Sam Bankman-Fried took the stand for the final time during his criminal fraud trial in New York to deny any wrongdoing.
Former FTX CEO Sam Bankman-Fried has completed the testimony and cross-examination portion of his ongoing criminal case, Bloomberg reported on October 31.
Bankman-Fried acknowledged $8 billion in hidden debt in Almaeda research , which came to light after a bug was fixed in an account known as fiat@. Despite her claim that the massive transfer was discovered sometime in September or October 2022, Bankman-Fried said she did not identify any specific employee as responsible and made no personnel changes based on the matter.
$8 billion worth of bugs
Bankman-Fried testified about Alameda's $8 billion in hidden debt. The debt was covered by a bug in the account labeled fiat@ until FTX employee Adam Yedida resolved the bug.
Following earlier claims that he had knowledge of the $8 billion transfer in September or October 2022, Bankman-Fried testified that he did not know the specific employees responsible and said he did not fire anyone in response. He denied making any particular decisions, more broadly, and did not investigate the bug more deeply.
An exchange goes as follows
Bankman-Fried: “I was told that [employees] were busy and I should stop asking questions because it was annoying.”
Sassoon: “Is it your testimony that your supervisor told you to stop asking questions?”
Bankman-Fried: “Yes, and I agree with them.”
Sassoon then asked Bankman-Fried whether he hid the risks of using Alameda customers' funds from FTX users before November 2022. Bankman-Fried disagreed but acknowledged that he provided more information to customers after FTX's bankruptcy.
Finally, Sassoon addressed various assurances that Bankman-Fried tweeted before the company went bankrupt. Bankman-Fried acknowledged that he had tweeted that the company did not invest in client assets – which appeared to be at odds with reality.
Redirect highlights more details Once Sassoon's cross-examination was complete, Bankman-Fried discussed the issue further. Bankman-Fried said: “Alameda's entire liability to FTX is the size of a fiat@ account… That's what I and most of us don't realize in 2022, which is about $8 billion in liabilities.”
He concluded that his company would have a better system for monitoring @fiat accounts if Alameda and FTX were not involved with each other. He called the company's oversight of the issue "very poor."
Bankman-Fried also commented on the falsified trial balance. The spreadsheet has eight tabs containing alternate versions intended to obscure the level of exposure to external lending companies such as Genesis.
Bankman-Fried stated that Caroline Ellison – then CEO of Alameda Research – simply sent him a spreadsheet and asked for his opinion. She testified that, at the time, he told her the spreadsheet seemed “reasonable.” Bankman-Fried argued that multi-tab spreadsheets were not unusual but said he did not remember whether he reviewed all the tabs on the spreadsheet.
The statements may or may not shift blame: Ellison testified that Bankman-Fried had told him to create “an alternative way of presenting” the financial situation. He said that he understood this to be an instruction to hide information on the balance sheet
Bankman-Fried's testimony is now complete. A report from Bloomberg indicates that the court will next hold an arraignment conference, which will provide instructions to the jury.
Source: Mike Dalton
