Sam Bankman-Fried: Why he lost $8 billion in a Wall-Winged Stock Market? What he told the Sassoon

“I’m not sure,” Mr. Bankman-Fried responded over and over, as Ms. Sassoon asked about statements he had made when he was chief executive of FTX. “I can’t recall,” he said at other points.

Time and time again, the U.S. government’s lawyers pointed to contradictions between what Bankman-Fried said in public and what he said — and did — in private, as they continued to build a case that he orchestrated one of the largest financial frauds in history.

With the trial against him, Sam Bankman- Fried took the biggest risk of his life and called the FTX founder to testify in his defense.

The charges in this case hinge on conspiracy and intentional deceit. Just losing $8 billion is not a crime, though it is very embarrassing. (Even losing $900 million is very embarrassing because people will make jokes about it forever!) But if Bankman-Fried lied to customers and lenders about what he was doing and how safe FTX was, that’s a crime.

Sasson did not leave it there. The loss occurred because someone had exploited several loopholes on FTX in order to make the trade, she noted. Did Bankman- Fried warn investors about this exploit? He did not. Did he tell them what was going on? Nope.

The meat of the cross was then moved on by Sassoon. Multiple statements, from multiple interviews, featured Bankman-Fried saying that Alameda had some special privileges — which was, of course, something Bankman-Fried had also denied to customers.

Sam Bankman-Fried: a fool in a nerd posse and his story to Kelsey Piper

The nerd posse ran away with a bunch of other peoples money and the fall of FTX was in a way that was incredibly childish.

Sassoon immediately followed this with direct messages Bankman-Fried had sent to Kelsey Piper, in which he said this was all just public relations, and “fuck regulators.”

It is not known if he made any of those statements under legal oath. Well… that remained true until we reached his Congressional testimony. According to testimonyBankman-Fried submitted to Congress, trading platforms have obligations to maintain sufficient liquid assets that customers could withdraw from on request. That platforms should ensure appropriate bookkeeping to prevent misuse of customer assets. Ensuring the proper management of risks. Avoiding conflicts of interest.

So for the stories Bankman-Fried wanted to tell, we had to rely on… Bankman-Fried. I still don’t understand Bankman-Fried’s argument that he is a smarter trader than his ex-girlfriend, the former Alameda Research CEO. The evidence shows that Ellison is a better trader than Bankman- Fried. She modeled a scenario for him to be unsuccessful in trying to save $2 billion in venture investing. She is helping the government. If I have to bet on one of them, I’m going “balls long” Ellison.

Bankman- Fried got on the stand and spoke directly to his state of mind in a way that no other witness can. Tell your own side of the story and you will be confronted with a lot of questions you may not want to answer during cross-examination. I’ve watched many crosses. This was the nastiest I think I’ve ever seen.

Bankman-Fried’s other major task was figuring out how to explain away the infamous “FTX is fine. Assets are not in trouble. tweet. Bankman-Fried said he thought that at the time. He said Alameda was still solvent on November 8th. Most of the events had been described by others, except that Bankman-Fried sounded more heroic in this telling if only because he had not committed crimes this time.

Midway through Sam Bankman-Fried’s cross examination, as prosecutor Danielle Sassoon went through a brutal line of questioning like a hot buzzsaw through a butter cow, I found myself reflecting on how smart the average person is. Maybe they don’t know calculus. Maybe they’ll never read Ulysses. Maybe they can’t code. But they definitely know how to identify bullshit when they see it.

The Day Sam Bankman-Fried Decided Not to Disturbate His Correlations with the Prosecutor

So if you, like Bankman-Fried, have moved into the Clintonian territory of “it depends on how you define ‘trading’’” you done fucked up, son. Even the stupid will see through the “sophisticated” argument you make.

I saw jurors make long eye contact with each other and frown as Sam Bankman- Fried questioned them. Personally, I now have a Pavlovian fear response to the phrase “Is it your testimony that…”

The day did not start as an actual disaster. In fact, Bankman-Fried’s direct testimony was the strongest he’d given so far: clear, coherent, believable. On his home territory of direct examination rather than cross-examining the prosecutors’ witnesses, defense lawyer Mark Cohen improved his ability to order a simple chronological narrative, even if he once instructed us to move forward in time from November 7th to… November 7th.

Bankman-Fried’s account was supported by very little other evidence. Gary Wang,Caroline Ellison, and Nishad Singh had all been through the same process of corroboration. What Bankman-Fried had was very little of that, and what it did have was thin.

Sam Bankman-Fried Walked through the FTX Bug: There was a Fire in Chicago 1871 that started as ‘ftx borrows’

Danielle Sassoon walked Sam Bankman- Fried through his response to the FTX software bug. In my case, there would probably be shouting? Like, a lot of shouting. I would also probably have my assistant figure out which law enforcement agency to call immediately. There was a fire in Chicago in 1871 that started when several billion was not accounted for.

