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SBF Testifies in Hearing, Claims Alameda Research had Right to “Borrow” Funds

Julia Smith
Last updated: | 2 min read


Disgraced FTX founder Sam Bankman-Fried took the stand for the first time in his landmark fraud trial without the jury present.

With numerous pieces of evidence and lines of testimony in contention between the prosecution and the defense, Judge Kaplan sent the jury home early Thursday in order to hammer out which arguments may be presented to them.

A missing piece of evidence

In the defense’s direct examination, Bankman-Fried admitted to using encrypted messaging due to “security threats” and being concerned about “potentially vulnerable” information being leaked.

“There were constant attempts to hack FTX,” Bankman-Fried said.

Moreover, Bankman-Fried revealed that FTX had a document retention policy that required certain information to be maintained or deleted. He then testified that he believed he acted in accordance with this policy when he “toggled on” Signal’s auto-deletion feature. However, he “proactively disabled” this feature “for a variety of reasons I understood to be coming from regulators” following FTX’s collapse.

When Judge Kaplan questioned where a copy was of this document, the prosecution revealed they did not have it, despite Bankman-Fried centering much of his testimony around it.

Terms of service controversy

Moreover, he stated that FTX had a difficult time getting a bank account and was required to use Alameda Research and its subsidiaries as part of a “payment agent agreement.”

Bankman-Fried further testified that Alameda Research was permitted to borrow FTX funds according to the company’s terms of service “in many circumstances.”

However, he admitted that he “skimmed” over parts of FTX’s terms of service while largely placing responsibility on FTX’s general counsel.

When the prosecution pushed for specific details regarding what conversations Bankman-Fried may have had with his legal counsel, Bankman-Fried skirted around the questions.

Bankman-Fried’s long-awaited cross-examination

Assistant U.S. Attorney Danielle Sassoon put on an impressive hours-long cross-examination that saw Bankman-Fried hesitate over contentious lines of testimony.

When asked if Alameda Research was permitted to use customer funds, Bankman-Fried stated, “I wouldn’t phrase it that way, but if that’s the question you’re asking, then yes.”

When Judge Kaplan sustained an objection from the defense against the prosecution asking whether it was okay to embezzle customer funds, Bankman-Fried continued on by stating it wasn’t. When Judge Kaplan informed him he didn’t need to answer the question, the fallen “king of crypto” said, “I felt like I had to answer that one.”

Moreover, throughout Bankman-Fried’s testimony, Judge Kaplan became upset over the defendant’s use of “vague generalities” without straightforwardly answering the question.

In a particularly tense moment, Judge Kaplan demanded Bankman-Fried to  “listen to the question and answer the question directly.”

At one point, Kaplan stated that “the witness has what I’ll simply call an interesting way of answering questions.”

Bankman-Fried’s formal testimony is expected to begin in front of the jury when the trial reconvenes tomorrow morning.