FTX’s Sam Bankman-Fried tells jury that he didn’t commit fraud or take customer funds

On Friday, Bankman-Fried acknowledged that one of his biggest mistakes was not having a risk management team or chief regulatory officer. That led to “significant oversights,” he said. Cohen walked Bankman-Fried through his background and how he got into crypto. The defendant said he studied physics at the Massachusetts Institute of Technology and graduated in 2014. He then worked as a trader on the international desk at Jane Street for over three years, managing tens of billions of dollars a day in trading. That’s where he learned the fundamentals of things like arbitrage trading. In the fall of 2017, Bankman-Fried founded Alameda Research. “This was when crypto was starting to become publicly visible for the first time,” Bankman-Fried testified. He said people were excited about it, watching bitcoin, which had jumped from $1,000 to $10,000 in a two-month period. Banks and brokers weren’t involved yet and it seemed like there would probably be big demand for an arbitrage provider, he said. “I had absolutely no idea” how cryptocurrencies worked, Bankman-Fried said. “I just knew they were things you could trade.” The first Alameda office was in an Airbnb in Berkeley, California, he said. It was listed as a two bedroom but they used the couch in the living room as a third bed and the attic as a fourth. He started FTX in 2019. Trading volume grew substantially on FTX from a few million dollars a day to tens of millions of dollars that year to hundreds of millions of dollars in 2020. By 2022, that number was up to $10 billion to $15 billion of dollars per day in trading volume, he said. Bankman-Fried said Alameda was permitted to borrow from FTX, but his understanding was that the money was coming from margin trades, collateral from other margin trades or assets earning interest on the platform. At FTX, there were no general restrictions on what could be done with funds that were borrowed as long as the company believed assets were greater than liabilities, Bankman-Fried testified.