It’s week four of Sam Bankman-Fried’s trial, and on Thursday the former FTX CEO took the stand to testify on his own behalf. Bankman-Fried is being charged with seven counts of fraud and money laundering at the Southern District of New York courthouse.
During court, Bankman-Fried wore an oversized gray suit and a purple tie. He arrived at the courthouse around 9:30 a.m., with his hands folded in front of him, nodding at those he made eye contact with. Throughout the morning, Bankman-Fried seemed relaxed, turning around to face the back of the court and occasionally smiling at his lawyers.
This marks the second time Bankman-Fried has spoken out publicly in the courtroom after saying yes on the first day in response to Judge Lewis Kaplan asking if he understood he had the right to testify if he wanted to.
His first words spoken on the stand Thursday were: “Good afternoon.”
But unlike the rest of the trial, Kaplan sent the jury home. He first wanted to review Bankman-Fried’s comments before determining whether that testimony could be shared with jurors. “I haven’t had a hearing of this nature in a long time, if ever,” Kaplan said.
Once on the stand, Bankman-Fried was jittery and quick to respond to the questions his defense lawyer, Mark Cohen, was asking. But when it came time for Danielle Sassoon, assistant U.S. attorney for the SDNY, to cross-examine, he was slower to respond and said he couldn’t remember many of the facts.
One of the areas Kaplan wanted to hear about was Bankman-Fried relying on legal counsel to draft terms of service and data retention policies, which included using Signal to share internal communication.
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Bankman-Fried said the “big picture takeaway” for these policies was that specific data like KYC (know your client) policies, regulatory mandates, compliance and formal accounting required retention. But not elements like drafted faulty balance sheets, which Caroline Ellison testified about weeks earlier.
But earlier in the trial, Adam Yedidia, a former FTX employee, testified that Bankman-Fried said keeping messages was “all downside.” When asked about this during the cross-examination, he said he didn’t recall that conversation and that he “didn’t have that view with all company messages,” only some in particular.
“I don’t have any knowledge that I did” violate data retention policies, Bankman-Fried said.
Bankman-Fried continuously pointed to FTX’s lawyers as the people responsible for these policies, and he didn’t have the ability to see everything all the time. He said that sometimes things were put on his desk, and he would just sign them, assuming they were in good faith.
As for Bankman-Fried autodeleting various chats in which he was involved, he testified that he believed he was following company policy because those chats were “not formal business channels,” and were “for chatter, for conversations.”
Once the company collapsed in November 2022, Bankman-Fried said he removed the autodelete function from a number of Signal chats for a “variety of reasons” and “took an effort to disable” the feature with chats he received messages in or any others that he “thought of.”
When Kaplan asked Bankman-Fried where a written copy of the data retention policy was, he was silent and looked to Cohen for guidance. The silence was filled by Kaplan stating, “Let’s move on.” During the cross-examination, the question of where the written policy was arose again; Bankman-Fried said his defense team was unable to get the policy from FTX, since he’s no longer a part of the company.
Throughout the three hours of questioning, Bankman-Fried looked straight ahead, sometimes glancing around the courtroom. His mother, Barbara Fried, took notes, while Michael Lewis, the author of “Going Infinite,” which is about Bankman-Fried, sat two rows back with his arms crossed over the bench in front of him. He didn’t take many notes and mostly stared at Bankman-Fried, occasionally glancing at the monitor to view evidence brought up.
As for the company’s terms of service, Bankman-Fried said he only “read parts in depth” and other sections he just “skimmed over.” When asked if he believed Alameda could borrow customer funds from FTX, he replied, “Yes, in many circumstances,” based on the terms of service.
Later on, prosecutors asked whether Alameda was permitted to spend FTX customer funds, to which he replied, “I wouldn’t phrase it that way, but yes.”
Bankman-Fried also said he was aware of some “speed bumps” on Alameda’s account, but “not the exact nature,” when it came to its special privileges. “I wish I could tell you more, but I don’t recall knowing more about it,” he said.
Observers in the courtroom seemed to grit their teeth at Bankman-Fried’s replies, and small rounds of snickering filled the silence after Bankman-Fried said that he did not recall certain major details about FTX and Alameda. Kaplan quipped that the “witness has an interesting way of responding to questions.”
At the end of the day, Sassoon asked the defendant about FTX general counsel Daniel Friedberg’s employment and why Bankman-Fried had hired him. He replied that he was “reluctant to hire the wrong general counsel,” to which Sassoon asked whether he hired Friedberg because he let him do what he wanted. Bankman-Fried smirked and said, “I wanted a general counsel [who was] OK with reasonable risk.”
Three hours into her son’s hearing, Barbara Fried looked up at the ceiling and leaned against Bankman-Fried’s father, Joseph Bankman. She continued to take notes.
Earlier in the day, Cohen requested a motion for acquittal on all seven counts against his client, calling the government’s case on the charges “insufficient” with “materiality not shown.” Prosecutors opposed the motion, and Kaplan declined it.
Two other witnesses, a Bahamian attorney and a “consultant for financial issues,” took the stand on behalf of the defense’s case earlier in the day.
Over the last four weeks, people in Bankman-Fried’s inner circle also took the stand; FTX co-founder and CTO Gary Wang, Alameda CEO Caroline Ellison and FTX head of engineering Nishad Singh all testified as part of their plea deals with the government.
Investors, including upper management at Paradigm and Third Point as well as retail investors, also testified about how their investments in FTX were wiped out.
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