Sam Bankman-Fried acknowledges mistakes, denies wrongdoing

Sam Bankman-Fried, the former billionaire and founder of the FTX cryptocurrency exchange, took the witness stand on Friday to testify in his own defence at his ongoing fraud trial in Manhattan federal court. During his testimony, Bankman-Fried candidly acknowledged that a “lot of people got hurt” when FTX collapsed, attributing the downfall to various mistakes, but firmly denying allegations of fraud and misappropriation of customer funds.

Bankman-Fried, who has pleaded not guilty, addressed the court, stating, “We thought that we might be able to build the best product on the market. It turned out basically the opposite of that. A lot of people got hurt – customers, employees – and the company ended up in bankruptcy.”

The crux of the prosecution’s case revolves around accusations that Bankman-Fried used FTX customer funds to support his crypto-focused hedge fund, Alameda Research, engaged in speculative venture investments, and made substantial political campaign donations, exceeding $100 million. Additionally, he faces charges related to an alleged scheme to deceive Alameda’s lenders and FTX investors.

Bankman-Fried’s trial, which commenced on October 3, is approaching its conclusion, nearly a year after FTX crumbled in the face of significant customer withdrawals, leading to the company’s declaration of bankruptcy in November 2022. He was indicted the following month.

This pivotal moment in the trial marked the first time the jurors and alternates had the opportunity to hear directly from the 31-year-old former billionaire. Bankman-Fried, previously known for his casual attire, appeared in a suit and gave his testimony calmly and measuredly, recounting his journey from founding Alameda Research in 2017 after graduating from the Massachusetts Institute of Technology, despite having limited knowledge of the cryptocurrency world.

Bankman-Fried, whose educational background was in physics and had experience as a quantitative trader at Jane Street, discussed his initial venture into the crypto market by identifying opportunities for “arbitrage” in the digital asset space. He shared that Alameda’s first office was a small Airbnb in Berkeley, California and later relocated to Hong Kong to operate under the radar.

Throughout the trial, jurors have already heard from three of Bankman-Fried’s closest confidantes at FTX and Alameda, all of whom have pleaded guilty and agreed to cooperate with prosecutors. Their testimonies earlier this month implicated Bankman-Fried in financial crimes orchestrated at his direction, supported by evidence from spreadsheets and text messages.

For Bankman-Fried, taking the stand carries inherent risks, as it exposes him to potential cross-examination by prosecutors. However, legal experts believe that his willingness to testify demonstrates his determination to challenge the allegations made by his former associates, whose claims were supported by compelling evidence.

As the trial reaches its final stages, the outcome hinges on the jury’s assessment of Bankman-Fried’s testimony, the credibility of his defence, and the strength of the prosecution’s case. The cryptocurrency community, investors, and legal observers are watching closely to see how this high-profile trial will conclude.