NEW YORK — Sam Bankman-Fried's risky choice to testify in his fraud and conspiracy trial exposed him to a tough line of questions Monday from prosecutors, focused on a core question: Did the former FTX crypto mogul lie to customers, investors, the public and even Congress?
Following dozens of questions from Assistant U.S. Attorney Danielle Sassoon, Bankman-Fried said he did not remember telling FTX customers that his exchange was a safe place to trade, that customers would be protected or that Alameda Research (his trading firm that played a central role in the former billionaire's demise) did not have special privileges on the platform.
Unfortunately for him, the U.S. Department of Justice has receipts; Bankman-Fried's prolific tweeting caught up with him. Sassoon repeatedly cornered the FTX founder on his public statements both before and after the crypto empire's collapse about his involvement in Alameda and the safety of FTX customer assets.
The prosecutor immediately demonstrated that what he was saying in public diverged from his private statements, whether it was about the role of regulators or about the strength of FTX's risk engine, which was one of the exchange's internal tools intended to prevent major losses by automatically liquidating untenable positions.
While Bankman-Fried was more careful in his replies on Monday than he was Thursday when testifying without jurors present – many of his Monday answers were initially just variations of "yes" or "no" – he still gave off the impression he resented having to answer some of these questions.
The former FTX CEO was less loquacious during cross, dishing out curt, one-word affirmatives and the occasional denial. When he spoke about his companies' operations in more than just those clipped utterances, his answers usually riffed on the same chord: He simply couldn't remember what he’d said prior to his companies' collapses.
Around 30 minutes into his cross-examination on Monday, Sassoon asked Bankman-Fried repeatedly if he publicly said FTX's international arm was "safe relative to other crypto exchanges." Sassoon offered to jog his memory, summoning a message Bankman-Fried tweeted to his followers in August 2021: "As always, our users' funds and safety come first." After several non-answers, including one where he said he didn't understand what she was referring to, even Judge Lewis Kaplan told Bankman-Fried to just answer the questions being asked.
But the main theme of Sassoon's rapid-fire questioning on Monday was clear: Bankman-Fried was not telling customers or investors the truth when discussing Alameda's access to FTX, his role overseeing the company or the safety of customers' assets.
To this point, Sassoon pulled up multiple exhibits listing both his public and private statements saying Alameda operated by "the same rules as other traders" – which wasn't true, the DOJ has spent weeks arguing in court.
The early hours of the government's cross-examination were punctuated by quips from the government's lawyers that might have felt out of pocket at other criminal trials. At one point, when Sassoon proposed showing a piece of evidence to the jury, one of Bankman-Fried's lawyers piped up to remind the court that the evidence be entered "not for its truth" but rather for the simple fact that the defendant had said it.
Sassoon agreed with the defense: The evidence – Bankman-Fried's sworn testimony before Congress – did indeed contain "inaccurate" statements from the defendant, she offered dryly.
The ghost of publicity tours past
Following the collapse of his crypto empire last year, Bankman-Fried couldn't seem to keep quiet. Instead, to the possible chagrin of his lawyers, the FTX founder went on a media blitz – seemingly desperate to dish out his side of the story to practically anyone who would listen, be they journalists, Twitter personalities, or vexed crypto traders.
Bankman-Fried's post-collapse press tour came back to bite him on Monday, with the bulk of his exchanges with Sassoon following a strikingly similar pattern. Sassoon would ask the defendant a question: "In private, you said things like 'f**k regulators, didn't you?" Bankman-Fried would issue a response to the effect of "I don't recall saying that," or in the case of the comment disparaging regulators: "I said that once."
Then, whether Bankman-Fried could remember making a statement or not, Sassoon would jump to show the jury her corroborating evidence – like the defendant's ill-advised, viral text exchange with a Vox reporter expressing his distaste for regulators.
Sassoon's grilling excerpted interviews with Good Morning America's George Stephanopoulos, the New York Times' Andrew Ross Sorkin and Bloomberg's Zeke Faux, among others – just a handful of the journalists Bankman-Fried spoke to in the immediate wake of FTX's collapse.
At least five journalists were physically present at New York's Southern District courthouse on Monday when their names were included in evidence shown to the jury.
SBF's lawyer wraps up questioning him
Before Sassoon's cross-examination, Bankman-Fried's lawyer finished up questioning him earlier Monday.
Continuing a trend from Friday, when Bankman-Fried's lawyers kicked off their direct examination, the FTX founder corroborated some details from company insiders who testified against him earlier in the trial while providing alternate explanations – downplaying his culpability – for certain key events.
Toward the end of his defense lawyer's questioning, Bankman-Fried walked the jury through the events of August through November of 2022, when FTX rapidly descended into bankruptcy.
Bankman-Fried zoomed in on the aftermath of a Nov. 2, 2022, CoinDesk scoop that revealed Alameda's secretly precarious financial position, characterizing the events that followed as a "run on the bank," an interpretation that prosecutors moved to strike for the jury. (It was the same phrase former Enron CEO Jeff Skilling used to explain his company's spectacular collapse to Congress more than 20 years ago; he ended up serving 12 years in prison for fraud.) The defendant rephrased his description as a "run on FTX," which the judge accepted.
Bankman-Fried also defended an infamous subsequent Twitter thread shown by prosecutors in which he told the world that "assets are fine" – a seeming plea to slow down withdrawals from the platform just days before it filed for bankruptcy on Nov. 11, 2022, and failed to return billions of dollars in user deposits.
Bankman-Fried has argued throughout his testimony that he had a vague picture of his empire's finances in the run-up to FTX and Alameda's collapse, and he said that by November 2022, when he tweeted, he still believed that FTX didn't have any "hole" in its balance sheet, and Alameda still had assets in excess of liabilities.
Bankman-Fried's read on the direness of the situation only changed a few days after his tweet thread, he testified, when key assets on Alameda's balance sheet – namely FTX's FTT token and Solana's SOL token – dropped drastically in price.
SBF started testifying to jurors on Friday
The one-time crypto exchange CEO began sharing his story with a jury of New Yorkers on Friday, arguing that FTX's collapse was the result of mistakes, including by some of his lieutenants who held key positions running the companies, including former Alameda CEO Caroline Ellison. He'd previously testified before Judge Kaplan on Thursday without jurors present, though much of that testimony won't make its way to the jury.
"We thought that we might be able to build the best product on the market, an exchange that would combine the elements that we thought were best from traditional financial products with the elements we thought were best from the big crypto ecosystem, that it could move the – move the ecosystem forward," he testified Friday. "It turned out basically the opposite of that."
The MIT graduate walked through his work at Jane Street and the origin of FTX and Alameda, before delving into some of the missteps he said led to last year's bankruptcy. These included Alameda's lack of hedges against the risks it was exposed to.
Bankman-Fried also walked through some of his companies' investments, his political donations and other issues prosecutors have said show he intended to defraud his customers and investors. At points, the FTX founder seemed to contradict testimony provided by government witnesses – namely, his friends and former executives like Ellison and FTX Head of Engineering Nishad Singh.
Read all of CoinDesk's coverage here.
UPDATE (Oct. 30, 12:49 UTC) Corrects date in seventh paragraph; adds details from trial throughout.
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