1.Samuel Bankman-Fried — Direct (Part 3)
474 linesUNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, v. 22 CR 673 (LAK) SAMUEL BANKMAN-FRIED, Defendant. Trial
New York, N.Y. October 30, 2023 9:30 a.m. Before: HON. LEWIS A. KAPLAN, District Judge APPEARANCES DAMIAN WILLIAMS United States Attorney for the Southern District of New York BY: DANIELLE R. SASSOON NICOLAS ROOS DANIELLE KUDLA SAMUEL RAYMOND THANE REHN Assistant United States Attorneys COHEN & GRESSER, LLP Attorneys for Defendant BY: MARK S. COHEN CHRISTIAN R. EVERDELL SRI K. KUEHNLENZ DAVID F. LISNER Also Present: Luke Booth, FBI Kristin Allain, FBI Arjun Ahuja, USAO Paralegal Specialist Grant Bianco, USAO Paralegal Specialist
(Trial resumed; jury not present)
JUDGE KAPLAN: I am going to tell the jury that it's unclear whether we will finish by the end of Thursday and see if any of them has a real serious problem about sitting on Friday, if we are not done, and to be aware that we may go into next week.
Let's get the witness on the stand.
(Jury present)
JUDGE KAPLAN: Good morning, everyone. I hope you had a nice weekend, especially that wonderful day we had Saturday.
It is not clear that we will be able to finish by Thursday afternoon. I would appreciate it if after the morning break, if any of you would be very seriously inconvenienced by holding court this coming Friday, if we are not done, that you let me know in a note, and let me know what the problem is. And be aware that if we are not finished this week, we will go into next week at that point.
Mr. Bankman-Fried, you are still under oath.
Mr. Cohen, you may continue.
MR. COHEN: Thank you, your Honor. SAMUEL BANKMAN-FRIED, resumed. DIRECT EXAMINATION (cont'd)
BY MR. COHEN:
MR. COHEN: Good morning, Mr. Bankman-Fried.
SAMUEL BANKMAN-FRIED: Good morning.
MR. COHEN: Mr. Bankman-Fried, when we left off last week we were speaking about the period of September and October of 2022. During your time as CEO of FTX, did you prepare priorities lists?
SAMUEL BANKMAN-FRIED: Yes, I did.
MR. COHEN: What were those?
SAMUEL BANKMAN-FRIED: They were lists that I would post in Slack every couple of weeks of what I and the company were working on.
MR. COHEN: Did you prepare such lists in September and October of 2022?
MR. COHEN: What was the purpose of these lists?
SAMUEL BANKMAN-FRIED: They had a few purposes. One was so that I could communicate to the company what I was and wasn't focusing my attention on. One was so that the employees could give feedback on it if there are things they thought I should be changing, things I should be more highly prioritizing. One was that I could get updates from employees on the things I was paying attention to.
MR. COHEN: Would you prepare them on a regular basis?
SAMUEL BANKMAN-FRIED: Yup. Every couple of weeks.
MR. COHEN: In the ordinary course of FTX's business?
MR. COHEN: Can we call up DX-5 for identification, please, just for the witness only.
MR. COHEN: Mr. Bankman-Fried, take a moment and go through this document and let me know if you recognize it.
SAMUEL BANKMAN-FRIED: Yes, I do.
MR. COHEN: What is it?
SAMUEL BANKMAN-FRIED: That is one of the priority lists from late September, early October of 2022.
MR. COHEN: The defense offers Exhibit 5.
MS. SASSOON: No objection.
JUDGE KAPLAN: Received.
(Defendant's Exhibit 5 received in evidence)
MR. COHEN: May we publish it, your Honor?
JUDGE KAPLAN: Yes.
MR. COHEN: Looking at first page where it says priorities, there are a number of names, Mr. Bankman-Fried. I don't want you to read them all out, but who are these folks generally?
SAMUEL BANKMAN-FRIED: These are generally managers at FTX or people who had self-directed work.
MR. COHEN: If we could continue to the next page. Brian, if we can make the whole page a bit larger.
MR. COHEN: You see there is 16 items on this page?
MR. COHEN: Were these the priorities that you were talking about?
SAMUEL BANKMAN-FRIED: Yes, they are.
MR. COHEN: Brian, condense the page again.
MR. COHEN: If you look at the top it says: Priorities, Sam Bankman-Fried, and then it says 10/9/22. What does that refer to?
SAMUEL BANKMAN-FRIED: That's the date that this post was last updated on.
MR. COHEN: Below that it says currently live issues. What does that refer to?
SAMUEL BANKMAN-FRIED: That was how we referred to the priorities, priorities that were still live, as in still ongoing, not yet completed.
MR. COHEN: If we can come back to the list, Brian.
MR. COHEN: I am not going to go through all 16 items with you, Mr. Bankman-Fried, but just a few.
MR. COHEN: If we can call out number 1, data.
MR. COHEN: It says: Data. Then there is some entries and: Close to done.
What did that refer to?
SAMUEL BANKMAN-FRIED: The FTX data team was building out a second database for FTX in Google Cloud to complement the main AWS database. I was told that the purpose of this was so that nondevelopers could have database access as well, including myself.
MR. COHEN: If we could continue to number 4, call out number 4.
MR. COHEN: API throughput @Gary Wang, @Lelia Clark. ETA, 10/15.
What did that refer to?
SAMUEL BANKMAN-FRIED: During busy times, when markets were moving a lot, FTX's core systems would get backlogged and our largest customers were consistently saying they would trade much more, multiples more on the exchange if they could send more orders, especially during busy periods. So this is a project which had been ongoing for six months or so to roughly 5X, the number of orders that we could process as an exchange.
MR. COHEN: When you said to 5X the orders, what did you mean by that?
SAMUEL BANKMAN-FRIED: There is -- at the core of FTX is what's called the matching engine, which is the piece of computer code where people send orders to buy and sell cryptocurrencies and it pairs those off against each other. So it's what determines -- if you send an order saying, I'd like to buy one Bitcoin for $11,000, there is a seller willing to sell at that price to you. And that piece of computer code could handle -- could basically run through a certain number of orders the user had submitted, of trades they had submitted per second. That number was in the thousands to tens of thousands per second, and this project was to increase by a factor of five, roughly, the number of trades per second that our systems could handle.
MR. COHEN: You've indicated @Gary Wang and @Lelia Clark.
What did that mean?
SAMUEL BANKMAN-FRIED: Those were the people who were chiefly responsible for this project.
MR. COHEN: If we can call out item 15, please.
MR. COHEN: Latency reduction, and then it calls out a person. What did that refer to?
SAMUEL BANKMAN-FRIED: So this was a similar project. Rather than talking about the number of trades per second the exchange could handle, this was talking about how long it took to handle a single trade. So if you sent an order to buy this one Bitcoin and there was a seller, basically how long was it between when you told FTX that you wanted to buy and when FTX said congratulations, you are successful, you bought. That was on the order of 10 to 100 milliseconds, which is to say a tenth of a second or a hundredth of a second, and this project was to make that much faster.
MR. COHEN: Now if we could call out number 6, please.
MR. COHEN: It says: User risk score and then @Nishad Singh, @Alfred Xue, 10/10. How's this going.
What does this refer to?
SAMUEL BANKMAN-FRIED: There were a number of areas on FTX where users would have some ability if we were acting with bad intent to try abuse the system. Credit card fraud was one of the most prominent areas. We were trying to be on the lookout for users who might have stolen someone else's credit card and then trying -- be trying to use it to buy crypto. And we had a lot of speed bumps in place to limit how much new users could take actions that were susceptible to fraud until we determined that they were in fact legitimate. User risk score was an attempt to come up with a single metric for how confident we were that a particular user was not attempting to do anything malicious.
MR. COHEN: And it says @Nishad Singh, @Alfred Xue.
Who was that?
SAMUEL BANKMAN-FRIED: So Nishad, obviously, was the head of engineer. Alfred was one of the developers at FTX who worked for Nishad.
MR. COHEN: We can take that down.
Finally, if you can call up number 9, item 9, please.
MR. COHEN: Getting accounting right on FTX @Andrea Lincoln ETA, 10/15, what did this refer to?
SAMUEL BANKMAN-FRIED: This was a significant and long-running project to overhaul FTX's accounting infrastructure. The core goal was for the developer team to have at all points in real time displayed what FTX's revenue was, what its expenses were, how much was in each bank account and how much it had invested, how much funding it had received, everything else that went into its financial statements.
MR. COHEN: Go ahead.
SAMUEL BANKMAN-FRIED: Prior to this, each year there were -- it took months of work to get the developer team and the accounting team and finance team on the same page about what each of the terms meant about exactly what we are trying to calculate for financials in the first place. So the goal here was to clean all of that up.
MR. COHEN: Again, who was Andrea Lincoln?
SAMUEL BANKMAN-FRIED: She was one of the developers at FTX.
MR. COHEN: Had she been one of the people who worked on the bug-fix project we talked about?
SAMUEL BANKMAN-FRIED: She had been involved, yeah.
MR. COHEN: How, if at all, did getting accounting right relate to the bug fix project?
SAMUEL BANKMAN-FRIED: It did to some extent. Part of getting accounting right meant that the dev team had to understand the fiat@ account very well. Otherwise, the accounting wouldn't have been right, since this project required it, but it was also much broader than that and included, among other things, making it easier to calculate and display FTX's total revenue ever. It was prompted by, in part, the fiat@ bug, but also, in part, general concerns about it being messy to figure out exactly what -- reconciling FTX's finances each year.
MR. COHEN: Brian, you can take down number 9.
MR. COHEN: Just looking at this page, Mr. Bankman-Fried, there are 16 items. How much of your personal item did they take up?
SAMUEL BANKMAN-FRIED: I was probably spending 30 minutes to an hour per day on each one of these, so maybe 12 hours a day total on these.
MR. COHEN: What would you do with your personal time on these projects?
SAMUEL BANKMAN-FRIED: It depended on the project. There were a few of these for which the time I spent was effectively doing the project itself. Those were things for which it was mostly having conversations with people. So if there is a deal that needed to be negotiated, I might be directly involved in that.
For most of these, however, what I would do would be, at a high level, manage the people who were themselves implementing this project and, once they had something built, give feedback on how it felt. I might say, hey, I think it would be cool if we had this sort of feature for users. A developer would build it out. And then I would test it out and say: I found it confusing where this button was. I found this language confusing. Did other people have the same impression.
MR. COHEN: In total, how much revenue did these 16 items relate to?
SAMUEL BANKMAN-FRIED: So obviously many of them didn't end up getting done.
MS. SASSOON: Objection. Form.
JUDGE KAPLAN: Sustained.
MR. COHEN: What was the impact, if any, of these items on revenue?
SAMUEL BANKMAN-FRIED: At the time my belief was that, put together, these would roughly double FTX's revenue.
MR. COHEN: From what to what?
SAMUEL BANKMAN-FRIED: From roughly 1 billion per year to roughly 2 billion per year.
MR. COHEN: We can take DX-5 down.
MR. COHEN: Mr. Bankman-Fried, in the September, October period, did you have an understanding of what constituted customer funds?
SAMUEL BANKMAN-FRIED: Yes, I did.
MR. COHEN: Can you tell us what it was?
SAMUEL BANKMAN-FRIED: Yeah. If you have a purely spot exchange, no margin, no futures, no leverage, no borrowing, then customer one deposits ten Bitcoins, customer two deposits five Bitcoins, the customer funds are those 15 Bitcoins.
If you have a margin exchange, like FTX, then customer one deposits ten Bitcoins, customer three withdraws three Bitcoins, going to negative three Bitcoins, likely collateralized by some other asset, the customer funds would be the seven Bitcoins remaining; in other words, the net between all users put together.
MR. COHEN: On FTX's system, when the customer withdrew these Bitcoins, what could the customer do with them?
SAMUEL BANKMAN-FRIED: They could do anything with those Bitcoins. Those were not customer funds anymore. When a customer withdrew those Bitcoins, that was the customer's Bitcoins. So customer two in that hypothetical could spend the three Bitcoins on rent, they could spend it on food, they could spend it on vacation or anything. FTX's goal was to manage risk, to as best we could.
MS. SASSOON: Objection. Beyond the scope of the question.
JUDGE KAPLAN: Yes. Strike FTX's goal and so forth after that.
MR. COHEN: Let me ask another question. In connection with the customer borrows, did FTX attempt to manage risk?
SAMUEL BANKMAN-FRIED: Yes, it did.
MR. COHEN: How did it do that?
SAMUEL BANKMAN-FRIED: The core risk that FTX faced related to borrows was what would happen if there was an account that went overall negative for which that customer could not or would not be able to have enough value. So if all of the customers' assets became less than all of the customers' liabilities, that could potentially create a hole in the system. That was the core risk that FTX was trying to manage.
MR. COHEN: And how was it trying to do that?
SAMUEL BANKMAN-FRIED: It was trying to do that generally with the risk engine and related processes whereby it would look at users' accounts, look at users' assets, in some cases context on the users, and if we became concerned that the user might end up running out of assets, that the user might end up with an overall negative value, that we would begin to margin call that user, to sell off their positions, close them down and potentially using backstop liquidity providers and have the goal, if possible, of avoiding having to claw back or socialize losses.
