- His ex, the CEO of Alameda, did not do enough to protect the firm against market crashes
- FTX and Alameda executives often acted of their own volition, he didn’t have direct oversight
Fallen crypto mogul Sam Bankman-Fried took the stand on Friday, and his testimony mainly aimed to insinuate he wasn’t to blame for the disastrous outcome because he had no direct control over his employees. That said, he told the court he suggested shutting down Alameda Research in September 2022, two months before it actually did go under, CNN wrote.
Serious risks
He was worried about serious risks for FTX’s research arm due to turmoil in the crypto market at the time. He warned the company would go bankrupt if Bitcoin were to lose another 50% of its value.
His ex didn’t do enough to hedge
Bankman-Fried had expressed concern at the time that his then-girlfriend and CEO of Alameda, Caroline Ellison, had not done enough to protect the firm against the risk of market crashes. He was worried that the management was “not great” and Alameda’s “culture had been decaying.”
He recalled her telling him that Alameda may have gone bankrupt in June 2022. The firm’s liabilities had an $8 billion overstatement due to an accounting bug. Its net asset value was around $9 billion after the bug was fixed.
On a personal note, he said he had had less energy and time to invest in their relationship than she wanted.
He had no direct oversight
According to Bankman-Fried, FTX and Alameda executives often acted of their own volition, and he didn’t have direct oversight despite being the CEO of both companies for some time. He said his programming capabilities were inadequate and he didn’t supervise developers’ work. As a result, he was not responsible for the code they built for FTX, which probably had a big role in its demise.
Bankman-Fried will be back in court on Monday to continue testifying. He will be cross-examined on Monday afternoon and on Tuesday. If he is found guilty, he faces over a century in prison.
