FTX founder, Sam Bankman-Fried, grilled in court over Alameda's trading involvement

FTX cryptocurrency exchange founder Sam Bankman-Fried faced tough questioning on Monday regarding his involvement in his Alameda Research hedge fund’s trading activities. Prosecutor Danielle Sassoon’s rigorous cross-examination aimed to challenge Bankman-Fried’s credibility, focusing on his previous statements that he was not engaged in Alameda’s trading decisions.

Bankman-Fried, 31, testified that while he was not actively making trading decisions, he was not completely isolated from Alameda’s operations. Sassoon confronted him with a December 2022 podcast clip where he claimed to have distanced himself from Alameda’s trading for years, contradicting his recent statements. This line of inquiry aims to establish whether Bankman-Fried misled the public about his role in Alameda, a key argument in the prosecution’s case.

Bankman-Fried, who pleaded not guilty to charges of fraud and conspiracy, faces accusations of misusing FTX customer funds to support Alameda, making speculative investments, and contributing to political campaigns. If convicted, he could potentially face decades in prison.

Throughout the cross-examination, Bankman-Fried frequently claimed uncertainty and lack of recall when pressed on specific details. He contested allegations that he intentionally deceived the public about FTX’s financial health, asserting that he believed the exchange was stable until November 2022 when a significant crash in specific cryptocurrencies heavily impacted Alameda, triggering FTX’s downfall.

Crucially, Bankman-Fried emphasised that FTX allowed customers, including Alameda, to trade on margin, borrowing from other customers’ deposits. He argued that despite Alameda’s attempts to hedge against market risks, the fund’s collapse became inevitable due to the drastic decline in cryptocurrency prices and the substantial debts owed to FTX.