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
It looks like the Batmobile from the future. Mercedes unveiled a stunning new Vision Iconic EV concept, promising to “stand out in a sea of sameness.” The show car blends the Golden Era of auto design with advanced new tech and features like Solar Paint and Level 4 self-driving capabilities.
Meet the Mercedes Vision Iconic EV concept
The Vision Iconic offers a glimpse of the luxury brand’s new era of design. It’s no secret by now that legacy automakers are struggling to keep up with the influx of new, more advanced, and oftentimes better-looking EVs coming out of China, South Korea, and other regions.
Mercedes is drawing inspiration from its past icons to revamp the brand with a fresh new look. The first thing you’ll notice is the redesigned grille.
The updated grille design was first shown on the new GLC in August. After introducing a closed-off grille design on its first electric vehicles, Mercedes is going back to a more traditional luxury style with a massive, bold new look.
Mercedes said the new front face, showcased on the Vision Iconic, enables the brand to “stand out from the sea of sameness.” And that it does. The concept builds on it with an illuminated upright star on the bonnet.
The electric coupe is inspired by the Golden Era of auto design, the 1930s. It draws inspiration from Mercedes’ icons, like the 300 SL and 600 Pullman.
According to Mercedes’ chief designer, Gorden Wagener, the Vision Iconic is “more than just an automobile – it is a sculpture in motion, a homage to timeless elegance, and a statement for the future.”
The concept is more than just a beautiful show car. It’s also packed with Mercedes’ most advanced tech and features.
An entirely new driving experience
Inside, the Vision Iconic is defined by “lounge-like comfort” and an entirely new digital experience. The instrument panel is a floating glass structure Mercedes calls “Zeppelin.”
Once you open the door, the instrument cluster comes to life with a screen stretching pillar to pillar. At the center, one of the four clocks is shaped like the Mercedes’ logo and acts as an AI assistant. The massive four-spoke steering wheel almost looks like something you’d find on a sailboat.
With steer-by-wire, Mercedes claims the Vision Iconic offers an entirely new steering experience with rear axle steering.
Mercedes said it’s also looking into using solar modules applied to the body of an EV to draw energy from the sun and extend the driving range.
According to Mercedes, an area of 11 square meters, or about the size of a mid-size SUV, could produce energy for up to 12,000 km (7,456 miles) a year in ideal conditions. The coating can be easily recycled and does not contain any rare earths or silicon.
Mercedes said the solar cells have a high efficiency of 20% and generate energy constantly, even if the vehicle is off.
And that’s not all of it. The company is also advancing neuromorphic computing, which Mercedes said “has the potential to reduce the energy requirements for data processing in autonomous driving by 90 percent compared to today’s systems.”
The Vision Iconic will come with Level 2 autonomous driving capabilities, but on the highway, Level 4 autonomy is activated.
Will we ever see the Vision Iconic on the road? Don’t get your hopes up, as it’s just a show car. However, you can expect to see several elements and new tech make their way into upcoming Mercedes models.
What do you think of the electric show car? A timeless design? Or should Mercedes head back to the drawing board yet again? Let us know your thoughts in the comments.
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Aptera reports having secured access to $75 million in funding to bring its solar car to production as it is set to go public later this week.
As we reported last week, Aptera is about to go public on the NASDAQ this week, but there were, and still are, some concerns about their approach.
The company is doing a direct listing rather than an IPO or a SPAC deal, which means that Aptera doesn’t secure any funding from going public.
Generally, a direct listing serves as an exit strategy for existing shareholders. In the case of Aptera, there are numerous shareholders, as the majority of funding comes from crowdfunding campaigns.
One of the biggest red flags is that company insiders, especially the co-CEOs, had no lockup period with the listing.
Furthermore, Aptera disclosed that it had only $13 million left by the end of June, as stated in its SEC filing. That’s not enough money to bring its solar car to production, and again, the direct listing is not getting any money into the company.
However, two days before going public on the NASDAQ, Aptera is now announcing that it secured “up to $75 million in equity financing”:
Aptera Motors Corp. (“Aptera”), the solar mobility company focused on developing highly efficient vehicles, today announced it has entered into share purchase agreement providing for up to $75 million of committed equity financing (the “ELOC”) with New Circle Principal Investments LLC, an affiliate of leading growth-focused investor New Circle Capital.
