The Head-Spinning Story That Sam Bankman-Fried Told the Jury

This is part of Slate’s daily coverage of the intricacies and intrigues of the Sam Bankman-Fried trial, from the consequential to the absurd. Sign up for the Slatest to get our latest updates on the trial and the state of the tech industry—and the rest of the day’s top stories—and support our work when you join Slate Plus.

OK, so, you know how Sam Bankman-Fried was supposed to take the witness stand Thursday and begin testifying on his own behalf, however bold or ill-advised the idea might be? And how what happened instead was that the prosecution and defense in United States v. Samuel Bankman-Fried, in the thick of an argument over what SBF should be allowed to testify about under oath, instead test-drove those hypothetical arguments in a courtroom without a jury, for Judge Lewis Kaplan to evaluate? And Bankman-Fried’s answers to the prosecution’s cross-examination were … less than brilliant? And the defense got really mad about the government’s questions? And we all left that evening with nary a clue as to what would happen Friday?

Well, it’s Friday, and the trial is back to chugging along, mostly. Kaplan decreed right away that none of the subjects in dispute would be forbidden, and that the prosecution would be free to interrogate Bankman-Fried as it pleased. As a result, Sam Bankman-Fried finally began testifying to the jury Friday morning, with his attorney Mark Cohen asking him questions. Cohen didn’t finish, and by day’s end, he’d informed the judge that his questions would likely continue through 11:30 a.m. Monday, “maybe sooner,” after which the prosecution would be free to grill his client. From there, the trial could still last all through next week, maybe longer.

The end is in sight, at least, for the cryptocurrency industry’s most consequential trial to date. Still, in the words of Kaplan, the trial’s ending will probably be “somewhat protracted, given the trajectory of the case” so far. Considering that he offered that caveat at Friday’s close, it’s almost certain he had the day’s excruciating proceedings in mind.

Allow me an opportunity to expound: SBF employed a new suit—a rather shiny one at that—but not a new strategy. He straight-up denied defrauding investors and using FTX customer funds inappropriately (read: illegally) for a few reasons. One, FTX was a crypto exchange that primarily traded on margin. That is, a significant percent of users opted in to a system that allowed the company to use their deposits to help cover for customers whose FTX holdings plunged in value, thanks to market downturns or other such factors. Two, he’d merely made a series of mistakes, large and small—and yes, lacking any risk-management infrastructure was the biggest one. Three: His hedge fund Alameda Research did dump FTX customer deposits in an Alameda-owned bank account, and he did help himself to personal loans from Alameda to splash on venture investments and political donations, but those two things were not related, he swears—but do please remember, FTX was a margin trading firm, and for what it’s worth, there were no restrictions on what FTX customers could do with their withdrawals. And like he’d said, Alameda was treated like any other FTX customer, even though it was a market maker and most FTX customers were not themselves market makers. (But others were! Because Alameda had shrunk its position on FTX by late 2022, because FTX was able to find other market makers! But FTX was still mainly humans who traded on margin, not market makers. Got that?)

This, broadly, was the thrust of the story SBF told on the stand Friday, at least if you traced a thread through his definite admissions over many, many hours. Seems like the defense attorneys’ consistent lack of a coherent story may be due in part to the fact that SBF, despite nearly a year of reportedly intense preparation, hardly has one himself. At any rate, they’ve both been grabbing at excuses where they can. Blaming former FTX counsel Daniel Friedberg and law firm Fenwick & West for insufficient legal oversight while swearing they’re not going for an advice-of-counsel defense (which Kaplan has barred).* Claiming he didn’t know much about FTX’s underlying troubles while declaring that running FTX was a 22-hour-a-day job. Allowing himself Alameda access when he pleased, because he was always its majority owner, while blaming its former CEO Caroline Ellison (his ex-girlfriend who was also Bankman-Fried’s direct report) for not doing enough to keep things together, even though he’d appointed her to the position because she was great at what she did, and even though he “felt” (his word, not mine) that Alameda was “quite net-positive in value.” Saying he never dispatched sensitive business documents over apps like Signal while conveniently making exceptions for the Signal-transmitted spreadsheets that the defense displayed in court Thursday (and is sure to mention again by next week). Stating he “didn’t … read any of FTX’s code” while also admitting he learned of certain information while flicking through a custom database.

If you find that reasoning confounding, imagine how it felt to hear it spelled out live in the courthouse, and to have that take up the entire day. All conveyed for the most part through Bankman-Fried’s confident, quick-paced delivery, marred only later on by some of the pauses, hums, and “I don’t recall” caveats that defined his previous cross-examination. I suspect we’ll see a little more of that on Monday than we did Friday—that is, after we get another couple hours of the above.

Though there’s many more hours of testimony to come, it’s pretty clear that everything we’ve seen from the defense so far is … quite possibly all it’s got. It has a few chances to help its client yet: the rebuttal, the closing statement, maybe a few souls on this surely confused jury. Again, the defense notched no direct refutation of prosecutorial testimony, or even cleanly summarized any takeaway for the record. It was primarily a walk back through previous exhibits in the trial. What’s more, it all came with some really grating omissions that anyone who’s followed SBF’s case could clearly catch. The defendant brought up the Guarding Against Pandemics PAC as an example of one of his company’s political consultants—forget that his brother was its founder. He spoke to the system governing the digital token Serum—without acknowledging allegations that he exercised undue control over its network. He compared his infamous exchange token FTT (an in-house coin that ultimately went to zero) to Binance’s BNB, without, uh, any additional context on the BNB blockchain’s own sketchiness. He elaborated on how the summer 2022 collapse of crypto hedge fund Three Arrows Capital screwed with his business, leaving aside a 3AC co-founder’s accusation that FTX was in large part responsible for its downfall. He recalls exactly what he was trying to convey in a July 2022 conversation with colleague/friend Adam Yedidia, but doesn’t remember where it took place—even though he was there for the court session where Yedidia, who turned witness, recalled that very location (a tennis court in their Bahamian luxury complex), and the prosecution displayed a photo of the very spot.

In short: The Sam Bankman-Fried on the witness stand is everything and nothing, a man who knew and had it all, only to realize he didn’t know or have anything to begin with. This, as a whole, appears to be his offering to the jurors. Will they buy it?