Oct 31, 2023 - Economy & Business

Defense rests in SBF case, as founder blames employees

A drawing of a young man on a witness stand and an attorney at a podium, looking at him.

Sam Bankman-Fried under cross examination by Assistant U.S. Attorney Danielle Sassoon in federal court today. Drawing: Brady Dale/Axios

The defense rested Tuesday in the trial of Sam Bankman-Fried, the fallen founder of the FTX cryptocurrency exchange and its sister trading firm, Alameda Research.

The big picture: A decision is nearing on whether the one-time public face of crypto is criminally responsible for the billions of dollars of assets allegedly misappropriated from customers.

Zoom in: As SBF's attorneys led their client through the final moments of his time on the stand, they ask him to recall the moment he learned that Alameda had approximately $8 billion in unmet liabilities to FTX.

  • According to SBF, he said he first learned of this shortfall in the middle of 2022. Previously, he said, he had been unaware that Alameda had been using FTX customer funds deposited into Alameda's bank accounts.

What they're saying: "I wasn't particularly interested [at the time] in trying to dole out blame," SBF said from the stand Tuesday, testifying on redirect following the prosecution's end of cross examination.

  • His stance on the question of blame has now changed considerably, as seen from his testimony over the last few days from the witness stand.

The fallen founder spent Tuesday aggressively pointing fingers at his employees, particularly the former co-CEO of Alameda, Caroline Ellison.

  • He frequently claimed to be unable to remember specifics in answer to questions from the prosecution.
  • He testified that he was unaware that FTX customer funds deposited with Alameda had been used by the trading firm, not until several billion dollars had been spent.

Flashback: Ellison — testifying under a cooperation agreement after herself pleading guilty to fraud and conspiracy charges — previously told the court that SBF directed her and other Alameda staff to make use of FTX customer funds for its own purposes.

  • SBF Tuesday testified that he never explicitly told Alameda staff not to use the funds. "I don't recall giving any directions related to it."
  • However, he told the court, "I would have thought it was permissible."

After leaving the CEO role at Alameda in late 2021, he largely had no role at the trading firm, SBF testified.

  • Countering evidence presented by prosecutors Monday that showed him discussing trades with Ellison, SBF said Tuesday that his involvement was restricted to some part of the firm's venture investing, occasionally consulting with its leadership and some involvement in how it managed risk.
  • "I cared about the company a fair bit," he said.

He also denied detailed involvement with preparing the multiple balance sheets of Alameda, entered into evidence in the trial.

  • In her testimony, Ellison said she prepared these at SBF's direction, in order to assuage concerns by the trading firm's lenders of its solvency.
  • SBF, however, said he only took a brief look at one of the balance sheets shown in the Excel file.
  • He said it wasn't unusual for Ellison to bring him an Excel filed with multiple tabs. He often only looked at the main one, he said today.
  • As to whether or not he looked at all eight versions of the balance sheet, he said "I just don't remember one way or another."

What we're watching: Closing arguments begin tomorrow, and could be over by tomorrow afternoon.

  • If the court finalizes how it plans to instruct the jury today, then deliberations could begin as early as Friday.

Go deeper: SBF visibly annoyed during trial, uses mocking voice to answer prosecutors

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