SBF’s testimony in court: “I don’t remember how $13 billion disappeared”

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jk
4 months ago
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SBF said I dont remember thirteen times during questioning.

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SBF’s testimony in court: “I don’t remember how  billion disappeared”

On October 26, local time in the United States, the SBF case resumed after a six-day adjournment. After the prosecutions three star witnesses Nishad Singh, Gary Wang and Caroline Ellison all took the stand, SBF himself decided to take the witness stand and testify without a jury, which is a rare occurrence in American courts.

According to reports from the crypto media Coindesk, Sam Bankman-Fried testified in person in his criminal trial, but the jury members were asked to go home for the day.in order for the judge to first hear from the FTX founder about certain aspects of his testimony and decide what is admissible — a very rare step. Bloomberg called it “a dress rehearsal.”

This may be a little surprising, Judge Lewis A. Kaplan told the jury, but you have the rest of the day off. Judge Kaplan said it was something he had not done in years and told them the case might Ending in the first half of next week. Were getting close to the end, he said.

Odaily adds the following summary:

During court hearings in the SBF case, FTXs chief technology officer Gary Wang and former Alameda Research executive Caroline Ellison revealed internal misconduct by FTX and Alameda, including misappropriating FTX customer funds and submitting false financial statements at the direction of SBF accusations. It is alleged that SBF may have exploited its position to engage in opaque and irregular transactions.During the trial on the sixth day, star witness Caroline Ellison detailed how SBF operated FTX in several aspects including Alameda’s misappropriation of FTX customer funds, Alameda’s false financial statements, CZ’s Twitter response, etc. illegal. The second week of the trial,Nishad Singh, a close partner of SBF and chief of the engineering team, also began to testify. His testimony related more to the inside story of FTX, including scandals such as political donations and misappropriation of funds., involving celebrities such as Hillary Clinton and Leonardo DiCaprio.

So what did SBF say in todays court hearing?

According to the on-site testimony, SBF frequently answered I dont know and I dont remember on key questions, so much so that the judge even reluctantly said, I think the witness has a very interesting way of answering questions. Later, the defense lawyer and There was a dispute between SBF (that is, SBF and its own lawyer) because the lawyer believed that SBF did not need to answer certain questions.

To sum it up in one sentence, it is The scene was very chaotic.Odaily has compiled todays live testimony for you. Lets take a look at how SBF, a key figure in FTX, testified and the entire process of todays trial.

background

Cohen, SBFs attorney: The defense subpoenaed Sam Bankman-Fried.

Cohen: What communication platforms does FTX use?

SBF: Used Telegraph, Slack and Signal.

Cohen: What is Signal?

SBF: It is communication software that is not saved by any host.

Cohen: Is encryption important to FTX?

SBF: Yes, we have been hacked. Therefore the data is at risk.

SBF: We are based in Hong Kong. While we were there, there were some, um, safety concerns. Additionally, former employees may have data to sell to competitors.

Cohen: Has FTX been hacked?

SBF: There has never been a core security vulnerability. But third parties have been hacked.

Alameda and FTX joint account

Cohen: Tell me about North Dimension.

SBF: Alameda set it up in 2020.

Cohen: How was it set up?

SBF: Dan Friedberg gave me some papers to sign, and I signed them.

Cohen: Why did you sign for both FTX and Alameda?

SBF: I was the CEO of two companies at that time. FTX does not have a bank account.

Cohen: Do you think it is legal to receive FTX deposits through Alameda?

SBF: I think so.

Cohen: So what is this?

SBF: This is an application for a North Dimension bank account with Silvergate Bank.

Cohen: Who signed it?

SBF: Dan Friedberg。

Cohen: Let’s talk about venture capital. Where does the funding come from?

SBF: Alameda Research。

Cohen: Who did you discuss these issues with?

SBF: Fenwick & West... Dan Friedberg... Can Sun。

Cohen: What is your understanding of loan structure?

Judge Kaplan: You should ask, what did you say and what did they say?

SBF: I told them about an investment I wanted to make. Sometimes it’s not Alameda as an investor, but me. I think about it from a business perspective.

Cohen: Are you satisfied with the way the lawyers are structured?

SBF: Yes.

Omnibus Wallet

Cohen: Let’s change the subject. What is Omnibus Wallet (Comprehensive Wallet)?

SBF: For example, we put all our customers’ net Bitcoin together, in one wallet.

Cohen: Did you get into the cryptocurrency industry in 2017?

SBF: Yes.

Judge Kaplan: Mr. Cohen, we need to know the source of the witnesss knowledge.

