FTX founder Sam Bankman-Fried’s lawyer said Tuesday that the now-bankrupt cryptocurrency exchange’s investments were not “reckless and frivolous,” rejecting testimony from former executive Nishad Singh that outlined his spending on marketing and sponsorship of celebrities as excessive.
Singh, former head of engineering at FTX, testified for the second day in a row at the Bankman-Fried fraud trial in Manhattan federal court. During cross-examination, Singh told jurors that he thought FTX could stay in business upon learning in September 2022 of a $13 billion shortfall in client funds, which could bolster Bankman-Fried’s argument that he believed that the problems of the exchange were manageable.
FTX filed for bankruptcy on November 11, 2022.
Singh testified Monday that the company’s venture investments and $1.1 billion in planned marketing deals, including the naming rights to the stadium where the NBA’s Miami Heat play and the unveiling of NFL quarterback Tom Brady in the commercials, “reeked of excess and ostentation.”
Defense attorney Mark Cohen on Tuesday asked Singh, one of three former members of Bankman-Fried’s inner circle who pleaded guilty to fraud and agreed to cooperate with prosecutors, whether promoting the FTX brand could be helpful.
Nishad Singh, a right-winger, testified Monday that the company’s venture investments and $1.1 billion in planned marketing deals “reek of excess and ostentation.” Defense attorney Mark Cohen on the left.REUTERS
“I understood that it had business benefits and costs,” Singh said in testimony that defense attorneys could use to argue that Bankman-Fried was making what he believed were good faith business decisions in disbursing funds for marketing and investments, even if others disagreed. .
Bankman-Fried is in the third week of her trial on charges involving her looting billions of dollars in FTX client funds to make investments, donate to U.S. political campaigns and prop up her hedge fund, Alameda Research. He has pleaded not guilty.
Singh testified Monday that he was concerned that a deal the company had with an investment firm called K5, which Bankman-Fried described as a “one-stop shop” for brokering relationships with celebrities, would prove “toxic” to FTX’s culture.
Sam Bankman-Fried is in the third week of his trial on charges of looting billions of dollars in FTX client funds for investments.REUTERS
On Tuesday, Singh said K5 also helped Bankman-Fried invest in a tequila brand run by a “famous celebrity,” when Cohen asked him if the company was more than just a relationship broker.
“Yesterday (Monday) we were told that these were all reckless and frivolous investments, and I have the right to show that there was much more than what we were told yesterday,” Cohen said, after a prosecutor objected to his questioning about K5.
In a lawsuit filed against K5 in June seeking to recover $700 million, current FTX management said a shell company controlled by Bankman-Fried used $214 million in FTX funds to buy a stake in celebrity Kendall Jenner’s 818 tequila brand. at a time when the tequila company’s assets were valued at just $2.94 million. K5 said the lawsuit was baseless.
Bankman-Fried has argued that while he made mistakes when running FTX, he never intended to steal funds. His attorneys have said he is considering taking the stand as a witness in his own defense.
Jurors have already heard from Gary Wang, former CTO of FTX, and Caroline Ellison, former CEO of Alameda and Bankman-Fried’s ex-girlfriend.
Cohen questioned Singh on Tuesday about a confrontation he had with Bankman-Fried in September 2022 after learning that Alameda owed billions of dollars to FTX clients. He confronted Bankman-Fried on the balcony of the $35 million Bahamas penthouse they shared with many FTX and Alameda employees.
Singh acknowledged that he was anxious at the time and said he was suicidal at the time and for several months afterward. On Monday he testified that Bankman-Fried was angry during the conversation.
“Yesterday (Monday) we were told that these were all reckless and frivolous investments, and I have the right to prove that there was much more than what we were told yesterday,” Cohen said. REUTERS Bankman-Fried has argued that while he made mistakes when running FTX, he never intended to steal funds.AP
After telling Cohen that he thought FTX could stay in business “for some time” despite the deficit, Singh said he had previously told US authorities that he thought the company could survive for years.
Cohen also pressed Singh about a $3.7 million home he purchased with funds from FTX clients in Washington state in the fall of 2022. Singh acknowledged purchasing the home on Orcas Island, but said he was “embarrassed.” and had agreed to lose it as part of his statement. agreement.
“I was putting myself ahead of the customers,” Singh said.
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Source: vtt.edu.vn