Sam Bankman-Fried's Jurors Were Sent Home for the Day, but His Debut on the Stand Was Significant Anyway

Even though jurors weren't there to hear the former crypto mogul, the ex-FTX CEO's first appearance on the witness stand was still remarkable.

AccessTimeIconOct 26, 2023 at 1:30 p.m. UTC
Updated Oct 27, 2023 at 2:41 p.m. UTC
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  • Sam Bankman-Fried's testimony began Thursday without the jury present so the judge overseeing the case could review the FTX founder's comments first.
  • The former CEO placed blame on FTX's attorneys for the collapse of the multi-billion-dollar crypto exchange – a seeming attempt to deflect responsibility.
  • Prosecutors got to cross-examine him, too, and it didn't go well for SBF.

NEW YORK — Sam Bankman-Fried began testifying at his criminal trial Thursday without jurors present, an unusual move by the judge who wanted to review the comments first to see if they're admissible.

Even though jurors weren't there to hear him, Bankman-Fried's first performance on the witness stand – delivered while he was under oath – was remarkable.

The FTX founder's decision to testify is risky. While Bankman-Fried has tried to frame the collapse of his multi-billion-dollar FTX crypto exchange as an unavoidable accident – he gave interviews to reporters, started a Substack newsletter and tweeted to downplay his culpability after his company filed for bankruptcy in November 2022 – he has exposed himself to tough questioning from prosecutors.

A sketch of Sam Bankman-Fried testifying on Oct. 26, 2023 (Nikhilesh De/CoinDesk)
A sketch of Sam Bankman-Fried testifying on Oct. 26, 2023 (Nikhilesh De/CoinDesk)

On Thursday, Bankman-Fried answered his own lawyer's queries in crisp, polished tones that differed from the uncertain responses he gave during a "Good Morning America" interview a year ago after his empire crumbled. The former CEO placed blame on FTX's attorneys for the collapse of the multi-billion-dollar crypto exchange – a seeming attempt to deflect responsibility.

But prosecutors got to cross-examine him, too, in this jury-less session. The grilling from Assistant U.S. Attorney Danielle Sassoon – which normally would take place after the defense has a chance to fully air its argument – did not go well for Bankman-Fried and showed precisely how testifying in a case like this can backfire for a defendant.

Certain lines of questioning from Sassoon seemed to catch Bankman-Fried off-guard.

"I'd like you to point out where in this agreement it is specified that Alameda is allowed to spend customer funds," she said at one point, getting at the heart of the fraud and conspiracy accusations he faces: that he stole clients' money. She said this after pulling up a “Payment Agent Agreement” between FTX and Alameda Research, Bankman-Fried's trading firm that is accused of spending billions of dollars that belonged to FTX customers.

Whereas he was able to answer questions from his own lawyers without skipping a beat, Bankman-Fried took nearly two minutes to scan over the document. When he did come up with an answer – pointing, with a seeming lack of confidence, at a passage in the middle of the page – he admitted that he's "not a lawyer" and couldn't be sure of his interpretation.

In response to other questions, Bankman-Fried would pause and mouth words to himself in an apparent struggle to come up with anything to say – a stark contrast to his verbosity earlier in the hearing.

Occasionally, Bankman-Fried would look upwards for an extended period, eyes darting as if searching for the optimal answer to a given query. When Bankman-Fried did answer, his responses were almost always lengthy and meandering – couched in terms like "probably," "I think," and "to my best estimate." Frequently, though, he simply said: "I don't recall," such as when he was asked whether he recalled a conversation about how $13 billion had gone missing at the company – a discussion described earlier in the trial by prosecution witness Nishad Singh, a member of Bankman-Fried's FTX inner circle who has pleaded guilty.

SBF's defense

Previously, Judge Lewis A. Kaplan blocked Bankman-Fried's team from raising issues like an "advice-of-counsel" defense without explicit permission from the court. But in Thursday's hearing, arguments around Bankman-Fried's legal advice at FTX were fair game, since the jurors had been sent home.

The defense argued in a Wednesday filing that Bankman-Fried planned to testify to the role of his lawyers as part of his defense strategy, and Judge Kaplan said he wanted to preview his argument in more detail before deciding whether jurors could hear it.

