This Is What Sam Bankman Fried Had To Say About On His First Day of Testimony in His $8 Billion Fraud Trial

FTX founder Sam Bankman-Fried testified in his ongoing criminal trial, vehemently denying allegations of fraud and embezzlement. 

Bankman-Fried, facing seven criminal charges, including wire fraud, securities fraud, and money laundering, affirmed that he did not engage in fraudulent activities and did not misappropriate customer funds.

The trial, which has lasted four weeks, featured the testimonies of top FTX executives and leaders of sister hedge fund Alameda Research, who pointed to Bankman-Fried as the mastermind behind a scheme to utilize FTX customer funds for various purposes, including venture investments and luxury properties.

Bankman-Fried acknowledged that a major mistake was not having a risk management team, leading to significant oversights. 

He provided background on his journey into the crypto world, mentioning his physics studies at MIT and subsequent experience as a trader. 

In 2017, he founded Alameda Research, anticipating the growing demand for arbitrage services in the emerging crypto market.

He launched FTX in 2019, and the platform’s trading volume witnessed substantial growth, reaching billions of dollars daily. Bankman-Fried noted that the funds borrowed by Alameda from FTX were assumed to come from margin trades, collateral, or interest-earning assets.

Bankman-Fried explained that there were no general restrictions on how borrowed funds were used as long as the company’s assets exceeded its liabilities. An error in liquidation in 2020 prompted adjustments in Alameda’s borrowing permissions.

Throughout his testimony, Bankman-Fried maintained that he believed funds were sourced from legitimate revenue, venture investments, and collateral. The defense’s case hinges on whether the jury believes Bankman-Fried had no intention of committing fraud.

The trial presented extensive evidence and documents, including Signal messages, that seemingly indicate Bankman-Fried’s involvement in spending FTX customer funds. 

Bankman-Fried’s defense has focused on his lack of fraudulent intent, asserting that he believed the spending was supported by company profits.

Bankman-Fried’s testimony also addressed FTX’s marketing activities, emphasizing that the naming rights sponsorship for a Miami basketball arena and the Bahamas properties were funded from revenue and venture investments. He claimed the spending was essential for recruitment purposes.

As for the venture investments, Bankman-Fried stated that he believed the funds were sourced from Alameda’s profits and third-party lending desks. 

He acknowledged taking loans from the business for venture investments and political donations but insisted that he did not direct others to make political contributions.

Bankman-Fried’s testimony aims to shift blame to his ex-girlfriend and former colleagues by highlighting his repeated requests for risk hedging and the management of FTX’s liability. 

He was “very surprised” to discover an $8 billion negative balance in FTX’s financial data. The trial delved into his discussions with lenders about emergency capital and efforts to reach a $1 billion revenue target.

The outcome of the trial remains uncertain as the defense seeks to refute allegations of fraudulent intent while the prosecution presents substantial evidence implicating Bankman-Fried in misappropriating customer funds.


David Huner
David Huner
David Huner is a tech lover. After completing his graduation from the University Of Phoenix, he started gather his knowledge mostly on latest technologies that keeps his life smart and cool. Now he wants to spread his knowledge with people who loves technologies.

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