On direct examination, Bankman-Fried described Alameda's liabilities, FTX's November withdrawal crisis, emergency financing efforts, and post-bankruptcy events. Cross-examination contrasted his public statements with private messages and evidence about Alameda's credit line, liquidation treatment, financial condition, and disclosures.
Full day summary
On direct examination, Bankman-Fried testified that an October database query revealed an approximately $8 billion fiat-related liability, which he believed was already reflected in Alameda's financials. He said Alameda still appeared to have roughly $10 billion in positive net asset value. He described warning Caroline Ellison about inadequate hedging, the November surge in FTX withdrawals, the decline in Alameda's assets, his removal of a public assurance that FTX was fine, and his efforts to liquidate Alameda assets and seek financing. He also testified about Binance's brief agreement to acquire FTX, Apollo's review of financial information, his post-bankruptcy public statements, and asset transfers undertaken at the direction of Bahamian regulators.
During a sidebar, the court sustained the government's objection to proposed testimony that Bankman-Fried had told Nishad Singh neither of them had done anything wrong. The defense argued that the statement showed Bankman-Fried's state of mind, while the government characterized it as a retrospective, self-serving assertion outside the cited hearsay exception.
On cross-examination, prosecutors contrasted Bankman-Fried's public statements about Alameda, customer safety, regulation, and risk controls with private messages and evidence concerning Alameda's account privileges. He acknowledged higher-level involvement in Alameda trading and hedging discussions, a $65 billion maximum credit line, Allow Negative settings, different liquidation treatment, and directing a code alteration so Alameda would not be liquidated like typical customers. He said he did not disclose that alteration to customers or Congress and did not recall disclosing it to investors. The examination also addressed the MobileCoin incident, agreements signed after their stated effective dates, venture investments, Robinhood shares, lender repayments, and Alameda's obligations to FTX. Bankman-Fried acknowledged knowing by September 2022 that Alameda owed FTX more than $10 billion while maintaining qualifications about his knowledge, beliefs, and the context of earlier statements.