users sought to withdraw their deposits in November 2022, much of the money had bene spent or was wrapped up in illiquid positions, spurring the exchange to declare bankruptcy.
Ellison, Wang, and Singh all testified that Bankman-Fried had directed a series of changes that allowed Alameda to rack up a negative balance and a $65 billion line of credit on FTX, as well as to plow billions of dollars into risky investments—the foundation for the Department of Justice’s fraud allegations.
During Tuesday’s cross-examination, Sassoon asked Bankman-Fried about his involvement in facilitating the $8 billion hole, citing instances from previous testimony where witnesses said they’d discussed the issue with him.
Rather than claiming responsibility, or even awareness, Bankman-Fried repeatedly painted himself as an absentee CEO, instead shifting blame to other executives. Sassoon brought up a conversation Bankman-Fried held with Wang and Singh about Alameda’s mounting debt several months before FTX’s collapse, including a bug in the database that made the hole seem much larger than it actually was. At the time, the issue was serious enough that Bankman-Fried canceled a planned trip to Washington, D.C.
Sassoon asked whether, in his capacity as CEO, he followed up with them to inquire about the multibillion-dollar hole or where it came from. Bankman-Fried said he did not. When pressed further, he said that they were “busy” and he didn’t want to be “distracting.” Bankman-Fried added that he thought his top lieutenants could get “to the bottom of it.”
Regain control
Despite Bankman-Fried’s display of innocence, the previous weeks of testimony have portrayed him as an involved executive who oversaw every detail of his empire. During direct testimony, he said he sometimes worked 22 hours a day.
During the beginning of Tuesday’s cross-examination, Sassoon focused on Bankman-Fried’s closeness to the Bahamian government, where he moved FTX and Alameda from Hong Kong in 2021.
While headquartered in the Bahamas, which had implemented a comprehensive crypto regulatory regime shortly before the move, Bankman-Fried cultivated a close relationship with the country’s prime minister, Philip Davis. Sassoon pointed to texts that showed Bankman-Fried had given Davis courtside seats to a Miami Heat game at the FTX Arena. Bankman-Fried even joked that a top FTX employee was a member of the Bahamian government.
After FTX collapsed in November, Bankman-Fried tried to leverage his relationship with Bahamian regulators to “regain control” of the exchange, he admitted under cross-examination, including allowing Bahamian customers to withdraw funds while the function was shut off for the rest of the world.
Ultimately, his efforts were unsuccessful, with much of FTX going into Chapter 11 bankruptcy in the U.S.
Bankman-Fried’s first criminal trial is expected to conclude in early November, with a second set of charges set to be presented in 2024.
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