FTX founder Sam Bankman-Fried took the witness stand during his fraud trial, providing an explanation for the events surrounding the October 2022 crisis. As his hedge fund, Alameda Research, faced a $8 billion debt to the cryptocurrency exchange, Bankman-Fried said he believed he had enough assets to cover it until a few days before both entities collapsed.
Questioned by his defense lawyer, Mark Cohen, the 31-year-old billionaire expressed his level of concern, stressing that he was not alarmed, although the sum at stake was substantial. According to him, a much larger debt would have qualified the situation as a crisis.
Prosecutors say Bankman-Fried tapped FTX client funds to support Alameda, finance risky venture capital investments and contribute to political campaigns in the United States. If convicted, he could face decades in prison.
Although Bankman-Fried admitted to making mistakes that led to FTX's bankruptcy in November 2022, he maintains that he did not embezzle customer money. On the witness stand, he attempted to offer alternative explanations for the use of the funds, pointing out that FTX was a "margin" exchange, where many customers, including Alameda, borrowed money from other users to invest.
However, during cross-examination, prosecutor Danielle Sassoon brought up previous testimony from Caroline Ellison, Alameda's former general manager and Bankman-Fried's on-and-off girlfriend. Ellison had said the fund borrowed money from FTX clients in June 2022 to repay its lenders. Sassoon pressed the question of whether this constituted margin trading, to which Bankman-Fried responded by emphasizing that it depended on the details and could potentially be considered as such.
The lawsuit continues to attract attention as the FTX founder attempts to defend his position and provide clarity on the events surrounding the October 2022 financial crisis. The outcome of this lawsuit will have significant implications for the future of the crypto-industry and the responsibility of the major players in this field.
We therefore remain waiting for what happens next, always doing your own research and training is the only way to protect yourself from any volatility. Don't forget to subscribe and leave a 👍 if you liked this article😊
Credit Photo: #reuters