Unchained - SBF Trial, Day 13: Before Judge, Former FTX CEO Sam Bankman-Fried Gives Few Straight Answers

Starting point is 00:00:00 Hi everyone, thanks for tuning into the Unchained Recap of the SPF trial for October 26th, Day 13. On Thursday, in a sort of mock trial known as an evidentiary hearing, Sam Bankman-Free took the stand for the first time in his criminal case. However, the jury had been sent home, so his only audience was the judge in the packed courtroom. The purpose of the hearing, which took place after the defense's two other witnesses, was for the judge to decide whether to permit the defense to allow certain lines of testimony. However, it also gave a sneak preview of how SPF would perform in front of the jury, and so far it seems that cross-examination could prove challenging for him. Under very pointed questioning from Assistant U.S. Attorney Danielle Sassoon, SBF gave wordy answers in run-on sentences with multiple clauses and caveats, or responded by saying he didn't know or recall. Oftentimes

Starting point is 00:00:55 he looked down. He repeatedly apologized or said he was sorry. The contrast between her specific and narrow questions, and his verbose responses at times made him seem evasive. At one point, Judge Kaplan got up and walked around behind his chair and later said of SBF, quote, the witness has what I'll simply call an interesting way of responding to questions. For instance, while asking whether he believed that Alameda was allowed to borrow FTX customer funds and withdraw them from the exchange, he said, quote, I wouldn't phrase it that way, but I think that the answer to the question I understand you to be trying to ask is yes. At this point, Sasssoon requested that he looked at the payment agent agreement between Alameda and FTCS and asked him to show where the agreement said that Alameda

Starting point is 00:01:43 could use FtX customer funds. There was a long silence, which coined us time to be two minutes in the courtroom. Bankman-Fried's response, which took up an entire page of the court transcript, began, 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 jive with that, I, 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 as you most recently phrased it. I'm going to try as best as I can to give the answer that I believe, which is that the, as at least as I remember understanding it at the time, FTCS either itself or I think as actually

Starting point is 00:02:27 happened without FTX as an intermediary, customers fee-up funds would be sent to Alameda bank accounts. FTX would retain effectively a debt from Alameda for those and a in the lien section here. That was just a portion of his response. But when he finished, Sassoon asked the question again. When the defense objected, she pointed out he had not answered her question, so it was overruled. At another point when Sassoon asked of his understanding of why, it meant to safeguard assets included not embezzling customer funds, his lawyer, Mark Cohen, objected. And though the objection was sustained, Bankman Fried answered anyway, saying, quote,

Starting point is 00:03:10 yes, it would include that. People in the courtroom laughed, and Cohen pointed out that he didn't have to answer, and that his four weeks in the courtroom should have taught him that. SPS responded, quote, I felt the need to answer that one. It's unclear how if he were to make these kinds of statements in front of the jury, it would affect their deliberations, and if he's convicted, how they would impact a sentence. Earlier in the examination, Cohen appeared to be trying to train him to answer briefly, and so would sometimes cut off his answers to get him to respond only to the question. However, during the cross-examination, it appeared Bankman Freed had not gotten the memo. SBF faced other questions from Sassoon regarding FTC's data retention policy and his use of

Starting point is 00:03:55 auto-deletion on communication apps such as Signal. Bankman-Freed said the policy was that informal chatter, which occurred either verbally or on Signal, an end-to-end encryption chat app, could be deleted, whereas sensitive information, like customer passwords or formal business decisions, could not be deleted. However, when asked for a copy of the data return policy, Bankman-Freed said that he did not have one, because the defense has been unable to serve FTCs the subpoenas that requested. Sassoon also asked whether the data retention policy was followed when then Alameda CEO Caroline Ellison sent him the spreadsheet with seven versions of the balance sheet via signal chat. He said it was consistent with the policy, explaining that since, quote,

Starting point is 00:04:43 a rough draft of that was still being workshoped, I would not have yet considered a formal business document that had to be separately memorialized, nor would I have considered the sending of that to one other person so they could look it over to be a formal business decision. Similarly, he said he also didn't recall having a conversation with Caroline, Nashad, or Gary, about a $13 billion hole at FTCS. However, SVF did say in November 2022 that he turned off the auto-delete feature on Signal, quote, for a variety of reasons, but including because what had been communicated to me, what I understood to be coming from regulators. One of the moments when he seemed to dance around Sassoon's line of questioning was in regards to the bank account for North Dimension, a subsidiary of Alameda

Starting point is 00:05:27 research, which prosecutors allege was used to process deposits from FTX customers into Alameda's bank accounts. While so soon asked who decided to establish the entity North Dimension or use its bank account, he said he didn't recall telling then-chief regulatory officer Dan Freedberg to set it up. She asked multiple questions about who chose the name, why the description in its bank application was that it was a proprietary trading firm, when he signed the payment agent agreement, whether he signed it a year or two after the effective date. He kept responding variations of, quote, I don't know or I don't recall. When Sassoon asked Bankman Freed about conversations with his lawyers about the permissibility of using North Dimension to receive

Starting point is 00:06:09 customer funds, Bankman Fried replied with such an unclear long response that Judge Kaplan interjected by first attempting to clarify the defendant's answer. Then repeat, repeating Sassoon's question, and finally saying, quote, listen to the question and answer the question directly. Banking Fried ended up expressing that he didn't know initially that North Dimensions bank account would receive FDX customer deposits. Other lines of questioning that were previewed in the evidentiary hearing involved the presence of counsel defense, namely having a lawyer present or having them draw of the documentation used in the alleged crime. However, Judge Kaplan lankened this defense to someone who has a lawyer draw-up documents for a transaction, whose purpose

Starting point is 00:06:50 was money laundering without revealing that to the lawyer. He did add at the end that he wasn't saying anything about SVF's guilt or innocence. Still, it gave a hint that Judge Kaplan may be disinclined to allow the defense to use that line of questioning. Friday morning, Judge Kaplan will announce his decision on what parts of McPenfried's testimony are admissible in front of the jury. The defense brought in two other witnesses Thursday morning, after the prosecution rested. First, a Bahamian lawyer that SPF had retained on November 12th, the day after the bankruptcy, and a financial consultant who analyzed a snapshot of the FDX database. However, in its cross-examination, the government got across that the Bahamian lawyer was not involved with the FTX until after the alleged crimes,

Starting point is 00:07:35 and that the financial consultant's analysis was of the FTC's database, but was not cross-checked against actual bank balances or actual crypto assets held in FTCS wallets using blockchain analysis. That made the witnesses' testimonies seem rather moot. Tomorrow, SBF takes the stand again, this time in front of the jury. Judge Kaplan said, quote, we are in the home stretch, and he expects the trial to finish by early next week. Thanks for tuning in.

Unchained - SBF Trial, Day 13: Before Judge, Former FTX CEO Sam Bankman-Fried Gives Few Straight Answers

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