In the lead-up to Thurday's testimony, prosecutors drew attention to FTX's practice of "auto-deleting" certain internal communications – a possible sign, in their telling, that Bankman-Fried and his team had something to hide.

According to Bankman-Fried, however, his external general counsel was the architect of the policy that led him to automatically delete things in Signal – a messaging app FTX used internally for communications. Bankman-Fried also said his lawyers were behind FTX's terms of service and its banking arrangement with Alameda, Bankman-Fried's trading firm. Both subjects are core to prosecutors' case against him.

Bankman-Fried specifically named general counsel Dan Friedberg as well as external law firm Fenwick & West as creating many of the documents and policies in question.

Prosecutors cross-examine the former crypto titan

Assistant U.S. Attorney Sassoon picked apart Bankman-Fried's responses to his defense attorney's earlier questions.

"I'm not actually sure," he said about retaining Signal messages in response to subpoenas. It was an uncertain response similar to ones he gave to other questions asked by the prosecution.

At times, Bankman-Fried ramblingly asserted his recollection of the events leading up to FTX's collapse was foggy. The twists and turns of his testimony visibly frustrated the prosecution, but that didn't deter Bankman-Fried from launching into unusually long explanations of his decision-making at FTX or bickering with the prosecution over semantics.

"I apologize," Bankman-Fried warned before Sassoon cut him off. "This will be a somewhat substantial digression."

At times, his tough-to-parse testimony caught the attention of Judge Kaplan.

"The witness has what I simply call an interesting way of responding to questions," Kaplan observed as he weighed in on a particularly contentious conversation between the defense and prosecution over the scope of the cross-examination.

The jurors

Bankman-Fried's Thursday comments are a preview of arguments he may present to the jury when they return to the courtroom. He took the stand in the Manhattan courtroom around 2 p.m. ET, but the jurors were then sent home for the day so the judge could hear from the FTX founder first about certain aspects of his testimony and decide what is admissible – a rare step.

"It may be a little bit of a surprise," Judge Kaplan told jurors, but "you've got the rest of the day off." Judge Kaplan, who said this is not something he's done in years, also told them the case will likely wrap up in the first half of next week. "We're in the home stretch," he said.

Cohen had tried to dismiss the prosecution’s case after the U.S. Department of Justice rested its case earlier in the day, arguing insufficient evidence had been provided so far to support a conviction. This is a common procedural move that Judge Kaplan denied.

The prosecution rested its case after calling one last witness, FBI special agent Marc Troiano, to show that Bankman-Fried used the auto-deletion setting for the majority of his Signal conversations.

The defense then called as witnesses Krystal Rolle, a Bahamas attorney who represented Bankman-Fried, followed by financial services expert and consultant Joseph Pimbley. Then came Bankman-Fried's turn.

The former exchange CEO is accused of misusing his customers' and investors' funds, to the tune of over $8 billion lost by the time FTX filed for Chapter 11 in November 2022. The Department of Justice has argued over the past few weeks that Bankman-Fried directed various actions that let Alameda Research – another of his firms – misappropriate funds and then hid losses until the "house of cards" abruptly collapsed.

Bankman-Fried's former colleagues and inner circle – former Alameda CEO Caroline Ellison, former FTX Director of Engineering Nishad Singh and former FTX Chief Technology Officer Gary Wang – all testified against him, telling a jury in the New York courtroom that he specifically directed them to allow Alameda to tap FTX customer funds and to hide those actions from the companies' investors.

Edited by Nick Baker and Marc Hochstein.

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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

Helene Braun

Helene is a New York-based news reporter at CoinDesk, currently covering the criminal trial of infamous crypto mogul Sam Bankman-Fried. Helene is a recent graduate of New York University's business and economic reporting program and has appeared on CBS News and Nasdaq TradeTalks. She holds BTC and ETH.

Elizabeth Napolitano

Elizabeth Napolitano was a news reporter at CoinDesk.

Sam Kessler

Sam is CoinDesk's deputy managing editor for tech and protocols. He reports on decentralized technology, infrastructure and governance. He owns ETH and BTC.


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