After nearly two weeks watching his closest friends detail the collapse of his FTX crypto exchange, Sam Bankman-Fried is facing the toughest choice in his fraud trial so far: whether to defend himself on the witness stand.
(Bloomberg) — After nearly two weeks watching his closest friends detail the collapse of his FTX crypto exchange, Sam Bankman-Fried is facing the toughest choice in his fraud trial so far: whether to defend himself on the witness stand.
It’s a risky strategy that white-collar crime defendants usually stay away from. But after failing to dent the testimony of FTX co-founder Gary Wang — his former college roommate — and Alamada Research CEO Caroline Ellison — Bankman-Fried’s former girlfriend — it may be one of the only options left, legal experts say.
“They have a real choice to make,” said Christine Adams, a former federal prosecutor. “Because what other options do they have to get their defenses in?”
Bankman-Fried faces decades in prison on charges that he funneled FTX customer money into Alameda Research, an affiliated hedge fund, for risky trades, political donations and expensive property before both companies collapsed into bankruptcy last year.
As soon as Monday it will be the turn of another friend to testify: Nishad Singh, the former director of engineering at FTX. But if defense lawyers are unable to shake his story, taking the stand may be Bankman-Fried’s final shot at avoiding prison.
“It’s a very dangerous thing to do,” Adams said.
If he’s convicted and the judge determines he lied, that could add to his sentence and testifying could complicate any appeal. A panel could determine that jurors simply rejected Bankman-Fried’s story, overwhelming any mistakes the trial judge, Lewis Kaplan, may have made.
Bankman-Fried is unlikely to say whether he’ll take the stand until the last minute – after the prosecution rests its case. His lawyers didn’t immediately respond to a request to comment on whether their client will testify.
But Ellison and Wang’s testimony may have already limited his options.
On the witness stand, both senior executives detailed the extent of their knowledge about what Bankman-Fried allegedly knew about the alleged fraud. They lived with him in a $30 million Bahamian penthouse that was shared by FTX executives and employees.
“First-hand witness after first-hand witness who was in the room, at the table, when very damaging things were said and the person saying them and the person directing the criminality and the transfer of the money was him,” said Michael Weinstein, a criminal defense lawyer and former prosecutor. “That’s very, very difficult to counter.”
Wang, Ellison and Nishad pleaded guilty to felonies and agreed to cooperate. Earlier in the case, former FTX software developer Adam Yedidia testified as a prosecution witness under a grant of immunity.
What’s more, Bankman-Fried has done plenty of talking: to reporters, to investors and to author Michael Lewis, who followed him around at critical points of the FTX meltdown for a book on the crypto mogul. If he deviates from things he’s said in the past, the jury will hear about it, from prosecutors.
“It just seems to me, if he testifies it’s a Hail Mary,” Adams said.
Some of Bankman-Fried’s tweets and text messages in group chats are already being used as evidence against him in trial.
Holmes, Goel
It’s unusual for white-collar defendants to testify, but not unheard of. Recent examples include former Theranos Inc. CEO Elizabeth Holmes and Brijesh Goel, a former Goldman Sachs banker, both of whom were convicted after taking the stand.
Holmes was found guilty of fraud in 2022 and Goel was convicted of insider trading in June. Holmes, who’s serving an 11-year sentence, is appealing. Goel will be sentenced Nov. 1.
‘Going Poorly’
Wang and Ellison both admitted, at the start of their testimony, that they had committed a multi-billion-dollar fraud, telling jurors that Bankman-Fried directed him to alter the cryptocurrency exchange’s code so that Alameda was able to draw a $65 billion line of credit.
Later, when FTX was on the cusp of bankruptcy, Wang testified that a reassuring tweet by Bankman-Fried was a lie.
“FTX was not fine, and the assets were not fine,” Wang said.
Read more: Group Chats, Tweets and Audio Tape: The Evidence Against SBF
Ellison followed, detailing Bankman-Fried’s control over Alameda, even after he made her CEO. Prosecutors showed jurors a set of seven alternative, misleading Alameda balance sheets she said she prepared at his direction to avoid having lenders catch on to its massive borrowing of customer money from FTX.
“Bankman-Fried may have little choice but to take the stand because the trial appears to be going poorly for him,” said Kevin O’Brien, a former federal prosecutor who’s now a defense lawyer in New York.
“His very eccentricity may bring home something no other witness could, namely, that he is so detached from real-life concerns and financial realities that he gave little thought to what he was doing,” he said.
While that’s not a defense to fraud, it could draw some sympathy from jurors, he said.
Or it may be that Bankman-Fried, will insist that he’s in the best position to explain himself. It’s a spot that lines up with his former role as the public face of his company and, to a large extent, the crypto industry.
“People who run large businesses often have great confidence,” Weinstein said. “I don’t care what you say as my lawyers, I want to testify. I want to tell my side of the story.”
The case is US v. Bankman-Fried, 22-cr-00673, US District Court, Southern District of New York (Manhattan).
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