Ex-FTX Boss Bankman-Fried Testifies He 'Did Not’ Defraud Clients, Admits 'Mistakes’

Sam Bankman-Fried, once a rising star of the crypto industry, took the stand to speak in his own defense at his criminal trial at a Manhattan federal court on Friday. The former FTX Chief Executive faces a potential life sentence if convicted.

“I did not defraud anyone,” insisted Sam Bankman-Fried, also known by his initials, SBF, as he testified in New York on October 27.

He also claimed he never took any "customer funds” when asked the question by his lawyer, Mark Cohen, according to media reports.

While acknowledging committing "a number of small mistakes and a number of larger mistakes," and regretting that “people got hurt", the former CEO of the now-bankrupt crypto trader FTX said:

“I wish I had a better understanding than I did… I wasn’t entirely sure what was happening.”

SBF singled out lack of a risk management team as one of his grave miscalculations, which resulted in "significant oversights."

"We thought that we might be able to build the best product on the market... It turned out basically the opposite of that. A lot of people got hurt, customers, employees, and the company ended up in bankruptcy," he was cited as saying.

The former crypto billionaire, 31, who has pleaded not guilty after being accused of "fraud of epic proportions,” faced 12 jurors for around five hours. He took the stand after a trial that dragged on for four weeks, and heard testimonies of a plethora of members of FTX’s leadership, as well as staff of Alameda Research - the company’s affiliated trading firm.

Sam Bankman-Fried, the indicted founder and former CEO of the bankrupt FTX cryptocurrency exchange, was arrested in the Bahamas on December 12, 2022 over charges that include conspiracy to commit wire fraud, securities fraud and money laundering. He was then extradited to the US, with prosecutor Nicolas Roos arguing that SBF had carried out a "fraud of epic proportions" that led to the loss of billions of dollars of customer and investor funds.

In his testimony on Friday, Bankman-Fried reminisced about his days studying physics at the Massachusetts Institute of Technology, his three year stint as trader at Jane Street trading firm, and early days in the world of crypto. Recalling how he founded Alameda Research in 2017, Bankman-Fried said:

“This was when crypto was starting to become publicly visible for the first time.”

FTX Collapse

FTX, the Bahamas-based cryptocurrency exchange co-founded by Bankman-Fried and Gary Wang in 2019, had become one of the largest cryptocurrency exchanges in the world. It had allowed customers to trade crypto or digital currencies for other assets, such as conventional fiat money or other digital currencies. The company boasted over one million customers and was valued at $32 billion in January 2022. In November 2022 several newspapers alleged that FTX was a financial bubble, triggering an outbreak of withdrawals. Amid the company's liquidity crisis, the media reports also drew the attention of US regulators to FTX. Investigators have since asserted that Bankman-Fried and his subordinates misled investors for years, using billions of clients' dollars to make risky bets at Alameda hedge fund, along with sinking them into personal expenses. On November 11, 2022, FTX and over a hundred of its affiliates filed for bankruptcy in Delaware. After FTX's collapse, an estimated one million customers were left facing billions of dollars in losses.

Bankman-Fried faces seven criminal counts, including wire fraud, securities fraud and money laundering. Federal prosecutors allege that Bankman-Fried defrauded FTX customers from the time the company started in 2019 until its bankruptcy. If convicted, he could land in prison for life.

Furthermore, SBF is notorious for being a Democratic Party "mega-donor." According to the US press, he was one of a batch of donors who sank over $10 million into Joe Biden's campaign in 2020, and spent around $38 million on the Democratic Party's midterm campaign, coming in second only to American-Hungarian tycoon George Soros. Besides the swathe of other charges, Sam Bankman-Fried stands accused of violating US political campaign finance laws.