FTX Founder Sam Bankman-Fried’s Closed-Door Testimony Raises Questions
Sam Bankman-Fried, the founder of FTX, faced intense scrutiny during a closed-door testimony on October 26th, shedding light on his controversial decision to delete corporate messages. Bankman-Fried, also known as “SBF,” testified without the presence of the trial’s jury, providing explanations for his actions under the examination of prosecutor Danielle Sassoon of the Southern District of New York.
The crux of the matter revolved around Bankman-Fried’s choice to utilize the encrypted messaging app Signal for corporate communications, a decision that has sparked controversy and legal consequences. Initially, SBF claimed that he had used Signal with the approval of FTX counsel Daniel Friedberg. However, the revelation that he had never sought prior approval for the app’s auto-delete feature raised significant questions about his actions and decision-making.
[US v SBF without jury present]
Prosecutors are back, and SBF is back on the witness stand. Still no Judge Kaplan.
Deputy Andy: I’ve been asked to remind everyone to avoid conversations while the hearing is going on. Save that for afterward. Thanks.
— Inner City Press (@innercitypress) October 26, 2023
“At some point I remember changing my toggle to one-week auto-delete,” Bankman-Fried revealed, explaining that this practice had been in place since 2021. When questioned by Sassoon about whether he sought approval for this decision, he responded with a simple “No.”
His rationale for using Signal without seeking prior approval, according to Bankman-Fried, was rooted in a document retention policy established in 2021 and purportedly approved by Friedberg. He contended that this policy exclusively pertained to emails and did not cover other forms of communication, such as Signal messages. However, when asked if any lawyer had explicitly authorized him to delete messages with key colleagues like Caroline Ellison, Gary Wang, and Nishad Singh, SBF admitted that they had not.
Regarding communications related to seven allegedly “fake” balance sheets prepared by Caroline Ellison, Bankman-Fried asserted that deleting the messages was permissible because “verbal discussions were not required to be reported.” This explanation seemed to suggest that the company’s data retention policy did not extend to such messages.
In a later line of questioning concerning an alleged $13 billion hole in FTX’s balance sheet, Bankman-Fried argued that the messages were never shared with lawyers in compliance with the company’s data retention policy. He expressed concerns about the potential for statements to be taken out of context and for the situation to become embarrassing.
This closed-door testimony has further intensified the controversy surrounding the FTX case. Bankman-Fried’s explanations have raised doubts about his adherence to company policies, the appropriateness of his actions, and the extent of his legal liability. As the trial progresses, the revelations from this testimony are likely to play a pivotal role in determining the outcome of the case.
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