Prosecutor aims at Bankman-Fried's credibility in FTX founder's trial

Bankman-Fried says he initially believed his companies could withstand withdrawal of billions of dollars in assets

FTX founder Sam Bankman-Fried testifies during his trial in New York City. Reuters

A prosecutor began cross-examining Sam Bankman-Fried at a New York City trial on Monday, attacking the FTX founder's credibility.

Assistant US Attorney Danielle Sassoon highlighted statements he made before and after the FTX cryptocurrency exchange filed for bankruptcy late last year when it could no longer process billions of dollars in withdrawals.

Ms Sassoon confronted Mr Bankman-Fried with occasions in which he promised customers that their assets would be safe and that they could demand those assets to be returned at any time

He repeatedly answered the questions with a rapid “Yep”.

Mr Bankman-Fried has been on trial for the past month on charges that he defrauded his customers and investors of billions of dollars.

He has pleaded not guilty to the charges, which could carry a penalty of decades in prison.

The Californian gained a level of fame from 2017 to 2022 as he created the Alameda Research hedge fund and FTX, building a cryptocurrency empire that became worth tens of billions of dollars.

For a time, Mr Bankman-Fried seemed to be transforming the emerging industry by conforming to his publicly stated vision of a more regulated and safe environment for users.

Through her line of questioning, Ms Sassoon tried to show that his public statements were false and that he promised customers that their accounts were safe while he looted them, spending lavishly on real estate, celebrity-laden promotions, investments and political contributions.

She asked him if he had used profanity in speaking about regulators, even as he was trying to convince Congress to bring more legitimacy to the cryptocurrency industry by setting up a regulatory framework.

“I said that once,” he answered when she offered a specific example.

Sam Bankman-Fried is questioned by defence lawyer Mark Cohen. Reuters

And when Ms Sassoon asked if his pursuit of regulations was just an attempt at positive public relations, he answered: “I said something related to that, yes.”

Before cross-examination began on Monday, Mr Bankman-Fried testified that he believed his companies could withstand the daily withdrawal of billions of dollars in assets until several days before they could not.

He was arrested last December on fraud charges.

Initially freed on a $250 million personal recognisance bond to live with his parents in Palo Alto, California, he was jailed in August when Judge Lewis Kaplan became convinced that he had tried to tamper with potential trial witnesses.

He began testifying on Thursday. Mr Kaplan has told jurors that the trial might be completed as early as this week.

Updated: October 30, 2023, 7:13 PM