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<\/a><\/div>\nSam Bankman-Fried<\/a>, the co-founder and former CEO of FTX<\/a>, continued to provide testimony in his criminal case on Oct. 27<\/a>, in which he described how FTX and its sister firm, Alameda Research<\/a>, began as small but ambitious operations that eventually collapsed.<\/p>\n Bankman-Fried testified that he launched Alameda because of the growing popularity of cryptocurrency even though he knew \u201cbasically nothing\u201d about it, saying:<\/p>\n \u201cCrypto was getting public. In 2017, I\u2019d seen two people talking excitedly and it was probably about crypto \u2026 crypto seemed like a place with a big demand for an arbitrage provider.\u201d<\/p>\n<\/blockquote>\n He told the court that Alameda operated out of a small Airbnb in North Berkeley, California, in order to keep a low profile. When asked to explain the firm\u2019s name, he said that he wanted to \u201cstay under the radar\u201d and \u201cdidn\u2019t want to call it Sam\u2019s crypto trading firm.\u201d<\/p>\n Up to this point, Bankman-Fried had been made to give his testimony in the absence of the jury<\/a> at the request of government prosecutors.<\/p>\n As jurors returned to hear the remainder of his testimony, Bankman-Fried stated that Alameda Research continued to serve as a market maker for FTX as the latter firm went live. He explained that risk could spill between companies, stating:<\/p>\n \u201cWe increased the number of servers for the risk engine. But we learned that if there was an erroneous liquidation of Alameda, or any other large account \u2026 it would be catastrophic for FTX.\u201d<\/p>\n<\/blockquote>\n Bankman-Fried said that he eventually told FTX co-founder Gary Wang to take measures to stop possible liquidations of that type. He said that he now knows that those measures consisted of allowing account balances to go negative, as described in Wang\u2019s testimony<\/a>.<\/p>\n Bankman-Fried added that Alameda\u2019s line of credit \u201cgrew over time to billions\u201d of dollars. He testified that he had discussed Alameda with Wang and FTX\u2019s former director of engineering, Nishad Singh, and said that they decided to increase the line of credit.<\/p>\n He once again downplayed his awareness of the full financial situation, stating:<\/p>\n \u201cAt the time I wasn\u2019t entirely sure what was [happening]. I thought the funds were being held in a bank account or sent to FTX in stablecoins. If Alameda was keeping it, I figured it would be reflected as a negative number on FTX.\u201d<\/p>\n<\/blockquote>\n Bankman-Fried briefly touched on a number of other operational matters, including his use of the Signal messaging app, FTX\u2019s terms of service, and FTX\u2019s FTT token<\/a>.<\/p>\n Earlier in his testimony, Bankman-Fried said that FTX and Alameda had moved to Hong Kong for the region\u2019s \u201cbetter regulatory environment.\u201d However, both companies soon left due to COVID-19 quarantines and domestic disputes with China.<\/p>\n Bankman-Fried said that FTX instead moved to the Bahamas, which had \u201csuitable\u201d regulations. The firm\u2019s employees moved into an apartment for ten, he said.<\/p>\n He also described his break-up with former Alameda Research CEO Caroline Ellison, stating that \u201cshe wanted more than I could give \u2026 it wasn\u2019t the first time with me.\u201d Ellison described a significantly more strained<\/a> relationship in her own testimony, stating that Bankman-Fried had blamed and yelled at her for the company\u2019s issues.<\/p>\n Bankman-Fried described his marketing activities, including the purchase of Miami-Dade Arena and investments in emerging projects such as Solana<\/a>. He further detailed his investments in the VC firm K5 for its \u201cpromising incubations\u201d and \u201ccelebrity contacts.\u201d<\/p>\n\n
Jury returns to hear testimony<\/h2>\n
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FTX goes to the Bahamas<\/h2>\n
SBF describes company spending<\/h2>\n