The fifth week of the high-stakes trial that has captivated the cryptocurrency world started with Sam Bankman-Fried (SBF) resuming his testimony on the stand earlier than a radical cross-examination by the prosecution.

SBF was hit with intense questioning about his function because the CEO of FTX and the inside workings of the crypto trade in each classes and recounted a few of the key choices he made within the weeks main as much as the collapse of FTX and Alameda Analysis.

Choose Kaplan opened the day’s proceedings by addressing the jury and informing them that it was unsure if the trial would conclude by Nov. 2 and requested if any of them had vital points with persevering with into Nov. 3.

Not one of the jury members objected to the proceedings taking longer, and the proceedings started with SBF resuming his testimony from the prior week.

Remaining testimony

Through the direct examination, protection lawyer Mark Cohen delved into SBF’s tasks because the CEO of FTX. The previous billionaire revealed that he ready precedence lists to tell staff about his actions and the corporate’s strategic objectives.

The protection subsequently submitted a “precedence record” from late September 2022 to early October 2022 into proof as a key exhibit to additional assist the statements.

Cohen highlighted key priorities, beginning with the significance of knowledge. SBF defined that the FTX staff was engaged on a database to make buying and selling sooner and extra accessible for non-developers. SBF’s dedication to those initiatives was evident as he talked about spending roughly 12 hours day by day on them, managing the groups concerned.

Cohen aimed to uncover the income potential of those initiatives, however an objection from AUSA Danielle Sassoon on the type of the query was sustained by Choose Kaplan. Nonetheless, SBF mentioned he believed the initiatives might double FTX’s annual income from $1 billion to $2 billion.

The dialogue then shifted to threat administration at FTX, and SBF informed the courtroom that he was all the time dedicated to threat administration and highlighted the presence of a threat engine to handle potential points.

Cohen then explored discussions about hedging, notably with Caroline Ellison and Sam Trabucco, who have been serving as co-CEOs of Alameda Analysis.

SBF revealed that these conversations befell within the Orchid residence examine; nevertheless, when requested a few particular second involving Alameda’s web asset worth (NAV) and Bitcoin’s worth, an objection from the prosecution was sustained — hanging the testimony.

SBF disclosed that in one dialog, Caroline Ellison acknowledged the necessity for Alameda to hedge and even supplied to step down. Nevertheless, his response was to give attention to placing on the hedges as a substitute of punishing errors.

SBF mentioned he urged for a extra substantial hedging effort in subsequent discussions with Ellison and Trabucco, emphasizing the significance of managing threat successfully.

Cohen additionally inquired a few journey SBF took to the Center East in October 2022, revealing his in depth journey schedule, usually spending 100 days a yr on the street, primarily to Washington, D.C.

SBF revealed that he had been invited to  Dubai for a convention and had met with some sovereign wealth funds. He added that he had been cautious of the conferences since they could upset Binance — its direct rival within the area—  however had gone by way of with them in the end.

Cross-Examination

The cross-examination, performed by Assistant U.S. Lawyer Danielle Sassoon, started with the prosecution difficult SBF on varied statements he had made.

Sassoon started by confronting SBF about his stance on cryptocurrency regulation. She referred to a Twitter publish the place he seemingly steered that his assist for regulation was contingent on safeguarding prospects.

Whereas SBF couldn’t recall the precise tweet, he admitted to creating a press release akin to “F*ck regulators” in personal, implying that it might need been a public relations tactic.

The cross-examination then delved into SBF’s selection of phrases on Crypto Twitter. SBF conceded to utilizing derogatory language, referring to a subset of Crypto Twitter customers as “Dumb motherf*ckers.”

Sassoon probed additional, questioning whether or not SBF believed regulation might present FTX with a aggressive benefit over Binance. SBF acknowledged that there have been each execs and cons to this angle.

The questioning then turned to an exploration of SBF’s claims relating to FTX’s threat mannequin and its suitability for the U.S. market. SBF mentioned that some points of FTX’s threat mannequin would work effectively within the U.S., highlighting nuances in his earlier statements.

The cross-examination additionally touched upon SBF’s interview with The New York Instances’ Andrew Ross Sorkin relating to FTX’s borrow lending facility. SBF couldn’t recollect the specifics of the interview however agreed to overview it later.

