Day 16 Of Sam Bankman-Fried Trial: End of Questioning of Witnesses

Sam Bankman-Fried

This is the last day Sam Bankman-Fried testifies in his own trial for the collapse of the FTX cryptocurrency exchange.

The U.S. Prosecutor’s Counterarguments

Following the 15th day of the trial, the U.S. prosecutor questioned Sam Bankman-Fried about his relationship with the government of the Bahamas, where FTX is headquartered.

Sam Bankman-Fried admitted to being acquainted with the Prime Minister of the island, Mr. Phillip Davis, and assisting with some tasks for the Prime Minister’s son.

Moreover, through social connections facilitated by K5 Global, Sam Bankman-Fried had the opportunity to meet and invite two former politicians, former U.S. President Bill Clinton and former UK Prime Minister Tony Blair, to an FTX conference held in April 2022. The conference also featured other celebrities like singer Katy Perry and actor Orlando Bloom.

SBF with President

When FTX collapsed, Sam Bankman-Fried directed customers on the platform in the Bahamas to be given priority in withdrawals, as part of an effort to appease authorities and buy more time.

The prosecutors are turning their attention back to North Dimension, the company established by Sam to receive deposits from FTX customers. However, the company is under the management of Alameda Research, and funds have been withdrawn by Alameda for spending. Sam Bankman-Fried admitted to not disclosing the connection between North Dimension and Alameda externally.

The former CEO of FTX couldn’t identify the personnel working for Alameda who were involved in spending for the fund, even though he claimed it didn’t happen during his tenure at Alameda.

The prosecutors then highlighted investments directly approved by Sam Bankman-Fried, including Anthropic AI ($500 million), K5 Global ($700 million), and a $35 million villa in the Bahamas. The former CEO of FTX stated in court that he himself had initiated these deals.

Regarding accounting errors at FTX leading to Alameda’s debt being over $8 billion more than actual, Sam Bankman-Fried mentioned being informed by subordinates but initially not being concerned as he believed someone was handling it. He also asserted that when inquiring further about the loophole, his subordinates, Gary Wang and Nishad Singh, told him they were busy and advised against asking more questions.

However, the prosecutors questioned why, if the former CEO of FTX didn’t consider it important, he canceled a scheduled trip to Washington D.C.

The loophole was later fixed by Adam Yedidia, a witness who testified in court. Yedidia claimed that Sam knew about the error six months prior but decided not to rectify it. After fixing the loophole, Alameda discovered they still owed FTX $8 billion that they had borrowed.

Next, the prosecutors questioned whether Sam Bankman-Fried knew about FTX’s financial difficulties in September 2022 but didn’t disclose it to the user community until the exchange went bankrupt in November. After several evasive responses, the CEO claimed a policy of not disclosing internal information externally.

Regarding FTX’s accounting balance sheet released by Sam Bankman-Fried at the time of bankruptcy, the prosecutors asked if he was aware that the $3.9 billion in listed liquidity assets, although recorded in the high liquidity assets column, were actually not marketable. Sam admitted to it.

In this liquidity assets section, Sam Bankman-Fried included other investments of FTX/Alameda, such as AI Anthropic, K5 Global, Genesis Digital Assets, and locked “Sam coin” tokens like FTT, SRM, and SOL.

The prosecutors used this information to refute Sam Bankman-Fried’s social media statement on November 7, 2022, claiming that “FTX is still stable, and user assets are still safe.”

However, when asked if removing the underperforming liquidity assets would leave enough money for FTX to meet customer withdrawal demands, Sam Bankman-Fried said it would still be possible.

The prosecutors then presented screenshots of text messages between Sam Bankman-Fried and high-level FTX managers on November 7. In those messages, the CEO estimated that Alameda could sell $3.9 billion in assets, while the amount needed to repay FTX was $8 billion. In these messages, Sam acknowledged there was no way for Alameda to liquidate the FTT, SOL, and SRM without affecting the market.

The prosecutors also inquired about Sam Bankman-Fried’s reaction after learning that his associates, including Caroline Ellison, Gary Wang, and Nishad Singh, had collectively pleaded guilty before the U.S. government in December 2022 and January 2023. They revealed some documents drafted by Sam Bankman-Fried during this period when the former CEO of FTX questioned himself about the reasons his employees pleaded guilty.

End of Questioning Session

Sam Bankman-Fried is the final witness of the trial, as both the prosecutor and defense attorneys have chosen not to summon any additional witnesses.

The trial will resume on November 1st with the debate between the prosecution and defense lawyers regarding the charges against the former CEO of FTX, marking the conclusion of the trial proceedings.

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