Quote from Heatman on October 29, 2023, 1:57 pm

As the final witness in his defense case, the former FTX CEO placed some of the blame for the crypto exchange’s failure on Gary Wang and Nishad Singh.

The jury overseeing the criminal trial of Sam “SBF” Bankman-Fried listened to the former FTX CEO’s testimony for the first time, which involved largely denying knowledge of fraudulent activities at the crypto exchange.

According to reports from the New York courtroom on Oct. 27, Bankman-Fried suggested Wang, the former chief technology officer at FTX, had been partly responsible for creating the “allow negative” button for Alameda Research. The feature gave the crypto hedge fund the ability to trade more funds than it had available.

 

“At the time, I wasn’t entirely sure what was happened,” Bankman-Fried reportedly said regarding Alameda’s line of credit. “I thought the funds were being held in a bank account, or sent to FTX in stablecoins. If Alameda was keeping it, I figured it would be reflected as a negative number on FTX.”

On former Alameda co-CEOs Caroline Ellison and Sam Trabucco, Bankman-Fried reportedly said they were “a good team” but criticized Ellison’s experience: 

 

“Caroline was a good manager, empathetic. She was not a software developer. She was good at doing research. She had not focused on risk management.”

Bankman-Fried’s claims partly or directly contradict the testimonies offered by Wang and Ellison. Wang took the stand on Oct. 6, saying Bankman-Fried had ordered him and former FTX engineering director Nishad Singh to implement the “allow negative” feature in 2019. Ellison testified that she had wanted to step down as CEO of Alameda, but SBF asked her to stay, citing the risk of rumors about the firm’s financial health.

In earlier testimony, the former FTX CEO reportedly said he knew “basically nothing” about crypto when launching Alameda. Defense lawyer Mark Cohen said he planned to finish his questioning of Bankman-Fried on Oct. 30. After that, attorneys with the Justice Department will have the opportunity for cross-examination in front of the jury.

Bankman-Fried’s criminal trial started on Oct. 3 and is expected to conclude within a few business days, with prosecutors and defense lawyers delivering closing arguments. After any motions from the U.S. government or SBF’s lawyers, or other court housekeeping matters, the jury will then likely deliberate on the seven charges.

 

SBF is expected to face five more criminal counts in a second trial scheduled in March 2024. He has pleaded not guilty to all charges in both cases.