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Sam Bankman-Fried admitted making “a number of significant mistakes” when running his cryptocurrency exchange FTX, but denied defrauding customers when he took the stand before a New York jury in his own defence.
After being sworn in shortly before 10 a.m. local time, Bankman-Fried explained that he and his co-founders believe they “may be able to build the best product on the market” and “move the market.” [cryptocurrency] Forward ecosystem” through the founding of the company.
When asked if that ambition had been achieved, the 31-year-old said the FTX exchange “basically shows the opposite”, adding that “a lot of people were hurt” when the company collapsed last November with an $8 billion hole in… Her balance. Bound.
When asked if FTX had a risk management team, he replied: “We definitely should have.”
Freed Bankman, a former billionaire who faces decades behind bars if convicted on charges including wire fraud and money laundering, will be questioned by prosecutors later Friday. He pleaded not guilty.
Wearing a gray suit and purple tie, Bankman-Fried spoke calmly to the jury about founding his two companies — FTX and its trading subsidiary, Alameda Research — with college friends from MIT and former colleagues at New York trading firm Jane Street Capital. The jury previously heard testimony from some of them, including Gary Wang, Nishad Singh and Caroline Ellison, who are cooperating with the prosecution.
“I made a number of small mistakes and a number of bigger ones,” Bankman-Fried said of his management of FTX. He added that the “biggest mistake of all” was the lack of dedicated risk management.
One of the main allegations against him is that his Alameda trading company had secret privileges on the FTX exchange that allowed it to borrow billions in client money.
Bankman Fried testified that some of these features — including the ability to carry a negative account balance and access to a nearly unlimited credit limit — were created by his employees in order to prevent the “erroneous” liquidation of Alameda, which could have been “disturbing” to customers. FTX others due to the critical role the trading company plays as a liquidity provider.
He said that after near misses in the early days of the exchange, he instructed his assistants, Wang and Seng, to come up with solutions, but he was not aware of the details of the concessions they granted to Alameda.
Bankman-Fried said he believed the Alameda company could do “anything” with the money it borrowed from FTX provided it “managed risk,” whether it was to “buy donuts” or “pay business expenses.”
Defense attorney Mark Cohen also tried to show the onslaught of decisions and information that Bankman-Fried faced as CEO of the fast-growing stock exchange. Bankman-Fried said he worked 12 hours on a “light day” and 22 hours on a “heavy day,” and received hundreds of Signal conversations. He said he aimed to get just 60,000 unread emails, but “I wasn’t usually successful.”
Bankman-Fried presented his evidence, without the jury present, on Thursday, answering questions about a number of issues so that the judge could decide whether the topics were admissible as evidence as part of the defense case.
On Friday morning, Judge Lewis Kaplan, who is overseeing the case, ruled that Bankman-Fried was unable to answer questions designed to elicit testimony claiming that he was following the advice of attorneys when implementing certain policies at FTX and Alameda.
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