As the founder and CEO of FTX, Sam Bankman-Fried won over presidents, pop stars, and princes. On Friday, he faced his toughest audience yet: A jury of his peers.
Bankman-Fried took the stand Friday following a dry run Thursday in front of federal Judge Lewis Kaplan and attorneys on both sides of his fraud case. Kaplan barred the former billionaire from pinning several of his alleged missteps on advice from his company’s lawyers, but otherwise let him speak widely about his experience as head of the now-bankrupt crypto exchange.
It was the first time in the three-week trial the jury heard from the disgraced founder directly, and early in his testimony, Bankman-Fried copped to making “a number of small mistakes and a number of large mistakes”—the largest of which, he said, was not hiring a risk-management team.
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“There were significant oversights,” he said in a stroke of understatement.
The 31-year-old claimed he intended to build a strong, streamlined product for crypto trading when he founded FTX in 2019. Asked by his attorney if that happened, he responded bluntly: “No. It turned out basically the opposite of that.”
But Bankman-Fried insisted he had not defrauded anyone and attempted to shift blame to his fellow executives—and former friends—who testified against him earlier in the trial.
He suggested that former head of engineering Nishad Singh and chief technology officer Gary Wang inserted elements into the site’s code that allowed it to make back-door trades with the hedge fund he founded, Alameda Research, without his full knowledge or understanding. And he suggested that the hedge fund’s CEO, his ex-girlfriend Caroline Ellison, failed to adequately hedge her trades, contributing to its catastrophic failure in November.
Crucially, he said he was not aware of the billions in customer funds that Alameda owed FTX until October 2022—just two months before the companies went belly up. His fellow executives have claimed Bankman-Fried not only knew about this shortfall but actively worked to cover it up.
Bankman-Fried said he knew Alameda had opened a bank account on FTX’s behalf, but that he “wasn’t entirely sure what was happening” with that money. It wasn’t until June 2022, when he ordered a review of the both companies’ accounting, that Wang and Singh mentioned the bank account—which had previously been filled with FTX customer funds—was operating at a deficit, he said. In October, he said, he opened a newly created database and realised the scope of the deficit: $8 billion. “I was very surprised,” he testified.
More than 70 people poured into the courtroom for the reprise on Friday, including journalists, crypto influencers, and curious onlookers involved in cryptocurrency or finance. Journalist Michael Lewis, who recently published a book on FTX’s rise and fall, sat in the overflow courtroom during the morning session, looking bored and leaning over the bench in front of him.
Though the day’s testimony started slow, it picked up in the afternoon when Bankman-Fried revealed some of the details behind his company’s high-profile public image. He decided to buy the naming rights to the Miami Heat’s home arena, for instance, after observing that he remembered the names of sports arenas more than the ads that played during games. The choice for which arena to christen with the FTX logo came down to the Kansas City Royals and the Miami Heat, he testified, and he “didn’t want to be known as the Kansas City Chiefs of crypto exchanges.”
He also claimed to have become the—very prominent—face of his company by accident, when a few initial interviews “ended up going better than I thought they would.” By the time interview requests started pouring in, he added, “it was too late to have another public face of the company. I was that public face.”
His signature shaggy hairdo was equally unintentional, he added—the result of being too “busy and lazy” to get a haircut. As for his uniform of shorts and a T-shirt? “I found them comfortable,” he said. (Ellison previously claimed Bankman-Fried purposefully adopted a low-effort look to appear more down to earth.)
Bankman-Fried also delved into his controversial relationship with Ellison, saying they dated on-and-off between 2020 and 2022, when he ended things for good. “I didn’t have the time or energy to put into what I think she wanted from a relationship,” he said, adding that sustaining romantic relationships was historically “not something I’ve been great at.”
The testimony differed significantly from what Bankman-Fried offered in the sort of dress rehearsal the day before, when Judge Kaplan excused the jury and had the founder testify outside their earshot, in order to preview what he would say and determine whether it was admissible. Bankman-Fried spent much of that hearing talking about advice his lawyers had given him, on issues including encrypted messaging and document retention, but Kaplan barred him from raising those issues in front of the jury Friday.
The former crypto poster boy also seemed noticeably more relaxed than during his mock cross-examination the day before, when he struggled to give direct answers and garnered headlines like “Honestly, Sam Bankman-Fried Was Very Annoying From the Stand.” He attempted a few jokes and occasionally cracked a smile, even letting out a laugh while discussing his penchant for fidget spinners.
Taking the stand was a risk, as it opened him up to what will likely be a fierce cross-examination. But it may have seemed like a risk worth taking it after a brutal three weeks of prosecution witnesses, during which his defense lawyers failed to poke many holes in the government’s case.
Ellison, Wang, and Singh testified against Bankman-Fried, saying he knowingly sent FTX customer money to Alameda, ultimately losing the $8 billion in customer funds. Singh also testified to Bankman-Fried’s lavish spending, including the $300 million apartment building in the Bahamas where FTX employees lived, and Ellison alleged he knew much more about the hedge fund operations than he publicly let on.
All three former executives have pleaded guilty to various fraud charges, but experts say the sheer number of witnesses will likely balance any jury concerns about their credibility. The defense only really managed to score points against Singh, pointing out that he purchased a $3.7 million home using a loan from FTX just weeks after he claims to have discovered the company’s misuse of customer money.
Bankman-Fried faces seven charges including securities fraud, wire fraud and money laundering that could land him in prison for decades. His defense is expected to finish its case within a week; prosecutors told the judge at the end of Friday’s hearing to expect “significant cross-examination.”
