Day 13 Highlights in Sam Bankman-Fried’s Trial

The trial involving the founder of FTX, Sam Bankman-Fried, has entered its fourth week. FTX is in the spotlight as its founder faces criminal fraud charges. Bankman-Fried was one of four witnesses, and his statement is considered crucial for the defense. On Oct. 26, he took the stand, but the jury was sent away by Judge Kaplan until Oct. 27 to review specifics from the defendant’s statements.

Many anticipate this trial, seen by some as America’s most significant crypto fraud case, to conclude by early November 2023. The defense is arguing against allegations that FTX’s ex-CEO violated federal financial regulations. Their stance became even clearer when they requested the dismissal of the case. They believed there was insufficient evidence linking Bankman-Fried to fraud and money laundering, with the founder facing seven specific charges.

However, Judge Kaplan didn’t grant the dismissal. The decision followed federal prosecutors bringing forward testimonies from BlockFi CEO Zac Prince and other witnesses that highlighted dubious transactions.

A noteworthy revelation came from FBI agent Mark Troyano. He stated that while Bankman-Fried led the crypto trading company Alameda Research and FTX, he was a part of over 300 chats on the platform Signal. Of these, 280 had the auto-delete feature enabled. Former Alameda CEO, Caroline Ellison, added that Bankman-Fried preferred the auto-delete feature to keep sensitive discussions hidden from regulatory scrutiny.

When asked about this, Bankman-Fried clarified to the court that the auto-delete wasn’t activated for essential decision-making groups. He further stated that the use of Signal was a protective measure since FTX had previously faced security breaches from third parties.

Elaborating on Alameda Research’s business conduct, Bankman-Fried mentioned that it did fund venture projects. Yet, the legal documentation for these transactions and the terms of service for FTX were overseen by FTX’s general counsel, Daniel Friedberg, and Can Sun. While he didn’t go through the entire paperwork himself, Bankman-Fried expressed his trust in the internal legal team and consultants from Fenwick & West. He also noted that the crypto exchange’s lawyers were aware of the Signal app’s auto-delete function.

As the trial progressed, Bankman-Fried’s defense seemed to pivot towards his legal advisors. He claimed a lack of knowledge on specific issues, like Alameda’s exceptions from FTX’s liquidation processes. He further detailed that in-house lawyers were responsible for crafting agreements for payments to Alameda’s North Dimension bank account on behalf of FTX clientele.

His complete testimony before Judge Kaplan and the jury will resume on Oct. 27, likely marking the end of witness testimonies in this trial on fraud and money laundering charges.