MR. COHEN: Let's continue on, Mr. Bankman-Fried. We talked a lot last week about conversations you had about hedging.
MR. COHEN: Up through the middle of 2022.
From June, July, 2022 to September 2022, did you have conversations about hedging?
SAMUEL BANKMAN-FRIED: Yes, I did.
MR. COHEN: Who did you have them with?
SAMUEL BANKMAN-FRIED: Chiefly with Caroline Ellison. In some cases, Ben Xie and Sam Trabucco were also on the thread.
MR. COHEN: Let's take your conversations first with Ms. Ellison between June and September. About how many times did you speak with her about the topic of hedging?
SAMUEL BANKMAN-FRIED: I spoke -- in June and July, I spoke chiefly once, followed up a few times, and then in September we spoke a few times.
MR. COHEN: Let's go to the June, July conversation. Where was that conversation?
SAMUEL BANKMAN-FRIED: That was in the Orchid 6 apartment in the study.
MR. COHEN: What did you say to her and what did she say to you?
SAMUEL BANKMAN-FRIED: I had organized the conversation. This was after the market crash in mid June, when Bitcoin fell to $20,000. This is after the fiat bug had been found and fixed. So this was when Alameda's net asset value was about $10 billion, down from --
MS. SASSOON: Objection.
JUDGE KAPLAN: Yes. All of that is stricken. It's unresponsive.
MR. COHEN: Just say what you said to Ms. Ellison and what she said to you.
SAMUEL BANKMAN-FRIED: Understood.
I called the meeting with Caroline, and I told her that I was very concerned about Alameda, about, to some extent, its historical failure to hedge, but much more so about its current market exposure.
MR. COHEN: Go on.
SAMUEL BANKMAN-FRIED: I said that I was very concerned that its NAV had fallen from 40 billion to 10 billion over the prior year, and that, as far as I could tell, it still had not hedged against the risk of a market collapse, that the 70 percent crash to that point had led to the decrease in NAV, and I said that if there were another 50 percent broad market decrease, I was worried that Alameda might become insolvent.
MR. COHEN: What did she say?
SAMUEL BANKMAN-FRIED: She started crying. She agreed. And she agreed that Alameda should have hedged. She also said that maybe it shouldn't have made some of the venture investments. She said she was also concerned about it. And she also offered to step down.
MR. COHEN: How did you react?
SAMUEL BANKMAN-FRIED: Well, I kind of took them point by point. On the last point, I said it was her decision what she wanted to do. On the other points, you know, what I said was that, at the end of the day, I was worried maybe I hadn't communicated clearly enough with her about hedging earlier and that it wasn't about like blame for me. I didn't -- that's not how I thought of it, and that the past wasn't what mattered the most, that what mattered the most was that going forward Alameda protect against a future market collapse that, by far, my biggest concern was that if Alameda remained unhedged that it might go bankrupt. And so I said that I thought the focus should be on urgently putting on the hedges that would protect against that.
MR. COHEN: Did you respond to her offer to step down?
SAMUEL BANKMAN-FRIED: Yeah. I said that that was obviously her decision about what to do, that I hadn't been asking her to do that. That's not what I intended at all. But ultimately that wasn't my decision to make.
MR. COHEN: You said you had another conversation or conversations with Ms. Ellison about hedging in September, is that correct?
MR. COHEN: Where were those conversations?
SAMUEL BANKMAN-FRIED: Those conversations were chiefly over Google Docs sent, I think, via Signal.
MR. COHEN: What did you say to her and what did she say to you?
SAMUEL BANKMAN-FRIED: I checked in again on the status of Alameda's hedging and was told that Alameda had hedged after our prior conversation. I had also seen some of that in progress.
MR. COHEN: What did you talk to Ms. Ellison about and what did she talk to you about?
SAMUEL BANKMAN-FRIED: Yes. I asked what the scale of hedges was. She calculated what Alameda's hedges were at that point, gave me the number. I said that first I was very glad that that had happened. It definitely made me less concerned but that my instinct had been that it would actually have been a bigger number, that Alameda would have hedged about twice as much as it seems like it actually had. And subsequent to that Caroline sent me some spreadsheets trying to calculate how much Alameda should hedge.
MR. COHEN: Was there any further discussion after that about hedging?
SAMUEL BANKMAN-FRIED: Yeah. After a back and forth on those spreadsheets, Caroline ultimately agreed that Alameda should hedge more than it had, and Alameda did in fact do so.
MR. COHEN: You mentioned in this period from June to September you also had conversations about hedging with Sam Trabucco.
Do you recall those?
SAMUEL BANKMAN-FRIED: He was on the Signal thread that this was often discussed on.
MR. COHEN: What about Ben Xie?
SAMUEL BANKMAN-FRIED: He was also on that same Signal thread. Trabucco at this point was not commenting much. He was effectively out of the picture and had been for a little while. Ben Xie would sometimes comment on it.
MR. COHEN: You are referring to the thread you had with Ms. Ellison?
SAMUEL BANKMAN-FRIED: Yes, that's correct.
MR. COHEN: Now, continuing in September, do you recall last week we talked about a memorandum you had written about the possibility of shutting down Alameda?
MR. COHEN: I am not going to go over that again, but I will ask you, around the time of that memorandum, do you recall a discussion about the size of the liability that Alameda owed to FTX?
SAMUEL BANKMAN-FRIED: I recall some time during that month a discussion. I don't recall exactly in what context it came.
MR. COHEN: Do you recall whether it was in person or over a chat?
SAMUEL BANKMAN-FRIED: I know that -- I don't recall confidently, no.
MR. COHEN: Who was it with?
SAMUEL BANKMAN-FRIED: Caroline, Gary, and Nishad were all involved. I believe a few other people were as well, but I am not a hundred percent confident.
MR. COHEN: What did you say and what did Gary, Caroline, and Nishad say?
SAMUEL BANKMAN-FRIED: Just to clarify, with respect to the thread about shutting down Alameda?
MR. COHEN: The size of the liability.
SAMUEL BANKMAN-FRIED: The size of the liability. I remember looking into it to some extent myself.
JUDGE KAPLAN: Sorry, Mr. Bankman-Fried. The question was, what did you say and what did they say?
SAMUEL BANKMAN-FRIED: I remember numbers a bit north that -- I don't remember specifically which one of them said the number -- a bit north of $10 billion of total liability being discussed then.
MR. COHEN: Can we call DX-5 back up again. We can go to the second page and call out the first entry, entry number 1.
MR. COHEN: You just told us that was a project to get you and other nondevelopers further access, correct?
SAMUEL BANKMAN-FRIED: That's correct.
MR. COHEN: Did there come a time that you did get such access?
MR. COHEN: When was that?
SAMUEL BANKMAN-FRIED: In October of 2022.
MR. COHEN: Did there come a time that you used the new access to review the database?
MR. COHEN: What did you determine?
SAMUEL BANKMAN-FRIED: I did a number of queries, but most relevantly in one of them I found an account called something like Seoyun, a Seoyun88, which had something with fiat in the name and a roughly $8 billion liability.
MR. COHEN: What did you do after you found this account?
SAMUEL BANKMAN-FRIED: I reached out to a few people to confirm what this account was.
MR. COHEN: Who did you reach out to?
SAMUEL BANKMAN-FRIED: I don't remember the full list. I believe that it was a few FTX developers.
MR. COHEN: What did you do after reaching out to them?
SAMUEL BANKMAN-FRIED: So after reaching out to them, I learned that this was --
JUDGE KAPLAN: I'm sorry. The question is, what you did after you spoke to them?
SAMUEL BANKMAN-FRIED: Yes. After I spoke to them, I started to compile a list myself of all accounts on FTX that were affiliated with Alameda, what their balances were, and tried to put together a full picture of what not just Alameda's financials were and FTX's financials but also Alameda's accounts on FTX.
MR. COHEN: Did you come to a view of how, if at all, the fiat@ account related to this analysis?
SAMUEL BANKMAN-FRIED: Yes, I did.
MR. COHEN: What was that?
SAMUEL BANKMAN-FRIED: So the view that I came to was that the fiat@ account, this $8 billion liability, had always been built into Alameda's financials, that Alameda's NAV and balance sheets already reflected it, and so the NAV was in fact roughly positive 10 billion. This didn't make the NAV 2 billion instead.
I came to the view that, on FTX, for at least almost all of the period, the info@ account, Alameda's primary trading account on FTX, had not reflected this liability, that this had been, for most of FTX's existence, a separate ledger that didn't appear on info@ and didn't appear on the admin user's dashboard that I could see, and that the total scale of liabilities was on the ballpark of $10 billion that Alameda had to FTX.
MR. COHEN: How did you react when you determined that?
SAMUEL BANKMAN-FRIED: I reacted. I felt like I needed to do a further analysis. I felt like it was neither -- that if it had been far smaller, I would not have been concerned at all. If it were far larger, I would have been calling it a crisis. It was neither of those. It was at a level where I wanted to make sure I understood the context and I understood what was securing it.
MR. COHEN: Last week we talked about the concept of liquidity.
Do you recall that, sir?
MR. COHEN: What, if anything, did that have to do with this analysis you did?
SAMUEL BANKMAN-FRIED: Yeah. There are two parts of the analysis. One was solvency effectively. The other was liquidity. The liquidity piece of it that you were referencing was effectively if FTX users requested withdrawals, how much could we process. Any time that you have a margin exchange, customer assets include both customers' assets but also their borrows, their liabilities. If you need to fill old customer positive assets, you would need to recall all loans and liquidate all positions, which leaves a practical question of, which I looked into at the time, of effectively how many liquid assets FTX had on hand, how many Alameda had on hand, if necessary, and I believe the answer was 5 to $10 billion worth.
MR. COHEN: What, if anything, did that mean to you?
SAMUEL BANKMAN-FRIED: That felt like a lot more than had ever been required before by a factor of 10 or more. It was also far less than it had been a year ago. And I certainly didn't feel like Alameda was in a position where it could do a $4 billion expenditure, for instance.
MR. COHEN: You also mentioned a concept called solvency.
MR. COHEN: Can you explain that and how, if at all, it factored into your analysis.
SAMUEL BANKMAN-FRIED: Yes. So solvency, at least as I was thinking of it, referred to -- effectively to net-asset value, to whether -- to the relationship between assets and liabilities. If a company had more assets than liabilities, it was solvent. If it had fewer assets than liabilities, it was insolvent. If Alameda were insolvent, that, in my mind, would have been a very significant problem. That would have been similar to the few hours of crisis prior to the fiat@ bug fix in June.
MR. COHEN: And in September, October, was it your view that Alameda was insolvent?
SAMUEL BANKMAN-FRIED: No. My view was that it had about positive $10 billion of net-asset value, which is to say that whatever its liabilities were, it had all of that and then another $10 billion of assets, and that that also wasn't counting some other assets that were securing the position as well.
MR. COHEN: Staying in October, did there come a time that you took a trip?
MR. COHEN: Where did you go?
SAMUEL BANKMAN-FRIED: I took a few trips. The longest was to the Middle East.
MR. COHEN: Before we get to the Middle East trip, I should ask you, in your duties as CEO of FTX, how often did you travel?
SAMUEL BANKMAN-FRIED: Probably too much in retrospect. About half the time I was gone, more than a hundred days in 2022.
MR. COHEN: What was the primary place you went to?
SAMUEL BANKMAN-FRIED: I went all over, but the single place I went to the most was Washington, D.C.
MR. COHEN: Why was that?
SAMUEL BANKMAN-FRIED: To meet with senators, with policy makers, with regulators there, both about general crypto regulation of the United States and about FTX US derivatives licensing application.
MR. COHEN: Let's come back. You said you took a trip to the Middle East in October, is that correct?
MR. COHEN: Did anyone go with you?
SAMUEL BANKMAN-FRIED: Yeah.
MR. COHEN: Who was that?
SAMUEL BANKMAN-FRIED: From the company, Ramnik did.
MR. COHEN: Just to remind everyone, what was Ramnik's role?
SAMUEL BANKMAN-FRIED: He was effectively -- he was the head of product base. Also effectively the person in charge of both venture investing and fundraising.
MR. COHEN: What was the purpose of your trip to the Middle East?
SAMUEL BANKMAN-FRIED: There were multiple purposes. I had been invited to speak at a conference there which was happening that month. I had earlier that year, or possibly late 2021, I don't remember the exact date, been invited to visit Dubai and meet with the regulators there. FTX had just secured a license with the Dubai financial regulators, but I had cancelled that trip. And the Dubai regulators I understood to have been asking that I come visit them at some point, so I owed them a trip as well.
On top of that, there were prospective investors in the Middle East who had wanted to meet in person, and there were some government officials who wanted to talk about the growth of the Blockchain industry, and we also had a few employees in the Middle East and an office there that I wanted to check out.
MR. COHEN: Have you ever heard the term sovereign wealth fund?
MR. COHEN: What's that?
SAMUEL BANKMAN-FRIED: It's an investment firm or venture capital firm that is funded by a government.
MR. COHEN: Did that relate at all to your Middle Eastern trip?
SAMUEL BANKMAN-FRIED: Yeah.
MR. COHEN: Can you tell us how?
SAMUEL BANKMAN-FRIED: Yeah. One of our larger investors had been a sovereign wealth fund, Temasek, from Singapore, and in the Middle Eastern trip we were going to meet with a few sovereign wealth funds there.
