Sam Bankman-Fried’s Ties With Alameda in Question: What Is He Hiding?

The founder of FTX, Sam Bankman-Fried, is currently defending himself in a legal battle. He’s being questioned about his role in the FTX collapse and his connection to Alameda Research. In a courtroom face-off, the 31-year-old former billionaire is dealing with tough questions from prosecutor Danielle Sassoon, who is determined to challenge his credibility.

Understanding the Alameda Connection

Bankman-Fried has always said that he stepped back from Alameda Research, a hedge fund he started in 2017, when he launched FTX two years later. However, he was surprised to find out that Alameda borrowed a huge $8 billion from FTX just a month before FTX fell apart in October 2022, and this surprised a lot of people.

“I was not generally making trading decisions, but I was not walled off from Alameda,” Bankman-Fried testified.

Sassoon quickly showed evidence that contradicted this—a December 2022 podcast and a Financial Times article. Both pieces of evidence revealed that Bankman-Fried had said he distanced himself from Alameda’s trading activities “for years.”

This contradiction doesn’t just threaten his defense but also raises concerns about how transparent the cryptocurrency industry is.

Playing the Amnesia Card?

In the courtroom, Bankman-Fried struggled to recall past statements and decisions. It’s important to note that not remembering things has often been a convenient defense in legal history, and whether the jury believes him remains uncertain.

There’s an interesting question about whether Alameda got special treatment within FTX. When asked if Alameda could have racked up such a massive debt if it were a ‘regular customer’, Bankman-Fried disagreed. However, he had previously suggested that things would have been different if Alameda had no connection to FTX.

When asked about the risk FTX faced due to Alameda’s debts, Bankman-Fried seemed to avoid the question, bringing up margin trading as a distraction. Since FTX relies heavily on margin trading, this diversion seemed unusual and possibly a sign of desperation in his defense.

This Could Be History in the Making

This high-stakes case could set legal standards for holding founders and CEOs responsible for financial issues and transparency. The contradictions in Bankman-Fried’s statements have raised the stakes, leaving the final verdict uncertain.