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Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
Sam Bankman-Fried was confronted with tweets, media interviews and sworn testimony wherein he repeatedly vouched for FTX’s governance and danger administration, as New York prosecutors started to cross-examine the previous tycoon over his cryptocurrency alternate’s multibillion-dollar collapse.
The 31-year-old, who had earlier answered questions from his personal attorneys, additionally admitted to calling a “particular subset” of crypto buyers “dumb motherfuckers” and conceded he had referred to his advocacy for crypto regulation as “simply PR” within the days main as much as his arrest final December.
He additionally admitted to writing “fuck regulators” to a reporter in November 2022.
Throughout questioning by assistant US legal professional Danielle Sassoon, Bankman-Fried was introduced with an audio recording of an interview wherein he had claimed to not be “concerned in any respect” within the operating of FTX’s affiliated hedge fund Alameda Analysis. Moments earlier, he acknowledged in testimony that he was nonetheless concerned in some discussions over the agency’s buying and selling technique.
The barrage of evidence got here because the trial in opposition to Bankman-Fried entered its fifth week, having beforehand featured testimony from among the former billionaire’s closest pals and colleagues, together with Caroline Ellison, Gary Wang and Nishad Singh, all of whom are co-operating with prosecutors.
Below direct examination from his defence lawyer earlier on Monday, Bankman-Fried testified he believed FTX “had no holes on its stability sheet” simply days earlier than it collapsed into chapter 11 with $8bn of customer deposits missing.
Introduced with a tweet from November 7 2022 — 4 days earlier than the alternate declared chapter — wherein he stated “FTX is ok”, Bankman-Fried maintained that on the time the alternate itself “had successfully no liabilities” and that there was “no gap when it comes to property”.
He added: “FTX didn’t do any investments with buyer property.”
Nonetheless, he conceded that at that time the alternate was “on the verge of a liquidity disaster” as prospects have been withdrawing billions of {dollars} per day after the founding father of competing alternate Binance forged doubt over FTX’s funds.
He additionally testified he had left it to Ellison, who ran Alameda Analysis, to hedge the buying and selling agency’s positions after its stability sheet deteriorated in the summertime of 2022. When up to date on that technique in September, Bankman-Fried stated he felt the corporate “may have hedged twice as a lot”.
Bankman-Fried, who has pleaded not responsible to all expenses, was later requested by Sassoon whether or not he agreed that he knew “methods to inform an excellent story”, to which he replied: “It is determined by what metric you employ”. Earlier than FTX’s collapse, Bankman-Fried was one of many best-known figures within the nascent crypto trade, turning into a mainstay of media protection and hobnobbing with politicians and celebrities.
He added that he informed “what I assumed was the reality concerning the firm” to journalists, buyers, and the US Congress, earlier than being introduced with testimony to Congress from Might 2022 wherein he stated FTX provided protections to prospects together with sustaining adequate liquid property to at all times meet withdrawal requests. The alternate was unable to fulfill such requests in November of that 12 months, and was compelled into chapter 11.
