Bankman-Fried dodges, waffles during cross-examination at trial hearing

Bankman-Fried was scheduled to begin officially testifying Thursday in his federal trial on criminal fraud charges. But Kaplan opted to listen to some of Bankman-Fried’s testimony at a hearing without jurors present after prosecutors argued that portions of what the defendant planned to say are not relevant to the case.

Kaplan’s decision to have Bankman-Fried speak at a hearing means he could find himself giving the same testimony twice, depending on what the judge ultimately rules. Kaplan said he would issue a ruling on Friday morning, before Bankman-Fried starts officially testifying before the jury.

During Thursday’s hearing, Bankman-Fried spoke coherently and precisely under questioning from defense attorney Mark Cohen. Bankman-Fried said lawyers on FTX’s legal counsel had signed off on the bulk of his decisions. The defendant spoke with his usual mannerisms, often smiling, bobbing his head and sometimes answering the defense’s questions with his signature “Yup” response.

But when it came time for Bankman-Fried to answer questions from federal prosecutor Danielle Sassoon, he responded with the uncertainty of a man who may or may not be responsible for losing billions in customer deposits.

Among his answers during prosecutors’ cross-examination: “I don’t remember”; “I may have”; “I wouldn’t phrase it that way, but I think the answer to the question you are trying to ask is yes.”

“Kaplan and the government even used the word ‘evasive’ to describe his efforts to answer some of their questions,” said Carl Tobias, a professor at the University of Richmond School of Law. “If the judge criticizes SBF for being evasive before the jury, he will have great difficulty countering that.”

Prosecutors have charged Bankman-Fried with orchestrating one of the largest financial frauds in history, accusing him of using billions of dollars in stolen customer funds from his crypto trading platform, FTX, to fund risky investments, dark-money political contributions and lavish personal expenditures. He faces seven criminal counts including fraud and money laundering, and could spend decades in prison if found guilty.

On Thursday, lawyers from both sides questioned Bankman-Fried about details of his deleted messages on Signal, an encrypted communications platform, and the parameters of FTX’s terms of service.

According to Bankman-Fried, FTX lawyers agreed that automatically deleting Signal messages, including those discussing company balance sheets, was permitted under company policy. Bankman-Fried said the terms of service crafted by an FTX lawyer allowed Alameda to administer the loans that prosecutors have criticized.

On multiple occasions, Bankman-Fried said his statements were corroborated by the company’s data retention policy, and he said he wished he had it in front of him in court as a reference. What happened next appeared to surprise Bankman-Fried — Sassoon gave him a printed copy of an FTX data retention policy.

The policy presented was “different from the one” he was referring to, said Bankman-Fried, whose hands shook as he held the papers handed to him by Sassoon.

Other questioning Thursday involved Bankman-Fried explaining certain cryptocurrency terminology.

When Bankman-Fried testifies before jurors starting Friday, it will probably take five hours to get through the defense team’s questions, Cohen told Kaplan. That would be roughly as long as the questioning of key witnesses Caroline Ellison and Gary Wang earlier in the trial.

As Bankman-Fried’s defense team prepared to present their case this week, they signaled they would seek to focus on proving the defendant acted “in good faith” and never meant to defraud customers. Cohen, Bankman-Fried’s lead attorney, outlined the strategy in a Wednesday letter to Kaplan, writing that the former executive relied on the advice of lawyers as he made critical decisions for his crypto empire.

Former federal prosecutors observing the case have said Bankman-Fried will have a tough time convincing the jury to take his word over that of his top lieutenants, all three of whom testified that their ex-boss and close friend knowingly directed them to carry out the fraud at the heart of the case. Government lawyers offered reams of documentary evidence backing up their key witnesses, and defense attorneys appeared to struggle to poke holes in the prosecution’s case.

Legal experts said Bankman-Fried probably has concluded that with diminishing hope of a not-guilty verdict, he needs to take the stand in a bid to shake up the trial, even if doing so is perilous.

“Given that Bankman-Fried is losing this trial badly, taking the stand is a Hail Mary of sorts,” said Renato Mariotti, a former federal prosecutor focused on financial crime. “Unfortunately for [him], he may be down by more than a touchdown.”

Newmyer reported from Washington.