Sam Bankman-Fried blames top lieutenants for FTX troubles in second day of testimony in criminal trial
FTX founder Sam Bankman-Fried leaves US Federal Court in New York City on March 30, 2023.
Kyle Mazza | Anadolu Agency | Getty Images
FTX founder Sam Bankman-Fried resumed his testimony on Monday, and used his time on the stand to blame his former close friends and colleagues for the downfall of his crypto empire.
As his criminal fraud trial enters what’s expected to be its last week, Bankman-Fried is trying to undermine the prosecution’s key witnesses, who placed the FTX founder at the center of the crypto exchange’s misuse of customer funds and its ultimate demise.
Bankman-Fried, 31, faces a potential life sentence if convicted of fraud charges stemming from the collapse in November of FTX and sister hedge fund Alameda Research. He has pleaded not guilty.
On Monday, Mark Cohen, Bankman-Fried’s lead defense attorney, allowed his client to take aim at Caroline Ellison, who ran Alameda and is also Bankman-Fried’s ex-girlfriend. The primary theme was Bankman-Fried’s concern, expressed in conversations between June and September 2022, about whether Alameda was properly hedged given the crash in crypto prices. He said he was notably concerned about the decline in Alameda’s net asset value from $40 billion the prior year to $10 billion.
The market had already dropped 70% and if it fell another 50%, he was afraid the firm would be insolvent, Bankman-Fried told the jury.
“She started crying,” Bankman-Fried said, regarding Ellison’s reaction when he told her that. “She agreed.”
Ellison, who took a plea deal and is cooperating with the government, also said Alameda shouldn’t have made some venture investments, Bankman-Fried testified. He said she offered to step down and said he told her that this wasn’t about blame or past failures, but that Alameda should urgently be putting on hedges. He said he hadn’t intended for her to resign.
In September, he checked in again with Ellison about the hedging activity, Bankman-Fried testified. She said Alameda had hedged. He asked about the scale of the trades and said his instinct was that they could have been twice the size. After Ellison sent him spreadsheets about the trades, she agreed there was more room to hedge and she did so, Bankman-Fried said.
Caroline Ellison, former chief executive officer of Alameda Research LLC, arrives to court in New York, US, on Thursday, Oct. 12, 2023.
Bloomberg | Bloomberg | Getty Images
Bankman-Fried’s testimony on Monday follows his initial appearance on the stand at the end of last week. He told jurors then that he didn’t commit fraud, and that he thought the crypto exchange’s outside expenditures, like paying for the naming rights at a sports arena and its venture investments, came out of company profits.
The majority of the four-week trial so far has been highlighted by prosecutors walking former leaders of Bankman-Fried’s businesses through specific actions taken by their boss that resulted in clients losing billions of dollars last year. Several of the witnesses have pleaded guilty to multiple charges and are cooperating with the government.
Bad hedging, troubled personal loans
As questioning continued on Monday, Bankman-Fried said his analysis suggested that net asset value at Alameda was still $10 billion.
The defense then walked Bankman-Fried through activities from Nov. 1 to Nov. 11, covering the period of FTX’s rapid collapse and its immediate aftermath.
Bankman-Fried said Gary Wang, a co-founder who previously testified on behalf of the prosecution, told him that the backlog of withdrawal demands had to do with a backlog of bitcoin withdrawals and that he was making a fix in the code.
FTX’s engineering director Nishad Singh, who was also called as a government witness, had a problematic personal financial situation, Bankman-Fried testified. He said Singh was suicidal and had a therapist on call 24/7 to watch over him. Bankman-Fried said he was trying to comfort him about his loans and expenses and to prevent him from hurting himself.
Bankman-Fried then blamed Can Sun, who was FTX’s general counsel. He said they had a talk before Bankman-Fried’s follow-up call with investment fund Apollo. The spreadsheet provided to Apollo did have the $8 billion liability included, Bankman-Fried said. He told the court that he spoke with Sun and told Apollo about his best understanding of the framework around the fiat account.
In describing the swift downfall of FTX, Bankman-Fried said that customer withdrawals had quickly increased from $50 million a day to $1 billion a day. He said it was like a run on the bank and he was very concerned since the only way to withdraw all customer funds was to liquidate every open margin trade.
Bankman-Fried defended his tweets that were designed to cool customer concerns.
FTX founder Sam Bankman-Fried is questioned by defense lawyer Mark Cohen as he testifies in his fraud trial over the collapse of the bankrupt cryptocurrency exchange, at federal court in New York City, U.S., October 30, 2023 in this courtroom sketch.
Jane Rosenberg | Reuters
Regarding the “assets are fine” tweet he wrote during the panic, he said he thought Alameda’s net asset value was roughly $10 billion and that FTX didn’t have a hole in its balance sheet.
“My view was the exchange was OK and there was no holes in the assets,” he told the court.
On Nov. 8, he realized that Alameda was going to need to be shut down. He had calls with potential investors to try and secure “significant” outside capital due to the run on FTX.
