On October 26th, Sam "SBF" Bankman-Fried, the former CEO of the cryptocurrency exchange FTX, underwent a closed-door interrogation separate from the ongoing jury trial.
Prosecutor Danielle Sassoon from the Southern District of New York questioned Bankman-Fried extensively on deleted corporate messages and financial transactions, adding a complex layer to a criminal trial that began on October 3rd.
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Sassoon asked Bankman-Fried why he conducted FTX's corporate communications using the encrypted messaging app Signal. Bankman-Fried said he only did so after receiving approval from the company's legal counsel, Daniel Friedberg.
However, he admitted that he activated Signal's auto-delete feature without prior approval, setting it to erase messages after a week.
During the questioning, Bankman-Fried justified his actions by pointing to FTX's existing document retention policy, which he claimed was in effect since 2021 and was focused mainly on emails. He said this policy didn't necessarily apply to other forms of communication.
When Sassoon inquired if he had the approval to delete messages involving colleagues like Caroline Ellison, Gary Wang, and Nishad Singh, SBF responded:
Not specifically. I apologize, I wish I had that <document retention> policy now. My memory...
In addition to the issues surrounding message deletion, the testimony also ventured into financial activities related to FTX. Sassoon questioned Bankman-Fried about moving customer funds from a bank account linked with Alameda Research to another company known as North Dimension, which has been described as a "shadowy entity" suspected of money laundering.
Bankman-Fried claimed he didn't know why the move was made but speculated that banks might have felt more comfortable with North Dimension than with well-known, crypto-connected hedge funds like Alameda.
Regarding the deletion of conversations about seven "fake" balance sheets and an alleged $13 billion hole in FTX's accounts, Bankman-Fried asserted that his actions were within policy boundaries. He explained that he was worried these communications could be misinterpreted and cause embarrassment.
At the end of the hearing, Judge Kaplan, who presides over the case, remarked that Bankman-Fried has an "interesting way of responding to questions." As the trial concludes, the legal team defending Bankman-Fried, led by attorneys Mark Cohen and Christian Everdell, is gearing up for its closing arguments.
This case is expected to conclude within a week, and Bankman-Fried could be convicted on up to seven charges. A second trial, where additional criminal counts will be addressed, is slated for March 2024.
