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Sam Bankman-Fried Admits Mistakes as FTX’s CEO

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Sam Bankman-Fried (SBF) faced the jury yesterday (Friday) and acknowledged the widespread fallout when the cryptocurrency
exchange FTX, which he co-founded, crumbled.

BBC reported that the 31-year-old entrepreneur,
accused of deceiving investors and embezzling customer funds, opened up about
his actions and decisions that led to this point. “A lot of people got
hurt, customers, employees, and the company ended up in bankruptcy,” he
added.

Throughout his testimony at the Manhattan federal
court, SBF admitted to making a series of errors, both minor and significant,
while managing the now-defunct exchange . He identified the absence of a
dedicated risk management team as one of his most critical oversights.

Despite the allegations against him, SBF maintained
his innocence, asserting that he never defrauded anyone or misappropriated
customer funds.

In an unusual hearing, SBF began testifying on Thursday after
the jury had been dismissed for the day. US District Judge Lewis Kaplan
requested a preview of his testimony regarding the role of lawyers in key
decisions to determine its admissibility as evidence.

SBF has consistently claimed that he acted
based on legal advice, a stance contested by prosecutors who accuse him of
misusing FTX customer funds for personal gain. Judge Kaplan ruled against
allowing testimony about the lawyers’ involvement in various loans made to SBF
and other policies, deeming it potentially confusing.

SBF expressed uncertainty regarding the flow of
funds from FTX customers to Alameda and dismissed allegations of directing
political donations. He admitted that he only became aware of the extent of
Alameda’s debt to FTX in October 2022.

Shifting Blame

According to a report by Coindesk, SBF deflected
blame in his fraud and conspiracy trial, highlighting mistakes rather than
misconduct. He shifted responsibility onto his former colleagues, pointing out mistakes rather than criminal intent.

One key issue discussed was a feature in FTX’s
software that allowed Alameda Research to have a negative balance. SBF argued
that this feature was introduced to address a bug in the risk-management system
rather than as a means to facilitate the withdrawal of unlimited funds from FTX’s users, as the prosecutors allege.

Notably, SBF attributed the responsibility
for implementing this feature to two of his former colleagues, Gary Wang and Nishad Singh, suggesting that he served as more of an adviser than a
decision-maker.

Bankman-Fried also countered the prosecutors’ claims
that he and his colleagues habitually deleted communications to avoid legal
trouble. He claimed that this practice was influenced by the “New York
Times test,” suggesting that written records could become public and
misinterpreted.

Furthermore, SBF
defended the massive borrowing by Alameda from FTX, asserting that Alameda had
the same borrowing capabilities as any other entity. He also addressed FTX’s “claw back” policy, which allowed the exchange to recover user
losses, arguing that it was clearly outlined in the terms of service.

Sam Bankman-Fried (SBF) faced the jury yesterday (Friday) and acknowledged the widespread fallout when the cryptocurrency
exchange FTX, which he co-founded, crumbled.

BBC reported that the 31-year-old entrepreneur,
accused of deceiving investors and embezzling customer funds, opened up about
his actions and decisions that led to this point. “A lot of people got
hurt, customers, employees, and the company ended up in bankruptcy,” he
added.

Throughout his testimony at the Manhattan federal
court, SBF admitted to making a series of errors, both minor and significant,
while managing the now-defunct exchange . He identified the absence of a
dedicated risk management team as one of his most critical oversights.

Despite the allegations against him, SBF maintained
his innocence, asserting that he never defrauded anyone or misappropriated
customer funds.

In an unusual hearing, SBF began testifying on Thursday after
the jury had been dismissed for the day. US District Judge Lewis Kaplan
requested a preview of his testimony regarding the role of lawyers in key
decisions to determine its admissibility as evidence.

SBF has consistently claimed that he acted
based on legal advice, a stance contested by prosecutors who accuse him of
misusing FTX customer funds for personal gain. Judge Kaplan ruled against
allowing testimony about the lawyers’ involvement in various loans made to SBF
and other policies, deeming it potentially confusing.

SBF expressed uncertainty regarding the flow of
funds from FTX customers to Alameda and dismissed allegations of directing
political donations. He admitted that he only became aware of the extent of
Alameda’s debt to FTX in October 2022.

Shifting Blame

According to a report by Coindesk, SBF deflected
blame in his fraud and conspiracy trial, highlighting mistakes rather than
misconduct. He shifted responsibility onto his former colleagues, pointing out mistakes rather than criminal intent.

One key issue discussed was a feature in FTX’s
software that allowed Alameda Research to have a negative balance. SBF argued
that this feature was introduced to address a bug in the risk-management system
rather than as a means to facilitate the withdrawal of unlimited funds from FTX’s users, as the prosecutors allege.

Notably, SBF attributed the responsibility
for implementing this feature to two of his former colleagues, Gary Wang and Nishad Singh, suggesting that he served as more of an adviser than a
decision-maker.

Bankman-Fried also countered the prosecutors’ claims
that he and his colleagues habitually deleted communications to avoid legal
trouble. He claimed that this practice was influenced by the “New York
Times test,” suggesting that written records could become public and
misinterpreted.

Furthermore, SBF
defended the massive borrowing by Alameda from FTX, asserting that Alameda had
the same borrowing capabilities as any other entity. He also addressed FTX’s “claw back” policy, which allowed the exchange to recover user
losses, arguing that it was clearly outlined in the terms of service.

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