Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, arrives at court in New York, on Aug. 11.EDUARDO MUNOZ/Reuters
FTX founder Sam Bankman-Fried concluded his defense in his fraud trial on Tuesday, saying he felt “regret” for not looking into the US$8-billion his hedge fund borrowed from the cryptocurrency exchange before it collapsed last November.
During a second day of cross-examination, the 31-year-old former billionaire said he had thought it “permissible” for his Alameda Research hedge fund to use money that FTX customers had deposited into a bank account the fund controlled.
FTX directed customers to deposit funds into the Alameda account before the exchange had its own bank account.
Mr. Bankman-Fried said he believed that Alameda’s borrowings were being recorded on its main FTX account, and only learned it was not in October, 2022.
“I deeply regret not taking a deeper look into it,” he said.
Mr. Bankman-Fried was trying to convince the 12-person jury to acquit him of the two counts of fraud and five counts of conspiracy he faces.
Prosecutors say Mr. Bankman-Fried illegally looted billions of dollars of customer funds to prop up Alameda, made speculative venture investments and donated upward of US$100-million to U.S. political campaigns.
He could face decades in prison if convicted.
Ethan Lou: Finally, we’re all tired of Sam Bankman-Fried and his FTX crypto exchange
Mr. Bankman-Fried frequently looked toward jurors as he testified, occasionally frowning or smirking at how prosecutor Danielle Sassoon framed her questions.
His father, Stanford Law School professor Joseph Bankman, attended Tuesday’s session, once passing a note to his son’s lawyers.
Ms. Sassoon challenged Mr. Bankman-Fried on how he had talked with other FTX executives about a bug had that had in June, 2022, inflated Alameda’s debt to FTX, but did not investigate it deeply despite owning 90 per cent of Alameda.
“They also were busy, and I had prioritized getting the high level update,” he said.
Ms. Sassoon also grilled Mr. Bankman-Fried on what she called his “cozy” relationship with officials in the Bahamas, where the cryptocurrency exchange was based.
Mr. Bankman-Fried said he could not remember whether he offered to pay the Bahamas’ US$11.6-billion national debt, or gave the Prime Minister and his wife courtside seats at a Miami Heat basketball game at the team’s home arena, then named for FTX.
Ms. Sassoon then showed Mr. Bankman-Fried a text message in which he told co-workers the couple sat courtside at a game.
The prosecutor also asked about Mr. Bankman-Fried’s decision to let FTX customers in the Bahamas withdraw funds after withdrawals for others had been halted.
Mr. Bankman-Fried said he thought Bahamian regulators had suggested allowing it.
Earlier in the trial, former FTX executive Gary Wang, who pleaded guilty to fraud and agreed to co-operate with prosecutors, said Mr. Bankman-Fried sought to transfer control of funds to the Bahamas after FTX’s Nov. 11, 2022, U.S. bankruptcy because he thought authorities might let him stay in charge.
The embassy of the Bahamas in Washington did not immediately respond to a request for comment.
Under direct examination from his lawyers, Mr. Bankman-Fried had testified that he had made “mistakes” that hurt FTX customers and employees but denied defrauding anyone or stealing funds.