MR. COHEN: You just told us that in September you had done an analysis of this $8 billion liability relating to the fiat@ account.
Do you recall that, sir?
MR. COHEN: Why did you go on a trip to the Middle East in October?
SAMUEL BANKMAN-FRIED: Because I viewed Alameda as solvent and FTX as solvent and as decently liquid. Had that analysis come up the other way, had it come up the way we briefly thought things were in June of 2022, with Alameda being essentially bankrupt or borderline bankrupt, I would have been in full-on crisis mode. But in my view at the time that wasn't the case.
MR. COHEN: Did you speak with any FTX employee before you went on the trip?
SAMUEL BANKMAN-FRIED: Yeah. I spoke with a number, probably the most with Adam Yedidia.
MR. COHEN: Can you tell us what you said to Mr. Yedidia and what he said to you.
SAMUEL BANKMAN-FRIED: Yeah. I described the trip that I was at that time planning to go on, and he said that he was skeptical that I should go on it, that it wasn't worth the time and wasn't worth some other counterparty complications associated with it. I laid out the reasons that I found it compelling but said I wasn't confident. After hearing that, he said, oh, that changed his mind, that particularly the excitement of investors there. He didn't feel like it was worth the trip.
MR. COHEN: You used the phrase counterparty complications.
SAMUEL BANKMAN-FRIED: Yeah.
MR. COHEN: Maybe you could explain that.
SAMUEL BANKMAN-FRIED: So FTX's largest competitor was Binance. Binance was the largest crypto exchange in the world. It had 40 percent of global roughly. Binance was headquartered in the Middle East and the relationship between FTX and Binance was frosty at that point and had been for a little while. So by traveling to the Middle East, there is a risk that I would be upsetting Binance by quote/unquote stepping on their turf.
MR. COHEN: At the end of your conversation with Mr. Yedidia, what was his view on whether you should go on the Middle Eastern trip?
SAMUEL BANKMAN-FRIED: He said he thought it definitely made sense.
MR. COHEN: Did you take the trip?
SAMUEL BANKMAN-FRIED: I did.
MR. COHEN: How did you regard the trip?
SAMUEL BANKMAN-FRIED: I thought it was overall pretty successful.
MR. COHEN: Did you end up speaking with any investors?
SAMUEL BANKMAN-FRIED: I did.
MR. COHEN: What was the reaction?
SAMUEL BANKMAN-FRIED: They were interested. They were going to do more diligence.
MS. SASSOON: Objection.
JUDGE KAPLAN: Pardon?
MS. SASSOON: For him to speculate whether they were interested.
JUDGE KAPLAN: The answer is stricken. A. They expressed --
JUDGE KAPLAN: Excuse me. Stop. I have ruled.
SAMUEL BANKMAN-FRIED: Understood.
MR. COHEN: After you came back from your trip -- let's do it this way. Let's move ahead now, Mr. Bankman-Fried, to November of 2022.
MR. COHEN: Can we call up, please, GX-1087.
This is a calendar of November 2022. I am going to circle November 11.
MR. COHEN: What happened on November 11, Mr. Bankman-Fried?
SAMUEL BANKMAN-FRIED: That was the day that FTX filed for bankruptcy.
MR. COHEN: Now I am going to ask you a series of questions that relate to the period from the 1st up through the 11th, OK?
MR. COHEN: Let me start with November 2. Did anything happen on that day?
MR. COHEN: Why don't you tell us.
SAMUEL BANKMAN-FRIED: A CoinDesk article came out. CoinDesk is a crypto industry news site which leaked an old copy of an Alameda Research balance sheet.
MR. COHEN: What, if anything, was your response to this CoinDesk article?
SAMUEL BANKMAN-FRIED: I reached out to Caroline to ask if she wanted to comment on it.
MR. COHEN: Finish your answer.
SAMUEL BANKMAN-FRIED: She was traveling and didn't get back to me until after the article came out, and then we and others talked about whether she wanted to send a tweet in response to it.
MR. COHEN: Did there come a time that a tweet was sent?
MR. COHEN: Let's take a look at Government Exhibit 875 in evidence.
MR. COHEN: Mr. Bankman-Fried, what is this?
SAMUEL BANKMAN-FRIED: This is that tweet.
MR. COHEN: I want to go through a couple of parts of that tweet with you. This is, first of all, from November 6. It says at the top: A few notes on the balance sheet info that has been circulating recently. That specific balance sheet is for a subset of our corporate entities. We have 10 billion of assets that aren't reflected there.
What was your understanding of that statement?
SAMUEL BANKMAN-FRIED: My understanding is that was true.
MR. COHEN: Why was it true?
SAMUEL BANKMAN-FRIED: Among other things, Paper Bird had far more than that amount of assets, chiefly equity holdings in FTX. That was not reflected on the Alameda balance sheet.
MR. COHEN: You used the phrase Paper Bird?
MR. COHEN: Which I think you used last week. Just to remind everyone, what was that?
SAMUEL BANKMAN-FRIED: That was a company that held my and my Gary's equity stakes in FTX.
MR. COHEN: Continuing down to the next --
JUDGE KAPLAN: Who owned Paper Bird?
SAMUEL BANKMAN-FRIED: Gary and I did.
JUDGE KAPLAN: Go ahead.
MR. COHEN: Continuing down to the next entry, it says: The balance sheet breaks out a few of our biggest long positions. We obviously have hedges that aren't listed.
What was your reaction to that, Mr. Bankman-Fried?
SAMUEL BANKMAN-FRIED: That seemed self-evidently true to me.
MR. COHEN: Why was that?
SAMUEL BANKMAN-FRIED: There were no hedges listed on that balance sheet, and Alameda had put on hedges.
MR. COHEN: And continuing to the last entry: Given the tightening in the crypto credit space this year, we returned most of our loans by now.
What was your reaction to that, sir?
SAMUEL BANKMAN-FRIED: That seemed true to me.
MR. COHEN: Why is that?
SAMUEL BANKMAN-FRIED: The loans that Alameda had taken out from third-party desks had fallen by far more than 50 percent over the prior year.
MR. COHEN: We can take this exhibit down.
MR. COHEN: Now, continuing in that period in November, let's go to November 6.
MR. COHEN: Let's pull up Government Exhibit 874 in evidence. Brian, if we can expand that.
MR. COHEN: Looking at the top of it, it says -- first of all, who is this from?
SAMUEL BANKMAN-FRIED: That is CZ, Changpeng Zhao, the CEO of finance.
MR. COHEN: It says: As part of Binance's exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash, BUSD and FTT. Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books.
Do you see that, sir?
MR. COHEN: I want to take it in steps. The first sentence says --
MR. COHEN: If you can highlight it Brian.
