FTX founder Sam Bankman-Fried continued his testimony in his criminal fraud trial on Monday, using his time on the stand to shift blame onto his former friends and colleagues for the downfall of his crypto empire. Bankman-Fried, who faces potential life imprisonment if convicted, pleaded not guilty to the fraud charges relating to the collapse of FTX and sister hedge fund Alameda Research in November. His defense attorney allowed him to target Caroline Ellison, his ex-girlfriend and former CEO of Alameda, during his testimony. Bankman-Fried expressed concern about Alameda's hedging practices and its decline in net asset value. He claimed that Ellison agreed with his concerns and offered to step down, though he didn't intend for her to resign. Bankman-Fried also mentioned that he believed Alameda's hedging activity could have been larger.
Bankman-Fried's testimony followed his initial appearance on the stand last week, where he denied committing fraud and claimed that the exchange's outside expenditures were covered by company profits. Throughout the trial, prosecutors have focused on actions taken by Bankman-Fried that led to the loss of billions of dollars for clients. Several former leaders of Bankman-Fried's businesses have pleaded guilty and are cooperating with the government.
During his testimony, Bankman-Fried discussed the troubled personal situation of Nishad Singh, FTX's engineering director, who he claimed was suicidal. Bankman-Fried said he tried to comfort Singh about his loans and expenses to prevent him from hurting himself. He also blamed Can Sun, FTX's general counsel, and claimed he spoke with Sun about Apollo's investment and the framework around the fiat account.
Bankman-Fried described the rapid downfall of FTX, with customer withdrawals increasing from $50 million to $1 billion per day. He defended his tweets intended to calm customer concerns and stated that he believed the exchange was okay and had no holes in its assets. Bankman-Fried also mentioned his attempts to secure outside capital due to the run on FTX and revealed that he realized Alameda would need to be shut down.
After the defense's questioning of Bankman-Fried, the prosecution began cross-examination. Bankman-Fried gave brief answers, frequently saying "I don't recall." The government presented exhibits, such as tweets and emails, to challenge his answers. The cross-examination also touched on Bankman-Fried's stories to raise funds and his past profane comments about regulators.
The trial continues, and legal experts expect a potentially devastating cross-examination of Bankman-Fried.