Sam Bankman-Fried acknowledges errors, including lack of risk management, during trial on charges of misleading investors and embezzlement.
When Sam Bankman-Fried (SBF), who co-founded the cryptocurrency exchange FTX, before the jury yesterday (Friday), he acknowledged the extensive consequences of the collapse.
According to the BBC, the 31-year-old businessman, who is charged with misleading investors and embezzling client money, talked candidly about the choices and acts that brought him to this position. “A lot of people got hurt, customers, employees, and the company ended up in bankruptcy,” he stated.
SBF acknowledged during his evidence in the Manhattan federal court that he handled the now-defunct exchange with a number of mistakes, both big and small. He cited one of his biggest mistakes as being the lack of a specialised risk management staff.
Sam Bankman-Fried Continues to Be Unaffected
SBF insisted on his innocence and said he had never misused customer funds or deceived anyone, notwithstanding the accusations made against him.
After the jury was excused for the day on Thursday, SBF started testifying in an unusual hearing. In order to decide whether or not his testimony about the role of solicitors in significant decisions might be admitted as evidence, US District Judge Lewis Kaplan asked to have a preview of it.
Prosecutors have disputed SBF’s assertion that he followed legal counsel when acting, claiming that he misused FTX customer funds for his own benefit. Due to possible confusion, Judge Kaplan decided not to allow testimony regarding the lawyers’ involvement in various loans provided to SBF and other rules.
Regarding the money flowing from FTX customers to Alameda, SBF voiced doubts and refuted claims that it was directing political contributions. He acknowledged that it wasn’t until October 2022 that he learned the full amount of Alameda’s debt to FTX.
Changing the Axe
In his fraud and conspiracy prosecution, SBF allegedly avoided responsibility by emphasising errors rather than wrongdoing. This was reported by Coindesk. He moved the blame onto his former colleagues, attributing errors rather than deliberate wrongdoing.
A quirk of FTX’s software that permitted Alameda Research to have a negative balance was one of the main issues that were explored. SBF countered that, contrary to what the prosecution claims, this feature was added to fix a flaw in the risk-management system, not to enable users of FTX to withdraw a limitless amount of money.
Remarkably, SBF suggested that he was more of an advisor than a decision-maker by attributing the implementation of this feature to Gary Wang and Nishad Singh, two of his former coworkers.
In addition, Bankman-Fried refuted the prosecutors’ allegations that he and his associates routinely erased emails to stay out of trouble. He asserted that the “New York Times test,” which raises the possibility of written records being misread by the public, had an impact on this practise.
SBF also defended Alameda’s large borrowing from FTX by claiming that Alameda was no different from any other business in terms of borrowing capacity. He further argued that the terms of service explicitly stated FTX’s “claw back” policy, which permitted the exchange to recoup user losses.