MR. COHEN: -- as part of Binance's exit from FTX equity last year, Binance received roughly $2.1 billion and so on.
What does that refer to?
SAMUEL BANKMAN-FRIED: So in mid 2021, we had bought out Binance's equity holdings of FTX. It had been the seed investor in FTX.
MR. COHEN: Continuing on he says: Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books.
What did that refer to?
SAMUEL BANKMAN-FRIED: CZ was declaring that they were going to sell off the FTT that they had gotten from this equity buyout, which was around $500 million worth.
MR. COHEN: You can take that down, Brian, and you can take down the slide.
MR. COHEN: What, if anything, was your response to this tweet from CZ?
SAMUEL BANKMAN-FRIED: I discussed, again with Caroline and others, about whether any of us should send a tweet in response to it.
MR. COHEN: What, if anything, happened with respect to customer withdrawals?
SAMUEL BANKMAN-FRIED: They increased massively.
MR. COHEN: Can you explain to us what happened.
SAMUEL BANKMAN-FRIED: Yeah. Historically, FTX had seen roughly $50 million per day of net deposits or withdrawals. On Sunday, November 6, it saw about $1 billion of net withdrawals.
MR. COHEN: What was your reaction, if anything, to the size of those withdrawals?
SAMUEL BANKMAN-FRIED: I was concerned.
MR. COHEN: Why were you concerned?
SAMUEL BANKMAN-FRIED: It signaled a potential, what I viewed to be a potential run on the bank and a risk of a liquidity crisis if that increased.
MR. COHEN: Let me stop you. You used the phrase, run on the bank.
SAMUEL BANKMAN-FRIED: Yeah.
MR. COHEN: What did that mean to you?
SAMUEL BANKMAN-FRIED: So what that meant to me was, if there is a bank and all of its customers --
MS. SASSOON: Objection.
JUDGE KAPLAN: Sustained.
MR. COHEN: What did it mean to you in connection with FTX?
SAMUEL BANKMAN-FRIED: What it meant to me in connection with FTX was that it was -- FTX was a marketing exchange. That meant that there were borrows, that there was leverage, and that, because of that, if many customers all at once wanted to close down their positions and withdraw everything from the exchange, that would necessitate closing down the other side of those positions and recalling all borrows.
In other words, the only way to return all funds, the only way to process all withdrawals for all users was to liquidate every open margin position on the exchange and shut down the business. Obviously, that would be in a most extreme, 100 percent withdrawals scenario. But $1 billion was already about ten times as much as I had ever seen in a given day.
MR. COHEN: Did you discuss with anyone responding to CZ's tweet?
MR. COHEN: Who did you discuss it with?
SAMUEL BANKMAN-FRIED: I don't remember the exact list, but I know that Caroline, Zane, Ramnik, Nishad, and Gary were all at least tangentially involved.
MR. COHEN: I think we all know the names. You mentioned Zane. Who was that?
SAMUEL BANKMAN-FRIED: Zane was the head of institutional customer relationships for FTX. Basically, that meant that he was the point person that large trading firms would talk to.
MR. COHEN: What was his last name?
SAMUEL BANKMAN-FRIED: Tackett.
MR. COHEN: Did there come a time that a response was put out to CZ's tweet?
MR. COHEN: Let's take a look at Government Exhibit 876 in evidence. Take a moment.
Mr. Bankman-Fried, do you recognize this?
SAMUEL BANKMAN-FRIED: I do.
MR. COHEN: What is it?
SAMUEL BANKMAN-FRIED: This is that response.
MR. COHEN: And it was put out by Ms. Ellison, correct?
MR. COHEN: Why did she put out the response?
SAMUEL BANKMAN-FRIED: Because ultimately the response was an offer from Alameda, and she put it out as Alameda's CEO.
MR. COHEN: Continuing in the next, it says: CZ Binance, if you're looking to minimize the market impact on your FTT sales, Alameda will happily buy it all from you at 22.
Do you see that?
MR. COHEN: What did that refer to?
SAMUEL BANKMAN-FRIED: So our understanding was that CZ was signaling that he was going to sell $500 million of FTT roughly over a three-month period, roughly, and FTT had been trading above $22 per token and had been above that level for a fairly long time. This represented a level that we had discussed and decided it would make sense and be profitable for Alameda to buy those FTT tokens at and an offer for CZ to do it in one big chunk to Alameda rather than by working it out over the course of months and hopefully saying hassle on both sides.
MR. COHEN: In your view, did Alameda have the funds to purchase the FTT at $22?
SAMUEL BANKMAN-FRIED: Yeah. I remember checking and seeing that Alameda had $5 billion, roughly, of liquid assets at hand.
MR. COHEN: We can take this slide down.
MR. COHEN: As we move from November 6 into November 7, what, if anything, did you observe with respect to withdrawals?
SAMUEL BANKMAN-FRIED: They didn't just continue at the pace of -- they increased further. On Monday, Monday November 7, FTX saw about $4 billion of net withdrawals from the platform. That was about 100 times an average day.
MR. COHEN: What, if anything, did that mean to you?
SAMUEL BANKMAN-FRIED: That meant that we were -- that we might be, in my view at the time, days away from a liquidating crisis if this continued.
MR. COHEN: Let's move now to November 7, to the morning of November 7.
Can we call up Government Exhibit 878, please.
JUDGE KAPLAN: Sorry. We were just on November 7.
MR. COHEN: Yes. We were merging into it. We are now in the morning, your Honor.
MR. COHEN: Do you recall, Mr. Bankman-Fried, seeing Government Exhibit 878 before?
MR. COHEN: What is it?
SAMUEL BANKMAN-FRIED: This was a tweet thread that FTX's Twitter account sent out in response to concern about slow withdrawal processing on FTX.
MR. COHEN: Were you part of the people who worked on this?
MR. COHEN: Who else worked on it?
SAMUEL BANKMAN-FRIED: Gary Wang and Nishad provided the technical input for it, and then FTX's customer support team, I believe Keith in particular, were involved in terms of actually posting it.
MR. COHEN: So at the top it says: Support updates, number 1. Number 2, it says: Matching engine, etc., all running smoothly. BTC withdrawals: Chunk through them. Node is throughput limited. We're switching it to process from both ends, which should help speed it up.
What did that refer to, sir?
SAMUEL BANKMAN-FRIED: So I was told by Gary at the time that FTX -- Bitcoin withdrawals were backlogged, which meant that if a customer requested to withdraw one Bitcoin, it would take hours for us to actually send them that Bitcoin, whereas usually we were processing them in seconds to minutes, and that the cause of that was that we were seeing so many withdrawals so quickly that we basically hit various speed bumps in the code that had been written to process Bitcoin withdrawals, that there were pieces of it that just weren't built to send them that quickly, but that Gary was rewriting it to be that much faster.
