The former crypto mogul, Sam Bankman-Fried, took the witness stand in a high-profile trial, defending himself against accusations of fraud and conspiracy.

The crypto exchange he founded failed due to mistakes rather than malicious intent, claimed Bankman-Fried. He admitted to making critical errors, the biggest of which was not having a risk management system in place. He explained that FTX’s risk engine, a key feature, had become overloaded as the exchange grew rapidly. He described a potentially catastrophic feedback loop that risked trillions of dollars in losses and suggested an “allow-negative” feature to prevent such disasters. This feature was implemented to avoid liquidating Alameda Research’s positions and not a deliberate attempt to misuse customer funds.

S.B.F.’s legal approach centers on undermining the credibility of Caroline Ellison, his former Alameda C.E.O. and ex-partner. However, during the court proceedings, she steadfastly maintained that she committed her alleged offenses under the explicit orders of her superior, and she provided substantial evidence to support her claim.

Throughout his testimony, Bankman-Fried sought to distance himself from key decisions, claiming that he did not supervise his colleagues closely. He mentioned that he did not know about the extent of Alameda Research’s borrowing from FTX and defended his practice of handling support tickets to stay connected with customers.

Bankman-Fried’s testimony also addressed his role as the public face of FTX and his choice of clothing, contradicting previous testimony about his attire’s intended effect on the company’s image.

He expressed a lack of awareness about certain financial transactions and liabilities within his companies, including a massive $8 billion liability associated with Alameda Research, which he claimed to have discovered only in October 2022.

The trial’s proceedings have been marked by Bankman-Fried’s lengthy and sometimes evasive responses, leading to objections from prosecutors and admonishments from the judge. The jury observed these exchanges closely.

Overall, Bankman-Fried’s testimony seemed to portray him as a hands-off CEO who was less involved in financial matters than one might expect. The jury will now consider his defense as the trial continues.

Categorized in: