As Sam Bankman-Fried took the stand for the last time in his trial for fraud and money laundering, his main lawyer, Mark Cohen, returned to question him on a number of themes that prosecutors touched on in the past few days. But this time, he took a different approach, presenting the defendant as a person who was acting in good faith.
“We lived and died by having a better product than competitors,” Bankman-Fried said of his now-bankrupt crypto exchange, FTX. Bankman-Fried owned majority stakes in both FTX and its sister trading firm, Alameda Research, but insisted he wanted the best for both.
Bankman-Fried has been testifying since Thursday afternoon, and the prosecution has grilled him for the past few days as part of their cross-examination. On Tuesday, when the defense lawyers returned to reexamine him, he was swaying slightly on the stand, shoulders drawn down and forward. He spoke softly, but was more talkative than earlier in the day and on Monday when he was being questioned.
Contrary to the picture prosecutors tried to paint, Bankman-Fried insisted that he was not involved in the day-to-day trading operations of Alameda or its “core operations,” but instead emphasized his concern for its leadership at the time, saying he wanted to be involved in many of its venture investments, decisions on hedging, and other areas.
When asked about Alameda’s “borrowing” of FTX customers’ funds, Bankman-Fried said it “seems like Alameda did increase its borrowing to repay lenders” like Genesis, which gave loans in summer 2022, when the crypto industry was in turmoil. Cohen didn’t ask any questions about what that “borrowing” entailed.
Cohen also brought up the time period in September and October 2022, when Alameda amassed an $8 billion liability by taking customer funds. When asked if he had spent the money, Bankman-Fried denied it, saying, “I don’t know how I’d define an answer on who spent that money.”
“Funds were being deposited and withdrawn constantly,” he said. “Money is fungible anyways . . . I wasn’t interested in trying to [stir] up blame.”
The issue was the scale of Alameda’s liabilities, Bankman-Fried explained. It was a “sign” that the scale of borrowing by the trading house was large, even for Alameda and FTX, he said, adding that he then got more involved in Alameda even though the two entities were supposed to be separate. The risk had to be managed, because if Alameda was underwater, it affected FTX, he said.
When his lawyer was questioning him, Bankman-Fried spoke in his more well-known manner: jittery, upbeat, quick to answer, and eager to start a sentence before finishing the last one.
Cohen also brought up FTX’s massive $65 billion line of credit to Alameda. “I understand [it] to be a limit,” Bankman-Fried said, adding that “Alameda never used anything close to that [amount],” and typically used about $2 billion in 2022.
But according to evidence submitted by the government, $2 billion is still 1,233% higher than the second-highest line of credit for another market maker on FTX, which has $150 million.
The defense also brought up the prosecution’s argument from Monday: that Bankman-Fried had spent the company’s money frivolously on private jets. Assistant U.S. attorney for the Southern District of New York Danielle Sassoon on Monday argued that the company had spent $15 million on private jet travel, and Bankman-Fried had replied that he couldn’t recall it happening. The prosecution had also highlighted a picture of Bankman-Fried asleep in a jet, and when Cohen brought it up again, Bankman-Fried joked that it was a “very flattering” picture, adding that he only used the private jet for “valid business expenses, depending on the context.”
By 11:55 a.m., the defense rested its case. The prosecutors did not provide a rebuttal case, and Judge Lewis Kaplan concluded the presentation of evidence for the case.
Cohen renewed his motion for an acquittal, which Kaplan denied. The jury will be back Wednesday morning for closing arguments.