Sam Bankman-Fried’s defense again blames his ex-girlfriend as he takes stand in fraud trial – live | Sam Bankman-Fried
Bankman-Fried’s defense blames Caroline Ellison
Within moments of Bankman-Fried returning to the witness stand for continued direct examination, it appeared that his attorney, Mark Cohen, was trying to show that the entrepreneur tried his best to make FTX better and safer—and once again laid the blame on ex-girlfriend and Alameda CEO Caroline Ellison, as he did during her cross-examination.
As they did Friday, Cohen and Bankman-Fried discussed hedging, specifically their contention that Ellison did not take positions that would have insulated Alameda from the dramatic crash of crypto in spring 2022, which imperiled the hedge fund.
“I called a meeting with Caroline and I told her that I was very concerned about Alameda,” Bankman-fried testified. “I said that I was very concerned that it’s fallen from $40b to $10b over the prior year, and that as far as I could tell, it still had not hedged against the risk of market collapse.”
He was worried that if the market plunged yet again, “Alameda might become insolvent.”
There was another meeting on the same subject in September of that year. Bankman-Fried said that he asked about Alameda’s lack of hedging.
“What did she say?” Cohen asked.
“Um, she started crying,” Bankman-Fried said. “She agreed that Alameda should have hedged.” Ellison admitted that she shouldn’t have made some of the investments and “offered to step down,” according to Bankman-Fried.
Bankman-Fried said that he told Ellison it was her decision about staying on. He recalled saying that “maybe I hadn’t communicated clearly enough with her about hedging earlier.”
Bankman-Fried said they needed to “urgently” put on hedges. The two had another conversation that month, he said. Eventually, Alameda did put in hedges, though not as large as he would like, he said.
“I checked on the status of Alameda’s hedging and was told that Alameda had hedged after our prior conversation,” he said. Bankman-Fried said he hoped it would be a bigger number.
“After a back-and-forth on the spreadsheet, Caroline ultimately agreed that Alameda should have hedged more than it had…”
Key events
In earlier testimony, Bankman-Fried admitted to ‘large mistakes’
Sam Bankman-Fried admitted to making management mistakes while at the helm of FTX, his former multibillion-dollar cryptocurrency empire, during his first day of testimony before a jury.
“I made a number of small mistakes and a number of large mistakes,” Bankman-Fried, 31, said in sharing his version of the rise and fall of crypto trading platform FTX. The biggest mistake, he said, was not implementing a dedicated risk management team.
Sam Bankman-Fried testifies in his crypto fraud trial without jury present
“There were significant oversights,” he said.
Asked by his lawyer, Mark Cohen, if he defrauded anyone or took customers’ funds, Bankman-Fried answered: “No, I did not.”
Bankman-Fried told the jury he didn’t know much about cryptocurrency before launching FTX. “I had absolutely no idea how they worked,” he told Cohen. “I just knew they were things you could trade.” But, he continued, he saw an opportunity to move the cryptocurrency system forward.
Read more about Bankman-Fried’s testimony here:
Sam Bankman-Fried takes the stand for direct examination
Sam Bankman-Fried has taken the stand. Monday’s testimony continues questioning from the defense, intended to cast doubt on what previous witnesses have said. Bankman-Fried has denied the allegations made Caroline Ellison, his ex-girlfriend and the CEO of Alameda Research, that he directed FTX executives to commit crimes. He denies having “misappropriated and embezzled” FTX customers’ funds, as prosecutors allege in their indictment.
He appears to have had a haircut this weekend. He is wearing a light grey suit and purplish necktie.
Cross-examination is expected to begin this week after Bankman-Fried’s defense wraps. We saw a preview of federal prosecutors’ questioning Thursday sans jury, which saw the diminishing of Bankman-Fried’s confidence on the stand.
Testifying is a risky move, exposing him to what may be harsh questioning from federal prosecutors during cross-examination. His defense attorneys have, through their lines of questioning, painted him as an overwhelmed “math nerd” who never expected to be rich or famous and certainly never meant to plunder billions of dollars.
‘Math nerd’ or crypto criminal? Question at heart of Sam Bankman-Fried’s trial
If there’s a single question that has dominated SBF’s fraud trial so far, it can be summed up as: which version of this tech bro do you believe?
Prosecutors have cast Bankman-Fried as the mastermind of a $10bn fraud, among the largest and most nefarious in American history. They say he selfishly squandered the money of customers who put their trust in FTX. He lavished the cash on ritzy properties, ill-gotten influence, glamorous travel and the highest-profile ads, all while concealing a hidden mountain of debt, they allege.
His lawyers, by contrast, have done their best to portray him as a wayward boy genius – a “math nerd who didn’t drink or party”, according to his lawyers’ opening statement. They describe the motivation for his actions not as malice so much as inexperience with normal business operations.
Bankman-Fried’s decision to take the stand in his own defense will offer jurors a chance to consider, in his own words, which version they should believe.
During the weeks-long crypto fraud trial, former business partners and members of Sam Bankman-Fried’s inner circle have taken the stand against him.
The prosecution’s star witness was Caroline Ellison, Bankman-Fried’s ex-girlfriend and the former CEO of Alameda. She testified that he directed her to commit crimes, saying that he siphoned $10bn in customer funds from FTX to prop up Alameda after a crash in the crypto market. She delivered stunning, detailed testimony against the failed crypto mogul.
Her accusations offer a guide as to what Bankman-Fried may try and refute when he takes the stand today.
Here’s a recap of the five things we learned.
Sam Bankman-Fried, 31, is testifying in a New York City courtroom today, his third day on the stand and his second before a jury. His first day testifying was an evidentiary hearing when the judge had dismissed the jury.
Bankman-Fried is charged with seven counts of wire fraud and conspiracy to launder money in the wake of the collapse of his cryptocurrency exchange, FTX. Prosecutors say the founder “misappropriated and embezzled” billions of dollars from unwitting FTX customers to plug a shortfall at Alameda Research, a hedge fund connected to FTX. He also allegedly used the ill-gotten gains to make speculative investments, secure celebrity endorsements and donate to political campaigns.
Wire fraud convictions can carry sentences of decades in prison. If convicted on multiple counts, Bankman-Fried faces what may amount to a life sentence.
He has pleaded not guilty to all charges. You can read an in-depth explainer here.
During the weeks-long trial, former business partners and members of Bankman-Fried’s inner circle have taken the stand against him. The prosecution’s star witness was Caroline Ellison, Bankman-Fried’s ex-girlfriend and the former CEO of Alameda. She testified that he directed her to commit crimes, saying that he siphoned $10bn in customer funds from FTX to prop up Alameda after a crash in the crypto market.
What is Sam Bankman-Fried accused of and does he face prison time?
Sam Bankman-Fried, 31, is testifying in a New York City courtroom today, his third day of testimony and his second in front of a jury.
Bankman-Fried is charged with seven counts of wire fraud and conspiracy to launder money in the wake of the collapse of his cryptocurrency exchange, FTX. Prosecutors say the founder “misappropriated and embezzled” billions of dollars from FTX customers to plug a shortfall at Alameda Research, a hedge fund connected to FTX and managed by his ex-girlfriend Caroline Ellison. Bankman-Fried allegedly also used the ill-gotten money to make speculative investments, secure celebrity endorsements and to donate to political campaigns.
Wire fraud convictions can carry sentences of decades in prison. If convicted on multiple counts, Bankman-Fried could face what amounts to a life sentence.
He has pleaded not guilty to all charges. You can read an in-depth explainer here.
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