Sam Bankman-Fried just failed the most important exam of his life
At a glance
- Under cross-examination on Monday, Sam Bankman-Fried was evasive when confronted with his own incriminating comments — seemingly failing what may prove to have been the biggest exam of his life.
- Judge Kaplan was visibly irritated with Bankman-Fried, at one point snapping at the FTX founder to “just answer the question.”
- Bankman-Fried’s evasion tactics included splitting hairs and conveniently failing to recall events that would have made a lasting impression on most.
On Monday October 30, Sam Bankman-Fried took the stand in his own defense, facing cross-examination by Assistant US Attorney Danielle Sassoon. The proceedings frequently verged on farce, as the FTX founder was again and again confronted with seemingly hard evidence of fraudulent claims made by him over the years.
Sassoon presented Bankman-Fried with a relentless catalog of his own direct quotes and official FTX promotional material that touted the exchange as safe, or that denied that Alameda Research, the hedge fund also owned by Bankman-Fried, had any special privileges or rights on the FTX platform. Given extensive evidence contradicting these and other direct statements, Sassoon seemed to thoroughly establish clear factual evidence for many of the fraud charges.
In just one example, Sassoon walked Bankman-Fried through his own sworn testimony before US legislators in Washington, DC on May 12, 2022. In that testimony, Bankman-Fried said that market makers on FTX were required to post “pre-funded collateral deposits instead of credit line extensions,” a claim which seemed to directly contradict Bankman-Fried’s own knowledge of Alameda Research’s immense credit line on FTX at the time.
Read more: How Sam Bankman-Fried thought he could win it all back
Even when so directly confronted with his own incriminating words, Bankman-Fried tried to redefine terms or, for lack of a better word, weasel out of admitting that he had actually said what he had clearly said. At one point, Bankman-Fried was shown an array of his statements that falsely reassured investors or customers that Alameda Research’s “account is like everyone else’s.”
But Bankman-Fried insisted that, in every instance, he was solely claiming that Alameda did not have access to customer data for the purpose of front-running. That is, the statements weren’t lies because he didn’t intend to refer to Alameda’s margin trading privileges or immense line of credit. Bankman-Fried’s protests were undermined, though, by the lack of such qualification in most cases when he had made the claim.
Judge snaps at evasive Sam Bankman-Fried
Another major theme of the day was Bankman-Fried’s apparently terrible memory. Again and again, when asked about some aspect of events, Bankman-Fried initially claimed to not recall them, before having Sassoon call up direct evidence of those events – including, frequently, in published interviews or audio recordings of Bankman-Fried’s own voice.
In many cases this made Bankman-Fried seem absurd, as when he claimed not to remember flying to the Super Bowl on a private jet. “You don’t recall traveling to the Super Bowl on a private plane?” AUSA Sassoon deadpanned in response. “Is that because you were on private planes so often?”
Bankman-Fried also frequently tried to evade questions by splitting hairs or deconstructing specific words. For instance, several minutes were given over to his insistence that claims that FTX’s risk engine “reduced clawbacks,” or socialized customer losses, were more important than, and meaningfully distinct from, document headings that implied claims to “prevent clawbacks.”
At one point, as Bankman-Fried tried to evade a question about his post-collapse efforts to regain access to FTX data, Judge Lewis Kaplan seemed to lose patience.
“Would you just answer the question?” the judge snapped.
SBF set to be questioned by defense again
Bankman-Fried’s criminal trial has been shadowed from the beginning by the question of whether the former FTX CEO would testify in his own defense. Though criminal defense experts broadly argue a defendant rarely does themselves favors by taking the stand, Bankman-Fried has shown consistent disregard for such conventional wisdom.
That led him to make extensive media appearances in the days immediately following the collapse of his allegedly corrupt enterprise, apparently convinced that his gift of gab can talk him out of the entire misunderstanding. He may have realized the depth of his mistake even as he was in the course of repeating it, as a variety of incriminating statements to media were played back to him before a jury.
Read more: Sam Bankman-Fried lied to FTX lawyers about using customer funds
On Tuesday, prosecutors expect to finish their cross-examination before lunch. That will be followed by redirect questioning by the defense, and finally one or two rebuttal witnesses from prosecutors. That’s expected to make up most of the day, with closing statements beginning on Wednesday, November 1.
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