Crypto
Former cryptocurrency billionaire Sam Bankman-Fried has testified at his fraud trial. Here’s what he said
Former billionaire Sam Bankman-Fried is currently standing trial for fraud in New York.
He is accused of stealing billions from his cryptocurrency fund’s customers to pay the bills for his other ventures.
The case sent shock waves through the financial sector and saw him arrested in the Bahamas before being extradited to the United States.
The saga is continuing to unfold in a Manhattan Court, with the FTX founder giving his much-anticipated version of events.
Here are the key moments from his testimony.
Who is Sam Bankman-Fried and what’s he accused of?
He was the founder of a cryptocurrency exchange called FTX that, at one point, was the second-largest cryptocurrency exchange in the world.
The 31-year-old was once one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion, when his cryptocurrency businesses collapsed last November.
FTX unravelled when a run on deposits and falling crypto prices left the company with an $US8 billion ($11 billion) shortfall.
Mr Bankman-Fried is accused of stealing billions of dollars in FTX customer funds to plug losses at his crypto-focused hedge fund, Alameda Research.
He is facing criminal charges including wire fraud, money laundering and conspiracy to commit fraud on the United States.
He has pleaded not guilty to all the charges, arguing that while he made mistakes running FTX, he never intended to steal funds.
If convicted, Mr Bankman-Fried could face decades in prison.
What has Sam Bankman-Fried said in his defence?
In his first day of testimony on Friday, Mr Bankman-Fried said a “lot of people got hurt” when the cryptocurrency exchange collapsed last year, but insisted he did not defraud anyone or steal billions of dollars from customers.
He fielded questions from his own lawyer, admitting to making “mistakes” such as not putting in place a risk-management team.
“We thought that we might be able to build the best product on the market,” Mr Bankman-Fried said during his 6 hours of testimony.
“It turned out basically the opposite of that.
“A lot of people got hurt — customers, employees — and the company ended up in bankruptcy.”
He thought hedge fund had assets to cover $8 billion debt
Back in the witness box on Monday, Mr Bankman-Fried said he believed his Alameda Research hedge fund had enough assets to cover an $8 billion debt to the cryptocurrency exchange up until days before both collapsed.
He said he was surprised, but not alarmed, upon learning in October 2022 that Alameda had borrowed $8 billion from deposits that FTX customers sent to the exchange.
“If it were far larger, I would have been calling a crisis,” Mr Bankman-Fried said in response to questions from his defence lawyer, Mark Cohen.
‘Margin trade’ called into question
Mr Bankman-Fried also emphasised that FTX was a “margin” exchange, where many customers, including Alameda, borrowed money from other users to place bets.
On cross-examination, prosecutor Danielle Sassoon asked Mr Bankman-Fried about the testimony of his ex-girlfriend and former chief executive of Alameda Research, Caroline Ellison.
She is one of three ex-members of the former billionaire’s inner circle who have pleaded guilty to fraud charges and agreed to cooperate with the Manhattan US Attorney’s office — making her a key witness for the prosecution.
Earlier this month, Ellison told the court that Alameda Research borrowed money from FTX customers to repay its lenders in June 2022.
Ms Sassoon asked Mr Bankman-Fried several times whether taking FTX funds to repay lenders was margin trading.
“It’s my testimony that it depends on the details but that it very well could be a margin trade,” Mr Bankman-Fried said, sighing.
“I’m not saying that’s what happened, and I’m not saying that’s not margin trading.”
Mr Bankman-Fried said some of Alameda’s debt to the exchange was the result of FTX customers depositing their money into Alameda bank accounts — which was necessary because the exchange did not have its own bank accounts.
Ms Sassoon asked Mr Bankman-Fried if he could identify FTX customers besides Alameda who received deposits on behalf of other customers.
“Not with 100 per cent confidence,” he said.
He trusted his deputies
In his testimony, Mr Bankman-Fried portrayed himself as a hands-off CEO who frequently left operational details to others.
FTX computer programmers Nishad Singh and Gary Wang — who have pleaded guilty and agreed to cooperate with prosecutors — testified that Mr Bankman-Fried directed them to grant Alameda special trading privileges on FTX that prosecutors say allowed the fund to siphon off customer funds.
During Friday’s testimony, Mr Bankman-Fried said he asked Wang and Singh to prevent Alameda from getting liquidated by mistake, but did not know their solution was to let Alameda run a negative balance.
On Monday, prosecutor Ms Sassoon challenged that assertion.
“You did not learn the details for the code change that you directed?” she asked.
“That’s correct,” Mr Bankman-Fried said.
“I trusted Gary and Nishad.”
The Manhattan trial will continue into November.
Reuters/ABC
World’s popular digital currency rises as high as $99,073 on expectations Trump will ease legal and regulatory hurdles.
Bitcoin is nearing the $100,000 mark as crypto enthusiasts bet that United States President-elect Donald Trump will usher in a more welcoming regulatory environment for digital assets.
The world’s most popular digital currency rose as high as $99,073 on Thursday, extending its surge since Trump’s re-election on November 5.
The commodity has risen more than 60 percent since election day as investors anticipate Trump’s incoming administration to ease regulatory and legal hurdles to its use.
Trump, who called the asset a “scam” during his first term, accepted campaign donations in cryptocurrency, and has pledged to make the US “the crypto capital of the planet” and accumulate a national bitcoin reserve.
Trump and his three sons in September also announced the launch of their own crypto business, World Liberty Financial, which investors have taken as a promising sign of the president-elect’s belief in the sector.
In another bullish signal for the sector on Thursday, United States Securities and Exchange Commission (SEC) chair, Gary Gensler, who was widely disliked among crypto investors for his aggressive enforcement actions targeting the sector, confirmed that he would step down in January.
Trump had pledged to fire Gensler on “day one” of his administration, though the president does not have the authority to remove the SEC chair before the end of his or her term.
While viewed by supporters as a ticket to big returns and financial freedom, Bitcoin and other cryptocurrencies are known for their volatility and have faced government crackdowns in several parts of the world.
After climbing to a record high of $69,000 in late 2021, Bitcoin plunged to less than $16,000 over the following year.
The commodity burst past its previous peak in March after gaining more than 300 percent since November 2022.
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