FTX founder Sam Bankman-Fried acknowledges in court docket that clients have been harm however denies fraud – Each day Information
By KEN SWEET and LARRY NEUMEISTER
NEW YORK — Sam Bankman-Fried, testifying at his fraud trial, forged himself Friday as a bumbling cryptocurrency visionary who knew nothing in regards to the business when he began FTX, nothing about advertising and marketing when he turned the face of his firm and never sufficient about his companies to comprehend his firm was $10 billion within the gap earlier than it collapsed.
Minutes right into a five-hour day on the witness stand in Manhattan federal court docket, the onetime cryptocurrency golden boy denied he defrauded anybody.
Bankman-Fried, 31, acknowledged some failures, saying he made errors, massive and small, however he additionally tried to counter testimony by 4 former prime executives who blamed him for the collapse of his companies final yr when a rush of shoppers withdrew their cash, exposing that billions of {dollars} have been lacking.
“We thought we would be capable of construct one of the best product available on the market” and transfer the cryptocurrency system ahead, he stated.
“It turned out mainly the other of that,” and lots of clients and others bought harm, Bankman-Fried stated.
Requested by his lawyer, Mark Cohen, if he defrauded anybody or took clients’ funds, Bankman-Fried answered, “No I didn’t.”
Principally unemotional on the witness stand, Bankman-Fried famous at one level: “I don’t have a tendency to point out lots of freakoutness.”
Because the day wore on, testimony centered on what occurred as Bankman-Fried’s companies sank deeper in debt, at the same time as he spent tons of of thousands and thousands of {dollars} on advertising and marketing that included a 2022 Tremendous Bowl industrial that includes comic Larry David, a partnership with quarterback Tom Brady and a agency that linked him to celebrities.
Bankman-Fried stated he was “very shocked” to study Alameda’s money owed have been so massive.
Cohen stated after testimony concluded for the day that he anticipated to proceed questioning his shopper till noon Monday. A prosecutor stated cross-examination would doubtless proceed into Tuesday and the decide urged that the jury won’t get the case till Friday or the next Monday.
The California entrepreneur has pleaded not responsible to conspiracy fees accusing him of diverting billions of {dollars} from his purchasers and traders to make dangerous investments, purchase luxurious housing, have interaction in a star-studded publicity marketing campaign, and make massive political and charitable donations.
His much-anticipated testimony turned the centerpiece of a protection that has tried to convey that Bankman-Fried had no legal intent as he took actions that prosecutors say have been on to blame for the collapse final November of companies Bankman-Fried started creating in 2017 and finally ran from the Bahamas.
Bankman-Fried instructed the jury that when he began his first firm Alameda Analysis, he knew virtually nothing about cryptocurrency past what a bitcoin was.
He described himself as “considerably introverted naturally,” however defined that he by accident turned the face of FTX when a number of interviews “ended up going higher than I assumed they might.”
He stated he testified 3 times earlier than Congress in an effort to influence legislators to create cryptocurrency rules that might enable merchandise to be marketed on to People.
As requests for interviews turned overwhelming, “It was too late to discover a new public face for the corporate. I used to be the general public face,” he stated.
“I had completely no background in advertising and marketing. Completely no concept,” he stated.
Most of Bankman-Fried’s testimony centered on the explosive progress and collapse of FTX, a cryptocurrency trade, and Alameda, however Cohen sometimes strayed into asking about his shopper’s private life and quirks, together with his penchant for sporting informal clothes and letting his hair develop lengthy.
Bankman-Fried additionally blamed himself for the breakdown of his on-and-off romantic relationship with Caroline Ellison, Alameda’s chief government, saying “I didn’t have the time or the vitality to place in what I believe she wished from a relationship.”
“It’s not one thing I’ve been nice at, with the ability to maintain a romantic relationship for an extended interval,” he stated.
When the jury was proven {a photograph} of Bankman-Fried with a deck of playing cards, he defined that he used them to fulfill his urge to “compulsively fidget with issues” — a behavior from his faculty years that grew so extreme that he stated he’d put on out a deck in per week. He has since switched to fidget spinners.
Bankman-Fried, sporting a swimsuit and tie in court docket and quick hair, stated he ceaselessly wore shorts and T-shirts as a result of he discovered them comfy. As for the scattered lengthy hair he had till weeks in the past, he stated: “I used to be busy and lazy and didn’t hassle getting haircuts for lengthy durations of time.”
Earlier than Bankman-Fried started testifying Friday, Decide Lewis A. Kaplan largely shut down his legal professionals’ makes an attempt to recommend to jurors that Bankman-Fried made many choices about his companies after consulting with legal professionals.
After the jury was despatched house Thursday, Bankman-Fried testified in entrance of the decide about his communications with legal professionals as he constructed his cryptocurrency empire.
“That proof would, in my judgment, be complicated and extremely prejudicial by falsely implying, given testimony yesterday, that legal professionals with full data of the info — the entire info — blessed what the defendant is alleged to have carried out. And I didn’t hear that in any respect yesterday,” Kaplan stated.
He did, although, grant a protection request to allow testimony in regards to the involvement of legal professionals in knowledge retention insurance policies at Bankman-Fried’s companies that required the frequent deletion of some communications.
He was extradited from the Bahamas to New York in December to face fraud fees.
Although he was initially granted a $250 million private recognizance bond and allowed to dwell together with his dad and mom in Palo Alto, California, the bond was revoked in August and he was jailed when Kaplan concluded that he had tried to affect potential witnesses at his upcoming trial.
Prosecutors constructed their case towards Bankman-Fried for 3 weeks, relying largely on his former prime executives, an internal circle of people who shared a penthouse house within the Bahamas with Bankman-Fried.
The executives testified that Bankman-Fried directed them to spend billions of {dollars} taken from the accounts of FTX clients and funneled by Alameda Analysis, a hedge fund he began in 2017, two years earlier than he created the FTX cryptocurrency trade.
