{"id":86357,"date":"2023-10-30T15:41:47","date_gmt":"2023-10-30T13:41:47","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=86357"},"modified":"2025-09-13T05:06:30","modified_gmt":"2025-09-13T02:06:30","slug":"sam-bankman-fried-refutes-witnesses-statements-in-the-ftx-collapse-case","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/sam-bankman-fried-refutes-witnesses-statements-in-the-ftx-collapse-case\/","title":{"rendered":"Sam Bankman-Fried refutes witnesses&#8217; statements in the FTX collapse case"},"content":{"rendered":"<div class=\"wp-block-text-wrappers-keypoints article_keypoints\">\n<ul class=\"wp-block-list\">\n<li>Bankman-Fried attributed the collapse of the exchange to staff miscalculations.<\/li>\n<li>The launch of FTX was intended to be sold to Binance.<\/li>\n<\/ul>\n<\/div>\n<p>Testimony by the former FTX<a href=\"https:\/\/forklog.com\/en\/news\/ftx-group-files-for-bankruptcy-sam-bankman-fried-resigns-as-ceo\"> <\/a>Sam Bankman-Fried (SBF) before jurors in the case of <a href=\"https:\/\/forklog.com\/en\/news\/ftx-group-files-for-bankruptcy-sam-bankman-fried-resigns-as-ceo\">the collapse of the exchange<\/a> on a number of fundamental points contradicted the positions of key witnesses. This is reported by <a href=\"https:\/\/www.coindesk.com\/policy\/2023\/10\/30\/sam-bankman-fried-implied-his-friends-lied-about-his-role-in-ftxs-collapse\/\"><a href=\"https:\/\/forklog.com\/en\/news\/ftx-group-files-for-bankruptcy-sam-bankman-fried-resigns-as-ceo\">CoinDesk<\/a><\/a>.<\/p>\n<p>Journalists noted that the entrepreneur used far more words than were necessary to answer the questions. For this, the judge repeatedly rebuked him.<\/p>\n<p>SBF explained the collapse of FTX and Alameda Research as the result of staff misjudgments and mistakes, not intentional fraud.<\/p>\n<h2 class=\"wp-block-heading\"><strong>Who is to blame? Bankman-Fried&#8217;s version<\/strong><\/h2>\n<p>According to the former CEO, he did not deceive anyone and did not misappropriate client funds \u2014 he built a company that turned out to be largely the opposite of his original conception.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>&#8220;The biggest mistake was the absence of a dedicated risk-management team [\u2026]. We had several people involved to varying degrees, but no one was fully dedicated. There were significant omissions&#8221;,<\/em> Bankman-Fried said.<\/p>\n<\/blockquote>\n<p>Testimony <a href=\"https:\/\/forklog.com\/en\/news\/acted-in-good-faith-early-days-of-the-sam-bankman-fried-trial\"> echoed the arguments of his lawyers<\/a>. The latter argued that the co-founder of FTX could not keep track of all processes in the fast-developing company at a time when the industry faced a series of market shocks.<\/p>\n<p>From Bankman-Fried&#8217;s remarks it followed that all key witnesses in the case gave false testimony.<\/p>\n<p>In particular, regarding the <a href=\"https:\/\/forklog.com\/en\/news\/ftx-used-a-random-number-to-generate-the-size-of-its-insurance-fund\">insurance fund&#8217;s operating algorithm<\/a> of the platform, the former head of FTX said he was not the author of the idea and did not deal with this issue.<\/p>\n<p>Also he refuted involvement in the &#8220;demonstration&#8221; of revenue for 2021 <a href=\"https:\/\/forklog.com\/en\/news\/ex-ftx-tech-chief-describes-sbfs-unilateral-decisions\">in the amount of $1 bln<\/a>. The former head of the crypto exchange stressed that he did not discuss such a proposal.<\/p>\n<p>Regarding hedging risks at Alameda Research, SBF said he discussed the matter with former head Caroline Ellison on a regular basis, which led nowhere.<\/p>\n<p>Earlier, Ellison stated that at Bankman-Fried&#8217;s instruction she developed<a href=\"https:\/\/forklog.com\/en\/news\/former-alameda-chief-cites-the-things-that-made-sam-bankman-fried-lose-it\"> seven different variants<\/a> of investor reporting that obscured the true state of affairs. SBF claimed that the idea originated with Ellison herself.<\/p>\n<p>According to the entrepreneur, <a href=\"https:\/\/forklog.com\/en\/news\/bloomberg-and-wsj-report-an-8-billion-hole-in-ftx-balance-sheet\">the $8 bln hole<\/a> he had no idea about until October 2022.<\/p>\n<p>Regarding <a href=\"https:\/\/forklog.com\/en\/news\/ftx-case-alamedas-misappropriations-and-sam-bankman-frieds-defense\">donations<\/a>, SBF said he did not give concrete instructions to subordinates, taking responsibility only for the Guarding Against Pandemics initiative, which was led by his brother.<\/p>\n<p>According to CoinDesk, the version of events thus described appeared &#8220;plausible&#8221; to some jurors.