Prosecutors in the case against FTX founder Sam Bankman-Fried rested on Thursday, setting the stage for him to testify about how his multibillion dollar cryptocurrency empire collapsed, causing billions of dollars in losses that prosecutors blame on his extravagant spending on investments, donations and a lavish lifestyle.
His testimony was likely to begin by afternoon, a day after his lawyer told a Manhattan federal court judge that his client planned to testify in his defense. Defense lawyers estimated that they would question him for about five hours after brief testimony from two other witnesses.
After prosecutors rested Thursday, defense lawyers immediately asked Judge Lewis A. Kaplan to acquit Bankman-Fried on the grounds that prosecutors had failed to present sufficient evidence. The judge rejected the request.
The California entrepreneur has pleaded not guilty to conspiracy charges accusing him of diverting billions of dollars from his clients and investors to make risky investments, buy luxury housing, engage in a star-studded publicity campaign and make large political and charitable donations.
Bankman-Fried, 31, has remained quiet through a three-week trial as several members of his executive inner circle have testified against him in cooperation deals they made with the government before pleading guilty to criminal charges.
In their testimony, the executives insisted that Bankman-Fried directed them to spend billions of dollars taken from the accounts of FTX customers and funneled through Alameda Research, a hedge fund he started in 2017, two years before he created the FTX cryptocurrency exchange.
Bankman-Fried was arrested in the Bahamas and extradited to the United States last December, a month after his businesses collapsed.
Initially, he was freed on a $250 million personal recognizance bond and required to remain at the Palo Alto, California, home of his parents, longtime Stanford University law professors.
Kaplan revoked the bail in August after concluding that Bankman-Fried had tried to influence potential trial witnesses.
Since then, his lawyers have complained that Bankman-Fried has been unable to properly prepare for trial while incarcerated at a Brooklyn federal lockup.
Those who have testified against Bankman-Fried have included Caroline Ellison, his former girlfriend who was chief executive of Alameda in the year before the billions of dollars in losses were exposed last November.
She told jurors that the collapse of the businesses brought her “relief that I didn't have to lie anymore” and she blamed Bankman-Fried for corrupting her moral compass by creating justifications for doing things that she knew to be wrong and illegal.
She also admitted doctoring financial balance sheets to try to hide that Alameda was borrowing about $10 billion from FTX customers by June 2022, a discrepancy that was revealed when customers rushed to withdraw deposits last November as word got out that their money was not safe.
