In a high-profile trial that has garnered significant attention from the crypto world, Sam “SBF” Bankman-Fried, the former CEO of FTX, took the stand for the first time on October 27, offering a testimony that largely denied his knowledge of fraudulent activities at the cryptocurrency exchange. This testimony is a pivotal moment in the ongoing criminal trial, shedding light on the allegations surrounding FTX and its former chief technology officer, Wang, and CEO of Alameda Research, Ellison.
SBF: So I told Gary, we have to stop such liquidations of Alameda’s account. They told me they’d done it. Now I know it was the “Allow Negative.”
Cohen: Tell me about the line of credit of Alameda.
SBF: It grew over to time to billions— Inner City Press (@innercitypress) October 27, 2023
SBF’s testimony revolved around the creation of the “allow negative” button for Alameda Research, a feature that permitted the crypto hedge fund to trade more funds than it actually had in its account. The “allow negative” button has been at the heart of the prosecution’s case, alleging that it enabled fraudulent trading practices at the exchange.
SBF suggested that Wang had played a significant role in the creation of this feature, distancing himself from any direct involvement. He stated, “At the time, I wasn’t entirely sure what was happening. I thought the funds were being held in a bank account or sent to FTX in stablecoins. If Alameda was keeping it, I figured it would be reflected as a negative number on FTX.”
However, Bankman-Fried’s claims directly contradicted the testimonies previously provided by Wang and Ellison. Wang, who took the stand on October 6, asserted that Bankman-Fried had ordered him and former FTX engineering director Nishad Singh to implement the “allow negative” feature in 2019. Ellison, the CEO of Alameda, testified that she had considered stepping down but was asked by Bankman-Fried to stay on, citing concerns about rumors regarding the firm’s financial health.
During the course of his testimony, SBF admitted to having known “basically nothing” about cryptocurrencies when launching Alameda Research, further emphasizing his limited knowledge of the crypto industry at that time.
Defense lawyer Mark Cohen indicated that he plans to conclude his questioning of Bankman-Fried on October 30. Subsequently, the Justice Department’s attorneys will have the opportunity to cross-examine him in front of the jury. The outcome of this cross-examination could have a significant impact on the trial’s trajectory.
Notably, SBF is expected to face five more criminal counts in a second trial scheduled for March 2024. Throughout these proceedings, he has consistently maintained his plea of not guilty to all charges in both cases.
Read more:
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