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From the second his cryptocurrency empire collapsed in November, Sam Bankman-Fried didn’t cease speaking.
Towards the recommendation of his protection legal professionals, Mr. Bankman-Fried launched into a prolonged press tour to clarify the failure of his FTX cryptocurrency alternate, giving interviews to TV anchors and obscure Twitter personalities. After he was charged with fraud and positioned beneath home arrest, he invited reporters to go to him so he may proceed defending his actions.
On Friday, Mr. Bankman-Fried, 31, made a fair riskier name: He took the stand to testify at his felony fraud trial in federal court docket in New York.
Over 5 and a half hours of testimony, Mr. Bankman-Fried denied that he had dedicated fraud or stolen from FTX’s clients, whereas emphasizing his efforts to make the alternate profitable. However he additionally acknowledged that he had made errors, citing “vital oversights” that damage FTX’s clients.
Carrying a grey swimsuit and purple tie, together with his famously tousled hair minimize brief by a fellow inmate on the jail the place he’s detained, Mr. Bankman-Fried stated he had “made a lot of small errors, and a lot of bigger errors.”
FTX was presupposed to “transfer the ecosystem ahead,” he testified. “It turned out the alternative of that.”
Mr. Bankman-Fried’s testimony was essentially the most anticipated second of a trial that has develop into a referendum on the excesses of the once-highflying crypto industry. The entrepreneur, who positioned himself because the face of the business when the costs of digital cash like Bitcoin and Ether have been surging, emerged final 12 months as a cautionary story of the unfettered hubris and risk-taking that value clients billions of {dollars} when the crypto market crashed.
His choice to testify was an unlimited threat. Attorneys often advise felony defendants to not take the stand, in order that prosecutors don’t have the possibility to catch them in contradictions.
However after weeks of damaging testimony from his closest pals and colleagues, Mr. Bankman-Fried was left with little choice however to make a long-shot try to vary the course of the trial. He was the protection’s third and remaining witness, and he took the stand after an unusual hearing on Thursday delayed his testimony by a day.
“The dangers that include testifying are large and quite a few,” stated Daniel Silva, a former federal prosecutor now in personal apply. “S.B.F. will probably be topic to intensive impeachment from prosecutors primarily based on the numerous private and non-private statements he has made.”
Mr. Bankman-Fried was arrested in December and charged with orchestrating a yearslong scheme to misappropriate as a lot as $10 billion from clients who had deposited their financial savings in FTX. Prosecutors accused him of funneling the cash into enterprise capital investments, political contributions and indulgent actual property purchases. Additionally they stated he used the funds to prop up a crypto buying and selling agency he based, Alameda Analysis.
His trial has been essentially the most intently watched white-collar fraud case since Elizabeth Holmes, the founding father of the blood-testing start-up Theranos, was convicted and sentenced to 11 years in jail in 2022. Mr. Bankman-Fried, who has pleaded not responsible, may obtain what would quantity to a life sentence if a jury convicts him on seven counts of fraud, conspiracy and cash laundering.
Mr. Bankman-Fried’s protection faces significant hurdles, after a procession of former FTX and Alameda workers testified that he had lied to the general public and stolen cash from FTX’s clients for years. On cross-examination, his lead legal professionals, Mark Cohen and Christian Everdell, struggled to poke holes within the witnesses’ testimony, stymied by objections from the prosecutors.
However Mr. Bankman-Fried’s choice to testify gave the protection a chance to inform its facet of the story.
When he took the stand on Friday morning, the FTX founder confirmed little emotion as he defended his selections in entrance of a packed courtroom. Court docket officers arrange a line of folding chairs within the gallery to accommodate a bunch of visiting college students. Mr. Bankman-Fried’s dad and mom, the Stanford regulation professors Joe Bankman and Barbara Fried, additionally watched from the pews, scribbling notes on a authorized pad. The creator Michael Lewis, who lately printed a e book concerning the FTX founder, sat a few rows behind them.
Mr. Bankman-Fried started his testimony with a mea culpa, acknowledging that FTX’s collapse had damage folks all through the crypto business. All he had wished to do, he stated, was “construct the very best product in the marketplace.”
Beneath questioning from Mr. Cohen, Mr. Bankman-Fried walked the jury by his biography, from his upbringing in Palo Alto, Calif., to his undergraduate schooling on the Massachusetts Institute of Know-how. In faculty, he stated, he belonged to an uncommon form of fraternity that was “coed, nerdy and dry,” earlier than graduating right into a job on the Wall Road buying and selling agency Jane Road.
At occasions, he solid himself as one thing of a novice. When he began buying and selling cryptocurrencies with Alameda in 2017, he stated, “I had completely no thought the way it labored.”
His enterprise empire grew sooner than he had ever imagined, Mr. Bankman-Fried testified. He was quickly working 22-hour days, he stated, and receiving hundreds of emails each day. He additionally began making political donations, he stated, after concluding that “I may have a considerable affect on the world.”
Mr. Bankman-Fried recommended that the sheer quantity of labor induced him to disregard necessary elements of the enterprise. Requested whether or not FTX had a threat administration division, he stated, “We certain ought to have, however no we didn’t.”
That alternate echoed a core declare in Mr. Cohen’s opening assertion: that Mr. Bankman-Fried was successfully constructing a airplane in midair, and performing in “good religion” the entire time.
Mr. Bankman-Fried additionally reiterated a number of different claims that his legal professionals have pressed all through the trial. He denied illegally backdating paperwork, and stated he used official sources of funding to finance investments and actual property purchases.
He additionally blamed the issues at Alameda on Caroline Ellison, the agency’s chief government and his former girlfriend, saying she had didn’t correctly handle threat. (Ms. Ellison has pleaded responsible and testified towards Mr. Bankman-Fried.) He discovered about an $8 billion gap in FTX’s accounts a lot later than prosecutors had asserted, he added.
At occasions throughout the testimony, Mr. Bankman-Fried appeared strikingly relaxed, smiling and making occasional wisecracks. He stated he had handed on a doable stadium sponsorship with the Kansas Metropolis Royals as a result of he didn’t need FTX “to be generally known as the Kansas Metropolis Royals of crypto exchanges.” Requested why his hair was so unkempt all through his tenure at FTX, he stated, “I used to be form of busy and lazy.”
Mr. Bankman-Fried is more likely to face a a lot more durable time beneath cross-examination, which may start as quickly as Monday when the trial resumes.
A preview of that testimony unfolded on Thursday, when the choose overseeing the case, Lewis A. Kaplan, held a listening to during which Mr. Bankman-Fried provided testimony on a slim set of matters with out the jury current.
Beneath intense questioning from a prosecutor, Mr. Bankman-Fried peppered his responses with “ums” and “ahs,” and infrequently stared down at his lap as he thought of what to say, particularly when he was requested if he had sought recommendation from his legal professionals on whether or not Alameda may borrow billions of {dollars} from FTX’s clients.
Choose Kaplan repeatedly chastised him for failing to reply questions immediately.
“The witness has what I’ll merely name an fascinating approach of responding,” Choose Kaplan stated.
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