Sam Bankman-Fried Will Testify in His Criminal Trial on FTX Collapse

Sam Bankman-Fried will take the witness stand to testify in his own defense in his criminal fraud trial, his lawyers said Wednesday.

The move will present a high-risk gamble for Bankman-Fried after weeks of evidence presented by the prosecution, and a step rarely taken by criminal defendants. His defense team informed the judge presiding over the case during a teleconference call Wednesday that they plan to put Bankman-Fried on the stand.

Prosecutors from the Manhattan U.S. Attorney's Office have presented three weeks' worth of evidence and testimony, and indicated they are largely finished with their case. That opens the door for the defense to begin presenting their side of the case shortly after court begins Thursday morning.

Defense lawyers told Judge Lewis Kaplan they intend to call three witnesses, including a lawyer from the Bahamas regarding legal advice provided to Bankman-Fried, "and then our client is going to be testifying," attorney Mark Cohen said during the call. He added that Bankman-Fried's testimony could take up most or all of the day Thursday.

The timing could mean jurors begin deliberating Bankman-Fried's fate next week after attorneys for both sides deliver closing arguments. Defense lawyers have been dangling the possibility of Bankman-Fried's testimony in court filings in recent weeks but until Wednesday had not definitively said he would take the stand.

Bankman-Fried is charged with seven counts of fraud stemming from the spectacular collapse of cryptocurrency exchange FTX one year ago. He stands accused of misleading customers, investors and lenders about its financial condition while misappropriating $8 billion in customer money to fund an empire-building acquisition spree and paper over trading losses suffered by an investment fund he also owned, Alameda Research.

Defendants rarely take the stand in their own defense in criminal trials, as the move is fraught with potential risk — any missteps can lead jurors to doubt their credibility, which increases the risk of conviction, and judges can also add more time on prison sentences if they conclude defendants lied on the witness stand. Defendants have a constitutional right to decline an appearance on the witness stand and often do, instead trying their case through cross-examination of prosecution witnesses and raising doubts about whether the government has met its burden of proof.

But such a move can also give a defendant the opportunity to offer an alternative explanation for the evidence in a more favorable way, and also the potential to establish a rapport with the jury if they can come off as likeable or believable.

"It’s a uniquely personal decision. And this guy can’t keep his mouth shut," said Renato Mariotti, a former federal prosecutor who focuses on financial and digital asset cases. "He’s a guy who just thinks he’s smarter than everyone else, despite the circumstances in which he now finds himself. 

"I don’t think he’s going to be able to resist the opportunity to tell everyone what he thinks," Mariotti added. "Put his version out there.” 

The prosecution case has featured testimony from several members of Bankman-Fried's inner circle, including his sometime-girlfriend Caroline Ellis, who have implicated him in decisions to tap customer funds for big-ticket expenditures including corporate acquisitions and glitzy promotional efforts to raise FTX's profile such as stadium naming rights and celebrity endorsements. They have testified under cooperation agreements with the prosecution after pleading guilty and admitting their own role in the crimes.

Still, the prosecution case is less than airtight. There is little evidence in the form of text messages or emails documenting Bankman-Fried's involvement in decisions that led to FTX's collapse, largely because functions were enabled to auto-delete messages on a regular basis. And evidence during trial has also shown there was a bug in FTX's computer system that overstated the hole in its balance sheet, leading to confusion among its executives over how much was actually missing.

Through it all, Bankman-Fried's defense lawyers have sought to undermine the case by raising doubts about the evidence and credibility of the witnesses. But putting Bankman-Fried on the witness stand may present more of a head-on opportunity to challenge the prosecution's case.

"It's his opportunity to explain the evidence that's come in against him," said Kan Nawaday, a former federal prosecutor in Manhattan. "They need to put in their own case." Still, he added, "That cross-examination is going to be eviscerating."

At least in part, Bankman-Fried's lawyers have indicated his defense will be that he relied on the advice of lawyers for actions he took at the helm of FTX. To that end, they cross-examined FTX's chief in-house lawyer last week, Can Sun, about deals he approved to use FTX funds for the purchase of real estate in the Bahamas, where FTX was operating, and they also intend to call another lawyer as a defense witness in the coming days. They have also indicated they intend to argue Bankman-Fried lacked intent to harm customers or steal funds, and that he planned to replace customer funds that were taken.