In a dramatic turn of events, Sam Bankman-Fried, the once-revered founder of the now-defunct cryptocurrency exchange FTX, took the stand on Friday, asserting that while he acknowledges errors, he vehemently denies any wrongdoing, including fraud or misappropriation of customer funds.
Bankman-Fried, addressing his legal counsel, Mark Cohen, conceded, "I made a number of small mistakes and a number of large mistakes." The magnate emphasized that the pivotal misstep was the absence of a dedicated risk management team within FTX.
This pivotal decision to personally testify, exposing himself to cross-examination, followed a three-week span of withering testimonies against the 31-year-old entrepreneur, who stands accused of siphoning off billions from clients.
Dressed in a grey suit and tie, Bankman-Fried categorically refuted any criminal activities when questioned by Cohen. When asked if he defrauded anyone, he resolutely stated, "I did not." Similarly, he unequivocally denied any misappropriation of customer funds.
During his initial hour of testimony, Bankman-Fried, colloquially known as SBF, chronicled the establishment of Alameda Research, his privately owned trading entity, in 2017, and the subsequent launch of the crypto platform FTX in 2019.
Once an esteemed figure in the crypto sphere, Bankman-Fried stands accused of employing FTX funds for high-risk trading via Alameda Research, in contravention of legal protocols. The entrepreneur faces a litany of charges, including seven counts of fraud, embezzlement, and criminal conspiracy. In the event of conviction, he could face an effective life sentence exceeding 100 years.
At the juncture of FTX's insolvency in November 2022, a staggering $8.7 billion remained unaccounted for. Since then, the majority of these funds have been recovered by liquidators and are slated for disbursement to clients in early 2024.
Bankman-Fried has sought to shift culpability onto former associates for FTX's abrupt demise. However, compelling testimonies over the past weeks from ex-FTX and Alameda staff contradicted his narrative. These witnesses, supported by prosecution-gathered internal documents, contended that Bankman-Fried was directly responsible for the infractions and did not lose sight of the financial state of FTX and Alameda.
Caroline Ellison, Bankman-Fried's ex-business partner and romantic interest, was among those who testified. Her evidence proved damning, providing intricate insights into his managerial role, asserting he was pivotal in all major decisions. Ellison, an accomplished mathematics graduate from Stanford University, was appointed by Bankman-Fried in 2021 to oversee Alameda, an entity predominantly financed by funds from FTX clients, unbeknownst to them.
Ellison, along with two other close associates of Bankman-Fried, has pleaded guilty to fraud charges and pledged cooperation with the prosecution.
Bankman-Fried's choice to personally testify stands as an anomaly in a legal landscape where defendants typically refrain from doing so, primarily to evade cross-examination and the potential risk of self-incrimination. The trial, which has captivated the financial world, continues to unfold with the eyes of the crypto community fixed firmly on the outcome.
