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On October 27, local time in the United States, the SBF case entered its second day of testimony by SBF himself. After yesterdays exercise questioning without a jury, today the SBF formally testified in court in the presence of the jury.
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.
existDuring yesterday’s questioning, SBF frequently answered “I don’t know” and “I don’t remember” on key questions., so that the judge even said helplessly, I think the witness has a very interesting way of answering questions. Later, the defense lawyer and SBF (that is, SBF and his own lawyer) had a dispute because the lawyer believed that SBF was not Certain questions need to be answered. The scene was chaotic for a time.
It should be noted that today’s questioning is for the defense, that is, SBF’s own lawyer Cohen’s questions about SBF. This is often used in American justice as an opportunity for witnesses to explain themselves and respond to some testimony that is unfavorable to themselves. So, todays testimony is more like an explanation. Instead, the real highlight will be the prosecutions questioning scheduled for Monday and Tuesday next week, where prosecutors lawyers will ask the SBF a variety of tough questions, and unlike yesterdays rehearsal, this time it will be in front of the jury.
Odaily compiled the testimonies from today’s scene as follows:
How FTX started, “I don’t think I deceived anyone”
SBFs lawyer Cohen: The defense subpoenaed Mr. Sam Bankman-Fried. ...Good morning. What does FTX mean?
SBF: means futures exchange. We think we can build the best product on the market.
Cohen: Is that what it turns out to be?
SBF: No. FTX declared bankruptcy and a lot of people were hurt.
Cohen: Have you ever cheated on anyone?
Cohen: How does FTX work?
SBF: It is primarily a margin exchange. It works just like a mortgage…
AUSA Sassoon (Prosecution Lawyer): Objection. The statement is too long.
Judge Kaplan: The objection is accepted. Please ask questions.
Cohen: Who did you live with in college?
SBF: Gary Wang, Adam Yedidia and others.
Cohen: And where do you work?
SBF: Jane Street. Thats not a high-frequency trading place.
Cohen: Did they tell you not to engage in front-loading?
Cohen: What department do you work in? What does department mean?
SBF (laughing): There are about 20 traders in one department. Im in international ETFs.
Cohen: How do you enjoy working at Jane Street?
SBF: Yes, they were very good to me.
Cohen: Is anyone else going to Alameda with you?
SBF: Yes. Caroline Ellison, Adam Yedidia and others.
Cohen: Why did you start Alameda?
SBF: By 2017, cryptocurrencies were starting to come into the public eye and I saw two people talking excitedly, most likely talking about cryptocurrencies. Demand is high.
SBF: Cryptocurrency seems to be a place where there is a lot of demand for arbitrage providers.
Cohen: How much do you know about cryptocurrencies?
SBF: Basically nothing.
Cohen: Where did you borrow money for Alameda?
Alameda risks wrong liquidation
Cohen: Why do you like Hong Kong?
SBF: A better regulatory environment.
Cohen: How do you get clients?
SBF: We asked our friends for advice, we made improvements, and word of mouth spread. It spreads through social media, where we interact.
Cohen: Once FTX is up and running, will it have anything to do with Alameda?
SBF: Yes. Alameda is a market maker.
Cohen: What about the risk waterfall?
SBF: If an account goes negative, we will start selling, but if there is a delay, we have backup liquidity.
SBF: We increased the number of servers for the risk engine. But we understand that if Alameda or any other large account has a wrong liquidation...
AUSA Sassoon: Objection!
Judge Kaplan: Complete your answer.
SBF: It would be disastrous for FTX.
SBF: So I told Gary, we have to stop these liquidations of the Alameda account. They told me they already did. Now I know thats allow negative numbers.
Cohen: Tell me about Alameda’s line of credit.
SBF: Grows to billions over time.
Cohen: Have you discussed Alameda with Gary and Nishad...
AUSA Sassoon: Opposition, inducement.
Judge Kaplan: Continue.
Cohen: Did you discuss it? If so, with whom?
SBF: Gary and Nishad. We increased our credit limit.
SBF: At the time I wasn’t entirely sure what was going on. I assume the funds are held in a bank account or sent to FTX in the form of stablecoins. If Alameda kept it, I think it would reflect as a negative number on FTX.
Caroline is not “focused on risk management”
Cohen: Who is Sam Trabucco?
SBF: Co-CEO of Alameda.
Cohen: How long do you usually work?
SBF: On an easy day, 12 hours. In a busy day, 22 hours. I take a day off every few months.I have about 60, 000 unread messages.
Cohen: How many Signal channels are you on?
SBF: I think a few hundred.
Cohen: Has the growth of FTX affected your relationship with Alameda?
SBF: I had to step down as CEO. But Im still involved in various projects.I gave it to Caroline Ellison and Sam Trabucco.
SBF: They are capable people and a good team. They are the best people I have.Caroline is an excellent manager and compassionate. She is not a software developer. She is good at research. She didn’t focus on risk management…
Cohen: Did Trabucco leave?
SBF: Yes, he actually retired early. I suggested a new co-CEO, but Caroline declined.
Cohen: When did you and Caroline break up?
SBF: Spring 2022. She wanted more than I could give. This isnt the first time this has happened to me.
Cohen: This property list, was it purchased by FTX?
SBF: Yes. We want core staff to move there and recruit others.
Cohen: Who represents the public face of FTX?
SBF: Me. My interview went better than I expected. (Interview) The demand is greater.
Cohen: Why are you wearing shorts and a T-shirt?
SBF: I find them very comfortable.
Cohen: Why do you have long hair?
SBF: Im lazy.
Cohen: Who is in this photo?
SBF: Katy Perry, Michael Kives, Kate Hudson and me. We were filming a Super Bowl commercial.
Cohen: When did you meet Michael Kives?
SBF: It was the Kives and I was wandering around the stadium and I met them and they invited me in.
SBFs defense questioning has not yet been completed and will continue on Monday, followed by a prosecution question. Odaily will keep you posted.