Sam Bankman-Fried took the stand in a New York courtroom on Friday (Oct. 27) to defend himself against charges of criminal fraud.
Cryptocurrency exchange FTX founder Bankman-Fried, who could potentially face a life sentence if convicted, denied the allegations leveled against him, CNBC reported Friday.
During his testimony, Bankman-Fried stated, “No, I did not,” when asked if he defrauded anyone, according to the report. He also denied taking customer funds, refuting claims made by several former top associates who testified against him.
Bankman-Fried is facing seven criminal counts, including wire fraud, securities fraud and money laundering.
Throughout the trial, members of FTX’s top leadership team and individuals associated with sister hedge fund Alameda Research accused Bankman-Fried of orchestrating a scheme to use FTX customer funds for personal ventures and to cover losses in Alameda’s cryptocurrency investments, the report said.
During his Friday testimony, the defense had Bankman-Fried describe his background and his entry into the crypto field, noting that he studied physics at the Massachusetts Institute of Technology and worked as a trader at Jane Street before founding Alameda Research in 2017, per the report. In 2019, he established FTX, which quickly gained traction and gained trading volume of $10 billion to $15 billion per day by 2022.
Bankman-Fried admitted to significant oversights, particularly in not having a risk management team or chief regulatory officer, according to the report. He said Alameda was permitted to borrow from FTX but that he believed the money was coming from margin trades, collateral from margin trades and interest-earning assets on the platform.
At FTX, there were no restrictions on what could be done with borrowed funds as long as the firm believed assets exceeded liabilities, Bankman-Fried said, per the report.
The prosecution has presented evidence, including encrypted messages and internal documents, suggesting that Bankman-Fried was involved in the spending of FTX customer funds, the report said.
This testimony came a day after Bankman-Fried made a dry run, presenting his first words in his own defense in a relatively empty courtroom after the judge overseeing the case had sent the 12-member jury home.
“There are areas of testimony that the government contends the jury should not hear,” Judge Lewis Kaplan said during the Thursday (Oct. 26) dry run. Kaplan explained that there were potential areas of testimony that are in dispute and that he needed to determine whether that testimony could be repeated to the jurors.