After the defense wrapped up its questioning of Bankman-Fried, the focus turned back to the prosecution. Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities & Commodities Fraud Section and now a trial partner in Chicago with Bryan Cave Leighton Paisner, said he expects the cross-examination to be “devastating given SBF’s frequent prior statements about the issues in the case.”
“What we’ve heard so far has been the direct examination — the defense telling its story,” Mariotti told CNBC. “There were no big twists or shockers. The defense doesn’t appear to have an ace up its sleeve.”
Following the morning break, Assistant U.S. Attorney Danielle Sassoon started cross-examination of the defendant.
Bankman-Fried gave a number of very brief answers to questions, frequently saying “yep” or “I don’t recall.” In answering the question as to whether Bankman-Fried had marketed FTX’s global exchange as safe compared to other exchanges, he said “I’m not sure.”
In some instances, his answers were directly followed with a government exhibit, such as a tweet, interview transcript, congressional testimony or email, intended to dispute his answer.
For example, Sassoon asked Bankman-Fried if he assured people that Alameda played by the same rules as others on the FTX exchange. Bankman-Fried said he wasn’t sure. The government followed by showing a tweet from him directly addressing the topic along with an email in which he wrote that Alameda’s account is like everyone else’s.
Another notable disclosure was around Alameda being allowed to have a negative account balance. Bankman-Fried was asked if any other users were able to pledge outside investments as collateral. He said Crypto Lotus was allowed to do it to the tune of $100 million, but that information wasn’t disclosed publicly.
Sassoon asked Bankman Fried, “Would you agree you know how to tell a good story?”
He replied, “I don’t know. It depends on what metrics you use.”
Sasoon then got into the stories he told investors to raise more than $1 billion, including telling them about how FTX used automated liquidation protocols that set it apart.
Sasoon also brought up Bankman-Fried’s past profane comments about regulators. She referenced the direct messages that were published by Vox in mid-November. In one case, the reporter mentioned to Bankman-Fried that he’s said in the past he wanted to make good regulations, and asked if that was just public relations. His text response was, “Yeah, Just PR,” followed by “F— regulators.”
Bankman-Fried was asked to read that last part out loud to the court. And he admitted to referring to a subset of crypto twitter as “dumb motherf——.”
If you are having suicidal thoughts or are in distress, contact the Suicide & Crisis Lifeline at 988 for support and assistance from a trained counselor.
— CNBC’s Dawn Giel contributed to this report
If Mayor Adams gets his way, New York City will institute a new speed limit on electric bicycles, reducing the cap to just 15 mph (24.1 km/h) from the previous e-bike speed limit of 25 mph (40 km/h). It’s a move that is ostensibly meant to protect New Yorkers, but which experts have said will actually result in risking more lives.
It’s a prime example of doing more harm than good, says Michael Replogle, the former policy director for NYC’s Department of Transportation and an internationally recognized expert in the field of sustainable transportation.
The issue is that the reduced speed limit means that slower e-bikes will constantly come into conflict with higher speed traffic, routinely being passed by multi-ton cars and SUVs.
Despite the 25 mph (40 km/h) city-wide speed limit for cars in NYC, the de facto speed limit is really 35 mph (56 km/h), which is the speed at which traffic cameras begin to record infractions and issue citations.
Previously, electric bicycles were permitted to travel at speeds up to 25 mph, helping them more closely match the speed of vehicular traffic and thus reduce the conflict rate between vulnerable cyclists and dangerously large and heavy vehicles. “I can tell you it feels much safer as a cyclist if you’re going close to the speed of the traffic than if you’re going half the speed of traffic,” Replogle explained.
“I strongly oppose the proposed rule to limit e-bikes to a 15 mph speed limit. It is an ill-considered idea to improve safety which will be counterproductive,” Replogle continued, according to NYC Streetsblog. “It is also likely to put New Yorkers at risk of a criminal record or entrapment in President Trump’s immigration dragnet.”
A large portion of the e-bike riders in NYC are immigrants who work as food delivery riders or bike couriers who are depended upon by thousands of New Yorkers every day.
“It’s a war on bikes, it’s a war on immigrants, and it undermines traffic safety,” Replogle added. “I think it’s Adams basically trying to mount a populist assault on cycling.”
Despite e-bike accidents being cited as the supposed reason for the city’s reduced bike speed limit, cars account for virtually all of NYC’s traffic-related injuries and deaths.
Electrek’s Take
I know this might come as a shock, but the experts here are correct and the politicians are wrong.
Reducing e-bike speed limits won’t make things safer; it’s just more likely to get people killed due to increased car crashes with cyclists.
This whole issue came about because a few pearl-clutching New Yorkers with money and power saw an e-bike whizz past them closer than they were comfortable with, and wanted it to stop. This has nothing to do with protecting people’s lives. If that were the primary goal, then they’d limit cars to 15 mph, not e-bikes. Only one of the two is a highly effective killing machine, and I’ll give you a hint – it’s not the one that weighs as much as a small child.
