SBF Acknowledges “Special Advantages” for Alameda on FTX in Day Two of Testimony

Federal judge John Walter commented, “Defendants were not creating a parody or satire. Instead, they were intentionally using the BAYC marks in an effort to profit off of Yuga’s success.”

Discussing Margin Trading

The prosecution revisited an event from June 2022 where Bankman-Fried reportedly approved Ellison’s repayment of the trading firm’s third-party loans, even though it required borrowing additional funds from FTX.

Trying to discuss margin trading as part of his response, Judge Kaplan insisted that he directly answer the question. When pressed to specify whether using FTX funds to repay loans was a form of margin trading, Bankman-Fried suggested it “very well could be a margin trade.” He, however, quickly labeled his own comment as “speculative,” adding he could “explain if you want.” Sassoon declined the offer.

The Role of Alameda Research

By September 2022, Bankman-Fried justified why Alameda Research should wind down and be supplanted by Modulo Capital, a competing trading company where he had significant undisclosed investments. He rationalized that Modulo Capital had a notably smaller PR expense compared to Alameda Research.

Though he acknowledged spending billions on PR for his cryptocurrency ventures, Bankman-Fried revealed he couldn’t close his trading due to the debt it had with FTX.

Further, he resisted the suggestion that using FTX funds to settle Alameda Research’s loans might jeopardize the exchange. Sassoon presented evidence indicating Bankman-Fried knew about Alameda Research’s substantial $65 billion credit line in FTX’s records. Still, Bankman-Fried maintained that he merely provided “suggestions” which were “interpreted” by his team, specifically by Gary Wang, the chief technical officer, and Nishad Singh, the head of engineering.

What Lies Ahead

The trial will likely see Bankman-Fried conclude his testimony tomorrow. In response, the prosecution plans to present testimonies from an FBI agent and an Apollo Crypto representative. If found guilty, the repercussions for Bankman-Fried could be lifelong imprisonment.