FTX-founder Sam Bankman-Fried decided last week to testify in his own defence at his criminal fraud trial.
This meant facing a cross-examination by prosecutors who have documents, messages and testimony from witnesses. Reminder: three former members of Bankman-Fried’s inner circle (Gary Wang, Caroline Ellison and Nishad Singh) have testified that he directed them to commit crimes and was aware his hedge fund Alameda Research had taken billions of dollars from FTX customers without their consent. Bankman-Fried has pleaded not guilty.
So far, Bankman-Fried has admitted “mistakes”, including not having a risk-management team in place.
On the accusation that FTX customer funds were used to prop up Alameda, Bankman-Fried said he believed the money spent on sponsorship and real estate came from the company’s revenue or capital from investors. But he did say he borrowed from Alameda, which he owned, for political donations.
When he learned that Alameda had borrowed $8 billion from FTX customers’ deposits (something he said he regretted not looking into sooner) he said that he thought that Alameda had enough assets to cover it.
“If it were far larger, I would have been calling a crisis,” he said.
Bankman-Fried blamed Ellison for Alameda’s collapse. He denied he’d looked in detail at what Ellison had said were falsified balance sheets he’d told her to draw up.
Overall, he presented himself as a hands-off CEO, who left decisions to others – in contrast to his ex-colleagues’ testimonies that he told them what to do. He said that lawyers were involved in the key decisions at FTX, although he often struggled to identify specific conversations in which lawyers approved what he was doing.
Now, the trial is moving on to closing arguments. This will probably take several hours, so jurors are not expected to get the case before Thursday.
Want to know more about how these things go down? Here’s a list of five other executives who testified in their own defence at white-collar criminal trials in the U.S. in recent years.
Meanwhile, the U.S. deputy treasury secretary, Wally Adeyemo, spoke in London about the flow of illicit finance, both in crypto and in traditional finance. Crypto’s role in terrorist financing has come under renewed scrutiny following the deadly attacks in Israel by Palestinian militant group Hamas. Adeyemo’s trip to London, then Brussels, is part of efforts by the U.S. government to coordinate a crackdown on Hamas exploiting the financial system to get around sanctions.
Adeyemo said that while most financial institutions want to root out terrorist financing, there are some, especially in the digital asset industry, “who wish to innovate without regards to its consequences, including protecting against illicit finance.”
It should be noted that crypto does not account for the lion’s share of terrorist group funding, Adeyemo said. But the U.S. is cracking down on it now to prevent its wider use in the future.
