Sam Bankman-Fried has taken the stand to testify in defense of his fraud case but, in a surprising twist, it was without the jury present.
Judge Lewis Kaplan said there were a “number of areas of potential testimony” that the prosecutor said the jury should not hear.
The unusual hearing was necessary without the jury present to determine what they should be told, the judge said.
After the testimony, Judge Kaplan said he would make a decision and the jury would be reinstated.
Bankman-Fried entered the witness stand wearing a gray suit and purple tie. He spoke nasally, but appeared calm and answered questions from his lawyer Mark Cohen clearly.
Sam Bankman-Fried took the stand Thursday to testify in his own defense at his fraud trial
The former billionaire faces up to 115 years behind bars on charges including conspiracy and bank fraud in connection with the collapse of his cryptocurrency exchange FTX in November 2022.
Bankman-Fried said there were “constant hacking attempts” on FTX, but the company never suffered what he called a “core breach.”
He said there were “constant hacking attempts” on FTX, but the company never suffered what he called a “core breach.”
According to Bankman-Fried, there were “concerns for most of FTX’s existence” about hacking, especially in the Hong Kong office.
He said that “during a period there were political events that resulted in unauthorized access to (staff) equipment.”
Earlier in the trial, the court heard that Bankman-Fried had enabled automatic deletion using the messaging app Signal.
In his testimony, Bankman-Fried said he was acting within FTX’s document retention policy when he did this.
He said: “Generally speaking, these were not channels where there were formal business documents. They were not channels through which decisions would be announced or adopted, or through which documents relevant to supervisory investigations would be discussed.”
Bankman-Fried said it was for “banter” and conversations that he likened to “someone walking up to my desk” and asking him if he has “any thoughts on Japan’s regulatory environment right now.”
He added that he disabled automatic deletion of message chats in November 2022, shortly before FTX filed for bankruptcy, after speaking with financial regulators.
Documents from his lawyers indicate he will try to argue that he took advice from his lawyers and that there is “nothing improper” about FTX’s finances.
Sam Bankman-Fried pictured at the 2022 Super Bowl with singer Katy Perry (far left), actor Orlando Bloom, actress Kate Hudson (far right) and Hollywood agent turned investor Michael Kives. The statue was shown to the court
Brady and Bankman-Fried are pictured together in a clip they shared on social media as one of his celebrity favorites
Facing a 115-year prison sentence, Bankman-Fried made the risky decision to testify after being blamed for the company’s collapse by its three largest former employees who had all taken plea deals.
He is first questioned by his own lawyers, but then the prosecutor can question him about the whole case in front of the jury.
FTX was worth $32 billion at its peak and Bankman-Fried appeared on the cover of Forbes magazine, which touted him as the future of the financial industry.
But the ‘house of cards’ collapsed last November when crypto prices plummeted due to fears of a recession.
Bankman-Fried, 31, was arrested at his penthouse in the Bahamas – where FTX was based – and extradited to the US to face charges.
A filing from Bankman-Fried’s lawyers ahead of his testimony said he would refute claims that he ordered FTX’s assets transferred to regulators in the Bahamas when it went bankrupt.
Bankman-Fried will reject the idea that this was done so he would have a better chance of retaining control of the company, the document said.
According to the filing, Bankman-Fried had the “understanding that the automatic removal policy for (messages) was instituted at the direction of attorneys” rather than pushing for it himself.
He also plans to say that FTX’s lawyers were also involved in arranging loans and other financial arrangements because this is “directly relevant to his state of mind and good faith at the time.”
The key witness for the prosecution is Caroline Ellison, Bankman-Fried’s ex-girlfriend who headed Alameda Research, FTX’s sister company.
The court heard Bankman-Fried tried to blame Ellison for the debts, saying in an email that she was “not a natural leader” and should be replaced.
According to the filing, “Bankman-Fried’s knowledge that attorneys were involved in structuring and documenting the loans would be evidence of his honest belief that there was nothing improper about the loans.”
His lawyers claimed he “believed in good faith that there was nothing improper” about FTX’s finances, it is alleged.
Bankman-Fried’s defense will call three other witnesses: Krystal Rolle, a lawyer from the Bahamas who represented Bankman-Fried, data expert Joseph Pimbley and a records custodian to talk about the different roles of people at FTX.
Bankman-Fried has denied 13 charges between 2019 and 2011, including bank fraud, money laundering and violations of campaign finance laws, which could land him in prison for up to 115 years.
Seven of them will be treated during this process, the rest next year.
The key witness for the prosecution was Caroline Ellison, Bankman-Fried’s ex-girlfriend who headed Alameda Research, FTX’s sister company.
She described how he “ordered” her to commit the fraud and broke down in tears as she apologized to those who lost money due to her feeling of “constant state of fear” last summer knowing the scale of the crisis.
FTX co-founder and former chief technology officer Gary Wang took a plea deal and testified earlier this month
Nishad Singh (pictured arriving at court with girlfriend Claire Watanabe) testified that the company spent millions on celebrity partnerships in early 2022 – as prosecutors tried to show how Bankman-Fried wasted customer money to boost its status
The court heard Bankman-Fried tried to blame Ellison for the debts, saying in an email that she was “not a natural leader” and should be replaced.
Nishad Singh, FTX’s former head of engineering, told the court how he felt “embarrassed and embarrassed” by the company’s excessive spending.
He said it “stank of excess and ostentation” and was “not in line with what I thought we were building the company for.”
Singh said he became aware of the “huge” hole in FTX customer accounts about two months before the company went bankrupt, and that most of it had gone to Bankman-Fried’s lavish spending.
He felt “really betrayed” and said he felt “intimidated” by Bankman-Fried for a long time.
Singh also walked the panel through FTX’s tens of millions in political donations, including $5 million to Joe Biden’s re-election campaign.
FTX co-founder Gary Wang told the court that, at Bankman-Fried’s direction, he changed the computer code to allow Alameda to withdraw unlimited funds from FTX customers.
The change in July 2019 would ultimately result in Alameda effectively stealing more than $10 billion in FTX user money, Wang told the court.
