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SBF believed Alameda had enough assets to cover FTX debt

written by Bella Palmer
crypto-currency-exchange

Sam Bankman-Fried told jurors that he was concerned and surprised, but not alarmed, upon learning in October 2022 that Alameda had borrowed $8 billion from deposits that FTX customers sent to the exchange

FTX founder Sam Bankman-Fried testified on Monday that he believed his Alameda Research hedge fund had sufficient assets to cover an $8 billion debt to the crypto currency exchange until days before both failed.

Testifying in his own defence at his fraud trial, he told jurors that he was concerned and surprised, but not alarmed, upon learning in October 2022 that Alameda had borrowed $8 billion from deposits that FTX customers sent to the exchange.

If it were far larger, I would have been calling a crisis, SBF said from the witness stand in Manhattan federal court in reply to questions from his defence lawyer, Mark Cohen.

Prosecutors have said he stole billions of dollars in FTX customer funds to prop up Alameda, make speculative venture investments and contribute to U.S. political campaigns. If convicted, he could face decades in prison.

SBF has pleaded not guilty to two counts of fraud and five counts of conspiracy. He has admitted making mistakes that led to FTX's November 11, 2022, failure, harming customers and employees. But he said he did not steal customers' money.

On the witness stand in federal court in Manhattan, SBF has sought to offer alternative explanations for what occurred to the money. He has sought to stress that FTX was a "margin" exchange, where many customers, including Alameda borrowed money from other users to place bets.

On cross-examination, prosecutor Danielle Sassoon asked SBF about testimony earlier this month in which Caroline Ellison, Alameda's former CEO and Bankman-Fried's girlfriend, said the fund in June 2022 borrowed money from FTX customers to repay its lenders.

Sassoon asked SBF several times whether taking FTX funds to repay lenders was margin trading.

It is my testimony that it depends on the details but that it very well could be a margin trade, he said. I am not saying that has what happened, and I am not saying that is not margin trading.

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