<\/p>\n<h2 class=\"wp-block-heading\"><strong>Binance&#8217;s role<\/strong><\/h2>\n<p>The former CEO testified that FTX was created to serve a niche that would later attract Binance. Journalists at <a href=\"https:\/\/decrypt.co\/203544\/sam-bankman-fried-always-planned-to-sell-ftx-to-binance\">Decrypt<\/a> noted this.<\/p>\n<p>In 2019, SBF and co-founder Gary Wang conceived a crypto exchange focused on margin trading and the ability to execute large trades. At the time, the niche was unfilled, which could have attracted Binance.<\/p>\n<p>The competitor indeed <a href=\"https:\/\/forklog.com\/en\/news\/binance-chief-changpeng-zhao-announces-purchase-of-ftx\">expressed willingness<\/a> to acquire FTX, but this happened only in November 2022. However Changpeng Zhao&#8217;s company <a href=\"https:\/\/forklog.com\/en\/news\/binance-abandons-bid-for-ftx-justin-sun-says-he-will-help-find-a-solution\">declined<\/a> the deal, citing &#8220;uncontrollable&#8221; issues with the platform.<\/p>\n<p>According to SBF, attracting customers at an early stage was a difficult task. Word of mouth helped turn the startup into a viable business. In 2019, the exchange&#8217;s revenue reached $20 million. By 2021, daily revenue exceeded $3 million.<\/p>\n<p>One of FTX&#8217;s advantages was its risk-management mechanism. Compared with peers of the time, the system responsible for liquidating traders&#8217; positions was more sophisticated, Bankman-Fried noted.<\/p>\n<p>Wang was the code&#8217;s architect, while SBF said he did not write or read it, contributing from a conceptual standpoint.<\/p>\n<p>Another attractive feature of the platform was cross-margin trading \u2014 an option that allowed traders to use excess margin in one trade to satisfy requirements in others.<\/p>\n<p>Rather than absorbing FTX, Binance developers replicated the mentioned functionality.<\/p>\n<p>According to SBF, his inspiration to launch the utility token FTT came from Binance&#8217;s BNB experience. He also intended to implement a burn feature to reward holders of the asset.<\/p>\n<p>Binance became the first investor in FTX, providing BNB to the exchange worth $80 million as seed capital. Subsequently, Bankman-Fried&#8217;s organisation <a href=\"https:\/\/forklog.com\/en\/news\/ftx-chief-explains-divorce-from-binance-as-a-difference-in-business-approach\">bought back<\/a> this stake for $2.1 billion in FTT and other digital assets.<\/p>\n<p>Binance&#8217;s decision <a href=\"https:\/\/forklog.com\/en\/news\/alameda-research-says-it-would-buy-ftt-from-binance-at-22-per-token\">to sell its utility tokens<\/a> in November 2022 set off a chain of events that culminated in FTX&#8217;s bankruptcy.<\/p>\n<p>Bankman-Fried&#8217;s continued testimony is scheduled for 30 and possibly 31 October.<\/p>\n<p>Earlier in court, SBF&#8217;s inner circle testified \u2014 former FTX CTO Nishad Singh<a href=\"https:\/\/forklog.com\/en\/news\/ex-ftx-tech-chief-describes-sbfs-unilateral-decisions\"> <\/a> and former Alameda CEO Caroline Ellison<a href=\"https:\/\/forklog.com\/en\/news\/former-alameda-ceo-reveals-details-of-a-meeting-ahead-of-the-firms-collapse\"> <\/a>.<\/p>\n<p>In October, new management and creditors approved a plan to compensate clients. By mid-2024, users could receive $9.2 billion in claims.<\/p>\n<p>It was also disclosed that FTX is considering whether to reorganize the platform with a partner, on its own, or to find a buyer.<\/p>\n<p>As reported, U.S. prosecutors <a href=\"https:\/\/forklog.com\/en\/news\/lawyers-weigh-in-on-sam-bankman-frieds-chances-in-court\">indicted<\/a> SBF on seven criminal counts. He <a href=\"https:\/\/forklog.com\/en\/news\/sam-bankman-fried-refuses-to-plead-guilty-trial-set-for-october\">has not entered a plea<\/a> to any of them.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The testimony of former FTX CEO Sam Bankman-Fried (SBF) before jurors in the case of the exchange&#8217;s collapse contradicted the positions of key witnesses.<\/p>\n","protected":false},"author":1,"featured_media":86358,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[83,1162,1236,1150,1403],"class_list":["post-86357","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-business","tag-court-cases","tag-ftx","tag-news-plus","tag-sam-bankman-fried"],"aioseo_notices":[],"amp_enabled":true,"views":"11","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/86357","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=86357"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/86357\/revisions"}],"predecessor-version":[{"id":86359,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/86357\/revisions\/86359"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/86358"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=86357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=86357"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=86357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}