NEW YORK TIMES
The continuing cross-examination of Bankman-Fried
Sam Bankman-Fried is to return to the stand today after the former wunderkind faced a four-hour grilling that exposed inconsistencies in his assertion that he didn’t defraud customers of FTX, his bankrupt crypto exchange.
Bankman-Fried made a few bombshell admissions. The biggest involved Alameda Research, the sister hedge fund he controlled that’s at the heart of a collapse that has cost investors, business partners and customers billions. Under questioning, he conceded that he played a larger role at Alameda before it imploded.
His decision to testify was long seen as risky, and that became clearer yesterday. The 31-year-old, who faces nearly a lifetime in prison on fraud and money-laundering charges, delivered curt “yep,” “no” and several “I’m not sure” responses, the latter drawing rebukes from the judge. The performance dealt a potential blow to his credibility in the eyes of jurors.
The lead prosecutor used Bankman-Fried’s own words against him. Danielle Sassoon clerked for the Supreme Court Justice Antonin Scalia, who taught her how to shoot a pistol “and made me feel like I had grit.” That prosecutorial style came into focus as she confronted Bankman-Fried with his own statements to journalists, on Twitter, and elsewhere that appeared to contradict his argument that he always had his customers’ backs.
Here’s what else we learned:
- Alameda had a near-unlimited $65 billion line of credit with FTX. Bankman-Fried conceded that detail yesterday after Sassoon showed jurors an excerpt from an interview he had given to Zeke Faux for the Bloomberg News reporter’s new book, “Number Go Up.”
- Bankman-Fried conceded that Alameda was not subject to the same credit rules as other FTX customers — a point he first made at last year’s DealBook Summit in an interview with Andrew, which the prosecutor cited yesterday — and he admitted that Alameda’s venture investments were too large and put too much risk on the hedge fund’s balance sheets.
- Bankman-Fried tried to downplay the media coverage about him and FTX. “I disagreed with basically every article written about me” after FTX collapsed, he said.
The toughest questions may lie ahead. Three of Bankman-Fried’s closest colleagues have pleaded guilty and have testified against him. Bankman-Fried has pleaded not guilty but has not offered much to contradict their testimony. And the prosecution hasn’t yet pressed Bankman-Fried on the events that immediately precipitated FTX’s spectacular fall late last year.