MR. COHEN: Continuing, finally, with number 3: Stablecoins processing of the banks are closed for the weekend, though. USD stablecoin creations redemptions might be slower until wires clear tomorrow, especially for some coins/chains.
What did that refer to, Mr. Bankman-Fried?
SAMUEL BANKMAN-FRIED: This came on -- late on a Sunday night. Most bank functions don't happen during weekends. They only happen during weekdays. So if a customer wanted to do a wire transfer withdrawal from FTX, unless they happened to bank at a very specific bank, they would have to wait until Monday for it.
In addition to that, if there were massive stablecoin withdrawals, which there were that day, FTX potentially -- FTX would have to use dollars in a bank account to create those stablecoins in order to send them for customer withdrawals and that, in turn, involved a bank wire transfer which also couldn't happen until the week started. So those were two reasons that U.S. dollar and stablecoin withdrawals were at least to some extent delayed for a day or so.
MR. COHEN: We can take this down.
MR. COHEN: Continuing into the evening of November 7, did there come a time, sir, that you put up a tweet?
MR. COHEN: Let's take a look at GX-866, please.
If you could expand the top part, Brian.
(Continued on next page)
BY MR. COHEN:
MR. COHEN: So the entry says, No. 1, "A competitor is trying to go after us with false rumors."
Then below that it says, "FTX is fine. Assets are fine."
Do you see that, Mr. Bankman-Fried?
MR. COHEN: What was the first entry a reference to?
SAMUEL BANKMAN-FRIED: Binance.
MR. COHEN: And what false rumors are you referring to?
SAMUEL BANKMAN-FRIED: There had been a number over the prior month or so. My impression had been that Binance was running a number of campaigns against us online, chiefly targeted at attacking FTX for working with regulators, and paying people on Twitter to say——
MS. SASSOON: Objection to that last portion about foundation with respect to paying people on Twitter.
JUDGE KAPLAN: Yes. The jury will disregard the impression. It's stricken.
MR. COHEN: Okay. Let's move to the next entry. You said F——
MR. COHEN: No. Go back to No. 1, Brian.
MR. COHEN: Underneath it, you said, "FTX is fine. Assets are fine." What did you mean by that?
SAMUEL BANKMAN-FRIED: So at the point——so this——this tweet was posted in the morning of November 7th. At the point where I posted it, Alameda still had a net asset value of roughly positive 10 billion. FTX had no holes on its balance sheet. And there had been no attack on the customer assets. And so my view at the time was that the exchange was okay and that there, you know, there was no——no hole in terms of assets.
MR. COHEN: Okay. Now let's call out No. 2, Brian.
MR. COHEN: You said here, "FTX has enough to cover all client holdings. We don't invest client assets (even in treasuries). We have been processing all withdrawals and will continue to be. Some details on withdrawal speed."
What does this all refer to, Mr. Bankman-Fried?
SAMUEL BANKMAN-FRIED: Yeah. So the last thing——the prior thing we looked at was the BTC notes and the banking and stuff. The first pieces of that, FTX itself had effectively no liabilities and just assets. And FTX did not do any investments with customer assets. So FTX just kept the customer assets it held in wallets and bank accounts. We had discussed whether to invest in treasuries. Hadn't done that. And as of the time this was sent, Alameda, which was obviously a large customer on FTX, still had far more in assets than in liabilities.
MR. COHEN: Okay. Okay. You can take that down.
MR. COHEN: Going into the evening of November 7th, what, if anything, did you observe with respect to customer withdrawals?
SAMUEL BANKMAN-FRIED: Yeah. They accelerated to about $4 billion over the course of the day.
MR. COHEN: And what did this mean to you?
SAMUEL BANKMAN-FRIED: It meant that we were on the verge of a liquidity crisis.
MR. COHEN: Okay. Now we've spoken several times about hedges. Do you recall that, sir?
MR. COHEN: And I think you told us hedges got put on in September.
SAMUEL BANKMAN-FRIED: That's right.
MR. COHEN: What effect, if any, did they have now in November?
SAMUEL BANKMAN-FRIED: Well, so far they hadn't been relevant because there hadn't been any market move. Alameda's assets and liabilities had not, in my understanding at the time, moved that much since mid-June. That would soon change, though.
MR. COHEN: All right. So you said you thought there was a liquidity issue. What did you mean by that?
SAMUEL BANKMAN-FRIED: So effectively, going into this, there had been roughly 5 to $10 billion of liquidity on hand, which means ability to immediately process or promptly process liquid customer withdrawals. That was far more than had been needed before, but in a two-day period, customers had withdrawn about $5 billion of liquid assets.
MR. COHEN: What happened going into November 8th in terms of withdrawals?
SAMUEL BANKMAN-FRIED: They were continuing at that same 3-to-$4 billion-a-day clip.
MR. COHEN: And did anything else happen that——did anything happen that changed your view of Alameda at that point?
MR. COHEN: What was that?
SAMUEL BANKMAN-FRIED: On the evening——so beginning on the evening of November 7th and continuing into the morning of November 8th, there was a market crash.
MR. COHEN: Can you explain what you mean by that.
SAMUEL BANKMAN-FRIED: Yeah. So assets that I understood to be associated with Alameda declined massively in value. FTT, over a 12-hour period or so, fell I think roughly 80 percent. Solana fell roughly 50 percent. This was——overall, this led to an approximately 50 percent crash in Alameda's assets, and that was the 50 percent crash that drove its net asset value from close to $10 billion to only a little bit above 0.
MR. COHEN: Okay. And what, if anything, did that mean to you?
SAMUEL BANKMAN-FRIED: That meant that Alameda was still solvent but that there was very little margin for error left, that we were risking a solvency crisis.
MR. COHEN: And now coming back to the hedges we talked about.
MR. COHEN: What, if any, effect did they have?
SAMUEL BANKMAN-FRIED: Unfortunately none.
MR. COHEN: Why was that?
SAMUEL BANKMAN-FRIED: The hedges had been in general market instruments, both cryptocurrency and equities, things like Bitcoin. However, unlike all of the previous market crashes, the 70 percent crashes over the first half of the year that had led to the large decline in Alameda's NAV from 40 billion or so to 10 billion or so, this crash was not a broad crash. Bitcoin had been down 70 percent over the first half of the year, but on November 7th and 8th, 2022, Bitcoin basically didn't move. Even though FTT was down over 50 percent, Solana was down around 50 percent, Bitcoin was down maybe 10 percent, and stocks basically didn't move at all. The hedges, which would have been helpful against the prior crashes to protect income, had effectively no benefit for what happened here.
MR. COHEN: Let's call up again Government Exhibit 866. And call out the first entry.
MR. COHEN: Where you say, "FTX is fine. Assets are fine."
