Former FTX CEO Sam Bankman-Fried is expected to testify as soon as Thursday in his own defense, his lawyers signaled during a telephone hearing Wednesday while the trial is paused.
The fraud trial in Manhattan federal court resumes Thursday, when the government is expected to rest its case.
Defense attorneys plan to put on a limited case, including testimony from Sam Bankman-Fried. The former crypto billionaire faces seven counts of fraud, conspiracy and money laundering centered on his alleged use of customer deposits on the crypto trading platform FTX to cover losses at his hedge fund, Alameda Research, and to buy lavish real estate, among other personal expenses.
Bankman-Fried has pleaded not guilty to all counts. If convicted, he could face a sentence of up to 110 years in prison.
Earlier this month, prosecutors explored Bankman-Fried’s unusual living arrangements and the luxurious lifestyle he’d been living in the Bahamas that was allegedly paid for, illegally, with customer and investor money. Prosecutors have alleged Bankman-Fried used other customer funds for real estate, speculative investments and political donations.
A witness, Adam Yedidia, who worked as a developer at FTX, testified that Alameda paid for a $35 million apartment in the Bahamas, where he said Bankman-Fried lived with nine other employees.
Yedidia said he had been tasked with fixing a bug in FTX’s system in June 2022 when he discovered Alameda allegedly owed FTX customers $8 billion. He called it concerning.
“Because if they spend the money that belongs to the FTX customers, then it’s not there to give the FTX customers should they withdraw,” Yedidia said during his testimony.
Five months later, when Yedidia said he heard Alameda had used customer money to repay loans, he said he resigned.
Bankman-Fried stepped down from his role at FTX in November 2022 amid a rapid collapse that ended with the company declaring bankruptcy. Prosecutors charged Bankman-Fried the following month with an array of alleged crimes focused on a scheme to defraud investors.
In an interview with ABC News’ George Stephanopoulos in November 2022, Bankman-Fried denied knowing “there was any improper use of customer funds.”
“I really deeply wish that I had taken like a lot more responsibility for understanding what the details were of what was going on there,” Bankman-Fried said at the time. “A lot of people got hurt, and that’s on me.”
A portion of that interview, which aired on “Good Morning America,” was played by prosecutors in court on Friday, after FTX’s former general counsel, Can Sun, testified he “never” would have approved lending FTX customer money to Alameda.
“Never approved anything like that, and I would never have done it either,” Sun said. “No, absolutely not.”
Sun testified that Bankman-Fried assured FTX customers “that all customer assets of FTX were safeguarded, segregated, protected.”
A prosecutor, Danielle Sassoon, asked: “Did you believe that FTX customer deposits could permissibly be commingled with other funds of the business?”
“No,” Sun answered. “Those funds belong to the customers and do not belong to FTX.”
The jury then saw an excerpt of Stephanopoulos’ interview from November 2022 during which he asked Bankman-Fried, “If Alameda is borrowing the money that belongs to FTX depositors, that’s a bright red line, isn’t it?”
In response, Bankman-Fried said: “There existed a borrow-lending facility on FTX and I think that’s probably covered, I don’t remember exactly where, but somewhere in the terms of service.”
“But they’d have to approve of that,” Stephanopoulos countered. “They’re saying they didn’t approve of it here — they’re saying you approved of it.”
After the excerpt concluded, Sassoon turned back to Sun and asked: “Was the borrow-lend facility a potential justification that you had discussed with the defendant on Nov. 7, 2022?”
“Yes,” Sun said, to which Sassoon asked: “And what had you said to the defendant about that?”
“It was not supported by the facts,” Sun said.
“And what was his response?” Sassoon asked.
“He acknowledged it,” Sun said.