Sam Bankman-Fried has gone from the smartest one in the room to the most forgetful.
This, as the 31-year-old cryptocurrency entrepreneur accused of orchestrating one of the largest financial frauds in American history took the witness stand for the fourth time, and the third juried time, on Tuesday (Oct. 31) as his defense team rested their case.
It didn’t go well for him.
By many accounts, including those of his colleagues, the former CEO of FTX failed his exchange’s millions of customers by misappropriating their money — and now his own memory appears to be failing him.
“I’m not sure,” and “I can’t recall,” repeated Bankman-Fried over and over while under cross examination by U.S. federal prosecutor Danielle Sassoon.
“I’m going to tell Juror 3 she can make her flight on Friday,” said Judge Lewis Kaplan, who is overseeing the criminal trial, at one point — indicating that the much-anticipated case may be wrapping up soon.
“Mr. Bankman-Fried, just answer the question,” the judge said at other points, including when Bankman-Fried equivocated around whether he had “dinner” or a “meal” with former U.S. President Bill Clinton and former U.K. Prime Minister Tony Blair in the Bahamas.
Fortunately, Sassoon came prepared.
“You gave the Bahamas prime minister floor side seats at the Miami Heat Arena?” she asked.
“I don’t remember that,” replied Bankman-Fried.
In response, Sassoon showed the jury a message where the defendant stated that the prime minister “is in FTX’s court side seats with his wife.”
Tuesday’s hearing was full of many such moments as the prosecution grilled Bankman-Fried about at-times glaring inconsistencies between his public statements and defense testimony, backing each up with the defendant’s own past words and statements.
The accused fraudster’s personal testimony in his own defense was one of the most anticipated moments of Bankman-Fried’s criminal trial, but Tuesday’s hearing ended up undercutting the defendant’s core strategy and narrative: that he was distracted and made honest, good-faith mistakes at the helm of a fast-growing startup.
Mistakes like allegedly establishing a $65 billion line of credit to his own trading creation, Alameda Research, which was backed by customer deposits.
And mistakes like allegedly spending billions of dollars from that line of credit on luxury real restate, private jets, and splashy marketing initiatives and venture investments.
Asked by the prosecution whether he “flew to the Super Bowl on a private jet?” Bankman-Fried replied, “I don’t recall how I got there.”
“Is that because you flew on private jets so frequently?” Sassoon rejoindered.
And the rest of Sassoon’s cross-examination was equally quick and incisive, sparing no punches in painting Bankman-Fried as an executive who directed his colleagues to funnel billions of dollars from customer deposits in order to fund an excessive and fraudulent lifestyle for himself and others.
Criminal defendants typically avoid testifying in order to avoid the type of sharp cross-examination by prosecutors that Bankman-Fried was subjected to, but the one-time crypto billionaire was left with few other choices.
And he was revealed to be left with few answers, outside of blaming his colleagues one more time for failing manage their responsibilities well enough.
Testifying on his ex-girlfriend Caroline Ellison’s role, Bankman-Fried repeated to the court that it was the former CEO of Alameda’s failure to adequately hedge the trading firm that led to many of the problems FTX later encountered.
Later, Bankman-Fried testified that he did not ever directly tell Alameda employees “not” to spend FTX customer deposits. He confirmed to the jury that when he discovered the $8 billion hole, no employees were terminated.
“I wasn’t particularly interested in trying to dole out blame,” Bankman-Fried testified.
The 31-year-old, who may spend the rest of his life in jail if convicted, also told the court that he learned about problems with FTX as he went along, and that the degree to which the two crypto firms he founded were working together was relatively unknown to him.
The defense’s two potential rebuttal witnesses are no longer planning to take the stand, and on Wednesday (Nov. 1), both the prosecution and the defense will present their closing arguments — which they have told Kaplan will run anywhere between two to three hours each.
The jury will begin deliberating on Thursday (Nov. 2) whether Bankman-Fried is guilty of the sizable financial crimes he is accused of committing by the U.S. government.