Jakarta, CNBC Indonesia – FTX founder Sam Bankman-Fried reveals the biggest sin he committed while building and running his company.
The mistake was not deceiving people as alleged. He admitted to the jury in his criminal trial that he did not commit any fraud.
In the trial held Friday (27/10) local time, lawyer Mark Cohen asked Bankman-Fried whether he deceived anyone.
Bankman-Fried replied “No, I didn’t,”.
Cohen went on to ask if she took customer funds, and Bankman-Fried answered “no.”
During the trial, he admitted that one of his biggest mistakes was not having a risk management team. This causes significant negligence.
At the beginning of his testimony, Cohen explained Bankman-Fried’s background and how he got into the world of crypto.
The defendant said he studied physics at the Massachusetts Institute of Technology and graduated in 2014. He then worked as a trader at Jane Street for more than three years, managing tens of billions of dollars a day in trades. That’s where he learned the basics of arbitrage trading.
In the fall of 2017, Bankman-Fried founded Alameda Research.
“That’s when crypto began to become visible to the public for the first time,” said Bankman-Fried’s testimony.
He said people were very enthusiastic about it, seeing Bitcoin jump from US$1,000 to US$10,000 in just two months. Banks and brokers are not yet involved and it is likely that there will be a large demand for arbitrage providers.
“I don’t know how cryptocurrency works at all,” said Bankman-Fried, quoted from CNBC International, Monday (30/10/2023).
“I just found out that it’s an item you can trade in,” he added.
He started FTX in 2019. Trading volume grew substantially on FTX from a few million dollars per day to tens of millions of dollars that year, and then to hundreds of millions of dollars in 2020.
By 2022, that number will increase to US$10 billion to US$15 billion per day in trading volume.
Bankman-Fried said Alameda was allowed to borrow from FTX, but his understanding was that the money came from margin trades, collateral from other margin trades, or interest-earning assets on the platform.
He faces seven criminal charges, including wire fraud, securities fraud and money laundering, which could send him to prison for life if he is convicted. Bankman-Fried, the son of two Stanford law graduates, has pleaded not guilty in the case.
Before the defendant appeared in court, the four-week trial was highlighted by testimony from several team leaders at FTX, as well as people who run sister hedge fund Alameda Research.
They all point to Bankman-Fried as the mastermind of a scheme to use FTX customers’ money to fund everything from venture investments and expensive condos in the Bahamas to covering Alameda’s crypto losses.
Several witnesses, including Bankman-Fried’s ex-girlfriend, Caroline Ellison, who ran Alameda, have pleaded guilty to various charges and are cooperating with the government.
[Gambas:Video CNBC]
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Originally posted 2023-10-30 08:11:10.