There is a balance sheet for June 13th, 2022. it shows Alameda borrows from FTX as ‘ftx borrows.’ Bankman-Fried seemed to be hazy on this.

If you are wondering how Bankman-Fried’s parents reacted to this, I can’t tell you — they weren’t there. I couldn’t really blame them. I wouldn’t want to watch my child be vivisected, either. The jurors, however, watched the operation attentively. It’s $8 billion, which has a way of focusing the mind for most of us.

Source: Sam Bankman-Fried didn’t ask where the $8 billion went

On the Bankman-Fried Relationships to the Bahamas, and Why You Shouldn’t Misplace $8 billion to a Criminal?

It is not good to utter phrases like “hole isn’t really the word I would use” and then say you want a few more references and comments on it. Yes, this will win certain kinds of nerd arguments. But this is a courtroom, and I have come to believe that if you know the meaning of the word “epistemology,” you absolutely should not testify in your own defense.

Establishing that would have sufficed, but also Sassoon got in a few flourishes about Bankman-Fried and his relationships to the power of the Bahamas. She asked if he had made any comments about paying off the debt. (You will be shocked, shocked to discover he didn’t recall.) We then saw an internal FTX group chat called “Project Chinchilla Chatter” in which another member asked who in the Bahamian government they needed to talk to for the project. Bankman-Fried said that he was called Ryan Salame. FTX had one of its executives, a man who goes by the name of Salame.

We would be more than happy to provide all of your withdrawals on FTX tomorrow so that you can fully withdraw your assets, making them whole. If you want us to, we could open it immediately if you said you wanted us to, but we are more than willing to do it, as it is the least of our duty to the country. We are going ahead and doing it tomorrow if you don’t reply back.

Bankman-Fried opened their account for customers in the Bahamas. The upshot of this testimony seemed to be that Bankman-Fried had a cozy, perhaps even inappropriately cozy, relationship with the Bahamian government — which isn’t what he’s on trial for but probably doesn’t make him look any better to a jury.

Closing arguments start tomorrow, and then the case will be handed to the jury. In the meantime, I will continue to ponder the appropriate response to misplacing $8 billion. Is that Crying? Fainting? Maybe it actually is padel tennis — I wouldn’t know. Net sports are not my area, and no one has ever given me $8 billion to misplace.

One of the few criminal defendants to take the stand was always going to be a risky move. And less than a minute into an unyielding cross-examination by the prosecution, it was clear why.

Cross-examinations with Danielle Sassoon in his trial on securities fraud and the failure of a risk management team

The stakes are high for Bankman-Fried. If he’s found guilty of securities fraud and seven other criminal counts, he would be in prison for the rest of his life.

Danielle Sassoon, a former clerk of the late Justice Antonin Scalia, is known to be effective in her cross-examinations and she did so in her trial.

For almost eight hours, the assistant U.S. Attorney for the Southern District of New York asked Bankman-Fried a litany of incisive questions. She moved quickly, and whenever the defendant hesitated, she dug in.

Bankman- Fried seemed to get more and more annoyed with each hour. He did not agree with how Sassoon described his past comments in trial testimony.

At times, he seemed resigned. When the prosecutor asked Bankman-Fried to read his prior statements, he did so with alacrity, but not without reluctance.

Bankman-Fried did interviews even after his companies collapsed. He opined on X, formerly known as Twitter. He even tried to start his own e-mail newsletter.

Bankman-Fried had claimed that he was someone who was simply struggling to keep up with the rapid growth of FTX and that he failed to recognize the extent of its troubles.

Above all, Sassoon was prepared. She would bring up the evidence in the form of an email, or a message on social media, if he said he could not remember.

Bankman-Fried was able to lay out his defense when he was questioned lightly by his lawyer, Mark Cohen.

Bankman-Fried also told the court that he made “a number of small mistakes and a number of larger mistakes.” He said that the biggest was not having a dedicated risk management team.

Bankman- Fried said that they did not have a chief risk officer. There were a number of people involved in managing risk, but no one dedicated to it, and there were significant oversights.

He blamed his top lieutenants at FTX and Alameda, who he said had mismanaging things, for the downfall of his company.

Bankman- Fried said that Ellison failed to hedge the investments adequately which made her firm vulnerable to steep market downturns.

Source: Sam Bankman-Fried took a big risk by testifying in his own trial. It did not go well

A Portrait of Ben McKenzie and Michael Lewis during a Debate on Banking in Bankman-Fried’s Undercover House-Area

The testimony also attracted an array of celebrities including actor Ben McKenzie. The former star of “The O.C.” and “Gotham” wrote a book about cryptocurrencies.

Michael Lewis is the author of a book about Bankman-Fried. While wearing a jacket and running shoes he followed the proceedings in one of the overflow rooms and sat near Bankman- Fried’s friends and family.

Tiffany Fong gained some attention when she interviewed Bankman-Fried for hours under house arrest, and she has summarized the trial in video digests.