SBF's testimony distances himself from FTX's missteps
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The federal courthouse in Manhattan where the trial is taking place, before sunrise on Oct. 27. Photo: Yuki Iwamura/Getty Images
Sam Bankman-Fried, testifying in his own criminal fraud trial Friday in Manhattan, attempted to distance himself from the decisions that ultimately brought down both the FTX crypto exchange and its sister hedge fund Alameda Research.
Why it matters: Crypto's fallen star needs only to establish reasonable doubt with the jury about his culpability as it relates to his companies' alleged misstatements and misuse of funds.
Details: Several times over the course of his testimony Friday, SBF attempted to present himself as not deeply involved in key decisions.
- Alameda Research had a line of credit with FTX, but SBF claimed he was not aware of how much it was using on a day-t0-day basis. He said he was "aware of roughly" how much it was using.
- With regard to the practice of FTX exchange customers wiring money to an Alameda bank account, he said he didn't know how the hedge fund was accounting for the liability. "I wasn't entirely sure what was happening," he said.
- He claimed to have been unaware that Alameda's liabilities to FTX were accounted for in the now infamous "[email protected]" account on the exchange until a crisis forced engineers to examine its code in June 2022.
- When the decision was made in October 2022 to keep Alameda open during a crisis around its solvency, he said the leadership ultimately took the decision because his lieutenants preferred not to shutter it. "I did not at the time feel I got clear reason why," SBF testified.
Earlier in his testimony Friday, SBF's counsel asked him if he defrauded customers or took customer money. He answered "no" to both.
- However, he admitted that the exchange's failure to institutionalize risk management had a price. "A lot of people got hurt. Customers. Employees," he said.
- "I made a number of small mistakes and a number of large mistakes."
Scene in the court: While SBF is known for having a high energy affect, he seemed fairly calm in court today. His characteristic rocking only cropped up a few times on the stand.
- He seemed to be trying very hard to show respect to the judge and to decorum of the court, but frequently had to be reminded not to veer beyond the specific question asked.
- "We will all get this done more efficiently if you focus on the question," Judge Lewis Kaplan instructed the defendant.
The bottom line: His counsel asked him to explain the roles of various FTX departments. At the end of several descriptions, he asked if FTX had a risk management department.
- "We sure should have, but no we did not," he replied.
What's next: SBF is expected to take the stand again Monday, and still must face cross-examination by prosecutors.
Go deeper: SBF broadly disallowed from talking about counsel in defense