Cohen: How do you know other exchanges use omnibus wallets?

SBF: I track my trades on other exchanges.

Cohen: So all major exchanges use omnibus wallets?

SBF: Yes.

Cohen: Just one more topic. Regarding the regulators in the Bahamas, were you at that meeting?

SBF: Yes. I was with my dad and Krystal Rolle. Gary Wang was in the building but not at the meeting.

File and information deletion function

AUSA Sassoon: Mr. Bankman-Fried, I want to ask you about Signal. Have you discussed your usage with an attorney?

SBF: Yes, in 2020. Signal Chat has a lawyer - Dan Friedberg is in the chat.

AUSA: What about the auto-delete feature?

SBF: Yes.

AUSA Sassoon: When did you discuss automatic deletion with them?

SBF: Im not sure what youre referring to... not long after I started using Signal.

AUSA: When did you start using auto-delete? 2021?

SBF: It sounds possible.

SBF: At one point, I remember changing my settings to auto-delete once a week.

AUSA Sassoon: Did you seek approval?

SBF: No.

AUSA: When did the document retention policy go into effect?

SBF: Midterm 2021, hosted by Dan Friedberg.

AUSA Sassoon: Does this policy cover automatic deletion on Signal?

SBF: Not specifically Signal.

AUSA Sassoon: When does it say you can destroy company records?

SBF: With permission——

Judge Kaplan: Does that mean you can do whatever you want?

SBF: Uh...

AUSA Sassoon: Where is the document retention policy?

SBF: Were looking for—

Judge Kaplan: You only said on the blockchain.

SBF: This policy specifically refers to email and does not address other platforms.

AUSA: Which attorney did you discuss this with?

SBF: Dan Friedberg。

I do not remember

AUSA Sasoon: How is the retention period for documents determined?

SBF: My timeline does not mean company-wide documentation policy.

AUSA: Did a lawyer tell you that you could delete messages with Caroline Ellison, Gary Wang and Nishad Singh?

SBF: Nothing specific.

SBF: I apologize, I wish I had that policy now.my memory...

AUSA Sassoon: Do you consider Caroline Ellison’s seven spreadsheets official documents?

Cohen, SBF’s lawyer: Objection! Beyond the scope of this hearing!

Judge Kaplan: Overruling the objection.

AUSA Sassoon: So you think deleting a message with seven different spreadsheets is allowed?

SBF: Yes. For example, oral discussions do not require reports.

AUSA: Are you the CEO of FTX? Is she from Alameda?

SBF: Yes.

AUSA Sassoon: Do you think deleting messages like this is allowed?

SBF: I don’t have that policy on hand right now.

AUSA: What about the discussion about closing Alameda?

SBF: That’s not how I would describe it.

AUSA: Do you have any discussion about the $13 billion shortfall?

SBF: I don’t remember this conversation.

AUSA: Do you think it should be saved?

SBF: It depends.

AUSA: Adam Yedidia quoted you saying that saving Signal would be a total disadvantage.

SBF: I dont remember that.

SBF: I was concerned that the statement might be taken out of context, which could be embarrassing.

AUSA: Have you shared this with your attorney?

SBF: Not specifically related to the data retention policy.

AUSA: Did you tell the lawyer that this would be totally detrimental?

SBF: I dont remember that.

Judge Kaplan: Do you think these Signals will be a negative at all?

SBF: At my previous company, Jane Street, we said anything could be front page news.

AUSA: Do you tell employees to only have certain discussions on Signal?

SBF: Nothing specific.

AUSA: FTX received a subpoena and was not allowed to destroy the documents?

SBF: Yes.

AUSA: Have you asked your lawyer which Signals you should keep?

SBF: Yes. Ryne Miller and Dan Friedberg.

AUSA: Who decides which ones to keep?

SBF: Ultimately it was Dan and Ryne.

AUSA: Did you tell them you discuss company business on Signal chat?

SBF: Yes.

AUSA: What did they tell you?

SBF: Save only formal business decisions.

AUSA: Do they use that phrase?

SBF: I don’t remember them using that phrase.

AUSA: Has anyone used the words informal business conversation and said a spreadsheet qualifies?

SBF: They know this happens sometimes.

AUSA: What about Alameda?

SBF: I believe they have a similar policy. Mentioned sometimes.

AUSA: When?

SBF: End of 2021. After the CEO duties were handed over to Caroline Ellison and Sam Trabucco.

AUSA Sassoon: You dont actually have a document retention policy?

SBF: No.

