Sam Bankman-Fried, former cryptocurrency mogul and founder of Alameda Research, faced intense questioning from New York prosecutors during his trial for fraud. Prosecutors presented evidence that contradicted Bankman-Fried’s public claims about the relationship between Alameda and the FTX exchange, accusing him of misleading customers and investors. The prosecution focused on allegations that Bankman-Fried directed the creation of features that allowed Alameda to drain billions of dollars from FTX, leading to the exchange’s inability to honor customer withdrawals. Bankman-Fried admitted to using derogatory language towards crypto investors and regulators, and conceded that he was still involved in discussions regarding Alameda’s trading strategy. The trial has entered its fifth week and has included testimony from Bankman-Fried’s colleagues who are cooperating with the prosecution.
Bankman-Fried’s defense lawyer questioned him about his confidence in FTX’s financial stability just days before its collapse into bankruptcy. Bankman-Fried maintained that the exchange had no liabilities and sufficient assets at the time, despite customers withdrawing billions of dollars daily following doubts raised by the founder of Binance. He also testified that he delegated the hedging of Alameda’s positions to Caroline Ellison after its balance sheet deteriorated, expressing regret that the company did not hedge more. Bankman-Fried, who pleaded not guilty to all charges, was known as a prominent figure in the crypto industry before FTX’s collapse, enjoying media attention and connections with influential individuals.
In response to questions about his public statements, Bankman-Fried claimed that he shared what he believed to be the truth about the company with journalists, investors, and the US Congress. However, prosecutors presented evidence from Bankman-Fried’s congressional testimony in which he claimed that FTX offered customer protections and had sufficient liquid assets to meet withdrawal requests. The collapse of the exchange in November 2022 proved otherwise and resulted in bankruptcy. The trial continues with the prosecution building its case against Bankman-Fried.