In a recent court appearance, former FTX head Sam Bankman-Fried argued the crypto exchange’s downfall was due to errors, not deceit. He shifted blame to Alameda Research, a firm led by his ex-girlfriend Caroline Ellison, for failing to hedge risks.
Bankman-Fried opened his defense by admitting flaws in his erstwhile empire, FTX. The most glaring? No risk manager. But, when his counsel questioned him, he denied Ellison took his advice to shrink Alameda’s gaping financial void. “No,” he said tersely.
His lawyer spun a counter-narrative: FTX and Alameda were well-meant, if flawed, ventures. He explained a hot-button issue—a software feature letting Alameda go into negative balance—as a mere bug-fix. Prosecutors claim it enabled illicit withdrawals from FTX accounts.
In an intriguing twist, Bankman-Fried faulted former colleagues for the feature. He suggested they had the autonomy to decide, painting himself as a guide rather than a dictator.
The ex-CEO also defended his company’s controversial practices. He cited his past at Jane Street’s elite quant shop to justify deleting communications. “It could end up on The New York Times,” he reasoned.
He dismissed earlier testimony by Ellison about his trademark casual look, attributing it to comfort and laziness. Cohen, his lawyer, even grilled him about FTX’s $10-million annual sponsorship of Miami Heat’s arena. “Worth it,” Bankman-Fried insisted, claiming it amounted to a minuscule fraction of FTX’s revenue.
Finally, Judge Kaplan restricted the defense. They can discuss how FTX’s lawyers advised on internal communication deletion but can’t venture into broader issues.
Bankman-Fried’s fate? Yet to be decided, but his legal wranglings have certainly clouded the crypto landscape.
