Oct 26, 2023 - Economy

SBF's very bad afternoon in federal court

Sam Bankman-Fried. Photo by Michael M. Santiago/Getty Images

Sam Bankman-Fried's first words on the witness stand were: "Good afternoon."

Driving the news: The SBF trial picked up again Thursday with the headliner himself taking the stand to give Judge Lewis Kaplan and others in the courtroom a preview of his testimony to help the judge decide what topics would be allowed to come up during the real thing tomorrow.

  • The jurors were excused shortly after 2 PM and given the afternoon off.
  • SBF took the stand for nearly three hours after that.
  • Judge Kaplan will rule on the matter of what topics to allow on Friday morning.

Zoom in: SBF, the founder and ex-CEO of the now-bankrupt crypto exchange FTX, has plead "not guilty" to the seven counts of fraud and conspiracy against him. The 31-year old also founded the hedge fund Alameda Research, the entity that was allegedly allowed to borrow funds from FTX, a revelation that ultimately led to the crypto exchange's death spiral.

  • The U.S. government is arguing that SBF knew about the borrowed funds and had fraudulent intent with the arrangement.
  • His performance on the stand fell well below that of the testimonies given by his lieutenants Gary Wang, Caroline Ellison and Nishad Singh.
  • All of them blamed him for depleting FTX customer deposits.

Details: Defense attorney Mark Cohen took a stab at pushing the "advice of counsel" strategy, meaning Bankman-Fried was merely abiding by his lawyers' direction ahead of the company's spectacular collapse.

  • But SBF's ability on Thursday to explain how his lawyers were involved was vague, and lacked the details that the U.S. government's witnesses had in spades.
  • Judge Kaplan took over asking questions for Cohen, prodding for specifics, but none came.

Of note: It was difficult to hear a clean quote from SBF — the stenographer at one point had to ask him to restate what he said several times just to understand what he was saying.

  • When the U.S. government's cross-examination hit, SBF seemed to tap-dance around the answers.
  • He was scolded for using legalese, wondering aloud whether a question was "in scope."
  • Kaplan at one point had to order him to listen to the U.S. prosecutor Danielle Sassoon's questions and answer them directly.

What they're saying: "Part of the problem is that the witness has what I'll simply call an interesting way of responding to questions for the moment," the judge said.

Go deeper