Sam Bankman-Fried, the disgraced founder of the now-bankrupt cryptocurrency exchange FTX, recently took the witness stand in his own defense.
Mark Cohen, an attorney for Bankman-Fried earlier confirmed the move in an Oct. 25 conference call. According to CNBC, "the decision by his legal team sets him up for a cross-examination by federal prosecutors, who will be able to press him on FTX's collapse."
Bankman-Fried's decision to testify came after lawyers from both sides were able to secure an adequate supply of his medication for attention-deficit hyperactivity disorder. His lawyers had previously argued before the court that inadequate access to the medication impugned his ability to participate in his defense. Aside from Bankman-Fried himself, Cohen added that three other defense witnesses will testify.
The FTX founder stands accused of fraud and money laundering in his role in the collapse of his crypto exchange. Since the company filed for bankruptcy in November 2022, Bankman-Fried has been accused of systematically pilfering billions in customer assets from the exchange's reserves to fund political contributions, real estate acquisitions and high-profile sponsorship deals. If convicted, he could be put behind bars for the rest of his life.
Lawyers for the prosecution have called up several of FTX's former executives to testify, such as former FTX engineer Nishad Singh and Caroline Ellison, former CEO of the Alameda Research hedge fund affiliated with the exchange.
Singh told the court that Bankman-Fried had given huge donations to politicians, with the majority of the recipients leaning Democrat. "I was a straw donor for campaign donations, knowing that the money for those donations came from customer funds," said the former FTX engineer.
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Ellison, a former romantic partner of Bankman-Fried, disclosed that he was the mastermind behind the scheme to embezzle customer funds. "Sam directed me to commit those crimes," Ellison testified when she took the witness stand on Oct. 10. (Related: Star witness Caroline Ellison says disgraced FTX founder Sam Bankman-Fried instructed her to COMMIT CRIMES and MISLEAD LENDERS.)
SBF denies crimes, points finger at Ellison and Alameda Research
Bankman-Fried took the witness stand on Oct. 27. He denied taking customer funds and defrauding FTX's customers during his testimony. Bankman-Fried also admitted to making management mistakes.
"Yes, I made a number of small mistakes and a number of large mistakes," he said. "By far, the largest mistake was we didn't have a dedicated risk management team. There were significant oversights."
While Bankman-Fried's testimony zoomed in on his habits while at FTX, its remainder zoomed in on the final months of Alameda Research – which Ellison had helmed at the time of the crypto exchange's collapse.
The FTX founder had repeatedly advised Alameda to hedge its holdings against market crashes, making it more stable in the case of mass crypto decline. Bankman-Fried had brought it up multiple times, including in late 2021 and again in August 2022. According to him, Ellison promised to look into the matter – but did not follow through.
"I became fairly concerned about Alameda's risk. It had not hedged against the market crashes despite the many conversations about hedging," Bankman-Fried recounted.
According to the disgraced crypto exchange founder, he felt that Alameda was in peril. While on the stand, he also took the opportunity to rebuke Ellison and her management practices.
"Its culture had been decaying somewhat," said Bankman-Fried. "It was harder and harder for Alameda to hire good employees – chiefly because they kept going to FTX instead."
He also recounted how he first learned that Alameda was saddled in debt. Back in the summer of 2022, Ellison reportedly approached executives and expressed concern that the hedge fund "might have just gone bankrupt."
"She was nervous," Bankman-Fried recounted. "She asked what we should do, what we should tell Alameda's lenders. I was very surprised and very concerned."
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FTX founder Sam Bankman-Fried donated customer funds to Democrats, former engineer testifies.
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