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NEW YORK — Sam Bankman-Fried’s initial appearance as a witness in his own trial featured the former crypto executive offering testimony that sometimes frustrated the judge who will decide whether jurors can hear it.
U.S. District Judge Lewis A. Kaplan said at one point, “The witness has an interesting way of answering questions I would say.”
Bankman-Fried was scheduled to officially begin testifying Thursday in her federal trial on criminal fraud charges. But after prosecutors argued that parts of what the defendant planned to say were not relevant to the case, Kaplan opted to hear some of Bankman-Fried’s testimony in a trial without jurors.
Kaplan’s decision to let Bankman-Fried speak at a hearing means she may find herself giving the same testimony twice, depending on what decision the judge ultimately makes. Kaplan said he would issue a verdict Friday morning, before Bankman-Fried officially begins testifying in front of the jury.
During Thursday’s hearing, Bankman-Fried spoke coherently and accurately under questioning from defense attorney Mark Cohen. Bankman-Fried said that lawyers from FTX’s legal counsel had signed off on most of his decisions. The defendant spoke with his usual demeanor, smiling often, bowing his head and sometimes responding to defense questions with his signed “yes” answer.
But when it came time for Bankman-Fried to answer federal prosecutor Danielle Sassoon’s questions, she responded with the uncertainty of a man who may or may not be responsible for the loss of billions in customer deposits.
Among his answers during cross-examination by prosecutors: “I don’t remember”; “I can keep”; “I wouldn’t put it that way, but I think the answer to the question you’re trying to ask is yes.”
“Kaplan and the government also used the word ‘evasive’ to describe their efforts to answer some of their questions,” said Carl Tobias, a professor at the University of Richmond School of Law. “If the judge criticizes SBF for dilly-dallying before the jury, he will have great difficulty countering that.”
Prosecutors have accused Bankman-Fried of carrying out one of the largest financial frauds in history, accusing him of using billions of dollars in customer funds stolen from his crypto trading platform, FTX, to make risky investments, dark money political contributions. And is accused of having lavish personal expenses. , He is facing seven criminal cases including fraud and money laundering and could face decades in prison if found guilty.
On Thursday, attorneys for both sides questioned Bankman-Fried about the details of her deleted messages on the parameters of Signal, an encrypted communications platform, and FTX’s terms of service.
According to Bankman-Fried, FTX lawyers agreed that the automatic deletion of Signal messages, including those discussing the company’s balance sheet, was allowed under company policy. Bankman-Fried said the terms of service drafted by FTX lawyers allowed Alameda to manage the loans that prosecutors have criticized.
On several occasions, Bankman-Fried said her statements were corroborated by the company’s data retention policy, and said she wanted it in front of her in court as reference. What happened next appeared to surprise Bankman-Fried – Sassoon gave her a printed copy of the FTX data retention policy.
The policy presented was “different from the policy to which he was referring,” said Bankman-Fried, whose hands trembled as she held the papers handed to her by Sassoon.
In other questioning Thursday, Bankman-Fried explained some cryptocurrency terminology.
Cohen told Kaplan that when Bankman-Fried testifies in front of jurors starting Friday, it will probably take five hours to get through the defense team’s questions. This will be roughly the same length of interrogation of key witnesses Caroline Ellison and Gary Wang before the trial.
As Bankman-Fried’s defense team prepared to present their case this week, they indicated they would focus on proving that the defendant acted “in good faith” and never intended to defraud clients. Was not meant to give. Cohen, Bankman-Fried’s lead lawyer, outlined the strategy in a letter to Kaplan on Wednesday, writing that the former executive relied on lawyers’ advice as he made key decisions for his crypto empire.
Former federal prosecutors observing the case have said that Bankman-Fried would have a hard time convincing a jury to believe the word of her top lieutenants, all three of whom testified that her former boss and close friend deliberately coerced her into doing so. Was instructed. Fraud at the heart of the matter. Government lawyers presented reams of documentary evidence in support of their key witnesses, and defense lawyers appeared to struggle to poke holes in the prosecution’s case.
Legal experts said Bankman-Fried may have concluded that with little hope of a not guilty verdict, she needed to take the stand to shake up the trial, even if doing so was dangerous.
“Given that Bankman-Fried is losing this case badly, taking the stand is kind of a Hail Mary,” said Renato Mariotti, a former federal prosecutor who focuses on financial crime. “unfortunately [him]He may be down by more than a touchdown.
Neumayer reported from Washington.