After concluding his first day of testimony in his fraud trial, FTX creator Sam Bankman-Fried stated that his creative venture, which he had anticipated would advance the bitcoin ecosystem, had instead harmed clients.
In his testimony on Friday at his fraud trial, Sam Bankman-Fried portrayed himself as a bumbling visionary of the cryptocurrency space who had no prior experience with the market when he founded FTX, had no marketing knowledge when he took on the role of company face, and had insufficient knowledge of his businesses to realize they were $10 billion in the red just before they crashed.
The former Bitcoin "golden boy" denied cheating anyone in federal court in Manhattan.
The 31-year-old Bankman-Fried admitted to some mistakes, both big and small, but he also refuted the testimony of four former top executives who held him accountable for the demise of his companies the previous year when a wave of customers withdrew their money, revealing billions of dollars missing.
According to him, "we thought that we might be able to build the best product on the market" and advance the cryptocurrency industry. It ended up being essentially the opposite of that. Numerous individuals suffered, including both clients and staff, and the business filed for bankruptcy,
When his attorney Mark Cohen questioned Bankman-Fried about whether he had stolen money from consumers or committed fraud, he said, "No, I did not."
Bankman-Fried, who may spend decades in jail if found guilty of all counts, was largely composed while testifying. He stated, "I don't tend to show a lot of freakoutness."
Testimony throughout the day centered on what transpired as Bankman-Fried's companies accrued more debt while he was spending hundreds of millions of dollars on marketing, which included a 2022 Super Bowl commercial starring comedian Larry David, a collaboration with quarterback Tom Brady, and a company that connected him to celebrities.
When he discovered in October 2022 that Alameda had a $8 billion debt that he was unaware of—implying the company's overall debt was approximately $10 billion—Bankman-Fried expressed his amazement, describing it as "very surprising."
Cohen stated that he anticipated wrapping up his client's interrogation on Monday. Cross-examination, according to a prosecutor, would continue into Tuesday. It was doubtful that the matter would come before the jury until at least late next week.
The California businessman has entered a not guilty plea to conspiracy charges alleging that he misappropriated billions of dollars from investors and clients in order to purchase luxury real estate, participate in a high-profile PR campaign, make risky investments, and make substantial contributions to charities and politics. His evidence became the main focus of a defense that attempted to show that Bankman-Fried did not intend to commit any crimes in relation to the acts that prosecutors claim were directly responsible for the failure of the companies he started in 2017 and eventually fled from the Bahamas last November.
Bankman-Fried admitted to the jury that he understood "basically nothing" when he founded Alameda Research, his first business.
He declared, "I knew that a bitcoin was digital."
Though he acknowledged that he was "somewhat introverted naturally," he went on to say that he became the face of FTX by mistake after a few interviews "ended up going better than I thought they would."
He claimed to have appeared before Congress three times in an effort to influence lawmakers to enact cryptocurrency laws that would permit direct marketing of goods to citizens.
"It was too late to find a new public face for the company," the statement reads, as the volume of demands for interviews increased. He stated, "I was the public face."
"I had no prior experience with marketing at all. I have no notion at all," he stated.
His attorney presented the jurors with an image of Bankman-Fried at the 2022 Super Bowl in Los Angeles alongside singer Katy Perry, actress Kate Hudson, and other celebrities. Bankman-Fried explained that he went to the game because he "thought maybe it would be interesting," and that when the celebrities saw him, they "invited" him in.
Bankman-Fried's testimony primarily covered the rapid rise and fall of cryptocurrency exchange FTX as well as Alameda, but every now and again Cohen ventured to inquire about his client's personal life and eccentricities, such as his preference for loose fitting clothes and growing out his hair.
In an on-off relationship with Caroline Ellison, the CEO of Alameda, Bankman-Fried blamed himself for its failure, claiming "I didn't have the time or the energy to put in what I think she wanted from a relationship."
"Maintaining a romantic relationship for an extended duration is not a skill I possess," he remarked.
Nevertheless, he painted Ellison as the bad guy in his company's demise, claiming that she disregarded his advice to build a hedge to safeguard Alameda for more than a year.
He claimed that at one point, he thought of closing the business because "Alameda might not have the right management in place to justify its risk going forward."
Upon presenting a picture of Bankman-Fried holding a deck of cards to the jury, he clarified that he utilized them to quell his excessive need to "compulsively fidget with things"—a behavior that began during his undergraduate days and became so intense that he claimed he could deplete a deck inside a week. Since then, he has shifted to fidget spinners.
Bankman-Fried, who had short hair and was dressed in a suit and tie for the court, claimed that he usually wore shorts and T-shirts because they were comfy. Regarding his unkempt, long hair a few weeks prior, he remarked, "I wasn't interested in getting haircuts for extended periods of time because I was busy and lazy."
Judge Lewis A. Kaplan largely blocked Bankman-Fried's attorneys' attempts to demonstrate that the defendant made numerous business decisions after consulting with attorneys, claiming that such evidence would falsely suggest that attorneys with complete knowledge of all the facts "blessed what the defendant is alleged to have done." Bankman-Fried gave his testimony on Friday.
In December, the defendant was extradited to New York from the Bahamas to face allegations of fraud.
When Kaplan determined that he had attempted to sway possible witnesses for his impending trial, the $250 million personal recognizance bond that had initially been granted to him was revoked in August, and he was placed in jail.
For three weeks, prosecutors worked to establish their case against Bankman-Fried, mostly depending on his former top executives—a select group of people who lived in a penthouse condominium in the Bahamas with the banker.
Bankman-Fried, according to the executives' testimony, gave them orders to spend billions of dollars that were stolen from FTX customers' accounts and passed through Alameda Research, a hedge fund he founded in 2017, two years prior to establishing the FTX cryptocurrency exchange.