In short, Aptera will be able to sell shares New Circle Capital, which appears to be a small boutique firm.
Aptera says that it will use the proceeds to bring its solar car to production:
Proceeds from the ELOC are expected to support production readiness, including tooling and other activities required to bring Aptera’s Launch Edition vehicles to market. This structure gives Aptera the flexibility to raise capital in stages over time, aligning with the Company’s strategic priorities and market opportunities.
The company had aimed to bring its vehicle to production this year, but that goal was delayed due to ongoing funding issues throughout the year.
Electrek’s Take
This is relatively good news. As I mentioned last week, Aptera’s only chance is to raise money after the listing. However, the ability to do so without unreasonable dilution would only occur if the price holds next week.
For that to happen, Aptera needs insider and crowdfunders not to sell, and that’s a tall order.
Perhaps this announcement that Aptera can secure the funding to bring the vehicle to production encourages people to stay put. New Circle Capital buys the shares from Aptera, hoping that the stock gains momentum as the company reaches production.
We will see, but a lot of things need to go right for this to happen, and only a few need to go wrong for the whole thing to come crumbling.
I am hoping for the best as I’d love to see Aptera’s hyper-efficient EVs on the road.
While solar cars are cool, the most efficient way to power an electric car with solar energy is to have solar panels on your home. If you are in the US, the next few weeks are likely the last opportunity to secure a solar installation and take advantage of the federal tax credit, which is set to expire.
If you want to make sure you’re finding a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage. EnergySage is a free service that makes it easy for you to go solar – whether you’re a homeowner or renter. They have hundreds of pre-vetted solar installers competing for your business, including those who install Tesla Solar and Powerwalls, ensuring you get high-quality solutions and save 20 to 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 you 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. The company is currently working double time to help people secure solar installations before the end of the tax credit.
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President Donald Trump could still slap China with 100% tariffs on Nov. 1 or sooner, depending on Beijing’s next move in a dispute over rare earths, U.S. Trade Representative Jamieson Greer told CNBC Tuesday.
“A lot depends on what the Chinese do,” Greer told CNBC in an interview. “They are the ones who have chosen to make this major escalation.”
China announced sweeping restrictions on rare earth exports last week that would disrupt U.S. defense, technology, semiconductor and automobile industries if implemented.
Trump retaliated with the threat of massive tariffs that would effectively shut down trade between the world’s two largest economies. But the president appeared to dial back his rhetoric earlier this week, saying saying “it will all be fine” with China.
“We can’t have a situation where the Chinese keep this regime in place, where they want to have veto power over the world’s high tech supply chains,” the U.S. trade representative said.
Trump, Xi scheduled to meet
The restrictions took the White House by surprise ahead of an expected meeting between Trump and President Xi Jinping at the Asia-Pacific Economic Cooperation summit later this month in Seoul, South Korea.
Trump and Xi are still scheduled to meet, Greer said, though he suggested those plans are subject to change depending on how the situation develops.
“Whether it will go through or not, I don’t want to precommit either ourselves or the Chinese,” Greer said of the meeting. “But I think it makes sense for people to talk when they can.”
U.S. and Chinese officials at the senior staff level spoke as recently as Monday in Washington about the rare earth dispute, Greer said.
“We think we’ll be able to work through it,” Greer said of the trade dispute.
‘We want to work with the Chinese’
The U.S. stock market erased about $2 trillion in value on Friday in response to Trump’s tariff threat against China. The White House watches the market, Greer said, but the administration is focused on building long-term economic success by bringing supply chains back to the U.S., and reducing dependence on China.
“We want to make sure that the market is also responding to appropriate information,” Greer said. “You’ve seen the market settle out this week as they realize that the president and his team, we want to work with the Chinese.”
Rare earths are critical minerals used to manufacture magnets, which are key inputs in U.S. weapons platforms, electric vehicles, the semiconductor industry and other applications.
China controls about 60% of rare earth mining and more than 90% of refining worldwide, according to the International Energy Agency. The U.S. is dependent on China for roughly 70% of its rare earth imports, according to the U.S. Geological Survey.
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