Sam Bankman-Fried is a 38-Year-Old Man on the Finsex Exchange Experiment. And When did he Learned About the Corrupt Practice?
There was more. Had Bankman-Fried referred to FTX as safe in numerous public statements? He couldn’t remember. Did he remember that in order to win a client’s money, there needs to be zero issues? He couldn’t recall. Is lying to customers a sin that everyone knows to follow? He couldn’t recall. Was he aware that he supported regulation only if it protected consumers? He couldn’t recall.
On the witness stand, Bankman-Fried also claimed he learned about problems with FTX’s financials as he went along and said he didn’t know the extent to which FTX and Alameda were actually working together.
Sam Bankman- Fried is being tried on seven counts of wire fraud and conspiracy. The SEC claims that FTX was a fraud from the start, with a multi-billion dollar deficiency caused by his own misappropriation of customer funds.
Mr. Bankman-Fried had been accused of orchestrating a scheme to steal $10 billion from FTX customers. They said he had spent the money on extravagant projects, including venture capital investments, political contributions and luxury real estate purchases in the Bahamas, where FTX was based. Mr. Bankman-Fried was also accused of creating a secret back door in FTX’s code that allowed a hedge fund he founded, Alameda Research, to seize billions of dollars in customer funds.
But, the man didn’t leave it there. She noted that the loss happened because someone exploited loopholes on FTX to make the trade. Did Bankman-Fried tell investors about this exploit? He didn’t. Did he tell his customers? Nope.
The meat of the cross was moved on by Sassoon after that. Multiple statements, from multiple interviews, featured Bankman-Fried saying that Alameda had some special privileges — which was, of course, something Bankman-Fried had also denied to customers.
Does f_X is fine? Sam Bankman-Fried’s infamous “Fractional X’s is fine” cross examination had been revealed by Sassoon
FTX went down in a way that was childish: a group of nerds ran away with a lot of money in the stupidest and simplest way possible.
This followed a direct message Bankman-Fried had sent toKelseyPiper, in which he said this was all about public relations and not about regulators.
He hadn’t made any of those statements under legal oath, had he? Well… that remained true until we reached his Congressional testimony. Bankman- Fried read testimony he had given to Congress about the obligations trading platforms have to maintain sufficient liquid assets. Proper accounting should be in place to prevent misuse of customer assets. Ensuring that the management of risks is done correctly. Avoiding conflicts of interest.
Bankman-Fried claimed to have been “not involved as a general principle in day to day trading,” but this turned out to depend highly on how one defines trading. Sassoon quickly introduced the “Vertex” Signal groupchat for discussing Alameda’s trading. In it, we saw messages where Bankman-Fried asked the group how much of two tokens, OXY and MAPS, the group had bought. Over the next few days, he suggested Alameda buy $1 million to $2 million of each. Bankman- Fried denied that this was him giving instructions.
Then we got what I had been waiting for: the cross examination. And while Bankman-Fried’s direct testimony was short on contemporaneous evidence, the cross was not. Sassoon was a matador in kitten heels, baiting Bankman-Fried before driving her sword through his shoulders.
Bankman- Fried had a lot of questions about how to explain away the notorious “FTX is fine”. Assets are okay. tweet. Bankman-Fried said that he believed that at the time. On November 8th, Alameda was still solvent, he said. Almost all of the other events occurred exactly as others had described them, except that Bankman-Fried sounded more heroic in this telling, if only because he was not doing any crimes this time.
I thought of how smart the average person is as Danielle Sassoon was questioning Sam Bankman-Fried, like a butter cow with a hot buzzsaw. Maybe they don’t know calculus. They might never read the novel. Maybe they are not able to code. But they definitely know how to identify bullshit when they see it.
Sam Bankman-Fried’s Confessions on a Difficult Day in December 2001: Why do you think he is fucked up, son?
If you have moved into the Clintonian area, you are fucked up, son. The stupid will see through any sophisticated argument you make.
At various points during Sam Bankman-Fried’s cross examination, I saw jurors shake their heads, frown so hard their lips disappeared, and make prolonged eye contact with each other. I have a fear response to the expression ‘Is it your testimony that’.
The day was not a disaster. Bankman-Fried gave the strongest testimony so far: clear, coherent, believable. If the defense attorney had instructed us to move forward in time from November 7th to November 8th he would have improved his ability to order a simple chronological narrative.
But Bankman-Fried’s recounting of events was supported by very little other evidence. Text messages, documents, code snippets and so on can be used to corroborate versions of events. Bankman- Fried did not have much of that, and what it did have was very thin.
Am I a Fool? Alameda Customer Funds: How did I Meet the Bankman-Fried? The jury didn’t ask where $8 billion went
I am the owner of a hedge fund and one day, my employees show up and say, “Hey, Liz, we have an accounting problem.” We are missing a lot of money. How would I react?