AUSA Sassoon: Do you think youve ever violated it?

SBF: I don’t remember ever violating it.

AUSA: North Dimension, why did you set it up?

SBF: Dan Friedberg。

AUSA: What is your relationship with Dan Friedberg?

SBF: changes over time. Can you be specific?

AUSA: Okay, North Dimension.

SBF: I don’t remember giving him guidance.

AUSA: Why is it called North Dimension?

SBF: I dont remember.

AUSA: Why did FTX move from a bank account called Alameda to North Dimension? Do you think banks want to avoid cryptocurrency hedge funds?

SBF: That’s pretty much it.

AUSA: As the CEO of Alameda, dont you know why it moved its deposits to North Dimension?

SBF: I don’t know.

AUSA: Did you and Dan Friedberg discuss bank accounts?

SBF: Im not sure, I dont remember.

AUSA: Werent you involved in the decision to use North Dimension?

SBF: Not specifically. I may have been part of the conversation.

Judge Kaplan: So you dont remember it specifically, is that right?

SBF: I want to make sure Im answering the right questions.

Judge Kaplan: Is using North Dimension to receive funds allowed?

SBF: Only you count Alameda.

Judge Kaplan: Listen to the question carefully and answer it head-on.

AUSA: Is North Dimension acting as a trading company?

SBF: I dont know.

AUSA: Have you reviewed Dan Friedbergs witness notes?

SBF: Not really.

AUSA: What other attorneys have you talked to about North Dimension being able to accept funds from FTS clients?

SBF: Im not entirely sure.

AUSA: Have there been any conversations with the auditors regarding the flow of funds to Alameda and North Dimension?

SBF: As far as I recall...

SBF: Im going to say, Im not a lawyer, Im just trying to answer based on my recollection... FTX at the time, some customers thought the accounts were going to be sent to Alameda. FTX will retain a debt that can be repaid... I did not create this payment agency agreement.

AUSA: To your knowledge, has this agreement been disclosed to the public?

SBF: I dont know.

AUSA Sassoon: Terms of Service, Section 16

AUSA: What is this provision about?

SBF: Assets posted as collateral for their positions.

AUSA: Have you and Can Sun discussed Alamedas exemption from automatic liquidation?

SBF: No...I, I, not by name. I didnt know the names of these things at the time.

AUSA: What do you mean?

SBF: I, I... I dont think I knew at the time - Im sorry - I knew the credit limit -

AUSA: You mentioned speed bumps - what do you mean?

SBF: I apologize for that. This would be quite a tangent.

AUSA: Im asking about Alameda being exempt from automatic liquidation, but youre a speed bump. What do you mean?

SBF: Some combination of delays and alerts, I apologize for that and wish I could give you a more specific answer.

AUSA: Im asking a typical customer.

SBF: If you mean, not a market maker.

AUSA: Are you aware that Alameda may have an overall negative balance?

SBF: Add up all the assets, right?

AUSA: Yes. Please answer now.

SBF: Im not sure if its in the code base.

SBF: I may have misunderstood what the allow negative values feature is... Do you mean negative asset values?

AUSA: Lets look at the evidence.

SBFs lawyer: I object to this. This is a testimony.

AUSA: Can I explain? It has to do with what he told his lawyer.

Judge Kaplan: Im a little confused here.One problem is that the way witnesses answer questions is interesting.

Cohen: Thats what this hearing is all about.

Judge Kaplan: If you want this hearing to be the basis for your defense, you have no other choice but to go through this hearing.

Cohen: I understand.

Judge Kaplan: The question never mentioned net asset value. But you keep using it in your answers.

SBF: I apologize.

AUSA: Im going to move on to the next question.

AUSA: When did you believe Alameda had the authority to borrow from FTX?

SBF: I think borrowing from collateral assets used as margin positions is allowed...

AUSA: Does that include taking assets out of exchanges?

SBF: A risk analysis is required.

AUSA: Which attorneys have you discussed this with?

SBF: I discussed Three Arrows Capital with Ramnik [Arora] --

AUSA: Ramnik Arora is not a lawyer. So, no lawyer? The answer is no.

AUSA: Let’s talk about loans. Are they documented?

SBF: I think so.

AUSA: Have you discussed with your attorney that the funds are coming from FTX clients?

SBF: I wouldn’t describe it that way. So no, I have not discussed this with an attorney.

AUSA: Why not just go through Alameda?

SBF: Investment targets dont want Alameda to do this.

AUSA: Do you think you should not misappropriate client assets?

Cohen: Objection!

JUDGE: The objection is sustained.

