The Journal. - The Trial of Crypto’s Golden Boy: Bankman-Fried Testifies

Episode Date: October 27, 2023

After a short break, court is back in session as Sam Bankman-Fried takes the stand to testify in his defense. Rachel Humphreys and Caitlin Ostroff were inside the courtroom to hear some of Bankman-Fried’s side of the story and how the prosecution worked to pick it apart.  Further Reading: - What’s Happening Today at the Sam Bankman-Fried Trial  Further Listening: - The Trial of Crypto’s Golden Boy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Caitlin, I honestly, I don't usually say this, I don't know where to start. It's hard to see you at a loss for words, that's usually my thing. Today was the day we've all been waiting for. Sam Bankman-Fried, after much anticipation, he took took the stand and wow how would you describe it? It like it was wild um Bankman-Fried took the stand today and he was questioned by his defense attorneys and the prosecution and the mood in the courtroom was one of tense excitement like everyone has been waiting for this moment and from the moment that the trial started it's been an ongoing question

whether Bankman-Fried would actually testify. Yes, it definitely has been. And that anticipation really goes way back, I would say, to before this trial started, because it's been nearly a year since FTX collapsed and almost a year since Bankman-Fried went on a media tour where he explained his side of the story. But now he's telling his side of the story under oath.

Very different circumstances. Yes. And today was the first time we also saw him be cross-examined by the government. Yeah. I think we need to get back to the studio and talk more about what happened in court today. Yeah, buckle up. From The Journal, this is the trial of crypto's golden boy. I'm Caitlin Ostroff.

And I'm Rachel Humphries. Coming up, Sam Bankman-Fried takes a stand. Listen closely. That's not just paint rolling on a wall. It's artistry. A master painter carefully applying Benjamin Moore Regal Select eggshell with deftly executed strokes. The roller lightly cradled in his hands, applying just the right amount of paint. It's like hearing poetry in motion. Benjamin Moore. See the love. So I'm going to get to the point, Caitlin, because we've been up for a very

long time today. We got up extremely early to line up outside the courthouse because we wanted to get into the courtroom today to see Sam Bankman-Fried testifying. Now, there are only 21 seats for the public in the courtroom, and we did manage to snag two, although it was competitive. Yeah, I think the last kind of slots were filled by 4.30 a.m. this morning. And everyone was really excited again, because it's the day that Bankman-Fried took the stand. But we actually didn't get Bankman Freed until the afternoon. And the morning was pretty uneventful, except for the fact that we lost a juror.

One of the jurors showed up sick. He had been vomiting. And Judge Kaplan was like, I can't risk you infecting the rest of the courtroom. He really wanted to stay on the trial. He really wanted to stay. Must have been very upsetting for him. But Kaplan said, I can't risk you infecting the rest of the courtroom. He really wanted to stay on the trial. He really wanted to stay. It must have been very upsetting for him. But Kaplan said, I can't risk it. But this is why we have five remaining alternates. Yeah. Sorry to that juror who's not only sick, but also wanted to be part of this trial. But yeah, he is gone. And after that uneventful morning where we had thought that Bankman-Fried might

take the stand, and then we went to lunch and we were promised that he would. And for weeks, he's been watching his former colleagues like Caroline Ellison, Nishad Singh, and Gary Wong testify. And today, it was his turn. And it was packed. Every seat and all of the benches were taken up. His parents were there as usual. Judge Kaplan's wife was present and the

mother of one of the main government prosecutors, Danielle Sassoon, was also sitting in the court. Yeah, it's a family affair some days at court. And in the room, you could feel the tension, like it was a little bit fizzy. And so we were all expecting this was going to be the big moment. But then something unexpected happened and the judge told the jury that they could go home. Yeah, I was really surprised. I was starting to wonder slash panic if we weren't actually going to hear from Bankman-Fried at all.

We suddenly thought, wait, the long wait in the line this morning wasn't worth it. Yeah, the heart started racing a little bit. But before Bankman-Fried could testify in front of a jury, there was an issue that the court had to resolve and that was that Bankman-Fried could testify in front of a jury, there was an issue that the court had to resolve. And that was that Bankman-Fried's defense team wants him to testify in part about advice that lawyers at FTX gave to Bankman-Fried. And the government doesn't want that to be heard in court. And so the judge basically said, before I decide whether I'm going to allow this testimony to happen in front of a jury, we're going to kind of do a dry run. And you're going to

do that and the class examination, but without a jury. Yeah. So what we watched this afternoon, Caitlin, was a dress rehearsal. And Bankman-Frie walked in and instead of taking his usual chair in between his lawyers, he went up onto the witness stand. Yeah, and he sat there and I mean, we were in the background, but he looked quite small. He was staring out at the courtroom wearing this dark suit and a lilac tie. And, you know, this is the big, huge courtroom on the 26th floor of the federal courthouse. And we got started with the defense

questioning Bankman-Fried. Now, we've sat in court for weeks hearing witnesses testify that Bankman-Fried directed them to commit fraud. And today we got to hear his rebuttal to that, didn't we? Yeah. And basically, Bankman-Fried put a lot of blame on his lawyers and company policies that they helped create at FTX. And he talked about, you know, not being the CEO of Alameda Research, the trading firm he founded. He was CEO for a while, but he stepped down in 2021. And he said that, you know, because of that, he wasn't aware of big decisions that happened. Yeah. And let's talk about FTX's lawyers for a moment, because the name that Bankman Freed mentioned a lot today was Dan Friedberg. Now, remind us, who is he? Yeah. Dan Friedberg was the former chief regulatory officer at FTX, and he was a lawyer

