SBF Testimony May Try to Show Lawyers Signed Off on Conduct (2)

Sam Bankman-Fried’s testimony in a New York courtroom Thursday will be the latest must-see moment in the high-profile fraud trial over the collapse of his FTX crypto exchange.

The 31-year-old Bankman-Fried’s decision to take the stand was questioned by defense lawyers, but may be his only chance to win over jurors after weeks of damaging testimony from his former friends and colleagues.

Bankman-Fried’s lawyers gave a peek into their strategy in a letter to the judge Wednesday night, telling him they intend to ask about issues including the involvement of lawyers in many of the transactions at issue in the trial. They argue that is evidence he never intended to defraud anyone.

After the government rested their case Thursday morning, Judge Lewis Kaplan told the lawyers he can’t rule on the issues raised in the letter without first hearing Bankman-Fried’s testimony. He’ll hear part of the testimony without the jury, then decide what the panel can hear.

The once respected crypto mogul is facing decades in prison on charges that he directed the transfer of FTX customer money into Alameda Research, an affiliated hedge fund, for risky investments, political donations and expensive real estate before both companies spiraled into bankruptcy last year.

“He couldn’t stop talking to press and wider world after FTX collapsed and before he was arrested and then while out on bail so no one should be surprised that he is choosing to take the stand,” said Brian Klein, a former federal prosecutor.

Sam Bankman-Fried will take the stand at his own fraud trial. The FTX founder faces decades in prison on charges related to the collapse of his digital-asset empire. Bloomberg’s Max Chafkin and Sonali Basak report.

Source: Bloomberg

The highlight of the trial so far has been the testimony of Caroline Ellison, Bankman-Fried’s former girlfriend who he installed as CEO of Alameda. The 28-year-old Ellison told jurors that Bankman-Fried orchestrated a fraud at FTX, which included directing her to create a set of alternative balance sheets to obscure billions of dollars borrowed from the exchange’s customers.

Ellison commanded the attention of jurors and spectators when she talked about the end of Bankman-Fried’s empire, testifying through tears: “That was overall the worst week of my life.”

Caroline Ellison, former chief executive officer of Alameda Research LLC, center, exits court in New York on Oct. 12.

Photographer: Stephanie Keith/Bloomberg

Read more: Caroline Ellison Says ‘Sam Was the One’ Who Caused FTX Collapse

Bankman-Fried’s lawyers pushed hard before trial to be allowed to introduce evidence that he relied on the presence of lawyers for the belief that his actions were lawful. Judge Kaplan said he would rule on the issue as it came up in questioning.

Bankman-Fried’s team also told the judge they hope to question him about the conduct of other companies in the crypto industry and compliance with Bahamian financial regulators in November 2022.

In the letter, Bankman-Fried’s lawyer, Mark Cohen, told the judge his client “reserves the right” to change his mind at the last minute and not testify.

Bankman-Fried’s lawyers said Thursday that they will likely spend about four hours questioning Bankman-Fried, after which prosecutors will get their turn to cross-examine.

While the testimony will be pivotal for Bankman-Fried and his lawyers, it will also be a big moment for the dozens of court watchers who line up outside the court for one of the handful of seats reserved for the public. About 50 to 60 people were lined up Thursday morning, with some lining up before 3 a.m.

“I really want to be in the main courtroom for this,” said Tiffany Fong, a crypto influencer who’s been to the trial every day and who visited Bankman-Fried a few times during his house arrest in California. “Some people have told me they are gonna go at 6 a.m. or 7 a.m. I feel like that could potentially be too late.”

To get to the Bankman-Fried trial these days, spectators have to negotiate security barriers, swarms of cops and a battalion of satellite trucks focused on the $250 million civil fraud trial of Donald Trump, next door in state court.

Read more: FTX’s Final, Frantic Days Through the Lens of an SBF Insider

Bankman-Fried had to sit through the testimony of former friends and colleagues including, Adam Yedidia, a former FTX coder and college friend, Gary Wang, another friend from MIT who co-founded FTX, and Nishad Singh, FTX’s former engineering director.

After those witnesses, Bankman-Fried’s testimony will be “rearranging the deck chairs on the Titanic,” Klein said.

A defendant who takes the stand in a criminal case risks damaging cross-examination from prosecutors. Bankman-Fried has nonetheless decided to persuade the jury that his version of FTX’s collapse is true.

He’s expected to be on the stand for at least a full day, with closing statements and the start of jury deliberations likely next week.

“This is definitely like the climax of the movie,” Fong said. “I don’t even know what to expect.”

(Adds judge’s review of some testimony in fourth paragraph)

To contact the reporters on this story:
Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net;
Yueqi Yang in New York at yyang492@bloomberg.net

To contact the editors responsible for this story:
Anthony Aarons at aaarons@bloomberg.net

Peter Blumberg

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