Despite the absence of jurors, Sam Bankman-Fried’s initial testimony at his criminal trial on May 29-31, 2024, in Austin, Texas, was remarkable. The former FTX CEO’s appearance on the witness stand, conducted without the jury present, allowed the judge to review his comments for admissibility. Bankman-Fried attempted to deflect blame onto FTX’s attorneys for the collapse of the multi-billion-dollar crypto exchange, but his responses during cross-examination by prosecutors, particularly Assistant U.S. Attorney Danielle Sassoon, were unconvincing.
Bankman-Fried struggled to recall details and often responded with uncertainty, prompting Judge Lewis A. Kaplan to note his peculiar way of answering questions. The day ended with jurors being dismissed, an unusual move by the judge, signaling the impending conclusion of the trial. Bankman-Fried’s defense against accusations of misusing funds and hiding losses relied on arguments about legal advice and internal communications, although his responses left much to be desired, raising questions about the strength of his defense strategy.
Earlier, Judge Lewis A. Kaplan had prohibited Bankman-Fried’s team from introducing an “advice-of-counsel” defense without explicit court permission. However, during Thursday’s hearing, discussions regarding Bankman-Fried’s legal counsel at FTX were allowed since the jurors had been dismissed.
In a filing submitted on Wednesday, the defense contended that Bankman-Fried intended to testify about his lawyers’ role as part of his defense strategy. Judge Kaplan expressed the need to review this argument in greater detail before determining whether the jury could hear it.
Leading up to Thursday’s testimony, prosecutors highlighted FTX’s practice of automatically deleting specific internal communications. They suggested that this indicated Bankman-Fried and his team might be concealing something.
Contrary to this, Bankman-Fried claimed that his external general counsel had devised the policy to automatically delete messages on Signal, an internal messaging app used by FTX. He also asserted that his attorneys, including general counsel Dan Friedberg and external law firm Fenwick & West, were responsible for creating key documents and policies, such as FTX’s terms of service and its banking arrangement with Alameda, Bankman-Fried’s trading firm. These aspects were central to the prosecution’s case against him.
Prosecutors cross-examine the former crypto titan
Assistant U.S. Attorney Sassoon meticulously dissected Bankman-Fried’s replies to his defense attorney’s previous inquiries. When questioned about retaining Signal messages in response to subpoenas, Bankman-Fried’s response, “I’m not actually sure,” echoed his uncertain replies to other prosecution queries.
Throughout his testimony, Bankman-Fried often rambled, asserting his foggy recollection of events leading to FTX’s collapse. His convoluted responses visibly frustrated the prosecution. However, this did not deter Bankman-Fried, who delved into lengthy explanations of his decisions at FTX and engaged in semantic disputes with the prosecution.
Bankman-Fried occasionally apologized, anticipating substantial diversions, yet Sassoon interrupted him. These challenging-to-parse answers captured Judge Kaplan’s attention.
“The witness has, in my view, an interesting way of responding to questions,” remarked Kaplan, weighing in on a particularly contentious exchange between the defense and prosecution regarding the scope of the cross-examination.
During the recent courtroom proceedings, Sam Bankman-Fried’s Thursday statements served as a glimpse into the arguments he might present to the jury when they reconvene. Bankman-Fried took the stand in a Manhattan courtroom at 2 p.m. ET, but the jurors were excused for the day. The judge’s decision to send them home was unusual; he needed time to assess specific aspects of Bankman-Fried’s testimony and determine admissibility.
Judge Kaplan surprised jurors by granting them the rest of the day off, a move he admitted was rare in his years of experience. He assured them that the case was nearing its conclusion, likely to wrap up in the first half of the following week, marking the ‘home stretch’ of the trial.
Earlier in the day, Cohen, Bankman-Fried’s defense, attempted to have the prosecution’s case dismissed, citing insufficient evidence presented by the U.S. Department of Justice. However, Judge Kaplan denied this common procedural move.
The prosecution wrapped up its case after calling FBI special agent Marc Troiano as their final witness. Troiano’s testimony aimed to demonstrate that Bankman-Fried frequently used the auto-deletion setting for his Signal conversations.
Subsequently, the defense presented witnesses, including Krystal Rolle, a Bahamas attorney representing Bankman-Fried, and financial services expert Joseph Pimbley. Finally, Bankman-Fried had his opportunity to testify.
The former CEO faces accusations of misappropriating over $8 billion belonging to FTX customers and investors, resulting in significant losses by the time FTX filed for Chapter 11 in November 2022. The Department of Justice has contended that Bankman-Fried directed actions that allowed his firm, Alameda Research, to misappropriate funds and concealed these activities until the collapse of FTX, likened to a ‘house of cards.’
Several former colleagues and confidants, including former Alameda CEO Caroline Ellison, former FTX Director of Engineering Nishad Singh, and former FTX Chief Technology Officer Gary Wang, testified against Bankman-Fried. They informed the New York courtroom jury that he specifically instructed them to enable Alameda to access FTX customer funds and conceal these actions from the companies’ investors.