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Sam Bankman-Fried testifies in his crypto fraud trial without jury present

Sam Bankman-Fried did not make a scheduled appearance before the jury in his crypto fraud trial on Thursday, in a surprise decision that tamped the anticipation swirling around the high-profile case.

The former FTX executive instead testified without the jury present, so that the judge overseeing the case, Lewis Kaplan, could first decide what portions of his testimony are admissible.

Bankman-Fried’s planned testimony could now take place as soon as Friday, although Kaplan has not yet been determined how much will be admissible.

“We’re in the home stretch,” Kaplan told jurors as he sent them home for the day, saying he knew it was a little surprising for them to have the rest of the afternoon off.

Bankman-Fried, 31, was the CEO of the bankrupt cryptocurrency exchange FTX, which collapsed as the industry crashed in late 2022.

Bankman-Fried’s decision to testify in his own defense is a risky one, as it will allow prosecutors the chance to cross-examine him. He has so far remained silent through a three-week trial as former members of his inner circle testified that he directed them to commit crimes, including diverting customer funds from FTX to his hedge fund, Alameda Research, and that he lied to investors and lenders.

The court proceedings offered something of a test run for how Bankman-Fried plans to defend himself before jurors, indicating that he will attempt to clarify FTX encryption and data retention practices and explain away seemingly spurious movements of money.

Bankman-Fried was grilled with the sort of questions he will probably face during cross-examination, frequently eliciting choppy answers that made him seem unsure of the conversations he had had with lawyers.

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In one of the most telling exchanges of the day, Bankman-Fried said under questioning from his lawyer and the prosecutor that he thought the company’s terms of service allowed Alameda to use FTX customer funds.

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Bankman-Fried’s testimony comes after prosecution has presented 12 days of testimony in federal court in Manhattan, including from his former business partners and his ex-girlfriend.

Prosecutors have accused Bankman-Fried of pillaging FTX for his own high-flying ends. He faces seven counts of wire fraud and conspiracy to launder money, felony charges that could carry sentences of decades in prison if he is convicted. He has pleaded not guilty to the allegations that he stole FTX customers’ funds and used them for a $40m Bahamas penthouse, A-list celebrity endorsements and $100m in political contributions.

Federal prosecutors made a star witness of Caroline Ellison, Bankman-Fried’s former girlfriend and the CEO of Alameda Research, a hedge fund closely associated with FTX, through which Bankman-Fried allegedly funneled FTX customers’ cash. Ellison testified that Bankman-Fried masterminded billions of dollars in fraud, that his disheveled boy genius appearance was a carefully curated facade, and that her difficult personal relationship with him poisoned the businesses they ran together.

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Ellison and Gary Wang, a co-founder of FTX, have pleaded guilty in agreements with federal prosecutors to wire, securities and commodities fraud. Like Ellison, Wang testified against Bankman-Fried, saying that his former colleague was not surprised to hear about an $8bn hole in FTX’s balance sheet. Both Ellison and Wang testified that they committed crimes on Bankman-Fried’s direction.

Prosecutors called their final planned witness, the FBI agent Marc Troiano, when the trial resumed on Thursday morning in federal court in Manhattan after a week-long break.

Bankman-Fried’s decision to speak in his own defense echoes his media tour in the wake of the collapse of FTX. He was asked in November 2022 during his first interview after the exchange evaporated: “Are your lawyers suggesting it’s a good idea for you to be speaking?” Bankman-Fried answered: “No, they are very much not … I have a duty to talk; I have a duty to explain what happened.”

Reuters contributed reporting