In the ongoing trial of FTX founder Sam Bankman-Fried, his previous public statements and actions have come back to haunt him. During his high-flying days when FTX was at its peak, Bankman-Fried was known for his relentless communication with the public through tweets, TV interviews, and congressional pronouncements.
Now, as he faces a fraud trial in Manhattan, federal prosecutors are using his own words against him. On the second day of his testimony, prosecutor Danielle Sassoon relentlessly grilled Bankman-Fried for over four hours, pointing out inconsistencies between his public statements and his management of FTX, which spectacularly collapsed in November.
Bankman-Fried, who is 31, responded with curt “yeps” and “nos,” and often claimed not to remember much of what he had said publicly, especially regarding FTX’s handling of customer deposits and conflicts of interest within his businesses. This cross-examination revealed discrepancies in his claims, potentially damaging his credibility with the jury, consisting of nine women and three men who will decide his fate.
Prosecutor Sassoon displayed statements on a large projector screen, illustrating how Bankman-Fried would publicly state one thing and then act differently in private. She even had him recount FTX’s outreach to government officials and then asked him to repeat private messages where he dismissed regulators with an expletive.
Bankman-Fried’s testimony was highly anticipated, as it shed light on the hubris and risk-taking prevalent in the crypto industry. Once a prominent figure in the crypto world, he is now often compared to notorious fraudsters like Elizabeth Holmes of Theranos.
Taking the stand was a risky move, as criminal defendants typically avoid testifying to prevent prosecutors from questioning them. However, given the damaging testimony from government witnesses that Bankman-Fried had lied to the public and stolen from FTX customers, he had few options left to salvage his case.
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In December, federal prosecutors charged Bankman-Fried with orchestrating a scheme to steal up to $10 billion from FTX customers and creating a secret backdoor in FTX’s code that allowed his hedge fund, Alameda Research, to seize billions of dollars in customer funds. He pleaded not guilty to seven counts of fraud, conspiracy, and money laundering, potentially facing a life sentence if convicted.
Three of Bankman-Fried’s closest associates, Caroline Ellison, Nishad Singh, and Gary Wang, have already pleaded guilty to fraud and cooperated with the government. They testified against Bankman-Fried, revealing that they had lied and stolen at his behest.
When Bankman-Fried took the stand, he portrayed himself as a hardworking founder overwhelmed by his responsibilities and blamed his colleagues for many of the issues that led to FTX’s collapse. However, under prosecutor Sassoon’s questioning, he acknowledged that Alameda had a $65 billion line of credit with FTX, allowing it to borrow unlimited funds.
Sassoon also pressed Bankman-Fried on his previous statements about safeguarding customer funds, to which he initially claimed not to remember. She then showed the jury a tweet where he had stated, “And, as always, our users’ funds and safety come first.”
