The founder of the collapsed FTX exchange, Sam Bankman-Fried aka SBF, took the stand on Thursday over the ongoing fraud trial against him.
Judge Lewis Kaplan ruled Sam should testify in court outside the presence of a jury, as much of his testimony will be a repetition of what the court has been hearing for the past three weeks.
During cross-examination by prosecutors, Bankman-Fried frequently encountered difficulty when asked to identify specific conversations in which lawyers had approved his actions. His responses were cautious, often accompanied by phrases like, “I am not trying to give a definitive legal ruling on what this does or does not say.”
While responding to Judge Kaplan’s question on document retention, SBF said that both FTX and the Alameda team were using encrypted messaging apps like Signal in order to be secured against potential security threats and hacks. These apps were proper, as they had an auto-deleting conversation feature and were used for chat rather than sharing heavy details, he said.
Sam said that it was FTX’s counsel and lawyer’s decision to structure promissory notes as loans rather than dividends, and he believed in them. Moreover, the former FTX founder said that he “skimmed” the FTX exchange’s Terms of Service drafted by in-house and outside counsel.
When asked by his lawyers if Alameda’s borrowing from FTX was in accordance with the exchange’s Terms of Service, SBF said, “Yes, under many circumstances.”
In cross-examination, SBF repeatedly gave vague answers, often stating ‘he is not entirely sure’ or not recognizing his past meetings with the team and lawyers. Even at a time, Judge Kaplan had to interfere and told him to “listen to the question” and just answer the “question directly.”
As such, when asked if Alameda was permitted to spend FTX funds, he said, “I wouldn’t phrase it that way but I think the answer to the question I think you’re trying to ask is yes.”
The first day of SBF’s testimony revolved around communication and document-retention policies at FTX and Alameda Research. While Judge Kaplan sends jurors home, he will determine whether the testimony can be repeated to the jury. The FTX founder will continue to testify on Friday before the jury.