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Sam Bankman-Fried was confronted with tweets, media interviews and sworn testimony in which he repeatedly vouched for FTX’s governance and risk management, as New York prosecutors began to cross-examine the former tycoon over his cryptocurrency exchange’s multibillion-dollar collapse.
The 31-year-old, who had earlier answered questions from his own lawyers, also admitted to calling a “specific subset” of crypto investors “dumb motherfuckers” and conceded he had referred to his advocacy for crypto regulation as “just PR” in the days leading up to his arrest last December.
He also admitted to writing “fuck regulators” to a reporter in November 2022.
During questioning by assistant US attorney Danielle Sassoon, Bankman-Fried was presented with an audio recording of an interview in which he had claimed to not be “involved at all” in the running of FTX’s affiliated hedge fund Alameda Research. Moments earlier, he acknowledged in testimony that he was still involved in some discussions over the firm’s trading strategy.
The barrage of evidence came as the trial against Bankman-Fried entered its fifth week, having previously featured testimony from some of the former billionaire’s closest friends and colleagues, including Caroline Ellison, Gary Wang and Nishad Singh, all of whom are co-operating with prosecutors.
Under direct examination from his defence lawyer earlier on Monday, Bankman-Fried testified he believed FTX “had no holes on its balance sheet” just days before it collapsed into bankruptcy with $8bn of customer deposits missing.
Presented with a tweet from November 7 2022 — four days before the exchange declared bankruptcy — in which he said “FTX is fine”, Bankman-Fried maintained that at the time the exchange itself “had effectively no liabilities” and that there was “no hole in terms of assets”.
He added: “FTX did not do any investments with customer assets.”
However, he conceded that at that point the exchange was “on the verge of a liquidity crisis” as customers were withdrawing billions of dollars per day after the founder of competing exchange Binance cast doubt over FTX’s finances.
He also testified he had left it to Ellison, who ran Alameda Research, to hedge the trading firm’s positions after its balance sheet deteriorated in the summer of 2022. When updated on that strategy in September, Bankman-Fried said he felt the company “could have hedged twice as much”.
Bankman-Fried, who has pleaded not guilty to all charges, was later asked by Sassoon whether he agreed that he knew “how to tell a good story”, to which he replied: “It depends on what metric you use”. Before FTX’s collapse, Bankman-Fried was one of the best-known figures in the nascent crypto industry, becoming a mainstay of media coverage and hobnobbing with politicians and celebrities.
He added that he told “what I thought was the truth about the company” to journalists, investors, and the US Congress, before being presented with testimony to Congress from May 2022 in which he said FTX offered protections to customers including maintaining sufficient liquid assets to always meet withdrawal requests. The exchange was unable to meet such requests in November of that year, and was forced into bankruptcy.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
