Examining the Fourth Week of the Sam Bankman-Fried Court Proceedings

Sam Bankman-Fried, the former CEO of collapsed cryptocurrency exchange FTX, testified at his criminal trial on Thursday. The trial, which began earlier this month, has seen Bankman-Fried's former colleague, Caroline Ellison, also take the stand as a defendant.

Since November, Bankman-Fried has been actively explaining FTX's downfall to reporters, publishing a Substack newsletter, and posting tweets. On Thursday, he spent the afternoon previewing his testimony for the judge.

Bankman-Fried placed some blame on Ellison and former technology chief Gary Wang for the implementation of the "allow negative" feature that allowed Alameda, FTX's sister company, to have a negative balance of up to $65 billion on FTX. He testified that his former company's legal counsel advised him to use apps set to delete messages, and also advised him to make loans to himself.

Bankman-Fried expressed regret for his role in FTX's downfall, stating "I'm sorry... I f----- up, and should have done better" on Twitter on November 10. He also testified that he thought FTX's terms of service permitted its sister company Alameda Research to borrow customer funds.

One of the key points Bankman-Fried discussed was FTX's marketing spend, which included a $10-million-a-year naming rights deal with the Miami Heat's arena. At the time, this amount was equivalent to 1% of FTX's annual revenue, according to CoinDesk. Bankman-Fried defended the expenditure, stating that he believed the arena sponsorship was a good use of funds due to its perceived value "above and beyond" name recognition.

Judge Lewis Kaplan declined a trial delay requested by Bankman-Fried's lawyer, Kenneth Niemeyer, due to the former crypto wunderkind's struggles with his Adderall prescription. Half of defendants never testify at their own trials, and it was unclear if Bankman-Fried would testify at all prior to Thursday.

Ellison, who testified on behalf of the government earlier in the trial, is also Bankman-Fried's ex-girlfriend. Bankman-Fried has been active in explaining his side of the story, blaming Singh and former technology chief Gary Wang for the implementation of the "allow negative" feature that allowed Alameda to have a negative balance of up to $65 billion on FTX. He has also testified that he repeatedly asked Ellison to "hedge" FTX's risks, but Alameda wasn't hedged when crypto prices fell in June 2022.

Bankman-Fried testified that he knew "basically nothing" about crypto before starting Alameda in 2017. His testimony will continue next week.