Sassoon additionally raised considerations about prospects going detrimental and questioned whether or not typical prospects might keep detrimental account balances for prolonged intervals with out being liquidated, emphasizing the correlation with collateral and features of credit score.

Sassoon introduced an e-mail from March 2022 that didn’t point out entrance operating, difficult SBF’s assertion that Alameda performed by the identical guidelines as different individuals. SBF’s response revealed uncertainty, and Sassoon probed additional into his characterization of Alameda Analysis Restricted as a separate entity and his reference to FTX as a impartial market infrastructure. SBF’s recollections have been combined on these issues.

All through the cross-examination, SBF acknowledged sure factors, akin to Alameda having accounts with the “Permit Unfavourable” flag and the power of consumers to withdraw substantial sums with out dealing with liquidation dangers. He didn’t dispute these claims.

The questioning additionally prolonged to SBF’s involvement in varied monetary transactions, together with the acquisition of Binance’s fairness stake in FTX for $2 billion, investments in Genesis Digital Belongings, and the acquisition of Storybook Brawl for $20 million. Sassoon additionally raised questions on an actual property transaction involving the CEO of The Block, which SBF initially couldn’t recall.

The cross-examination continued with Sassoon delving into SBF’s involvement in varied funding choices. SBF acknowledged directing the funding in Modulo Capital however was extra cautious in his response when questioned about his function in investing in K5, stating that he directed “AN funding,” however not essentially the precise one in query. Nevertheless, when requested about his resolution to put money into Robinhood, SBF affirmed that it was certainly his selection.

The prosecution then turned its consideration to SBF’s function on the board of administrators of Alameda Analysis Restricted. Sassoon challenged SBF by asking if he was the one director on the board.

SBF responded:

“This makes it seem to be I used to be as of then. It wasn’t my intention to be.”

Choose Kaplan intervened as a result of confusion brought on by SBF’s response, mentioning that SBF owned 90% of the inventory, and questioned whether or not he grew to become a director by mistake. SBF firmly replied, “No.”

AUSA Sassoon launched an affidavit that SBF had signed, however the cryptocurrency entrepreneur didn’t seem to acknowledge the doc. Sassoon questioned SBF’s resolution to file the affidavit with out studying it.

The questioning then turned to SBF’s possession of Robinhood shares and whether or not he was conscious that many shoppers couldn’t entry their funds throughout a particular interval. SBF acknowledged being conscious of the difficulty however denied contemplating calling Robinhood to accumulate shares.

Sassoon additionally probed SBF on his involvement in directing funds to pay lenders whereas Alameda was repaying its money owed. SBF conceded that he directed these funds however argued that he didn’t consider it posed a big threat to the FTX trade.

The prosecution emphasised the danger inherent in taking cash from FTX to repay lenders and inquired whether or not SBF understood the opportunity of a monetary gap rising. SBF acknowledged the inherent threat however didn’t absolutely agree with characterizing the motion as margin buying and selling.

Because the direct examination progressed, the main focus shifted to spreadsheets and the sequence of occasions main as much as SBF’s information of Alameda’s lack of ability to pay. SBF talked about an alternate spreadsheet, Alt 7, because the one he had seen.

AUSA Sassoon pressed additional, asking SBF if he recalled receiving a number of tabs from Ellison.

SBF appeared unsure however admitted that there might have been a number of tabs. Sassoon then launched Google metadata, indicating that SBF had accessed an alternate spreadsheet.

Regardless of objections from SBF’s protection, Choose Kaplan overruled and allowed the road of questioning to proceed.

The proceedings for the day concluded with questions on SBF’s involvement in directing enterprise investments and his efforts to lift funds within the Center East. SBF confirmed his participation in these actions.

Courtroom adjourned

The prosecution informed Choose Kaplan that it intends to proceed the cross-examination for one more two hours when the courtroom reconvenes on Oct. 31.

As soon as that concludes, the protection will get one other probability for a direct examination to handle the problems and considerations raised throughout the cross-examination.

The prosecution additionally confirmed that it has two rebuttal witnesses ready to take the stand within the coming days.