Bankman-Fried Details FTX Growth, Admits Lack of Risk Management
FTX founder Sam Bankman-Fried took the stand for the first time Friday in his criminal fraud trial, describing the crypto exchange’s exponential expansion and his extensive work hours. However, he conceded that the lack of a risk management team was a glaring oversight.
Bankman-Fried testified that FTX trading volume rapidly scaled from millions to billions of dollars daily in 2021–2022. He worked 12–22 hours per day as the company’s head.
Despite the meteoric rise, Bankman-Fried claimed he didn’t expect such swift success. He pegged FTX’s odds of failure at 80% during the launch.
Bankman-Fried admitted a lack of risk management
As business grew, FTX added teams for marketing, support, compliance, legal, and other functions. But Bankman-Fried admitted that a risk management group was notably absent.
He called this a key deficiency, echoing his prior statements that risk controls and oversight were inadequately developed as FTX ballooned.
The trial testimony followed Bankman-Fried taking the stand Thursday in an unconventional pre-trial hearing. Presiding Judge Lewis Kaplan heard arguments without the jury admitting certain defense evidence. This included FTX legal advice and customer terms of service.
Kaplan ruled the defense can present much of the proposed evidence, except “boilerplate” documents around Bankman-Fried’s personal company loans.
Prosecutors allege he knowingly misused FTX customer funds, siphoning billions to his hedge fund, Alameda Research.
But the defense contends losses stemmed from broader market turmoil and FTX’s margin trading model. They argue Bankman-Fried acted ethically, without intent to defraud.
His testimony aimed to humanize his tireless work growing FTX amid crypto’s volatility. However, admitting problems with risk management could help prosecutors show there were some issues in how things were handled.
