FTX founder Sam Bankman-Fried took the stand in his own defense during his fraud trial on Friday, where he admitted that “a lot of people got hurt” when the cryptocurrency exchange collapsed last year. However, Bankman-Fried maintained that he did not defraud anyone or steal billions of dollars from customers. The 31-year-old former billionaire blamed his mistakes as an entrepreneur and pointed fingers at Caroline Ellison, the former CEO of his crypto-focused Alameda Research hedge fund, who testified against him.
During his testimony, Bankman-Fried conceded to making errors, such as not implementing a risk-management team. He emphasized that he did not set out to steal from people and claimed that he and his team aimed to build the best product on the market. However, the company ended up bankrupt, causing harm to customers, employees, and investors.
Bankman-Fried is facing two counts of fraud and five counts of conspiracy. If convicted, he could potentially face several decades in prison. Prosecutors allege that Bankman-Fried used FTX customer funds to support Alameda, engage in speculative investments, and contribute more than $100 million to political campaigns. He is also accused of defrauding Alameda’s lenders and FTX investors.
Bankman-Fried maintained that the funds used for sponsorships and real estate did not come from FTX customers, as alleged by the prosecutors. He stated that they were either sourced from the company’s revenue or from equity investors. He also claimed to have borrowed money from Alameda, which he owned, to make political donations.
The defense strategy involved Bankman-Fried distancing himself from the actions of three former colleagues who pleaded guilty to fraud and testified against him. He portrayed himself as an aloof CEO who entrusted his subordinates, contradicting his colleagues’ testimonies that he directed them to take actions that facilitated the theft of customer funds and misled investors and lenders.
Regarding Ellison’s testimony, which stated that Bankman-Fried instructed her to falsify Alameda’s balance sheets during a crash in crypto markets, he claimed to have only glanced over the spreadsheet she provided and thought it appeared reasonable. When former FTX chief technology officer Gary Wang testified that Bankman-Fried directed him to implement changes in FTX’s computer code that allowed the theft of funds, Bankman-Fried asserted he did not know about the specific details of what his colleagues had implemented.
Bankman-Fried’s arrest occurred in December 2022, following FTX’s bankruptcy declaration due to significant customer withdrawals. In court, he blamed Ellison for Alameda’s failure, citing her alleged failure to hedge against crypto market downturns and lack of focus on risk management.
Bankman-Fried’s testimony will continue next week when prosecutors have the opportunity to cross-examine him. His defense lawyer, Mark Cohen, is set to conclude the direct examination on Monday morning.