Prosecutors in fraud trial grill Sam Bankman-Fried over public statements

Sam Bankman-Fried, the founder and former chief executive officer crypto firm FTX was grilled Monday in court over his past public statements. File Photo by John Angelillo/UPI
1 of 4 | Sam Bankman-Fried, the founder and former chief executive officer crypto firm FTX was grilled Monday in court over his past public statements. File Photo by John Angelillo/UPI | License Photo

Oct. 30 (UPI) -- Prosecutors on Monday grilled Sam Bankman-Fried, the founder and former CEO of cryptocurrency firm FTX, about statements made to the media and online in the run-up to the exchange's disastrous downfall last year.

As testimony resumed in Bankman-Fried's federal trial on fraud charges stemming from the collapse of FTX and sister hedge fund Alameda Research in November, Assistant U.S. Attorney Danielle Sassoon attempted to show how the one-time cryptocurrency guru had made allegedly false statements over his companies' practices.


During the second day of testimony in his defense in a New York courtroom, Bankman-Fried faced tough questioning from Sassoon on cross-examination with queries regarding statements made in public forums such as media interviews and social media comments, as well as in private discussions with employees and investors.

Alameda was a sister company of FTX, as well as a client of the exchange, both of which were ultimately owned by Bankman-Fried.


The government contends the 31-year-old Californian concocted and carried out a plot to draw billions of dollars of customer funds from the FTX exchange for his personal use.

In one instance, Sassoon referred to a Twitter post and an email in which Bankman-Fried asserted that Alameda was treated like anyone else using the FTX exchange, when in reality it had an nearly unlimited line of credit at $65 billion, far more than any other FTX user.

Prosecutors allege that the hedge fund had borrowed billions of dollars in customer funds for its own purposes before the exchange's collapse, thus preventing other FTX users from withdrawing their funds.

"You did know that Alameda had a line of credit with FTX while you were CEO, correct?," Sassoon asked, according to Bloomberg. After Bankman-Fried answered in the affirmative, she followed, "Isn't it true that most customers of FTX didn't have a line of credit?", to which Bankman-Fried again answered, "Yes."

"You permitted Alameda to borrow without requiring that it post collateral to the exchange?" she asked twice, as Bankman-Fried replied, "That was not my understanding."

In his first of testimony on Friday, Bankman-Fried said he was not aware of any so-called digital back door used for Alameda to withdraw FTX customer funds.


FTX co-founder Gary Wang testified Friday that Alameda's borrowing ability was initially set up to be drawn from profits generated by FTX but that by late 2019 or early 2020 it had resorted to tapping into customers' accounts to cover its losses.

Earlier Monday, under friendly questioning from his defense attorney, Bankman-Fried cast blame for the exchange's collapse on colleagues such as Wang, Alameda CEO Caroline Ellison, FTX engineering director Nishad Singh and former general counsel Can Sun, CNBC reported.

The former CEO testified that he was under the impression from Ellison and others that Alameda remained solvent in the days before its collapse.

In the morning session, he was asked about his "[expletive] regulators" comments he made ahead of the trial, as well as comments made in another private conversation where he called some customers dumb.

Bankman-Fried said the comments were in relation to a specific subset of FTX customers.

Prosecutors also asked him about historical public statements he made that supported regulating the crypto industry. Sassoon asked pointedly if the comments were strictly as a public relations move, to which Bankman-Fried replied, "no."

"Do you recall saying FTX and Alameda acted separately?" Sassoon asked.

"I'm not sure about the exact phrasing," Bankman-Fried told the prosecutor.


The trial got underway in New York City on Oct. 3.

The former billionaire has denied any wrongdoing.

Prosecutors expect to rest their case Thursday.

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