During his ongoing criminal trial, Sam Bankman-Fried (SBF) faced some tough questions from New York prosecutors today (Monday). The once prominent figure in the crypto industry found himself cross-examined on his past statements and admissions, including derogatory remarks about certain crypto investors and comments on crypto regulation.
The Financial Times reported that during the cross-examination, prosecutors presented SBF with tweets, media interviews, and sworn testimony, which he claimed were unrelated to the operations of the defunct crypto exchange.
Inconsistent Claims
These statements stood in stark contrast to the eventual collapse of the crypto exchange, which resulted in customers facing a staggering $8 billion in missing deposits. Notably, SBF openly made derogatory comments about FTX's investors. He also admitted to downplaying his support for crypto regulation dismissing it as mere "PR" shortly before his arrest in December.
SBF's inconsistent claims further deepened the mystery surrounding FTX's collapse. In an interview, he had claimed not to be "involved at all" in the management of FTX's affiliated hedge fund, Alameda Research. However, he later acknowledged his participation in discussions about the firm's trading strategy.
Furthermore, during the trial, it came to light that just days before the collapse of FTX, SBF was under the impression that the exchange had a solid balance sheet with no deficits. In November, he even tweeted that FTX was in good shape. However, in reality, it was teetering on the edge of a liquidity crisis as customers were withdrawing billions of dollars daily. The doubts raised by the Founder of the rival exchange, Binance, exacerbated the situation.
Cross-Examination Unveils Troubling Statements
SBF's testimony suggested that he entrusted Caroline Ellison, who managed Alameda Research, to hedge the trading firm's positions as the balance sheet deteriorated in the summer of 2022. However, when questioned in September, he felt that the company "could have hedged twice as much," raising questions about his decision-making.
In a separate report by CNN, Assistant US Attorney Danielle Sassoon asked questions focusing on the contrast between SBF's role as the CEO of FTX and the statements he made publicly to the media and Congress. It became clear that the prosecution was determined to expose any inconsistencies.
Sassoon asked SBF: "You called the shots as CEO, didn't you?" The response was notably vague: "I called some of them." This answer hinted at the complexity of decision-making within FTX and suggested that not all decisions were within the CEO's sole discretion.
Sassoon presented a compelling argument that FTX's sister company, Alameda Research, enjoyed privileges not extended to other accounts on the FTX platform. Before the court recessed, Sassoon probed further into the issue of Alameda's special privileges.
This article was written by Jared Kirui at www.financemagnates.com.
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