FTX founder Sam Bankman-Fried plans to testify at his fraud trial, his lawyer told a federal judge Wednesday, ending speculation over whether a man who embraced the spotlight during his years atop the cryptocurrency world could remain silent after prosecutors portrayed him as a greedy entrepreneur who stole billions of dollars from customers.
Attorney Mark Cohen told Judge Lewis A. Kaplan that he planned to call three witnesses “and then our client is also going to be testifying” after prosecutors rest early Thursday.
Cohen spoke during a phone and video conference in Manhattan federal court after the judge told him: “It’s time to tell me what defense case, if any, you’re going to put on.”
The judge told him that he didn’t have to say yet whether Bankman-Fried would testify, but Cohen volunteered that he would.
Even so, prosecutors and the judge later discussed the possibility that closing arguments could occur as early as next week.
Bankman-Fried, 31, has pleaded not guilty to charges that he looted the financial accounts of his customers and investors to live lavishly and bolster the reputation of himself and his companies through large donations to charity and political candidates.
Alameda Research, a hedge fund he started in 2017, and FTX, a crypto exchange that began operating in 2019, became so prominent in the crypto industry that celebrities including NFL quarterback Tom Brady and comedian Larry David did commercials that put a shine on what appeared to be a stunning success story.
Over the last month, prosecutors have leaned heavily on testimony from Bankman-Fried’s inner circle, former top executives who lived in a luxury penthouse condominium in the Bahamas with their boss before a customer rush on deposits last November exposed the missing billions of dollars and caused the businesses to collapse.
Former federal prosecutors said the singular goal for Bankman-Fried on the witness stand is to persuade one or two jurors that he’s a sympathetic character who just let FTX’s problems get out of control.
“Only he’s capable of telling the story he wants to tell to the jury,” said Rachel Maimin, a former federal prosecutor in Manhattan who is now in private practice at Lowenstein Sandler LLP.
Through testimony and court exhibits, prosecutors have laid out a detailed case alleging that Bankman-Fried directed his former lieutenants to use FTX customer funds to fuel his ambitions and reckless spending. Jurors have also seen text messages and group chats in which Bankman-Fried appeared to be callous to the problems at Alameda Research and dismissive of the dangers of using FTX funds to cover up Alameda’s issues.
Caroline Ellison, Gary Wang and others testified in detail about Bankman-Fried’s behaviour, and his lawyers have struggled to cast doubt on their testimony. That means only Bankman-Fried or other character witnesses can tell his side of the story, former prosecutors said. And character witnesses are largely seen as ineffective in white-collar cases.
“You really need to get in front of the jury that [Bankman-Fried] was acting in good faith when all these other witnesses say he was intending to lie, cheat and steal,” said Joshua Naftalis, a partner with Pallas Partners LLP who also formerly worked as a Manhattan federal prosecutor. “It’s going to be a Hail Mary.”
Bankman-Fried has been jailed since August, when Kaplan ruled that he had tried to influence potential trial witnesses and revoked the $250 million personal recognizance bond that had permitted him to live with his parents in Palo Alto, Calif., after his December extradition from the Bahamas.