Facing cross-examination at his criminal fraud trial yesterday, Sam Bankman-Fried repeatedly testified that he doesn’t remember details about what he did and said while running cryptocurrency exchange FTX. Bankman-Fried responded “I’m not sure” or “I can’t recall” to many questions from US prosecutor Danielle Sassoon, according to news reports from the trial.
Sassoon “grilled Mr. Bankman-Fried about the inconsistencies between his public statements and how he ran his crypto empire before it collapsed spectacularly in November,” a New York Times article said. Bankman-Fried “insisted that he couldn’t remember much of what he had said publicly” and “added that he wasn’t significantly involved in the hedge fund he founded, Alameda Research.”
The New York Post wrote that Bankman-Fried answered with some variation of “I can’t recall” over 100 times on Monday. But Sassoon “presented jurors with a mountain of tweets, emails, and podcast clips revealing that the MIT grad did in fact say dozens of things he claimed not to have recalled,” the article said.
“After much pressing, Bankman-Fried eventually confirmed one aspect of prosecutors’ sprawling fraud and conspiracy case—that his hedge fund Alameda, in an unheard-of arrangement, could pull out billions of dollars it did not own from FTX using a near-unlimited line of credit,” the New York Post wrote. “I don’t deny it,” Bankman-Fried reportedly said. But he seemed to backtrack on that admission hours later, saying, “I’m not sure” when asked if Alameda was allowed to exceed normal borrowing limits, the article said.
Bankman-Fried reportedly drew a rebuke from Judge Lewis Kaplan when the defendant asked Sassoon to “rephrase” certain questions. “Could you just answer the question instead of trying to ask the questioner what she is referring to?” Kaplan told Bankman-Fried.
“When asked whether he was ‘involved’ in trading at Alameda—a hedge fund he owned 90 percent of—Bankman-Fried replied, ‘Depends what you mean by trading,'” the New York Post article said. “Sassoon then showed jurors several instances of Bankman-Fried ordering lieutenants to make trades on Alameda.”
FTX/Alameda relationship probed
In this trial, Bankman-Fried faces six charges for defrauding FTX’s and Alameda’s customers and investors and one charge for conspiracy to commit money laundering. The seven charges’ maximum sentences add up to 110 years. He faces five additional criminal charges in a separate trial scheduled for April 2024.
Caroline Ellison, the former Alameda Research CEO who dated Bankman-Fried, testified earlier that Bankman-Fried directed her to commit crimes and that “I would always ultimately defer to Sam.” She said that Bankman-Fried had a “utilitarian” philosophy in which rules like “don’t lie” and “don’t steal” did not fit into his moral framework.
Ellison told the jury about Alameda using FTX customer money, testifying that Bankman-Fried “said FTX would be a good source of capital, and he set up a system that allowed Alameda to borrow from FTX.” She also said Bankman-Fried directed her to create a misleading balance sheet so the firm could get more loans.
Under cross-examination yesterday, Bankman-Fried said he didn’t remember statements he made publicly about the ties between FTX and Alameda, a Wall Street Journal article said:
Sassoon pressed Bankman-Fried on the relationship between the two entities, including what prosecutors allege were Alameda’s secret and unique privileges to borrow virtually unlimited sums from FTX.
“Sitting here today, you don’t recall assuring customers that Alameda generally played by the same rules as other customers on FTX?” Sassoon asked. “I’m not sure,” Bankman-Fried said.
The trial is in US District Court in New York City.