A squirrely Sam Bankman-Fried tried to squirm his way out of answering questions during a surprise hearing at his Manhattan federal fraud trial Thursday — as he claimed his trading firm had been “permitted” to “borrow” the $8 billion in FTX user funds he is charged with stealing.
Bankman-Fried, 31, flailed as prosecutor Danielle Sassoon grilled him on the stand after the judge sent jurors home for the day to go over what evidence would be included in the accused crypto crook’s hotly-anticipated Friday morning testimony.
“Listen to the question, and answer the question,” Judge Lewis Kaplan told the fallen crypto king at one point during the bizarre three-hour hearing, reprimanding Bankman-Fried for giving roundabout answers.
“The witness has what I’ll simply call an ‘interesting’ way of responding to questions,” Kaplan quipped later as Bankman-Fried sat wearing a gray suit and a purple tie, with a bottle of Poland Spring water next to him on the stand.
The former crypto golden boy appeared to be distressed throughout the hearing, staring downward, wincing — and frequently telling Sassoon that he would have “phrased” questions differently, and then delivering rambling and long-winded answers.
He responded “I don’t recall” or said that he couldn’t remember certain conversations with either his ex-colleagues or lawyers at least a dozen times.
Thursday’s hearing was partly meant to probe the scope of Bankman-Fried’s planned “advice-of-counsel” defense — which argues that he shouldn’t be held accountable for his alleged crimes because he was just following his lawyers’ advice.
But it also served as a sort of rehearsal for Bankman-Fried’s planned testimony before the jury — and suggested that he may struggle to explain himself under withering cross-examination.
When asked directly whether trading firm Alameda Research’s FTX account was given the unique privilege of amassing a massive negative balance — which ex-company executives testified was used in the scheme to steal customer funds — Bankman-Fried did not answer the question.
“Um, sorry, I….,” he said, before trailing off.
After a beat, Bankman-Fried added, “I’ll make my best guess at answering your question” — but then did not provide a clear explanation.
He responded “I don’t recall” when asked whether he spoke with company executives on an encrypted app about Alameda having a $13 billion debt before FTX’s November 2022 collapse.
“I don’t specifically recall such conversations,” he said.
When asked if he spoke with lawyers about depositing money from FTX users into an account controlled by Alameda, Bankman-Fried responded: “I don’t recall any conversations that were contemporaneous and phrased that way” — and then grabbed the bottle of water next to him and took a swig.
“I wish I had had conversations,” he continued, and then appeared to say that he wished he had been “more informed,” though it was challenging to make out every word of his stilted remarks.
“I’m not sure if other people were involved in conversations,” Bankman-Fried added.
Earlier, he responded “Yes, in many circumstances,” when his defense attorney Mark Cohen asked him whether Alameda was allowed to “borrow” money from FTX deposits.
“Did you believe that you were managing FTX in accordance with its terms of service?” Cohen later asked.
“Yes,” Bankman-Fried answered.
But the California crypto magnate fumbled and provided a word salad answer when Sassoon later asked him a similar question.
“I believe that it gives a fair bit of discretion to how Alameda acts in general… I wouldn’t phrase it that way, but I think the answer to the question I think you are trying to ask is yes.”
“I’m not a lawyer…I’m just giving as best as I can what my memory is,” Bankman-Fried later said by way of explaining his incomplete responses to Sassoon’s questions.
Bankman-Fried has pleaded not guilty to conspiracy and wire fraud charges for allegedly using more than $8 billion in stolen FTX user deposits to fund lavish real estate purchases, political donations and to repay lenders.
His expected testimony comes after jurors heard earlier this month from three of his former FTX associates — including his ex-girlfriend Caroline Ellison — who flipped on him after pleading guilty.
Ellison testified that Bankman-Fried “directed her” to steal billions in FTX customer funds to pay off Alameda’s massive debt, and that the accused fraudster had the final say on both companies’ big decisions.
Bankman-Fried also did not care about following moral codes such as “don’t lie” and “don’t steal” because he felt that he was working for the “greater good” of society, Ellison told jurors.
Another of Bankman-Fried’s former top executives, Nishad Singh, ripped him for “excessively” spending hundreds of millions on FTX endorsement deals with celebrities and sports leagues – while jurors were shown a picture of a grinning Bankman-Fried posing with with Katy Perry, Orlando Bloom and Kate Hudson at the 2022 Super Bowl.
But Bankman-Fried’s lawyers defended FTX’s spending during cross-examination of Singh as crucial for growing the business.
Bankman-Fried faces what would effectively be a life sentence, if convicted.
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