Federal prosecutors questioned Sam Bankman-Fried in an ongoing hearing on Wednesday about his message deletion practices and the alleged use of customer funds while he was CEO of now-bankrupt crypto exchange FTX.
FTX Founder Faces Intensive Cross-Examination by Prosecutors in Ongoing Trial
Prosecutors focused on Sam Bankman-Fried‘s use of the encrypted messaging app Signal, including his enabling of auto-delete features in 2021. Bankman-Fried said he did not seek specific legal approval for auto-deleting messages, but believed it was allowed under FTX’s document retention policy implemented that year. Bankman-Fried’s testimony was recorded by Matthew Russell Lee from the Inner City Press.
When asked if he should have preserved messages with former Alameda CEO Caroline Ellison containing financial spreadsheets, Bankman-Fried replied “Yes. For example, verbal discussions were not required to be reported.” Prosecutors also questioned if Bankman-Fried violated the policy by deleting messages about shutting down Alameda and its reported $13 billion hole. He responded:
I don’t recall such conversations.
Prosecutors also asked about FTX customer funds being transferred through Alameda entity North Dimension bank accounts. Bankman-Fried signed documents listing it as a trading firm but said he was not aware of it actually conducting trades. When asked if he discussed the use of the account to accept customer funds with lawyers, Bankman-Fried said, “I’m not entirely sure.”
Bankman-Fried claimed he did not discuss with lawyers that the funds were coming from FTX customer accounts. “I would not characterize it that way. So no, I didn’t discuss that with lawyers,” he stated. Bankman-Fried maintained during testimony that he did not believe he should embezzle customer assets. He expressed this sentiment at a moment when responding to the prosecutor’s question wasn’t obligatory. Nevertheless, he emphasized his perceived necessity to provide an answer.
“You don’t have to answer after sustained,” Bankman-Fried’s lawyer Mark Cohen said. “Haven’t you been here for four weeks?”
The proceedings in Judge Kaplan’s courtroom are set to resume Friday morning Eastern Time (ET), with the prosecution team gearing up for an extensive line of inquiry. Despite facing multiple charges, Bankman-Fried has maintained a stance of innocence, entering a not guilty plea to all allegations. It’s noteworthy, just like the first part of his testimony, that the federal prosecutors conducted their interrogation in the absence of a jury.
What do you think about Bankman-Fried’s testimony and cross-examination by federal prosecutors? Share your thoughts and opinions about this subject in the comments section below.
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