Sam Bankman-Fried, the previous CEO of the crypto alternate FTX, took the stand on Friday in a New York federal court docket, sharing startling revelations concerning the cascade of occasions that led to the alternate’s staggering $13.8 billion shortfall. Going through severe fraud fees, Bankman-Fried narrated a story of being stored uninformed by shut associates, shedding mild on the behind-the-scenes turmoil that in the end led to the collapse of his crypto empire.
In his testimony, Bankman-Fried recounted his shock upon discovering the numerous US$8 billion buyer deposits owed by his non-public buying and selling agency Alameda Analysis to FTX in October 2022. Whereas admitting to creating errors, he implied that essential particulars relating to the monetary chasm had been intentionally withheld from him till the precipice of the corporate’s downfall.
Clad in a gray swimsuit and a purple tie, Bankman-Fried calmly elucidated the genesis of FTX and its affiliated buying and selling entity, Alameda Analysis, emphasizing their origins as ventures initiated with former colleagues from MIT and professionals from New York’s Jane Avenue Capital. Testimony from these people, together with Gary Wang, Nishad Singh, and Caroline Ellison, who’re cooperating with the prosecution, has additionally been introduced to the court docket.
Opposite to the accounts offered by these witnesses, Bankman-Fried contended that he solely comprehended the magnitude of the monetary hole when he gained entry to a brand new model of the corporate database in October 2022. Till then, he believed Alameda’s money owed to FTX had been roughly US$2 billion.
Bankman-Fried’s assertion that he was unaware of the entire monetary image till shortly earlier than the collapse has been instrumental to his protection technique. His testimony offered extra context, suggesting that essential choices and demanding data had been constantly relayed to him because the CEO of a quickly increasing alternate. He described grueling workdays spanning as much as 22 hours, inundated with a whole lot of Sign chats and striving to handle a deluge of emails.
Moreover, Bankman-Fried laid blame on Caroline Ellison, suggesting that her failure to hedge the agency’s debt-driven investments on crypto costs had incurred important losses, amounting to roughly US$10 billion. He attributed the creation of confidential privileges afforded to Alameda on FTX to Wang and Singh, emphasizing his restricted information of the specifics on the time.
The trial briefly touched upon Bankman-Fried’s previous relationship with Ellison, revealing that it ended definitively in 2022, citing irreconcilable variations. Because the trial progresses, Bankman-Fried’s testimony affords a glimpse into the internal workings of FTX and the occasions that precipitated its unprecedented monetary turmoil.