MR. COHEN: Once you learned the information you just related, what, if anything, did you do?
SAMUEL BANKMAN-FRIED: I took down this tweet thread.
MR. COHEN: All right. At this time, your Honor, I'd like to read from Government Exhibit 2001, which is a stipulation agreed upon by the parties, and in evidence.
"The exhibits set forth in attachment B below are authentic copies of tweets and retweets posted at the dates and times indicated on the exhibits, but which were later deleted at dates and times listed in attachment B." And it lists Government Exhibit 866, deleted November 8, 2022, at 5:37 p.m.
BY MR. COHEN:
MR. COHEN: Okay. All right. Now I want to pick up——well, let me just ask you one question, and then we'll come back to it.
On November 8th, what, if anything, were you thinking, what, if anything, did you do with respect to FTX and Alameda?
SAMUEL BANKMAN-FRIED: A few things. The first was, effectively began liquidating Alameda. It had reached that critical threshold where its NAV was barely positive, and started to get all liquidity it could put together, begun closing down positions, and potentially closing down the company entirely. And at the same time I had calls with potential investors.
MR. COHEN: Why were you calling potential investors?
SAMUEL BANKMAN-FRIED: Because in my view at the time, while Alameda was still solvent, as was FTX, it was potentially going to be a lengthy process to close down the company, to liquidate its holdings, and with the run on the bank, customers——
MS. SASSOON: Objection. "Run on the bank."
JUDGE KAPLAN: Pardon me?
MS. SASSOON: "With the run on the bank."
MR. COHEN: He defined it in terms of FTX.
JUDGE KAPLAN: I don't think exactly, but I'll let it stand. I think everybody understands what he's saying. A. With the run on FTX. The——customers were requesting billions of dollars immediately of——of withdrawals. And if we didn't want to have delays, then that was——potentially significant delays, that was going to potentially need significant amounts of outside capital, and so——
MR. COHEN: When you——finish your answer, sir. I'm sorry.
SAMUEL BANKMAN-FRIED: And so I was calling prospective investors about that.
MR. COHEN: We'll come back to it, but from November 8th forward, did you continue to call investors?
SAMUEL BANKMAN-FRIED: I did.
MR. COHEN: Okay. Now continuing in that week, that week of November 1st to November 11th, during that week did you have any conversations with Nishad Singh?
SAMUEL BANKMAN-FRIED: I did, yes.
MR. COHEN: What were the topics of those conversations?
SAMUEL BANKMAN-FRIED: There were chiefly two topics. One topic, which was the operational topic, was just on doing everything that we could to support FTX and its customers. The other was on Nishad's personal finances and situation.
MR. COHEN: Okay. Let's call up Government Exhibit 480A in evidence.
MR. COHEN: Okay. And this is a chat between you and Nishad; is that right?
MR. COHEN: Okay. If we can, Brian, expand what's in blue.
MR. COHEN: This is him talking. "One thing that'd seriously help me is if I didn't have debts. I think most of them are loans. 500m for me exercising, more for US investments. I hope we can unwind these but not sure."
"Maybe 80m extra or so are donations/personal/etc. that went through my bank acc and are in my name."
And then continuing to the bottom, he said, "would you be ok letting me trade to get rid of the 80? The only change in deliverable is the taxable amount, since the rest was already delivered. Sorry. I know this is not an important thing to focus on and not the point, I'm just having a really hard time, and I think this may help me get back, idk."
Do you see that, Mr. Bankman-Fried?
MR. COHEN: Continuing on in the document, Brian.
MR. COHEN: You say, "will think about this." He says "thanks."
You say, "what does 'trade' mean?" He says, "sell FTT or SRM earlier in 2022." And you say, "I think that's probably fine."
What does that refer to, Mr. Bankman-Fried, that exchange?
SAMUEL BANKMAN-FRIED: So I wasn't sure exactly what he had intended. I understood, at a high level, that he wanted to get out of his own personal loans at that point in time.
MR. COHEN: Okay. What was his demeanor during these conversations, this week?
SAMUEL BANKMAN-FRIED: He was actively suicidal. He had expressed that explicitly to myself and to others. We had a——a therapist on call and meeting with him and overseeing him more or less constantly.
MR. COHEN: Don't say anything more about that.
SAMUEL BANKMAN-FRIED: Yeah.
MR. COHEN: Okay. How did you——what did you mean when you said, "I think that's probably fine"?
SAMUEL BANKMAN-FRIED: I meant two things. The first thing was that assuming that we got through the crisis, I would do what I could in good faith to get his personal finances in a more comfortable situation. I wasn't sure exactly what form that would take. And the second was that I wanted to be reassuring to him, so I wanted to make sure he didn't take any actions against himself.
MR. COHEN: Did you agree to backdate any documents with him?
MR. COHEN: Okay. If we can take that down and pull up GX 480C.
MR. COHEN: Okay. This is another chain between you and Nishad.
MR. COHEN: Brian, if we could call up the blue.
MR. COHEN: "When I briefly called Dan he was very upset with us and blamed basically the three of us and said it was super F'd up."
MR. COHEN: Continuing on the next blue, Brian. I'm sorry. Drop that. Okay. No, no, no. I'm sorry. Back up. Give me the whole page again; I'll tell you what to pull up. From here to here. Okay. Forgive my bad handwriting.
MR. COHEN: You say——back and forth with Mr. Singh, you say, "makes sense. I don't hate the idea of them being pissed at me. There were pros and cons, mostly cons, but it might help move on."
Then he says, "this is wildly selfish of me, but they may need to know that it wasn't a ton of people orchestrating it. I think it makes sense to more likely to want to be here to help save the situation, at least. Even if you did think that was a good idea, idk how you say it, I don't really have a strong rec."
You say, "yup. Fwiw I don't think that's super selfish, I think that's probably correct."
What did you understand him to be saying here and what did you mean with your response?
SAMUEL BANKMAN-FRIED: I understood him to be saying that he wanted me to tell people that he was not involved in it, in causing the crisis, and to be——and him to be claiming that employees at FTX would be more comfortable working with him if they heard that was the case.
MR. COHEN: And what did you mean by your response?
SAMUEL BANKMAN-FRIED: I agreed with the second part of that, that it very well might be, you know, make it easier for people to work together to the extent that they weren't blaming Nishad.
MR. COHEN: Okay. We can take that down.
MR. COHEN: During your conversations in that first week of November, did Zane Tackett come up?
MR. COHEN: Can you tell us how that came up.
MS. SASSOON: Objection. Form. Which conversation?
JUDGE KAPLAN: Form.
MR. COHEN: Let me take it in steps.
During the week of November——well, it's more than a week——the period of November 1 to November 11th, did you have a conversation with Nishad about what he should say to Zane Tackett?