As Sam Bankman-Fried took the stand on Thursday, a crowded gallery of onlookers saw firsthand why defendants typically do not testify at their own criminal trials, with prosecutors eviscerating the disgraced crypto founder during an hours-long cross-examination without jurors present.
Bankman-Fried’s lawyers first indicated at a teleconference call on Wednesday that their client would testify in his own defense, introducing a lengthy court filing late that night laying out the themes they planned to tackle.
With the trial resuming on Thursday morning after a brief recess, the prosecution called one last witness—an FBI agent—before resting its case. Judge Lewis Kaplan, who’s overseeing the case, said he wasn’t convinced that the proposed topics for Bankman-Fried’s testimony had sufficient cause to be argued in front of the jury. Instead, Kaplan held an unusual dry-run hearing, hearing the direct and cross-examinations after sending the 12-person jury home for the day.
Blame the lawyers
Defense attorney Mark Cohen proceeded with his direct examination, calling a noticeably gaunt Bankman-Fried to the stand. After three weeks of testimony that saw his closest friends testify that they had stolen customer funds from FTX at his direction, Bankman-Fried finally had the opportunity to tell his version of events.
His lawyers focused on four areas that Kaplan was skeptical should be argued in front of a jury: auto-deletion policies by members of the FTX inner circle on the messaging platform Signal; Bankman-Fried’s so-called advice-of-counsel defense; the safeguarding of customer assets in omnibus wallets; and a fateful set of meetings with the Bahamas’ financial regulator.
Bankman-Fried held up under the guiding questions of his own lawyers, answering confidently that he operated his crypto empire in good faith under the advice of attorneys such as chief regulatory officer Dan Friedberg. As his current attorneys have telegraphed through a series of court filings, Bankman-Fried was pinning the blame on previous FTX lawyers.
Bankman-Fried argued that everything from FTX’s terms of service to its unorthodox—and potentially illegal—labyrinth of bank accounts was orchestrated by previous counsel, providing cover for his decision to use customer assets for his own purposes.
After a smooth direct examination, Bankman-Fried’s father, Joe Bankman, walked over to give him a grin and a thumbs-up.
An unforgiving cross
The downside of Bankman-Fried’s taking-the-stand gambit quickly became apparent: Assistant U.S. Attorney Danielle Sassoon drilled into his decision to lay the blame at the feet of previous attorneys, asking him a series of probing questions about whether he had specific conversations with Friedberg or FTX general counsel Can Sun about stealing customer assets.
Bankman-Fried answered in his signature format—a series of misdirections, “yups,” and stammers that previous interviewers have described as a “word salad” approach. While it may have worked in the past on unsuspecting reporters, Sassoon and Kaplan were unamused. At one point, Kaplan instructed Bankman-Fried to be more clear, noting that he had an “interesting way of answering questions.”
Sassoon seemed to pull loose every thread of the defense’s arguments, even noting that Bankman-Fried’s approach to auto-deleting Signal messages seemed inconsistent with a document retention policy that the defense couldn’t even produce.
In one tense moment, Sassoon pulled up a payment agreement between FTX and its trading firm, Alameda Research, and asked Bankman-Fried to find the section that he interpreted as allowing him to use FTX customer deposits for his own purposes. After a long pause, Bankman-Fried admitted that he had not done a “careful read” of the document “contemporaneously.”
Even without the jury present, Sassoon did not hold back. Near the end of her questioning, she asked how Bankman-Fried would define safeguarding customer assets.
“Would that include not embezzling customer assets?” she asked.
Kaplan quickly sustained the defense’s objection, but the point was made to a room packed with journalists, O.C. star Ben McKenzie, and FTX chronicler Michael Lewis, who was sitting in Bankman-Fried’s friends and family section.
After the cross-examination ended, Kaplan expressed further skepticism that Bankman-Fried could claim he was following his lawyers’ advice, observing that a bank robber could not use illegal funds to buy an apartment, even if he had an attorney’s unwitting sign-off.
Kaplan said he would decide whether to allow the testimony in front of the jury on Friday morning.
