Sam Bankman-Fried Takes Stand in Court, Claims FTX CEO Is Not 'Really in-Charge'

Sam Bankman-Fried, the founder and former CEO of FTX, testified on Thursday without the jury's presence.

He stated that the lawyers representing his bankrupt cryptocurrency exchange played a significant role in making important decisions. Bankman-Fried aimed to establish his separation from any wrongdoing related to the case, as per Fox Business.

Sam Bankman-Fried's Defense Strategy

(Photo : ED JONES/AFP via Getty Images)
Former FTX chief executive Sam Bankman-Fried leaves Manhattan federal court, New York, January 3, 2023. Bankman-Fried pleaded not guilty Tuesday to US criminal fraud charges over the spectacular collapse of his crypto exchange.

The trial centers around allegations of fraud, conspiracy, and money laundering. Bankman-Fried is accused of misdirecting customer funds from FTX to his hedge fund, Alameda Research, to cover debts, fund lavish personal expenses, and make illegal campaign contributions.

Bankman-Fried's testimony shed light on various aspects of the case, including his reliance on legal advice, his understanding of FTX's terms of service, and the unconventional business structure of his companies.

One key element of Bankman-Fried's defense strategy is to argue that he acted in good faith and followed lawyers' advice. During his testimony, he repeatedly referenced the involvement of lawyers and other individuals in crucial decision-making processes.

BAnkamn-Fried mentioned that FTX's former chief regulatory officer, Dan Friedberg, played a role in devising the document-retention policy for FTX. Much of the trial revolves around whether FTX employees used the encrypted messaging app Signal to conceal their conversations and delete drafts of documents shared on Slack.

Recovered Signal messages have been crucial to the prosecution's case against Bankman-Fried.

Bankman-Fried also discussed his knowledge of Alameda Research's role as a payment processor for FTX. He admitted that he knew this, which contradicted his previous denials. Additionally, Bankman-Fried's testimony highlighted the loose and informal corporate structure of his companies, FTX and Alameda.

FTX, in particular, lacked a chief financial officer, a board, or a head of human resources but notably had a staff psychiatrist, George K. Lerner, who created an informal org chart due to the overlapping roles within the company, according to Inc.

Borrowing Customer Funds Explained

During his testimony, Bankman-Fried revealed his belief that Alameda Research was allowed to borrow customer funds deposited with FTX based on the terms of service document drafted with assistance from FTX's top lawyer.

This was his first attempt to use his own words in court to defend his actions, as prosecutors allege that he stole billions from FTX to finance various investments, political donations, and real estate.

Bankman-Fried's defense argued that his reliance on legal advice and the involvement of counsel in drafting customer terms of service were directly relevant to his state of mind and good faith during the alleged misconduct.

They contended that he had no intent to harm FTX customers and believed that using customer deposits was permissible and consistent with FTX's customer relationship. The trial, which drew a packed courtroom, featured several moments of tension, with Judge Lewis Kaplan growing frustrated with Bankman-Fried's responses.

However, his testimony provided insight into his perspective on various aspects of the case, and it will be up to the jury to consider his defense in the coming days. As the trial unfolds, it continues to be closely watched by the cryptocurrency community and legal observers, given its potential implications for the regulatory landscape of the crypto industry.

Bankman-Fried's defense remains a central focus as they attempt to establish his good faith and compliance with the law in his cryptocurrency ventures. The trial will continue, and the verdict will ultimately shape the narrative surrounding one of the crypto world's most prominent figures, Aol reported.