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Alleged crypto criminal Sam Bankman-Fried took the stand at his multibillion-dollar fraud trial Thursday, but not in front of the jury that will decide his fate — just yet.
In a rare occurrence for a criminal defendant, the accused financial fraudster unexpectedly testified for several hours outside the jury’s presence for Manhattan federal court Judge Lewis Kaplan to consider what he can tell them when he takes the stand in his defense Friday.
Bankman-Fried, who’s been on trial since Oct. 3, informed Kaplan of his last-minute gamble to take the stand on Wednesday. Lawyers typically urge their clients not to testify because of the risks they face on cross-examination.
The stakes couldn’t be higher: He faces a potential century in prison if convicted of seven counts alleging he siphoned billions of dollars from his bankrupt cryptocurrency exchange FTX through a hidden portal built into its code. Millions worldwide bought and sold digital currency on FTX. He’s pleaded not guilty.
The feds say the Palo Alto, Calif., man used the stolen proceeds to pay his hedge fund Alameda Research’s debts, live lavishly in a $35 million Bahamas mansion, and funnel $100 million to politicians through straw donations to endorse his company and further his crypto agenda in Washington.
Bankman-Fried told his lawyer, Mark Cohen, that he believed “in many circumstances,” it was okay for Alameda to borrow from FTX under its terms of service in the Bahamas, where it was based, and he was arrested in December.
“Did you believe that you were managing FTX in accordance with its terms of service?” Cohen asked.
“Yes,” Bankman-Fried said.
At one point, Kaplan interrupted to ask Bankman-Fried if he had thoroughly read the terms of service.
“Parts” in-depth, he said. “Parts, I skimmed over.”
The fallen crypto whiz said repeatedly that he maintained close communication with his lawyers, trusting they’d advise him about out-of-bounds risks. The prosecution has argued he shouldn’t get to evade culpability by pinning responsibility on his lawyers.
Bankman-Fried said FTX’s lawyer, Dan Friedberg, had played a role in putting together loans for him and Alameda employees.
“Did you take comfort from knowing that lawyers had structured the loans?” Cohen asked.
“Yes,” Bankman-Fried said.
Speaking with the confidence of a court-appointed expert under questioning by Cohen, Bankman-Fried struggled to answer a single question directly once Assistant U.S. Attorney Danielle Sassoon began her cross-examination.
His rambling answers prompted Judge Kaplan to interject at one point to say “part of the problem” was Bankman-Fried’s “interesting way of responding to questions.”
Sasson asked whether he’d ever asked his company attorneys if it was okay for Alameda to spend FTX customers’ money.
After an extended pause, he replied, “I don’t recall any conversations that were contemporaneous and phrased that way.”
Jurors will meet “SBF” after hearing from three of his convicted associates cooperating in the hopes of receiving lenient prison terms — Alameda CEO Carolina Ellison, FTX co-founder Wang, and FTX head of engineering Nishad Singh — and reviewing a mountain of documents and damning private messages.
Kaplan is expected to rule on what Bankman-Fried’s lawyers can question him about on Friday.