In the ongoing criminal fraud trial of FTX founder Sam Bankman-Fried (SBF), he faced a rigorous cross-examination by federal prosecutor Danielle Sassoon during a second consecutive day of testimony. The cross-examination on Tuesday centered on SBF‘s actions and statements leading up to the collapse of FTX in November. Repeatedly, he denied any knowledge of the misappropriation of billions of dollars in customer funds until shortly before the company’s downfall last year.
This intense questioning came just before both sides concluded their case in the trial. Bankman-Fried stated three times concerning the use of FTX customer funds before concluding his testimony. The trial is set to proceed with closing statements, followed by deliberations by the jury, which may begin as early as Thursday.
Under the prosecutor’s relentless questioning, Bankman-Fried struggled to provide clear answers regarding whether he had instructed his employees not to use FTX customer funds for investments, luxury real estate, and other expenses. He was also unable to identify any employees who might have authorized such use of customer money.”I don’t recall giving any direction,”
The 31-year-old SBF had been testifying before a jury in his own defense in a trial that has become emblematic of the crypto industry’s highs and lows. He is accused of orchestrating a long-running fraud scheme that may have siphoned up to $10 billion from FTX‘s customers, diverting the funds toward extravagant real estate acquisitions and other expenses, as well as supporting another crypto trading firm he co-founded, Alameda Research.
Bankman-Fried has pleaded not guilty to seven counts of fraud, conspiracy, and money laundering, with potential penalties that could equate to a life sentence if convicted.
Throughout the trial, prosecution witnesses have pointed fingers at Bankman-Fried, asserting that he directed them to engage in criminal activities. Three of his close associates, Caroline Ellison, Nishad Singh, and Gary Wang, have pleaded guilty and agreed to cooperate with prosecutors. Testifying under the examination of his own lawyer, Mark Cohen, SBF denied committing fraud or embezzling from FTX‘s customers. Yet, he acknowledged making mistakes, referring to “significant oversights” that harmed FTX customers.
The troubles for FTX began when Changpeng Zhao (CZ), the CEO of Binance, the world’s largest crypto exchange, sold his stake in FTX back to Bankman-Fried in exchange for FTT tokens. CZ’s subsequent concerns about FTX‘s financial stability and his decision to sell the tokens triggered a chain of events. This led to a plummet in the price of FTT, prompting a rush of traders trying to withdraw their funds from FTX, causing an $8 billion shortfall.
During cross-examination by prosecutor Danielle Sassoon on Monday, Bankman-Fried was pressed on inconsistencies between his public statements and his management of FTX. He frequently claimed not to recall many of his public statements. The cross-examination continued on Tuesday, focusing on the actions and statements made by Bankman-Fried leading up to FTX‘s collapse in November. Despite the relentless questioning, Bankman-Fried maintained his position that he learned about the missing funds only around October 2022, while other witnesses testified that he knew much earlier.