Under prosecution’s fire, Sam Bankman-Fried brushes off past comments

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NEW YORK — From the moment his crypto exchange collapsed last fall, Sam Bankman-Fried has desperately tried to stay in control of the narrative, whether talking at length in ill-advised media appearances or leaking information to reporters once he fell under a gag order.

On Monday, in exchange for telling his side of the story one last time, Bankman-Fried testified at his own criminal trial and subjected himself to cross-examination — only to see his own words from the past used against him.

He was, for once, not in control of anything but at the mercy of federal prosecutor Danielle Sassoon as she hammered him with questions about private-jet flights, his disdain for regulators and contradictions in his own testimony.

It was a decision that he appeared to immediately regret. Bankman-Fried dodged questions on whether he remembered details of his alleged crimes, often opting instead for “no, but I may have,” and “I don’t remember.”

The statements were at the heart of Sassoon’s presentation as she showcased them to the jury, interspersed with vast amounts of evidence contradicting his claims. The defendant has given prosecutors a lot of material to work with — both on the stand and in the volumes of commentary he offered as his business rose and after it crashed.

As trial looms, Sam Bankman-Fried’s own words may pose his biggest risk

The stakes for Bankman-Fried could hardly be higher. Legal experts agree he took a major risk in deciding to testify, a gamble that frequently blows up for defendants when they are grilled by prosecutors.

As Bankman-Fried probably saw it, however, he had to make a long-shot bid to shake up the trial after government lawyers presented overwhelming witness and documentary evidence against him that his own attorneys did little to undermine, former federal prosecutors said. And if the ex-mogul can convince just one juror that he is credible, he could deny prosecutors the unanimous judgment they need to secure a guilty verdict.

In her cross-examination, Sassoon contrasted Bankman-Fried’s statements on social media and his appearances before congressional hearings with his private comments, which showed disdain for his colleagues as well as for his followers.

At one point, in a text to his inner circle of associates, he referred to government regulators with a vulgarity. In another text, he crudely disparaged a subset of his followers as “dumb motherf—–s” even as he publicly courted their trust.

Sassoon zeroed in on Bankman-Fried’s hedge fund, Alameda Research, from which he allegedly had billions of dollars of FTX customers’ funds siphoned without their knowledge. She pressed the former executive on whether he directed Alameda’s risky venture investments. Bankman-Fried did not deny he did and conceded the bets left the company too vulnerable, along with the fact that Alameda’s FTX account had special privileges, like a $65 billion line of credit on the platform — a singularly huge amount.

“I had screwed up there as well,” Bankman-Fried said in response to a question about an error in Alameda’s liquidation engine.

Bankman-Fried appeared on edge as prosecutors questioned him. The defendant took on a nervous and higher-than-usual pitched tone, often pausing for several seconds before answering yes or no questions. In the second half of the cross examination, he sounded sassy and at times dismissive.

As has become routine, Bankman-Fried frustrated Judge Lewis A. Kaplan with his style of answer.

“Could you just answer the question instead of trying to ask the question?” Kaplan said at one point.

Government lawyers also grilled Bankman-Fried on the discrepancies between the version of events he described to jurors starting Friday and the starkly different narrative offered by the prosecution’s three key witnesses, all former insiders and close friends.

Those former top executives in Bankman-Fried’s crypto empire have pleaded guilty to crimes they say he directed. They spent weeks describing their ex-boss as the mastermind of a scheme to defraud FTX customers, testifying that he knowingly tapped billions of dollars in customer funds to pay for risky investments, real estate acquisitions and political contributions.

Caroline Ellison, Alameda’s former chief executive and Bankman-Fried’s sometimes-romantic partner, testified earlier this month that he “was the one who directed us to take customer money to repay our loans,” adding the loans were “in the ballpark of $10 billion.”

She told jurors she lied repeatedly at his instruction, including by sending misleading balance sheets to Alameda’s lenders. And she said Bankman-Fried knew for months that the trading firm would face difficulty repaying what it took from FTX.

Bankman-Fried blames others, defends spending and draws judge’s ire

By contrast, Bankman-Fried insisted on Friday he consistently acted in good faith and only learned that Alameda owed $8 billion to FTX in the month before the businesses collapsed. He acknowledged making mistakes — conceding “a lot of people got hurt” — but insisted he neither defrauded anyone nor took customer funds.

His defense attorney also attempted to paint Bankman-Fried as a sympathetic character to the jury, showing texts where he appeared to comfort one of those insiders-turned-witnesses, Nishad Singh, while FTX was collapsing.

Bankman-Fried has pleaded not guilty to seven criminal counts, including fraud and money laundering. If convicted, the 31-year-old could spend decades in prison. The prosecution’s cross-examination will continue into Tuesday, Sassoon said.

Newmyer reported from Washington.

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