In a significant development, Sam "SBF" Bankman-Fried, the former CEO of FTX, appeared in a New York court to provide his testimony under oath, and this pivotal moment transpired without a jury of 12 present. On October 26, SBF's highly anticipated testimony commenced at the hearing, with defense attorney Mark Cohen delving into Bankman-Fried's use of the Signal messaging app and the preservation of communication data at cryptocurrency exchanges. In response to questions, Bankman-Fried asserted that his actions were in accordance with documented company policy and that communication channels set to "auto-remove" did not involve "decision-making."
Cohen inquired about why Bankman-Fried had disabled automatic deletion. To this, he responded, "I've heard that from regulators." The exchange continued as Cohen probed Bankman-Fried about the creation of North Dimension, a so-called "shadow entity" purportedly used for moving client funds from cryptocurrency exchanges through Alameda Research. SBF contended that he was provided with documents to establish the company by Dan Friedberg, the former chief regulatory officer, and he signed them without raising questions.
"Did you believe it was legal to receive FTX deposits through Alameda?" Cohen questioned SBF. To which he replied, "I did." He further explained, "I was the CEO of both companies at the time. FTX doesn't have a bank account."
One of the central issues in the Unitgovernment's lawsuit against SBF revolves around the allegation that the former CEO of FTX utilized client funds from the cryptocurrency exchange to invest through Alameda without the knowledge of its users. Bankman-Fried disclosed that he discussed these investments with the law firm Friedberg, Fenwick & West, and Can Sun, the former general counsel of FTX.
When asked whether he believed that a portion of FTX's terms of service encompassed the use of client funds, Bankman-Fried remarked, "I think it's limited to futures trading." He also clarified that Alameda was authorized to engage in such activities. Notably, SBF is the last witness expected to testify in the ongoing trial, which has spanned over three weeks and has delved into the alleged mingling of funds between FTX and Alameda. Judge Lewis Kaplan informed that the jury would reach a decision in the early days of the following week, despite not having heard the full testimony of FTX's former CEO.
SBF has pleaded not guilty to all seven charges in the criminal case; however, he is anticipated to face five additional charges in a second trial scheduled to commence in March 2024.