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The sun has set on a frantic day of scrutineering at this year’s Electrek Formula Sun Grand Prix (FSGP), as teams scramble to qualify for a spot on the starting line tomorrow morning. Electrek FSGP 2025 is shaping up to be one of the event’s most attended ever, thanks to a strong showing of first-time and returning schools. But that also means new and unproven vehicles on the track.
Today, I walked through a couple of bays and talked with a few of the teams able to spare a minute; almost all of them were debuting completely new cars that were years in the making. Building a solar car is no easy feat. It’s not just the engineering and technical know-how that’s often a hurdle for them; it’s more often monetary. However, one of the things that makes this event so special is the camaraderie and collaboration that happen behind the scenes.
Northwestern University is back with a completely new car this season, its eighth since the team’s original inception in 1997 during the GM Sunrayce days. Its motor controller, which is responsible for managing the flow of power from the batteries to the motor, was given to them by the Stanford team. Stanford had extras and could spare one for Northwestern, which needed a replacement. It doesn’t stop there. Two members of the Northwestern team (Shannon and Fiona) told me four other teams helped them with a serious tire replacement around 1 a.m. Wednesday morning, saving them from missing important parts of scrutineering.
This is also an exciting year for the West Virginia team, which is celebrating its 35th anniversary as a solar car team, making them one of the oldest teams on the track. With age comes wisdom though: WV is competing again this year with its single-occupant vehicle, Sunseeker. The team ran into issues after last year’s American Solar Challenge (ASC) cross-country event when the vehicle’s control arm, an important part of the suspension that connects the wheels to the chassis, broke. They tell me this year they’re back with a completely redesigned control arm made of both aluminum and steel. Thank you, Hayley, John, and Izzy, for taking the time to talk.
We’re also seeing new builds this year from the University of Florida, the University of Puerto Rico, NC State, and UC Irvine. Believe it or not, the latter team has never competed in an American Solar Challenge/Formula Sun Grand Prix. This is their first year. UC Irvine doesn’t expect to be on the starting line tomorrow but hopes to be on the track soon after.
On the other hand, we have tried-and-proven cars like my personal favorite, Polytechnique Montréal’s Esteban, which undergoes minor improvements each year. I talked a little bit with this team today, and they told me the car’s motor was dropped, disassembled, and cleaned in preparation for the event. Polytechnique Montréal has passed scrutineering and will appear on the starting line tomorrow.
Teams that haven’t wrapped up scrutineering in the last three days can still complete it, though doing so will eat into time on track.
Last year, École de Technologie Supérieure (ETS) and Polytechnique Montreal took first place in the Single-Occupant Vehicle (SOV) and Multi-Occupant Vehicle (MOV) classes, respectively. There’s something in the water in Canada.
You can learn more about the different classes and the specific rules here.
I’ll continue to post more updates as the event continues!
2025 Electrek FSGP schedule
The 2025 Electrek FSGP will again be held at the National Corvette Museum Motorsports Park in Bowling Green, Kentucky, which, interestingly enough, General Motors occasionally uses for Corvette testing and development. A bit of a full-circle moment being so close to the company that started it all.
The event is open to the public and FREE to attend. Come see the solar car race up close!
Racing starts on July 3 from 10am to 6pm CT and continues through July 5 from 9am to 5pm CT.
July 2 (Wednesday)
- 9am–7pm: Scrutineering
- 10am–8pm: Altair Challenge
July 3 (Thursday)
- 10am–12pm: Altair Challenge
- 10am–6pm: Hot Track
- 6pm–8pm: Evening Charging
July 4 (Friday)
- 7am–9am: Morning Charging
- 9am–5pm: Hot Track
- 5pm–8pm: Evening Charging
July 5 (Saturday)
- 7pm: Awards Ceremony
- 7am–9am: Morning Charging
- 9am–5pm: Hot Track
2025 Electrek FSGP teams
If you’re interested in joining us in sponsoring these events, please get in touch here!
Featured image via Cora Kennedy for Electrek FSGP/ASC.
Note: The Formula Sun Grand Prix is not in any way associated or affiliated with the Formula 1 companies, FORMULA 1 racing, or the FIA Formula One World Championship.
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Tesla’s Q2 results are in, and they are way, way down from Q2 of 2024. At the same time, Nissan seems to be in serious trouble and the first-ever all-electric Dodge muscle car is getting recalled because its dumb engine noises are the wrong kind of dumb engine noises. All this and more on today’s deeply troubled episode of Quick Charge!
We’ve also got an awesome article from Micah Toll about a hitherto unexplored genre of electric lawn equipment, a $440 million mining equipment deal, and a list of incompetent, corrupt, and stupid politicians who voted away their constituents’ futures to line their pockets.
Source Links
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New episodes of Quick Charge are recorded, usually, Monday through Thursday (and sometimes Sunday). We’ll be posting bonus audio content from time to time as well, so be sure to follow and subscribe so you don’t miss a minute of Electrek’s high-voltage daily news.
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Drop us a line at tips@electrek.co. You can also rate us on Apple Podcasts and Spotify, or recommend us in Overcast to help more people discover the show.
If you’re considering going solar, it’s always a good idea to get quotes from a few installers. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. It has hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use, and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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