Sam Bankman-Fried defense rests in criminal trial, closing arguments kick off Wednesday
FTX Founder Sam Bankman-Fried leaves Manhattan Federal Court after a court appearance on June 15, 2023 in New York City.
Michael M. Santiago | Getty Images
FTX founder Sam Bankman-Fried’s fate is now in the hands of the 12 jurors who have spent the past four weeks sitting just feet away from the former crypto billionaire in a lower Manhattan courtroom.
After three days on the stand, Bankman-Fried’s testimony wrapped up Tuesday morning and the defense rested its case shortly before noon. The jury was sent home, so the judge can decide in the charging instructions what’s admissible before jurors begin their deliberations. Closing arguments will start on Wednesday.
Bankman-Fried, 31, faces a potential life sentence if convicted on fraud charges tied to the collapse of crypto exchange FTX and sister hedge fund Alameda Research late last year. He pleaded not guilty.
Tuesday’s session began with cross-examination from Assistant U.S. Attorney Danielle Sassoon, who has led the prosecution during the trial. Sassoon began by questioning Bankman-Fried’s relationship with Philip Davis, prime minister of the Bahamas, which was home to FTX and Bankman-Fried’s inner circle.
Bankman-Fried was asked if he’d proposed paying off more than $11 billion in national debt for the Bahamas, and he responded by saying he didn’t remember discussing the matter. Sassoon also mentioned how Bankman-Fried would joke that Ryan Salame, a former FTX executive, was effectively a member of the Bahamian government.
Sassoon asked about the prime minister’s visit to Miami and attending a Heat basketball game at the arena that carried the FTX name, and whether he and his wife were given courtside seats. She also mentioned FTX’s opening up customer withdrawals only for Bahamians. As with much of the questioning by prosecutors, Bankman-Fried said little, didn’t admit to anything and frequently responded by saying he didn’t know.
The FTX Arena in downtown Miami, Florida on Friday, June 4, 2021.
Matias J. Ocner | Miami Herald | Tribune News Service | Getty Images
Sassoon again asked Bankman-Fried about the key issue in the case — the $8 billion hole in FTX’s balance sheet. Bankman-Fried said he “deeply” regretted not taking a deeper look at it. When he asked his deputies about the hole, Bankman-Fried testified that they “told me they were busy and I should stop asking questions because it was distracting.”
With no other significant witnesses representing the defense, Bankman-Fried is relying on his ability to convince the jury that he wasn’t intentionally siphoning customer funds out of FTX to use for a host of other purposes, including covering Alameda’s losses, paying for his luxurious condo in the Bahamas, venture investments and the naming rights for the Miami arena.
Encouraging bad regulation
In his first two days on the stand, Bankman-Fried told the court that he didn’t defraud anyone or take customer funds. He testified that one central problem was a lack of a risk management team, which led to “significant oversights.” Beyond that, he spread the blame around to several of his former friends and top lieutenants, some of whom testified against him earlier as witnesses for the prosecution.
Sassoon ended her questioning on Tuesday at about 10:40 a.m. Mark Cohen, Bankman-Fried’s defense attorney, then spent a short amount of time with his redirect examination.
Cohen revisited articles that stemmed from Bankman-Fried’s press interviews after Nov. 11. Bankman-Fried estimated he gave around 50 interviews and didn’t have access to any internal documents. He said he didn’t remember every statement he made to journalists.
One notable comment he made was to Vox in mid-November. In a text exchange with the reporter, Bankman-Fried wrote “F— regulators.” Bankman-Fried testified that he was growing frustrated with regulators and skeptical about what they were doing. He said he felt all the work he’d done might have encouraged bad regulation as much as good regulation.
After the mid-morning break, Cohen asked Bankman-Fried to clarify a few things. He asked why the defendant hadn’t fired anyone when the $8 billion liability had been discovered. Bankman-Fried said he wasn’t particularly interested in blaming others and was instead focused on how to get things turned around and moving forward.
FTX founder Sam Bankman-Fried is questioned by prosecutor Danielle Sassoon (not seen) during his fraud trial over the collapse of the bankrupt cryptocurrency exchange at federal court in New York City, U.S., October 31, 2023 in this courtroom sketch.
Jane Rosenberg | Reuters
Regarding a $65 billion line of credit to Alameda, Bankman-Fried said that was the maximum withdrawal size but it was never near that amount. He said it was typically around $2 billion.
Finally, following issues raised by the prosecution about Bankman-Fried’s excessive use of a private jet, the defendant said he thought it was a valid expense as CEO. He testified that he wasn’t using it for personal travel, and that it was logistically difficult to fly from the Bahamas to Washington, D.C., where he estimated he spent more than a month in total.
With the jury gone for the rest of the day and closing arguments set to begin on Wednesday, Bankman-Fried is now out of opportunities to convince the jurors that he doesn’t deserve a lengthy prison sentence. Deliberations will start after closing arguments.
