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Sam Bankman-Fried defense rests in criminal trial, closing arguments kick off Wednesday

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FTX Founder Sam Bankman-Fried leaves Manhattan Federal Court after a court appearance on June 15, 2023 in New York City.
Michael M. Santiago | Getty Images

FTX founder Sam Bankman-Fried’s fate is now in the hands of the 12 jurors who have spent the past four weeks sitting just feet away from the former crypto billionaire in a lower Manhattan courtroom.

After three days on the stand, Bankman-Fried’s testimony wrapped up Tuesday morning and the defense rested its case shortly before noon. The jury was sent home, so the judge can decide in the charging instructions what’s admissible before jurors begin their deliberations. Closing arguments will start on Wednesday.

Bankman-Fried, 31, faces a potential life sentence if convicted on fraud charges tied to the collapse of crypto exchange FTX and sister hedge fund Alameda Research late last year. He pleaded not guilty.

Tuesday’s session began with cross-examination from Assistant U.S. Attorney Danielle Sassoon, who has led the prosecution during the four-week trial. Sassoon began by questioning Bankman-Fried’s relationship with Philip Davis, prime minister of the Bahamas, which was home to FTX and Bankman-Fried’s inner circle.

Bankman-Fried was asked if he’d proposed paying off more than $11 billion in national debt for the Bahamas, and he responded by saying he didn’t remember discussing the matter. Sassoon also mentioned how Bankman-Fried would joke that Ryan Salame, a former FTX executive, was effectively a member of the Bahamian government.

Sassoon asked about the prime minister’s visit to Miami and attending a Heat basketball game at the arena that carried the FTX name, and whether he and his wife were given courtside seats. She also mentioned FTX’s opening up customer withdrawals only for Bahamians. As with much of the questioning by the government, Bankman-Fried said little, didn’t admit to anything and frequently responded by saying he didn’t know.

The FTX Arena in downtown Miami, Florida on Friday, June 4, 2021.
Matias J. Ocner | Miami Herald | Tribune News Service | Getty Images

Sassoon again asked Bankman-Fried about the key issue in the case — the $8 billion hole in FTX’s balance sheet. Bankman-Fried said he “deeply” regretted not taking a deeper look at it. When he asked his deputies about it, Bankman-Fried testified that they “told me they were busy and I should stop asking questions because it was distracting.”

With no other significant witnesses representing the defense, Bankman-Fried is banking on his ability to convince the jury that he wasn’t intentionally siphoning customer funds out of FTX to use for a host of other purposes, including covering Alameda’s losses, paying for his luxurious condo in the Bahamas, venture investments and the naming rights for the Miami arena.

Encouraging bad regulation

In his first two days on the stand, Bankman-Fried told the court that he didn’t defraud anyone or take customer funds. He said one central problem was a lack of a risk management team, which led to “significant oversights.” Beyond that, he spread the blame around to several of his former friends and top lieutenants, some of whom testified against him earlier as witnesses for the prosecution.

Sassoon ended her questioning on Tuesday at about 10:40 a.m. Mark Cohen, Bankman-Fried’s defense attorney, then spent a short amount of time with his redirect examination.

Cohen revisited articles that stemmed from Bankman-Fried’s press interviews after Nov. 11. Bankman-Fried estimated he gave around 50 interviews and didn’t have access to any internal documents. He said he didn’t remember every statement he made to journalists.

One notable comment he made was to Vox in mid-November. In a text exchange with the reporter, Bankman-Fried wrote “F— regulators.” Bankman-Fried testified that he was growing frustrated with regulators and skeptical about what they were doing. He said he felt all the work he’d done might have encouraged bad regulation as much as good regulation.

After the mid-morning break, Cohen asked Bankman-Fried to clarify a few things. He asked why the defendant hadn’t fired anyone when the $8 billion liability had been discovered. Bankman-Fried said he wasn’t particularly interested in blaming others and was instead focus on how to get things turned around and moving forward.

FTX founder Sam Bankman-Fried is questioned by prosecutor Danielle Sassoon (not seen) during his fraud trial over the collapse of the bankrupt cryptocurrency exchange at federal court in New York City, U.S., October 31, 2023 in this courtroom sketch. 
Jane Rosenberg | Reuters

Regarding the $65 billion line of credit to Alameda, Bankman-Fried said that was the maximum withdrawal size but it was never near that amount. He said it was typically around $2 billion.

Finally, following issues raised by the prosecution about Bankman-Fried’s excessive use of a private jet, the defendant said he thought it was a valid expense as CEO. He testified that he wasn’t using it for personal travel, and that it was logistically difficult to fly from the Bahamas to Washington D.C., where he estimated he spent more than a month in total.

With the jury gone for the rest of the day and closing arguments set to begin on Wednesday, Bankman-Fried is now out of opportunities to convince the 12 jurors that he doesn’t deserve a lengthy prison sentence. Deliberations will start after closing arguments.

— CNBC’s Dawn Giel contributed to this report

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