Sam Bankman-Fried Says He Believed Taking FTX Deposits Was Legal

Former Chief Executive Officer (CEO) of FTX Sam Bankman-Fried took the stand on Thursday in his criminal trial and in his testimony, he stated that he believed taking FTX deposits was legal. 

Bankman-Fried Takes the Stand

According to Inner City Press which has been reporting the proceeding since it began in the first week of October, Bankman-Fried took the stand after the jury had been sent home for the day. Judge Lewis Kaplan asked the jury to exit the courtroom on the basis that there were some areas of the testimony that the Government contended the jury should not hear. By doing this, he is trying to have a rule on what part of the testimony will eventually be admissible. 

The examination session began with the defendant’s lawyer Mark Cohen asking some questions about communication via Slack and Signal, the encrypted platforms which SBF leveraged before and during his time in detention. Bankman-Fried mentioned that the firm had never had a core breach but connected third parties previously been hacked therefore, there were some security concerns that necessitated the use of encrypted platforms like Signal.

After some other questions about document retention and auto delete on Signal, Cohen posed a question at SBF which lies right at the center of his fraud trial. “Did you believe taking FTX deposits through Alameda was legal?” the defence attorney asked. 

In response to Cohen’s question, the 31-year-old claimed that he did.

Transferring FTX Deposits to Alameda Research

When FTX imploded in November 2022, Sam Bankman-Fried was accused of redirecting FTX deposits to Alameda Research, the sister trading firm of the crypto exchange. At first, this appeared to be an accounting oversight but it was later discovered that it was a fraud attempt as FTX balance sheet showed assets less than what the former CEO quoted.

FTX leaked balance sheet showed that there was $9 billion in liabilities, another $900 million in assets, and some poorly labeled entries with a deficit of $8 billion that could not be traced. While giving his testimony in the first week on the criminal trial, Adam Yedidia, FTX developer and former MIT roommate to SBF, highlighted that he mentioned this huge $8 billion deficit to the defendant.

With Bankman-Fried now stating that he believes the transfer of FTX deposits to Alameda was legal, he may likely maintain his not guilty stance