Sam Bankman-Fried plans to testify at his fraud trial, lawyer says Prosecutors have relied on former execs to build case of fraud

By Larry Neumeister and Ken Sweet
Associated Press

NEW YORK (AP) — FTX founder Sam Bankman-Fried plans to testify at his fraud trial, his lawyer told a federal judge on Wednesday, a day before the defense is set to counter testimony from former executives who say the cryptocurrency executive stole billions of dollars from his customers and investors over several years.

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 made the comment 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 early next week if Bankman-Fried changes his mind and doesn’t take the stand.

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 his personal reputation and the reputation of his companies through large donations to charity and political candidates.

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 partner at Lowenstein Sandler LLP who previously served as a federal prosecutor in Manhattan.

For the last two weeks, U.S. 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 his hedge fund, Alameda Research, and dismissive of the problems with using FTX funds to cover up Alameda’s issues.

Caroline Ellison, Gary Wang and others testified in detail about Bankman-Fried’s behavior, and his lawyers have largely been unable to make significant progress in casting 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 used to work as a federal prosecutor in Manhattan. “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, California, after his December extradition from the Bahamas.