- Sam Bankman-Fried testified before the jury on Friday, detailing his version of events.
- He said he was alarmed by Alameda Research’s risks and lack of hedging.
- He added that he doesn’t show it when he’s “freaking out,” contrary to testimony by former execs.
Sam Bankman-Fried took the stand on Friday to tell a jury his side of the story of how his cryptocurrency empire collapsed.
The rare move for the defendant comes after he spent weeks listening to his inner circle, several of whom have pleaded guilty to financial crimes, describe their version of events. (A prosecutor even accused Bankman-Fried of shaking his head amid the testimony, though former CEO’s attorney denied it.)
Taking the stand before the jury in Manhattan federal court, Bankman-Fried described learning about the $8 billion hole in the finances of his cryptocurrency exchange, FTX, in mid-2022.
Prosecutors have alleged the hole came about after Bankman-Fried funneled billions of dollars of customer funds from FTX to Alameda Research, his crypto trading firm, and then loaned the money to himself and his fellow executives. They have charged him with seven financial crimes, including fraud and conspiracy.
In June 2022, a “nervous” Caroline Ellison alerted Bankman-Fried, along with FTX executives Gary Wang and Nishad Singh, that she was concerned Alameda may have just gone bankrupt. At the time, she was a co-CEO of the firm.
"I was very surprised and fairly concerned," Bankman-Fried testified. "I had not expected that Alameda would be bankrupt."
Ellison's assessment came on the heels of a tumultuous summer in the crypto market in the summer of 2022, but Bankman-Fried didn't think Alameda's assets on FTX had fluctuated enough for the firm he founded in 2017 to go bankrupt, he testified.
Upon investigating, Wang and Singh informed Bankman-Fried that there was a bug in FTX's code that caused a miscalculation of $8 billion, suggesting that Alameda's balance was actually positive. Developers ran the numbers and confirmed them, bringing about a "relieved" demeanor in Ellison, Singh, and Wang, Bankman-Fried testified.
Though they believed a crisis had been averted, the situation did cause Bankman-Fried to consider shuttering Alameda altogether as he was "fairly concerned about Alameda's risk."
Ellison didn't want to shut down the firm and wrote up a list of things "Sam is freaking out about," including what he saw as risks the firm had taken without hedging – something he repeatedly told Ellison to do, Bankman-Fried testified.
Asked by defense attorney Mark Cohen if he was, indeed, freaking out, Bankman-Fried said: "I don't tend to show a lot of freak-out-ness, but relative to my standard, yes."
Bankman-Fried noted he cancelled a planned trip from the company's head quarters in the Bahamas to Washington, D.C. to testify before Congress on a cryptocurrency regulation bill.
"I was not going to fly to DC when Alameda might be bankrupt," he said.
It contrasts with earlier testimony from Singh, FTX's top engineer who flipped against his former friend and has been cooperating with the prosecution. Singh testified that Bankman-Fried had tells, including "physical twitches for when he gets angry."