Following the former cryptocurrency billionaire’s testimony in self-defense on Monday, prosecutors cross-examined Sam Bankman-Fried, the co-founder of FTX.
Due to seven federal charges, including wire fraud, securities fraud, and money laundering, Bankman-Fried could spend decades behind bars. To every charge, he has entered a not guilty plea.
In the coming days, the trial is anticipated to come to an end.
Numerous times throughout the cross-examination Prosecutors questioned Bankman-Fried on Monday and then presented evidence that contradicted his responses.
Assistant U.S. Attorney Danielle Sassoon once questioned Bankman-Fried about whether he had told anyone that Alameda Research followed the same regulations as other companies on the FTX exchange. According to Bankman-Fried, he wasn’t positive if he had.
The government then displayed a tweet in which he had addressed the subject directly, followed by an email in which he claimed that FTX’s “sister” hedge fund, Alameda Research, had an account that was similar to everyone else’s.
Alameda was granted permission to have a negative balance on its $65 billion line of credit with FTX, according to testimony provided by senior executive Nishad Singh and co-founder Gary Wang of FTX.
Earlier in the day, Bankman-Fried concluded his testimony on behalf of the defense. He attempted to refute accusations made against him by FTX insiders Wang, Singh, and Caroline Ellison, the former CEO of Alameda, in that testimony.
In October 2022, for instance, Bankman-Fried testified that he did not travel to the Middle East in order to raise money to close gaps in FTX’s balance sheet. He said he went to speak at a conference and meet with investors, regulators, and staff because he thought Alameda and FTX were solvent.
He was also questioned regarding a now-famous tweet he sent on November 7th that was later removed: “FTX is fine.” The assets are good.
According to Bankman-Fried, at the time, he believed that FTX’s balance sheet was sound and that Alameda had assets worth about $10 billion.
He informed the court, “In my opinion, the exchange went well and the assets were complete.”
But as word spread about some of Alameda’s financial woes and its close ties to FTX, customers started taking their money out more quickly.
As the value of digital currencies fell, Alameda’s assets were halved. Too few assets were on hand at FTX to support the $4 billion in withdrawals that occurred every day.
In her testimony, Bankman-Fried said that the firm’s hedge trades, which were intended to shield it from market downturns, had proven ineffective. He had previously testified that Ellison had disregarded orders to hedge some of its bets. Additionally, he stated in his testimony that he became aware that Alameda Research would need to close on November 8, 2022.
On November 11, FTX and Alameda both filed for bankruptcy.
Bankman-Fried has entered a not guilty plea to the additional charges that will be brought against her at a separate trial in March.