We were shown the Alameda balance sheet from June 13th, 2022, which showed the money it was borrowing from FTX. Bankman-Fried was hazy on this as well.
I cannot tell you how Bankman-Fried’s parents reacted, they weren’t there. I couldn’t really blame them. I wouldn’t want to watch my child be vivisected, either. The jurors, however, watched the operation attentively. For most of us, $8 billion represents a way of focusing the mind.
Opening a Closed House for All Bahamian FTX Customers to Open a Depositary of $8Billion to Misplace
Look, uttering phrases like “hole isn’t really the word I would use” and responding to a question by saying you wanted “a few more qualifiers and scoping on it” do not, as a general rule, bode well for your believability. Yes, this will win certain kinds of nerd arguments. But this is a courtroom, and I have come to believe that if you know the meaning of the word “epistemology,” you absolutely should not testify in your own defense.
We then saw a November 9th email from Bankman-Fried to Ryan Pinder, attorney general of the Bahamas, that said “we are deeply grateful” for what the Bahamas had done for FTX. Bankman- Fried wrote that it was a token of gratitude.
We would be more than happy to open up withdrawals for all Bahamian customers on FTX, so that they can, tomorrow, fully withdraw all of their assets, making them fully whole. If you tell us that you want us to, we could open it right away if you told us that you wanted us to. We will do it tomorrow if we don’t hear back from you.
Bankman- Fried opened their withdrawals for customers in the Bahamas. The upshot of this testimony seemed to be that Bankman-Fried had a cozy, perhaps even inappropriately cozy, relationship with the Bahamian government — which isn’t what he’s on trial for but probably doesn’t make him look any better to a jury.
Closing arguments start tomorrow, and then the case will be handed to the jury. In the meantime, I will continue to ponder the appropriate response to misplacing $8 billion. Crying? Is it still smilng? Maybe it actually is padel tennis — I wouldn’t know. No one has ever given me $8 billion to misplace, and Net sports are not my area.
Taking the stand was always going to be dangerous for the criminal, and only a few of them do. And less than a minute into an unyielding cross-examination by the prosecution, it was clear why.
A Conversation with Danielle Sassoon after he Was Indicted: “Measures in Managing Risk” and “Mismanagement Mismanagement”
Danielle Sassoon was a prosecutor and clerk for the late Justice Antonin Scalia, and is known to be an effective litigator.
For almost eight hours, the assistant U.S. Attorney for the Southern District of New York asked Bankman-Fried a litany of incisive questions. She moved quickly, and whenever the defendants hesitated, she dug in.
With each passing hour, Bankman-Fried got more and more upset. He often disagreed with how Sassoon characterized his past comments — in trial testimony, but also in media reports.
At times, he seemed resigned. The prosecutor asked Bankman-Fried to read his statements aloud, but he refused, as he slumped in front of the microphone.
Bankman-Fried did media interviews even after his companies collapsed and he was indicted. He said that X, formerly known as TWITTER, was his opinion. He even tried to start his own e-mail newsletter.
Bankman-Fried said that he was someone who didn’t know the full extent of FTX’s troubles and that he had trouble keeping up with the rapid growth of the company.
All of that was prepared by Sassoon. When Bankman-Fried said he couldn’t remember something, she would confront him with the evidence in the form of an email, or a tweet, or an excerpt from an interview.
When Bankman-Fried was questioned by Cohen, he laid out his defence much more gently than he did during the cross-examination.
Bankman-Fried said that he made a number of small and larger mistakes. He said the biggest one was not having a dedicated risk management team.
“We didn’t have a chief risk officer,” Bankman-Fried said. There were some people who helped manage risk but no one dedicated to it and there were some oversights.
He blamed his lieutenants at both FTX and Alameda for the mismanaging of things, including a former girlfriend and CEO who testified that he ordered her to commit crimes.
Bankman-Fried, for example, said that when Ellison led Alameda, she failed to hedge the firm’s investments adequately, which made it vulnerable to steep market downturns.
Source: Sam Bankman-Fried took a big risk by [testifying in his own trial](https://lostobject.org/2023/10/25/sam-bankman-fried-will-testify-in-his-defense-which-may-be-a-risk-for-his-life/). It did not go well
Ben McKenzie: The Trial of Michael Lewis and Michael Bankman-Fried in the O.C. Overflow Room with Tiffany Fong
The testimony also attracted an array of celebrities including actor Ben McKenzie. The former star of “The O.C.” and “Gotham” is now a “crypto skeptic” and the co-author of a bestseller about cryptocurrency.
Michael Lewis wrote a book about Bankman-Fried and was also present. Wearing Hoka running shoes and a down jacket, he followed the proceedings in one of the overflow rooms before he snagged a seat in the courtroom itself — not in the rows of reporters, but in a seat near Bankman-Fried’s friends and family.
Tiffany Fong gained some popularity during the trial by interviewing Bankman-Fried for hours while he was under house arrest, and has summarized the proceedings in video digests.