SBF: No, I dont think I should.

Cohen: You don’t have to answer after sustaining an objection. Have you really been here for four weeks?

SBF: I feel like I have to answer this question.

AUSA: What about the CEO of an exchange using client funds to pay for personal expenses?

Cohen: Objection.

Judge Kaplan: As a matter of form, the objection is sustained.

AUSA: Did you have conversations that convinced you that this was the right thing to do?

SBF: We discussed margin calls.

AUSA: Lets talk about Dan Friedberg - did you hire him?

SBF: Yes.

AUSA: Were you hesitant to hire chief legal counsel?

SBF: I don’t want to hire the wrong chief counsel.

Cohen: Objection.

Sassoon: This is relevant if he doesnt want to hire a reputable lawyer.

Judge Kaplan: I agree, but not necessarily with the use of the word prestigious.

AUSA: Did you know that Dan Friedberg was the general counsel of a company that was involved in an insider trading scandal?

SBF: Yes, a high-level scandal.

AUSA: A criminal scandal?

Cohen: Objection.

Judge Kaplan: I agree.

AUSA: Did you know that Dan Friedberg used illegal narcotics—

Cohen: Objection!

Judge Kaplan: Objection maintained. Ms. Sassoon! (You can’t ask this with implicit assumptions)

AUSA: Can I take a break? No further questions.

Cohen: No other questions.

Judge: Mr. Bankman-Fried, you may withdraw.

Follow-up conversation between lawyer and judge

Judge Kaplan: I will listen to counsel on the issues I need to decide.

Cohen: We think we can get testimony today. We do not advocate formal counsel-advised defense. Its just that he relied reasonably on it.

Judge Kaplan: Lets say someone robbed a bank, robbed a Walmart, whatever, and got a bunch of money. Do we agree that conducting transactions to conceal the source of funds is money laundering?

Cohen: Of course.

Judge Kaplan: Now hes getting legal advice on how to use the money to buy an apartment. The defendants were charged with money laundering. The defense is, I have a lawyer and I have no criminal intent. In principle, how is this different from what youre trying to do?

Cohen: Bank robberies are illegal. Our position is that the source of funds is not illegal.

Judge Kaplan: But you need to tell the lawyer what the facts are.

Cohen: In some cases, like a founder’s loan.

Judge: I have my doubts, but I understand your position.

AUSA Roos: This is a lawyers side-step, and it does not address the key issue, which is the use of funds. There is no evidence that Dan Friedberg was informed of the agency agreement.

Judge Kaplan: Can Sun says there is a public purse. I put that aside.

Judge Kaplan: I plan to rule tomorrow morning.

AUSA: We are planning a cross-examination -

Judge Kaplan: Im not surprised.

AUSA: If the witness does not respond, it will take longer.

Conclusion

As Coindesk commented: SBF’s decision to testify is risky, and although Bankman-Fried attempts to portray the collapse of his FTX cryptocurrency exchange as an unavoidable accident, he is exposing himself to rigorous interrogation by prosecutors’ lawyers. .

Even with the protection of witnesses cannot incriminate themselves, the courts dismissal of the jury today is to some extent beneficial to the SBF side, that is, the jury that ultimately decides SBFs personal fate does not need to be present to hear SBFs many opinions on FTX A statement of relevant facts. SBF’s testimony not only affects his own fate, but may also have a profound impact on the entire cryptocurrency market and other related exchanges. Odaily will continue to follow the coverage for you.

Note: In U.S. law,"Witnesses cannot incriminate themselves"("a witness cannot testify against oneself"or"no person...shall be compelled in any criminal case to be a witness against himself") refers to a persons right not to testify in a criminal case to prove his or her guilt. This is an important principle in the Fifth Amendment to the U.S. Constitution, often referred to as the Fifth Amendment right or the right to remain silent.

Simply put, this means that the defendant has the right to choose not to testify at trial, and the prosecutor cannot use the fact that the defendant chooses not to testify to imply guilt. (This allows the defendant to avoid questions that directly relate to the underlying criminal facts.) If the defendant chooses not to testify, the judge instructs the jury not to convict the defendant based on his choice not to speak. Additionally, the defendants attorney may choose not to allow the defendant to testify in court.

This article is translated from https://twitter.com/innercitypress/status/1717651780857659541Original linkIf reprinted, please indicate the source.

ODAILY reminds readers to establish correct monetary and investment concepts, rationally view blockchain, and effectively improve risk awareness; We can actively report and report any illegal or criminal clues discovered to relevant departments.

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