Sam Bankman-Fried’s Testimony Delayed in Crypto Fraud Case

Trial Postponed by Judge Kaplan
Defense’s Uphill Battle
Evidentiary Hearing Ordered
Challenges on the Stand
Judge’s Comment

Trial Postponed by Judge Kaplan

The much-anticipated testimony of Sam Bankman-Fried, the embattled mogul behind the FTX cryptocurrency exchange, has been postponed by Judge Lewis A. Kaplan in his federal criminal trial. This delay comes after a string of testimonies that painted Mr. Bankman-Fried as the orchestrator of a wide-reaching scheme that allegedly misappropriated as much as $10 billion in customer funds. The trial was adjourned for an evidentiary hearing to discuss the scope of his testimony regarding his reliance on the advice of company lawyers.

The jury was released on Thursday, with the expectation that they would return today, Friday, when Mr. Bankman-Fried is scheduled to testify.

Sam Bankman-Fried's jurors were sent home for the day, but his Thursday debut on the witness stand was significant anyway.https://t.co/ZQi29gzQOG
— CoinDesk (@CoinDesk) October 26, 2023

This postponement occurred following the presentation of two witnesses by Mr. Bankman-Fried’s defense team, after over two weeks of testimony from prosecution experts and associates who characterized him as a dishonest actor who treated FTX as his personal financial playground. He stands accused of masterminding a sweeping scheme to utilize FTX customer deposits to finance various ventures, real estate acquisitions, and extravagant spending.

The 31-year-old Mr. Bankman-Fried has entered a plea of not guilty to seven charges, including fraud, conspiracy, and money laundering. If convicted, he faces the prospect of a substantial prison sentence.

Defense’s Uphill Battle

The defense has consistently asserted that Mr. Bankman-Fried is not a criminal and that his decisions concerning FTX were made in “good faith.” However, legal experts closely following the case believe he faces a formidable legal challenge.

The prosecution has presented the case as a conventional fraud investigation, despite the complexity of Mr. Bankman-Fried’s business and its connection to a closely associated crypto trading firm he operated. Many of the witnesses called by the prosecution faced minimal resistance from Mr. Bankman-Fried’s legal team.

Evidentiary Hearing Ordered

Judge Kaplan, on Thursday afternoon, ordered an evidentiary hearing to determine the extent to which Mr. Bankman-Fried’s testimony should be allowed regarding his reliance on FTX’s legal counsel in his decision-making process. The judge had previously limited such testimony but had indicated that Mr. Bankman-Fried could revisit the issue during the trial.

The peculiar hearing, conducted without the presence of the jury, provided a glimpse of how Mr. Bankman-Fried might perform on the witness stand. When questioned by his attorney, he appeared composed as he discussed various technical matters, including the exchange’s document retention policy.

Mark Cohen, one of Mr. Bankman-Fried’s attorneys, aimed to demonstrate that his client regularly sought guidance from lawyers when making decisions.

Challenges on the Stand

During cross-examination by the prosecution, Mr. Bankman-Fried occasionally hesitated, using “ums” and “ahs” before responding. At times, he consulted his lap for several seconds before replying. His mother, Barbara Fried, seated in the gallery, gestured emphatically in response to the barrage of questions.

At one point, Danielle Sassoon, a federal prosecutor, inquired if Mr. Bankman-Fried had discussed with lawyers the use of FTX customer deposits by his crypto trading firm, Alameda Research. The core allegation from the prosecution is that Mr. Bankman-Fried misappropriated FTX customer funds transferred to Alameda.

Mr. Bankman-Fried expressed that, “in retrospect,” he wished he had more discussions with lawyers about the use of FTX customer funds. He acknowledged that there were some aspects of the use of these funds that he did not address with lawyers.

Judge’s Comment

Throughout the proceedings, Mr. Bankman-Fried at times posed questions of his own or stated that he did not comprehend the inquiries. When his lawyer raised objections to a line of questioning by the prosecution, Judge Kaplan deemed it appropriate, stating,

“Part of the problem is that the witness has what I’ll simply call an interesting way of responding to questions.”

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