In the ongoing criminal fraud trial of Sam Bankman-Fried, the FTX founder continued to present his defense against allegations of fraud and conspiracy in the operation of FTX and Alameda Research. In line with a pattern set on Friday during his direct examination, Bankman-Fried corroborated some details provided by company insiders who had testified against him. However, he also offered alternative explanations aimed at downplaying his involvement in certain key events.
Examining the FTX Collapse
During his testimony, Bankman-Fried walked the jury through the period from August to November 2022 when FTX faced a rapid transformation from a crypto powerhouse to a bankrupt entity. He notably focused on the aftermath of a CoinDesk report on November 2, 2022, revealing Alameda‘s precarious financial position. Bankman-Fried characterized the ensuing events as a “run on the bank,” a term that drew attention and led prosecutors to seek its removal from the jury’s consideration. This term had echoes of former Enron CEO Jeff Skilling’s explanation for his company’s collapse more than two decades ago.
Defending a Controversial Tweet Thread
SBF: FTX’s main competitor was Binance. They were headquartered in the Middle East. Our relationship was frosty. They trip could upset Binance, going into their turf.
Cohen: How did you view the trip?
SBF: Largely as successful.
— Inner City Press (@innercitypress) October 30, 2023
Another crucial point in Bankman-Fried‘s defense was his infamous tweet thread, displayed by prosecutors, where he reassured the public that “assets are fine.” This tweet thread occurred just days before FTX filed for bankruptcy on November 11, 2022, and failed to return billions of dollars in user deposits. Bankman-Fried maintained that at the time of these tweets, he still believed FTX had no financial “hole” and that Alameda’s assets exceeded liabilities. His perspective on the situation only shifted a few days later when key assets on Alameda’s balance sheet suffered significant price drops.
Mistakes and Missteps
Throughout his testimony, Bankman-Fried emphasized the mistakes that, in his view, led to the collapse of FTX. He acknowledged errors, including those made by key team members, such as former Alameda CEO Caroline Ellison. These missteps included a lack of risk hedges for the exposed risks.
Bankman-Fried’s testimony at times contradicted statements from government witnesses, including friends and former executives from FTX. The defense has centered on portraying the FTX collapse as a result of mistakes and mismanagement rather than fraudulent intent.