Sam Bankman-Fried thought ‘taking FTX deposits through Alameda was legal’: Report

The former FTX CEO took the stand for the first time in his criminal trial, but without members of the jury present.

Former FTX CEO Sam “SBF” Bankman-Fried addressed a New York courtroom under oath without the 12-member jury present.

According to reports from the courtroom on Oct. 26, SBF’s highly anticipated testimony kicked off with defense attorney Mark Cohen questioning the former FTX CEO on his use of the messaging app Signal and retention of communications data at the crypto exchange. Bankman-Fried reportedly claimed he acted in accordance with company policies on records, and none of the media set to “auto-delete” were “channels for decisions.”

“Why did you turn off auto-delete?” Cohen asked Bankman-Fried.

“I had heard from regulators,” he replied.

Cohen pressed the former FTX CEO on the creation of North Dimension, an alleged “shadowy entity” used to launder customer funds from the crypto exchange through Alameda Research. According to SBF, former chief regulatory officer Dan Friedberg provided him the papers setting up the firm, which he signed without question.

“Did you believe taking FTX deposits through Alameda was legal?” Cohen asked SBF.

“I did,” he replied.

“I was CEO of both at that time,” said Bankman-Fried on establishing North Dimension under Alameda and FTX. “FTX didn’t have a bank account.”

One of the key issues in the U.S. government’s case against SBF centers around allegations the former FTX CEO used customer funds from the crypto exchange to make investments through Alameda without users’ knowledge. Bankman-Fried testified that he communicated with Friedberg, law firm Fenwick & West, and FTX former general counsel Can Sun regarding the investments.

“I thought, only to futures trading,” said Bankman-Fried on parts of FTX’s terms of services concerning the use of customer funds. “And Alameda was authorized to do that.”

Bankman-Fried will be the last witness to take the stand after more than three weeks in court laying out details of the alleged commingling of funds between FTX and Alameda. According to Kaplan, the jury will “decide in the first few days of next week” without hearing the entirety of the former FTX CEO’s testimony.

SBF has pleaded not guilty to all seven charges in his criminal case, but he is expected to face five more counts in a second trial scheduled to start in March 2024.

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This is a developing story, and further information will be added as it becomes available.