Cryptocurrency mogul Sam Bankman-Fried took the stand on Friday to present his account of the events surrounding the collapse of his cryptocurrency empire. This move comes after weeks of testimonies from Bankman-Fried’s inner circle, some of whom have pleaded guilty to financial crimes. Bankman-Fried’s lawyer denied the accusation that he shook his head during the testimonies.
During his testimony in Manhattan federal court, Bankman-Fried recounted discovering the $8 billion financial hole in FTX, his cryptocurrency exchange, in mid-2022. Prosecutors allege that Bankman-Fried transferred customer funds from FTX to his trading firm, Alameda Research, and then loaned the money to himself and his colleagues. He faces charges of fraud and conspiracy.
In June 2022, Bankman-Fried was alerted Caroline Ellison, the co-CEO of Alameda Research, about concerns regarding the firm’s potential bankruptcy. Bankman-Fried expressed surprise and concern, as he had not expected Alameda to face such a situation despite the market volatility at the time. However, investigations revealed a bug in FTX’s code that led to a miscalculation of $8 billion. This discovery relieved the co-CEOs and confirmed that Alameda’s balance was actually positive.
Although the crisis seemed to be averted, Bankman-Fried contemplated shutting down Alameda due to the perceived risks and lack of hedging. However, Ellison insisted on keeping the firm operational. Bankman-Fried acknowledged his heightened level of concern but emphasized that he does not usually exhibit signs of panic. He even canceled a trip to testify before Congress on cryptocurrency regulation due to the uncertainty surrounding Alameda’s financial stability.
Bankman-Fried’s testimony differs from that of Nishad Singh, FTX’s top engineer, who has turned against his former colleague and is cooperating with the prosecution. Singh claimed that Bankman-Fried has noticeable physical twitches when he becomes angry.
The trial continues, providing further insights into the high-stakes world of cryptocurrency and the allegations against Sam Bankman-Fried.