- Federal prosecutors grilled Sam Bankman-Fried in a cross-examination on Monday.
- The aftermath of the cross-examination shows unexplained billion-dollar spending.
In a dramatic turn of events, the trial of Sam Bankman-Fried, the controversial founder of bankrupt FTX Derivatives Exchange, took a surprising twist as prosecutors used statements from the defendant’s oath confession to uncover a web of billion-dollar ventures.
Sam Bankman-Fried Grilled on His Oath Confession
On Monday, federal prosecutor Danielle Sassoon subjected Bankman-Fried to intense questioning during his second day of testimony in a Manhattan Federal court. The prosecution’s cross-examination lasted over four hours, revealing discrepancies between Bankman-Fried’s public statements and the way he managed FTX.
Bankman-Fried began his testimony last week, casting himself as a hardworking founder overwhelmed by responsibilities and shifting blame to his colleagues for the problems leading to FTX’s collapse.
Taking the stand was a calculated risk for Bankman-Fried, as criminal defendants typically avoid testifying to avoid potential pitfalls during cross-examination. However, after weeks of damaging testimony from government witnesses who accused him of lying to the public and embezzling from FTX customers, Bankman-Fried had few alternatives to salvage his case.
Monday’s session marked the prosecution’s turn to ask questions, with the courtroom filled with spectators, including Bankman-Fried’s parents, prominent law professors Joseph Bankman and Barbara Fried, and Damian Williams, New York’s top federal prosecutor.
Sassoon focused on Bankman-Fried’s public statements in interviews, congressional testimony, and Twitter. Sassoon confronted him about inconsistencies, such as his claim of a modest lifestyle compared to his frequent use of private planes, which reportedly cost $15 million.
The prosecuting lawyer also questioned him about statements he made before FTX’s downfall, asserting that Alameda Research had no special privileges as a customer of the exchange, despite prosecution witnesses stating the opposite. At one point, she presented Bankman-Fried with a book, “Number Go Up,” which seemed to contradict his prior statements about Alameda’s privileges, but he refused to acknowledge the contradiction.
Bankman-Fried’s recollection of various statements and key events was marred by his repeated claims of not remembering. When asked about statements regarding the importance of safeguarding customer funds, he hesitated and eventually said he couldn’t recall, despite having previously tweeted about it.
The Fall of FTX
In December, federal prosecutors charged Bankman-Fried with orchestrating a scheme to steal potentially up to $10 billion from FTX customers. These funds were allegedly spent on extravagant projects, including venture capital investments, political contributions, and luxury real estate in the Bahamas, where FTX was based.
Additionally, he was accused of creating a secret backdoor in FTX’s code, enabling his hedge fund, Alameda Research, to withdraw billions in customer funds. Bankman-Fried pleaded not guilty to seven counts of fraud, conspiracy, and money laundering, potentially facing a life sentence if convicted.
Shortly after FTX’s collapse, three of Bankman-Fried’s closest associates, Caroline Ellison, Nishad Singh, and Gary Wang, pleaded guilty to fraud and cooperated with the government. They testified against him, alleging they had lied and stolen under his direction.
