Disgraced crypto mogul Sam Bankman-Fried made a case for innocence in today’s instalment of the former FTX boss’s fraud and money laundering trial.
Defence attorney Mark Cohen, whose client faces a litetime behind bars for alleged criminal activity while running the collapsed cryptocurrency exchange, attempted to pivot the blame to Bankman-Fried’s fomer business partner and occasional girlfriend Caroline Ellison.
Ellison ran Alameda Research, a sister company of FTX that dealt in quant trading and venture capital.
She has already pleaded guity to siphoning FTX customer funds out of the exchange and into Alameda, though has painted her former lover as the evil mastermind behind the whole ordeal.
Not true, Bankman-Fried and his attroney tried to convince the jury today.
Rather, Bankman-Fried blamed Ellison for her failure to hedge losses while running Alameda, which eventually imperiled the hedge fund, causing Ellison and Bankman-Fried to allegedly prop up the balance sheet with FTX customers’ funds.
In court notes published in The Guardian’s live coverage today, Bankman-Fried was quoted: “I called a meeting with Caroline and I told her that I was very concerned about Alameda… I said that I was very concerned that it’s fallen from $40 billon to $10 billion over the prior year, and that as far as I could tell, it still had not hedged against the risk of market collapse.”
“Alameda might become insolvent,” if the market plunged even further, he quoted himself as saying. Cohen asked how Ellison responded.
“Um, she started crying,” Bankman-Fried said. “She agreed that Alameda should have hedged.”
He recalled saying that “maybe I hadn’t communicated clearly enough with her about hedging earlier”.
According to Bankman-Fried, Ellison agreed to step down, though she decided to stay on.
This resonates with previous testimony from Ellison, who has portrayed herself as a leader far out of her depth, who prayed for the whole empire to collapse so she could cut her losses and run.
At the time of writing, Bankman-Fried was facing cross-examination from Assistant US Attorney Danielle Sassoon.
“Mr Bankman-Fried, would you agree that you know how to tell a good story?” Sassoon opened with?
It’s a loaded question, for as Mark Twain once said: “Never let the truth get in the way of a good story.”