The post Sam Bankman-Fried Trial Update: Conflicting Claims on Alameda’s Unique Leverage within FTX appeared first on Coinpedia Fintech News
FTX founder Sam Bankman-Fried is under intense scrutiny, defending his role in the collapse of FTX and his connections to Alameda Research. The 31-year-old former billionaire was at the receiving end of blistering questions from prosecutor Danielle Sassoon, aiming to shatter his credibility.
SBF had long maintained that he’d relinquished an active role at Alameda Research, a hedge fund he founded in 2017, after establishing FTX two years later. However, his surprise upon learning that Alameda had borrowed $8 billion from FTX in October 2022, just a month before FTX went belly-up, raised eyebrows.
“I was not generally making trading decisions, but I was not walled off from Alameda,” Bankman-Fried testified.
Sassoon quickly pulled up evidence to the contrary—a December 2022 podcast and a Financial Times article—both showing SBF claiming to have isolated himself from Alameda’s trading activities “for years.” It’s the kind of contradiction that could not only throw his defense into disarray but also raise serious questions about the level of transparency, or lack thereof, in the crypto industry.
Playing the Amnesia Card?
The courtroom was tense when SBF repeatedly couldn’t recall, didn’t remember, or wasn’t sure about past statements and decisions. It’s worth noting that forgetfulness has often been a convenient refuge in legal history, and whether or not the jury buys into it remains to be seen.
Even more interesting is the question of special treatment for Alameda within FTX. When asked if Alameda could have racked up such a staggering debt if it had been a ‘regular customer,’ SBF disagreed. Yet, he had previously stated that the situation wouldn’t have unfolded as it did if Alameda were an unrelated entity.
SBF seemed to dodge the bullet when asked about the risk FTX faced due to Alameda’s debts. He repeatedly sidestepped the question, raising margin trading as a random distraction. Since FTX’s business model heavily incorporates margin trading, it sounded like an odd, perhaps desperate, moment in his defense.
Why SBF Trial Matters
This case could set legal precedents for how founders and CEOs are held accountable for financial discrepancies and transparency. The contradictions in SBF’s statements have ratcheted up the tension, and it remains to be seen how these will impact the final verdict.