Prosecutors accuse Sam Bankman-Fried of being two-faced on stand

Discrepancies between SBF’s public and private statements come into sharp focus under cross-examination, reports Bevan Hurley from the courtroom

Bevan Hurley
at the Daniel Patrick Moynihan US Courthouse
Monday 30 October 2023 21:40 GMT
Sam Bankman-Fried Taking the Stand Was a 'Huge Mistake,' Lawyer Says

Days before Sam Bankman-Fried’s crypto exchange FTX collapsed in November 2022, he tweeted his support for regulation that protected customer deposits.

In encrypted messages, he was saying: “F*** regulators.”

Those public and private faces of Mr Bankman-Fried came into sharp focus as he faced intense cross-examination at his fraud and money laundering trial in Manhattan on Monday.

Assistant US attorney Danielle Sassoon quizzed the 31-year-old former billionaire about public statements on social media and in media interviews in which he portrayed FTX as transparent, safe and trustworthy.

Answering in stilted “yeps”, “yeahs” and “No, but I may haves,” he was at times evasive and defensive about the apparent discrepancies between his public and private claims.

Sam Bankman-Fried was cross-examined in his fraud trial over the collapse of the bankrupt cryptocurrency exchange, at federal court in New York City on 30 October 2023
Sam Bankman-Fried was cross-examined in his fraud trial over the collapse of the bankrupt cryptocurrency exchange, at federal court in New York City on 30 October 2023 (REUTERS)

He testified that he had conducted thousands of interviews, and that he had did a “good job” with the press, but struggled to remember specific details when confronted with them as the government placed them into evidence.

“Mr Bankman-Fried, would you agree that you know how to tell a good story?” Ms Sassoon asked him.

“I don’t know, it depends on what metric you use,” he responded.

Ms Sassoon put it to Mr Bankman-Fried that his statements on the protection of customer assets were a public relations ploy.

“In private, you said things like ‘f*** regulators’”

Mr Bankman-Fried replied that he “said that once”.

Prosecutors have accused Mr Bankman-Fried of using a secret backchannel to funnel around $15bn from FTX’s customer funds to support risky bets by Alameda Research, invest in high-end real estate, fund sponsorship deals and make political contributions.

Mr Bankman-Fried owned both and allegedly controlled companies, but has claimed that they grew too quickly and tried to shift the blame for the collapse on to his one-time girlfriend and Alameda CEO Caroline Ellison.

Ms Ellison, who pleaded guilty to her role in FTX’s collapse, has previously testified that SBF’s image as a floppy-haired “effective altruist” was an act.

The former crypto wunderkind’s use of social media to grow the business organically was also probed in exchanges with the prosecution on Thursday.

Ms Sassoon asked how he interacted with customers on Twitter, essentially using the platform as a free marketing tool, and contrasted it with his private conversations.

FTX founder Sam Bankman-Fried has pleaded not guilty to seven counts related to fraud and money laundering
FTX founder Sam Bankman-Fried has pleaded not guilty to seven counts related to fraud and money laundering (Associated Press)

Mr Bankman-Fried admitted calling “crypto Twitter”, a passionate online community of blockchain and cryptocurrency enthusiasts, “Dumb motherf***ers”. He insisted the insult was only directed at a “subset” of crypto Twitter.

Ms Sassoon asked the FTX founder about whether his distinctively unkempt curly hair was a deliberate part of his brand. He previously testified that he was too busy, and lazy, to get it cut.

In a scenario that would repeat throughout his testimony on Monday, Ms Sassoon then introduced a news article that appeared to undermine his statements to the jury.

She pressed Mr Bankman-Fried on whether he told a colleague that it would harm his “estimated value” if he cut his hair, and that it was important for him to “look crazy”, as the New York Times reported.

He admitted “vaguely” recalling the interview.

Mr Bankman-Fried was later asked if he recalled telling Anthony Scaramucci on a business trip to the Middle East to woo investors that his usual attire of t-shorts and shorts were “part of his brand”. He replied that he didn’t remember the comment.

The prosecutor also pressed him on his degree of control of the businesses, asking: “You called the shots at FTX?”

“I called some of them,” he replied.

Ms Sassoon then asked if he thought highly of himself as CEO of FTX.

“I did,” he said.

Earlier, Ms Sassoon drilled into the $65bn line of credit that Alameda Research had with FTX to invest in stocks, other crypto exchanges. Mr Bankman-Fried spent $23m to acquire his favorite video game, Storybook Brawl.

He also admitted publishing a Twitter thread on 22 October 2022 trying to shore up confidence with FTX customers, but admitted he failed to mention a multi-billion liability it had with Alameda Research.

Mr Bankman-Fried has admitted he had made mistakes that hurt a lot of people but denied intentionally defrauding anyone during his testimony.

He was also quizzed last week by prosecutors without the jury present as Judge Lewis Kaplan worked out which evidence was admissible.

In court, Mr Bankman-Fried wore a grey suit and tie and a freshly-cropped haircut.

Mr Bankman-Fried has pleaded not guilty to seven counts related to fraud, conspiracy and money laundering. He faces up to 110 years in prison if convicted.

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