Founder and former CEO of defunct crypto exchange FTX, Sam Bankman-Fried, took the stand on Thursday to testify in his criminal fraud trial. Judge Lewis Kaplan of Manhattan federal court decided to exclude the jury during his testimony, with the judge later determining which parts can be shared with the jurors.
Federal prosecutors objected to Bankman-Fried's plan to discuss the involvement of lawyers in FTX's decision-making process. As a result, the jury was sent home around midday.
The trial, which started on October 4, featured testimony from several former close associates of Bankman-Fried who were called upon by the prosecution.
Judge Kaplan criticized Bankman-Fried for being evasive in his responses during cross-examination by the prosecution. The Wall Street Journal reported that Bankman-Fried claimed to not remember whether he had discussions with lawyers regarding important decisions made during his tenure at the exchange.
Furthermore, Bankman-Fried admitted uncertainty about the initial decision to utilize a subsidiary of Alameda Research, a related company, to handle customer funds from FTX. Prosecutors have accused him of conspiring to divert $10 billion in customer funds for personal projects, such as venture capital investments, political donations, and luxury real estate.
Prosecutors' Inquiry into FTX's Communication Security
During the recent trial, Bankman-Fried, the founder of FTX, faced intense scrutiny from prosecutors regarding his communication practices. One topic that received particular attention was the use of an auto-delete feature on the Signal messaging app, which Bankman-Fried had discussed with FTX lawyers. This emphasis on communication security stemmed from FTX's constant battle against hacking attempts.
Reliance on Legal Counsel
However, the defense focused its questioning on Bankman-Fried's reliance on the advice given by FTX's legal team. Bankman-Fried admitted to only skimming through the firm's terms of service, which had been meticulously drafted by both in-house and external lawyers. Interestingly, it was the lawyers who decided to structure the promissory notes for payments from Alameda to Bankman-Fried and others as loans.
Comfort in Legal Structure
When queried by his own lawyer, Bankman-Fried expressed comfort in having the lawyers oversee the loan structuring process. He also believed that, according to FTX's terms of service, Alameda had the right to borrow funds from the exchange under certain circumstances.
Trial and Testimony Updates
It is anticipated that the case will be submitted to the jury for deliberation sometime next week. Bankman-Fried is set to return to the courtroom on Friday at 9:30 a.m. to provide further testimony.
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