within the company. He had previously worked for a law firm called Fenwick & West. And Bankman-Fried testified that Friedberg set up the bank account that routed FTX customer deposits to Alameda Research. Yeah, and we should just say a lawyer for Friedberg declined to comment and a spokesperson for Fenwick & West didn't respond to a request for comment. Bankman-Fried also testified that FTX's attorneys were involved in approving loans from Alameda Research to Bankman-Fried and other FTX executives. And he also said that some of those loans were used to make investments. Yeah, and his lawyer, Mark Cohen, at one point asked if Bankman-Fried took comfort in the fact that his lawyers structured those loans. And Bankman Fried said,

quote, yeah, of course. So overall, the defense questioned Bankman Fried for over an hour this afternoon, and it went pretty well for him. I thought he was calm and coherent. Honestly, I've, you know, we've heard Bankman Fried speak a lot before, and I thought this was actually a new side to Bankman Fried that we were seeing. He, you know, came across, as you said, calm and coherent, and he seemed very poised. And then came the prosecution and the cross-examination of him, and we're going to talk about all of that after the break. We'll see you next time. That's a no. But a banana? That's a yes. A nice tan? Sorry, nope. But a box fan? Happily, yes.

A day of sunshine? No. A box of fine wines? Yes. Uber Eats can definitely get you that. Get almost, almost anything delivered with Uber Eats. Order now. Alcohol in select markets.

Product availability may vary by Regency app for details. Imagine you're in Ottawa paddling along the Rideau Canal. Oh. Then ziplining across the Ottawa River between two provinces. Ah! Before cycling along a picturesque pathway. Oh! And seeing your favorite artist at a giant outdoor music festival.

Ah! Adventure awaits in Ottawa. From oh to ah. Plan your Ottawa adventure at ottawatourism.ca. Before we get into what we heard during the cross-examination in Bankman Freed this afternoon, Caitlin, let's talk about the person in charge of grilling him, Danielle Sassoon. She went to Yale Law School and she clerked for Justice Antonin Scalia. And she says that he actually taught her how to fire a pistol. I mean, who wouldn't need to learn that from your...

The life skills you get from your mentors. Yeah, exactly. And she's been really impressive in the courtroom. She's very sharp. She's composed. Yeah, she really pushes for answers. And today, Sassoon really did get her teeth into Bankman-Fried, and she did not let him get away with evasions or dodging her questions. And very early into the cross-examination, Bankman-Fried began to unravel, didn't he? Yeah, that kind of composure he had on the direct questioning

really kind of slipped away. He started going into a lot of ums in his testimony. He was kind of tripping over his words and he wouldn't answer questions directly, which frustrated both Sassoon and Judge Kaplan. And Judge Kaplan at one point said, quote, part of the problem is that the witness has what I'll simply call an interesting way of responding to questions. Yeah, he was doing a lot of work with the word interesting there, I think. that the witness has what I'll simply call an interesting way of responding to questions. Yeah, he was doing a lot of work with the word interesting there, I think. And Sassoon asked Bankman-Fried some very pointed questions today.

At one moment, she asked about the FTX terms of service, and they were shown to Bankman-Fried and the rest of the courtroom. And she asked him very directly, quote, maybe you could point out to us where in this agreement you think Alameda is permitted to spend customer funds. And she offered to scroll down in the dock for him to find it. And Bankman Freed really fumbled. He sat in silence for a minute or two and Sassoon just kind of let him sit there in that silence. And it seemed to take him aback. And when Bankman-Fried answered, he, well, here's what he said from the transcript. Quote, so I should preface this by saying I'm not a lawyer. I'm not giving a legal interpretation of this. I'm just giving as best I can what my

memory is and the parts of this that jibe with that. I, you know, I'm not trying to give a definitive legal ruling on what this does or doesn't you know, I'm not trying to give a definitive legal ruling on what this does or doesn't say. I'm not sure that I would quite answer yes to the question. I love your dedication to reporting this story as accurately as possible. I don't think we need any more. I mean, I found that answer incredibly difficult to follow in the courtroom. And I don't think Danielle Sassoon could follow it that well either. No, she asked the question again after Bankman-Fried finished his response. And when his lawyers opposed her asking the question again, she turned to Judge Kaplan and said, quote, he didn't answer my question, Your Honor.

And this happened a few times, you know, Bankman-Fried avoiding a straight answer and Sassoon pushing him for one. Now, as a reminder, the jury missed all of this. So while this afternoon was not great for Bankman-Fried, it won't actually weigh in the jury's decision. They're going to come back at 9.30 as usual. And we're expecting Bankman-Fried to take the stand again, assuming he wants to do so. Right. And first, Judge Kaplan will have to decide whether Bankman-Fried can talk about advice he got from FTX's lawyers and other topics that we heard about today in this kind of dry run testimony. If Bankman-Fried does testify in front of a jury,

he has a lot to do to improve on the performance we saw today. So I suppose we should probably make another podcast tomorrow. Seems likely that will happen, yes. That's all for today, Friday, October 27th. The Trial of Crypto's Golden Boy is part of The Journal, which is a co-production of Spotify and The Wall Street Journal. I'm Caitlin Ostroth. And I'm Rachel Humphries. This episode was produced by Enrique Perez de la Rosa, and it was edited by Catherine Whelan. Additional reporting from James Finelli, Corinne Ramey, and Vicky Guahuang. Special thanks to Jenna Telesca. Our engineer is Peter Leonard. Our theme music is by So Wiley and remixed by

Peter Leonard. Additional music in this episode by Peter Leonard. Thanks for listening. Check back here for trial updates.