FTX fraud trial: Sam Bankman-Fried tells court he thought hedge fund could cover US$8 billion debt
- The FTX founder said he was surprised but not alarmed that his Alameda Research hedge fund had borrowed US$8 billion from FTX customer deposits
- Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy. If convicted, he could face decades in prison
FTX founder Sam Bankman-Fried testified on Monday that he believed his Alameda Research hedge fund had enough assets to cover an US$8 billion debt to the cryptocurrency exchange until days before both collapsed.
“If it were far larger, I would have been calling a crisis,” Bankman-Fried said from the witness box in Manhattan federal court in response to questions from his defence lawyer, Mark Cohen.
Prosecutors have said the Massachusetts Institute of Technology graduate looted billions of dollars in FTX customer funds to prop up Alameda, make speculative venture investments and contribute to US political campaigns. If convicted, he could face decades in prison.
Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy. He has acknowledged making mistakes that led to FTX’s November 11, 2022, bankruptcy, harming customers and employees. But he said he did not steal customers’ money.
From the witness box in federal court in Manhattan, Bankman-Fried has sought to offer alternative explanations for what happened to the money. He has sought to emphasise that FTX was a “margin” exchange, where many customers, including Alameda borrowed money from other users to place bets.
On cross-examination, prosecutor Danielle Sassoon asked Bankman-Fried about testimony earlier this month in which Caroline Ellison, Alameda’s former chief executive officer and Bankman-Fried’s on-and-off girlfriend, said the fund in June 2022 borrowed money from FTX customers to repay its lenders.
