MANHATTAN (CN) — On cross-examination by federal prosecutors Monday, disgraced cryptocurrency mogul Sam Bankman-Fried was asked to recall statements made during his robust publicity campaign from his billionaire boom years between 2020 and 2022 but was resistant to recollect verbatim.
Prosecutors have accused Bankman-Fried, 31, of pilfering billions of dollars in customer deposits on his FTX exchange platform and using the money to bankroll his hedge fund’s risky futures bets, buy real estate, and make millions of dollars of illegal campaign donations to Democrats and Republicans in an attempt to buy influence over cryptocurrency regulation in Washington.
Facing decades in prison, Bankman-Fried has pleaded not guilty to all charges.
As his trial in Manhattan federal court entered its fifth week Monday, prosecutors grilled Bankman-Fried to refresh his recollection of statements he made about his companies’ practices.
Bankman-Fried’s questioning on cross-examination was handled by Assistant U.S. Attorney Danielle Sassoon, who previously worked as litigation attorney at Kirkland & Ellis LLP and law clerk to Justice Antonin Scalia for the 2012-2013 term.
Responding to Sassoon’s line of questioning, Bankman-Fried often came off meandering and evasive in his immediate replies to yes-or-no-type prompts, often responding: “I’m not sure exactly what you’re referring to," “I don’t remember," or, smarmily, "Yep".
Even after Sassoon repeatedly presented evidence of Bankman-Fried’s statements in online messages, on public podcasts, and in magazine articles, he continued to resist conceding that he made those remarks.
Shortly before afternoon lunch break on Monday, Bankman-Fried eventually admitted on cross-examination that his Alameda Research hedge fund had unique privileges with a $65 billion line credit to withdraw billions from FTX and exemption from same rules as other FTX customers, who were required to post collateral.
"Do you deny that Alameda could withdraw billions of dollars from the FTX exchange using a line of credit without being subject to the auto liquidation protocol?”
“That might be right,” Bankman-Fried replied.
“You don’t deny it,” the prosecutor pressed.
“I don’t deny it, no,” Bankman-Fried conceded after the first hour of cross-examination on Monday.
FTX co-founder Gary Wang testified earlier in the trial that Bankman-Fried had directed FTX to give Alameda a $65 billion line of credit and grant the hedge fund unique privileges in the platform’s coding to be allowed to keep trading cryptocurrency assets with a negative account balance.
Sassoon brought up interviews where Bankman-Fried had asserted during his publicity tour in the weeks following FTX’s bankruptcy that FTX and Alameda were “walled off” and distinct entities to avoid the perception of conflicts of interest between the exchange and Bankman-Fried’s own proprietary trading firm.
"Do you recall saying FTX and Alameda acted separately?" Sassoon asked.
“I don’t think I would have said that in that way,” he pushed back. “I don’t remember, probably not…I disagreed with nearly every article written about me then.”
“Is it true you wanted potential customers to view FTX as trustworthy,” Sassoon asked, which Bankman-Fried answered "would be good."
“Mr. Bankman-Fried, isn’t it true since its early days Alameda was allowed to exceed normal borrowing limits on the exchange,” the prosecutor asked.
“I’m not sure,” Bankman-Fried replied.
Sassoon brought up another article from December 2022, in which author Zeke Faux asked Bankman-Fried if Alameda had to follow the same margin rules as other traders, and the FTX CEO reportedly admitted that Alameda was not subject to the rules as other customers.
“Did you tell Zeke Faux that Alameda did not follow the same margin rules as other traders and it had more leeway on the exchange,” the prosecutor asked. “I don’t remember,” Bankman-Fried replied.
Sassoon asked Bankman-Fried to recall his previous Twitter statements regarding his support of federal blockchain regulation to protect customers.
“I don’t remember,” Bankman-Fried replied.
“But in private, you said things like 'Fuck regulators,’ right?” the prosecutor asked.
“I said that once,” he replied.
Sassoon asked Bankman-Fried if he recalled telling a reporter privately that his public advocacy for crypto regulation and his 2021 testimony before the U.S. House Financial Services Committee on crypto regulations was “was just for PR, wasn’t it,” to which Bankman-Fried responded, “I said something like that.”
Sassoon asked Bankman-Fried if he recalled telling a podcast host that he chose Alameda Research’s business name to conceal that that it was, in fact, a cryptocurrency hedge fund.
“In 2021, didn’t you say that that you used the name Alameda Research to mislead banks,” she asked.
“I don’t remember,” he replied.
Sassoon then played a video recording of an interview in which Bankman-Fried said he knew banks would refuse to work with Alameda if it were called "Shitcoin Daytraders Inc."
"But no one doesn't like research," Bankman-Fried said in the podcast recording.
Bankman-Fried’s parents — Stanford Law professors Joseph Bankman and Barbara Fried — were in attendance on Monday, as was Damian Williams, the U.S. Attorney for the Southern District of New York.
Bankman-Fried’s defense cross-examination will continue for a couple hours on Tuesday morning.
The trial is expected to run until Friday and possibly into next week before jurors return a verdict.
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