SBF Tells his Own Side of The Story: FTX Court Case

SBF Tells his Own Side of The Story: FTX Court Case

ExchangeSBF

By Miles

29 Oct 2023 (7 months ago)

2 min read

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FTX's ex-founder, "SBF" Sam Bankman-Fried, faces court, denies all charges but admits to company mistakes. Main points include political donations and communication rules.

"SBF" Sam Bankman-Fried, the EX founder of FTX and Alameda Research, faced court this week, denying all charges but admitting to "big mistakes" during the company’s rapid growth. His court appearance started on October 27, with the jury present, showing more preparation than in the previous day's hearing.

Key moments of SBF’s testimony include his denial of instructing his team for political donations in 2021 and his claim that FTX's terms covered transactions with Alameda Research. He also stated that he suggested risk management strategies for Alameda but they were not applied.

The defense will finish questioning SBF on October 30, followed by the prosecution's cross-examination. The court expects a rebuttal witness next week, someone to challenge SBF's testimony. SBF could face up to 115 years in prison if found guilty on all counts.

In his testimony, SBF denied directing former FTX co-CEO Ryan Salame and former director Nishad Singh to make political donations, despite their significant contributions recorded on OpenSecret. He agreed that he knows the importance of lobbying in Washington, D.C., to influence crypto regulations. He insisted that political donations came from the company’s funds, not customer deposits.

SBF introduced "The New York Times test" as a communication guideline at FTX and Alameda, urging employees to communicate cautiously. He explained the auto-delete policy on Signal, clarifying that official communications were conducted through other channels.

SBF described Alameda’s role as a payment processor and primary liquidity provider for FTX, justifying unique features in FTX’s code for Alameda’s operations. He also talked about Alameda's line of credit growing with the crypto market.

Regarding hedging strategies, SBF admitted discussing hedging strategies with Alameda's former CEO but they were not implemented, leading to significant losses during market downturns. He was surprised to learn about the increased liability between FTX and Alameda.

Finally, SBF highlighted a clause in FTX’s terms of use, stating that customers were aware of the potential risk sharing in case of significant losses. This part of the testimony aimed to show that customers trading on FTX were informed about possible risks.

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