The crypto magnate has testified without the jury present so the judge can decide which parts of the testimony to allow. The case has been called one of the biggest financial frauds in US history.
Sam Bankman-Fried got a test run taking the stand at his New York criminal trial on Thursday, after a judge sent jurors home but let him demonstrate portions of his testimony before deciding what parts of it he'll allow.
The defendant is expected to face the jury on Friday when he testifies about his version of how his multibillion-dollar cryptocurrency empire grew into a giant in the industry and then collapsed, causing billions of dollars in losses that prosecutors blame on his extravagant spending on investments, donations and a lavish lifestyle.
During nearly three hours of testimony on Thursday, Bankman-Fried tried to show that the presence of lawyers when he made decisions about how he spent customers' money led him to think he was acting legally.
Assistant US attorney Danielle Sassoon drilled him with the sort of questions he'll likely face during cross-examination. She frequently got choppy answers in which the crypto mogul seemed unsure of the conversations he'd had with lawyers and unaware of how his companies were functioning.
Staring downward and apologising repeatedly, he would many times rephrase the prosecutor's question, saying “I wouldn't phrase it that way.”
Sassoon pressed Bankman-Fried on why he hired a general counsel who had worked at a company that had a criminal insider trading scandal.
“I did want to find a general counsel who would be comfortable with the business being allowed to take reasonable risks,” the defendant said, adding that he did not want his top lawyer restraining the company from risk-taking.
Later, Sassoon asked if he was aware that FTX's general counsel was using illegal narcotics with the employees, to which Bankman-Fried's lawyer Mark Cohen objected. Judge Lewis A. Kaplan sustained and said he'll rule on Friday.
The crypto magnate was expected to start his testimony before the jury after lunch on Thursday when the judge changed plans, saying he'd prefer to make rulings on what Bankman-Fried can testify about before he starts.
What is Bankman-Fried accused of?
Bankman-Fried, 31, was arrested in the Bahamas last December and brought to the US. That was just a few weeks after FTX collapsed and went bankrupt, as investors ran to withdraw their deposits when reports surfaced about the dim condition of sister company Alameda’s balance sheet.
Prosecutors say the defendant defrauded people and financial institutions who had accounts worth billions of dollars at FTX by stealing massive amounts of their money for his personal use.
With those funds, Bankman-Fried allegedly made risky trades at Alameda, bought luxury beachfront real estate and made over $100 million (€95 million) in political contributions to try to influence government regulation of cryptocurrency.
The crypto mogul denies wrongdoing and has pleaded not guilty. In interviews and social media posts, he has acknowledged making huge mistakes while running FTX but insists he had no criminal intent.
“I didn’t steal funds and I certainly didn’t stash billions away,” he said in a post earlier this year on the online platform Substack.
The trial is expected to end late November.