Bankman-Fried Says He Acted On Legal Advice

The fraud trial of FTX founder and former CEO Sam Bankman-Fried saw him take to the stand on Thursday. to present his side of the argument over the high profile collapse of the crypto exchange platform last year.

However Bankman-Fried gave his testimony without the jury present CNBC reported, after Judge Lewis Kaplan sent jurors home early to decide whether some lines of defence were admissible.

The risky move to take to the stand comes after former colleagues of Bankman-Fried had testified for 12 days that he had directed them to divert customer funds to his hedge fund and lie to investors and lenders.

Bankman-Fried testimony

Bankman-Fried has pleaded not guilty to seven charges of fraud, money-laundering and stealing funds from FTX customers for his own use, including making property purchases and political donations.

The charges could land him in prison for more than 100 years if he is convicted.

In aid of his defence, Bankman-Fried took the stand in a New York courtroom on Thursday, in a move that had originally been scheduled to be before the jury.

But CNBC reported that the judge had sent jurors home early to consider whether some aspects of Bankman-Fried’s planned testimony, related to legal advice he got while running FTX, would be admissible in court.

CNBC reported that Bankman-Fried’s testimony then turned in “a sort of mini-hearing within the trial,” as defence attorney Mark Cohen guided Bankman-Fried through a series of questions designed to showcase the defence’s strongest arguments of his innocence.

This reportedly included suggesting that Bankman-Fried had relied on FTX’s former chief regulatory officer and in-house attorney, Dan Friedberg, to guide some actions that the government claims are illegal.

Evidence of guilt?

“Before the trial, I was convinced that SBF was headed to near-certain conviction on serious felony counts, and it was apparent to me that his defence team had not come up with anything that could derail that result,” Renato Mariotti, a former prosecutor in the US Justice Department’s Securities & Commodities Fraud Section and now a trial partner in Chicago with Bryan Cave Leighton Paisner told CNBC.

“Nothing that has occurred during the trial has changed my view. The evidence of his guilt appears to be overwhelming,” Mariotti reportedly added.

The defence case began with the testimony of two witnesses (Krystal Rolle, Bankman-Fried’s lawyer in the Bahamas, and database expert Joseph Pimbley) before Bankman-Fried took to the stand.

According to CNBC, both of these witnesses for the defence had testified in just over an hour on Thursday morning.

“He has always been convinced that he’s the smartest guy in the room and that he can talk his way out of any problem,” Mariotti told CNBC.

“But the biggest problem with SBF’s testimony will be SBF himself. Given that the core issue will be intent to defraud, SBF should be portraying himself as clueless, inattentive, and in over his head. But for years he had portrayed himself as a visionary genius, and I don’t expect that to change on the stand,” he reportedly said.

Blaming the lawyers

Under questioning led by Cohen, Bankman-Fried appeared to place much of the criminal blame on FTX’s chief regulatory officer, Friedberg, as well as outside counsel Fenwick & West, which advised the crypto exchange.

Bankman-Fried spoke about Friedberg’s active involvement in everything from the company-wide auto deletion policy on messaging apps like Signal, to the creation of Alameda’s North Dimension bank account, where billions of dollars worth of FTX customer money was funnelled.

The former FTX CEO also reportedly said that the hundreds of millions of dollars in personal loans to himself and other founders of the platform were structured through promissory notes drafted by his in-house legal team and discussed in concert with his general counsel and Friedberg.

Having the blessing of his legal counsel was something that SBF said he “took comfort in.”

Judge Kaplan is expected to rule on Friday on what’s admissible from the defence’s wish list of topics – as well as Bankman-Fried’s debut before the jury from the stand.

“Given that he appears headed for defeat, taking the stand can be a ‘Hail Mary’ of sorts,” said Mariotti told CNBC.

Under cross-examination by prosecutor Danielle Sassoon, Bankman-Fried swayed slightly side to side and motioned with his hands when speaking.