— CNBC’s Dawn Giel contributed to this report.
WATCH: FTX founder retakes stand
Chesnot | Getty Images
Dogecoin shot higher on Tuesday night, extending its postelection surge after President-elect Donald Trump formally announced the creation of the Department of Government Efficiency, which he referred to as “DOGE” in his statement.
Tesla CEO Elon Musk and Vivek Ramaswamy, former Republican presidential candidate and Strive Asset Management co-founder, will lead the department, Trump said in a statement. Together, they “will pave the way for my Administration to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”
Dogecoin was last up nearly 20%. It has been one of the biggest winners in the postelection rally, gaining 153% since election day compared to bitcoin’s 30% rise in the same period. It also shot past XRP this week to become the sixth largest cryptocurrency by market cap.
Dogecoin jumped after President-elect Donald Trump announced the creation of the Department of Government Efficiency, or “DOGE.”
Memecoins are seen as a gauge of retail interest and risk appetite in crypto. When memecoin activity ramps up, it usually indicates that retail investors are participating and have an appetite to speculate further out on the risk curve.
Trump initially floated the idea of an efficiency commission in September. Since then, Musk — who has called himself the “Dogefather” in the past and has been known to make public comments about the memecoin that influence its price — has posted on his social media platform X, referring to the commission as the “Department of Government Efficiency” or “D.O.G.E.”
Dogecoin gained relevance in 2021 following Musk’s endorsement and continuous hype on social media, which has since become a big catalyst for the coin. In May that year, Musk’s posts fueled dogecoin’s rally to its all-time high of 67 cents, per Coin Metrics. Though his appearance at the time on SNL, in which he called dogecoin “a hustle,” sent its price crashing down.
The rest of the crypto market was on pause from its postelection rally. Bitcoin was trading flat at about $87,000, after briefly touching $90,000 in late afternoon trading. Crypto stocks Coinbase and MicroStrategy were lower by 1% and 2%, respectively, in extended trading.
Elon Musk embraces Donald Trump during a campaign rally in Butler, Pennsylvania on Oct. 5, 2024.
Anna Moneymaker | Getty Images
President-elect Donald Trump said Tuesday that Elon Musk and former Republican presidential hopeful Vivek Ramaswamy will lead an efficiency group when his second term begins in January.
Trump wrote in a post that the Department of Government Efficiency, or DOGE, will “become, potentially, ‘The Manhattan Project’ of our time.” He also said the group would, “pave the way” for his next administration to “dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.”
Trump didn’t specify where cuts will take place or when the department may be formed. Congress hasn’t created or funded such an office. He said the group’s “work will conclude no later than July 4, 2026.”
Musk’s involvement in the envisioned group was previously promised by Trump and touted by the Tesla CEO, who spent an estimated $200 million backing the Republican nominee’s 2024 campaign, as a reason to put the former president back in the White House. Musk, who also runs defense contractor SpaceX, has reportedly been stationed at Trump’s Mar-a-Lago resort in Florida since Election Night.
Ramaswamy, who challenged Trump in the Republican primary, is co-founder of investment firm Strive Asset Management. He has opposed the widespread adoption of environmental, social and governance, or ESG, principles by companies.
Trump announced a number of other appointments Tuesday, including naming Fox News host Pete Hegseth as his pick for defense secretary and John Ratcliffe as CIA director.
The Spotify logo is displayed on a screen on the floor of the New York Stock Exchange on Dec. 4, 2023.
Brendan Mcdermid | Reuters
Spotify shares rose in extended trading Tuesday after the Swedish music streaming company issued a profit forecast for the fourth quarter that topped estimates.
Here’s how the company did, compared with what analysts expected:
- Earnings per share: 1.45 euros vs. 1.72 euros expected by LSEG
- Revenue: 3.99 billion euros vs. 4.02 billion euros expected by LSEG
- Monthly active users (MAUs): 640 million vs. 639 million expected by StreetAccount
While the company’s earnings and revenue for the third quarter trailed estimates, investors focused instead on guidance for the current period.
Spotify said operating income in the fourth quarter will come in at 481 million euros, exceeding the average analyst estimate of 432.7 million euros, according to StreetAccount. MAUs will increase to 665 million, while analysts were expecting 659.3 million, based on a StreetAccount estimate.
Still, revenue guidance trailed estimates. The company said sales will reach 4.1 billion euros, below the average analyst estimate of 4.26 billion euros, according to LSEG.
Subscribers to Spotify Premium, the company’s ad-free membership service that allows users to select songs on an unlimited basis, increased 12% year over year to 252 million, slightly ahead of estimates.
Spotify shares rose about 8% after the report to $452.35 after rising 2.2% in regular trading. The stock has more than doubled in value this year.
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