FTX founder and former CEO Sam Bankman-Fried testified on Thursday without the jury present at his federal fraud trial that the lawyers for his bankrupt cryptocurrency exchange were involved in key decisions as he sought to distance himself from wrongdoing in the case.
Bankman-Fried said lawyers were involved with crafting the company’s document retention policy – which involved auto-deleting messages in some cases – as well as the system in which FTX customers deposited funds into an account linked to its affiliated hedge fund Alameda and crafting loans he and other executives took from Alameda.
When prosecutor Danielle Sassoon cross-examined Bankman-Fried, he appeared more uncomfortable than when he was questioned by his defense team and often talked in circles while responding – drawing an admonishment from Judge Lewis Kaplan who is presiding over the trial in Manhattan federal court.
Sassoon pressed Bankman-Fried on what FTX lawyers told him about the company’s practice of having FTX customers deposit funds intended for the crypto exchange to Alameda, which he said happened for a time because FTX didn’t yet have its own bank account.
She asked Bankman-Fried if he ever talked with lawyers about the "permissibility" of Alameda spending the deposits, he paused before saying, "I don’t recall any conversations that were contemporaneous and phrased that way."
Although Bankman-Fried took the stand Thursday, he could still opt against testifying in front of the jury at a later date and his defense team could see it as a test run for how he reacts to tough questioning from the prosecution.
Bankman-Fried’s testimony occurred in a hearing outside the presence of the jury in which he was questioned by his defense team and cross-examined by the prosecution.
The hearing was intended to allow the two legal teams and the judge to determine what, if any, of Bankman-Fried’s testimony involving FTX lawyers would be permissible when the trial officially resumes with him on the stand and the jury present. Prosecutors argued that Bankman-Fried shouldn’t be allowed to suggest that lawyers’ involvement in decision-making showed that he lacked criminal intent.
Judge Kaplan is expected to rule on what testimony will be allowed tomorrow morning. He may also take into account everything heard during Thursday’s hearing without the jury present when he weighs a sentence if Bankman-Fried is found guilty of the fraud and conspiracy charges he faces.
FOX Business’s Kelly O’Grady, Justin Freiman and Daniel Hillsdon and Reuters contributed to this report.