"Well that was insane." That was the first update my colleague Leo Schwartz sent to our team upon leaving the Manhattan courthouse where Sam Bankman-Fried took the stand. A short time later, Leo filed an account of the day's testimony and it was apparent what he was talking about.
A defendant taking the stand is always a risky proposition since it opens the door for them to incriminate themselves on cross-examination. The testimony Bankman-Fried offered on Thursday was only a dry run since the judge had dismissed the jury (part of an unusual arrangement to resolve some of the lawyers' expected wrangling over admissible evidence before the jury's return on Friday), but it was more than enough to show he should have heeded that risk. The one-time FTX mogul was a hot mess on the stand, per Leo:
Bankman-Fried answered in his signature format, a series of misdirections, “yups,” and stammers that previous interviewers have described as a “word salad” approach. While it may have worked in the past on unsuspecting reporters, [prosecutor] Sassoon and [Judge] Kaplan were unamused. At one point, Kaplan instructed Bankman-Fried to be more clear, noting that he had an “interesting way of answering questions.”
Toward the end, the prosecutor asked, in regard to FTX's safeguards for customer money, "Would that include not embezzling customer assets?” It was a blow below the belt—and disallowed by the judge—but it drove home just how badly this trial has gone for Bankman-Fried. In the course of three weeks, the prosecution has shown how FTX's balance sheet has been in disarray since the beginning, and how a rigged trading platform let him treat client funds as a personal ATM. Then there was the spectacle of Bankman-Fried's top lieutenants and one-time friends lining up to say he was the architect of this massive Ponzi scheme.
In his defense, his lawyers appear set to offer little more than the legal equivalent of "'yups' and stammers." By now, Bankman-Fried's decision not to enter a guilty plea to reduce his sentence looks, well, insane.
The most interesting part of Thursday's events for me, however, was not Bankman-Fried's debacle of a cross-examination. Instead, I found Leo's account of his direct testimony to be most revealing. That testimony involved blaming FTX's lawyers for somehow being responsible for the multibillion-dollar fraud—a far-fetched strategy, especially in light of the secret computer code Bankman-Fried had implemented to siphon customer money. But most of all, I was struck by this line from Leo's account: "After a smooth direct examination, Bankman-Fried’s father, Joe Bankman, walked over to give him a grin and a thumbs up."
While any parent will support their child in court, this anecdote also emphasizes the twisted ethical compass of Bankman-Fried and his family. Instead of accepting responsibility for a massive theft, they appear convinced they are morally superior people entitled to their own set of rules. Too bad for them the justice system doesn't work that way. Look for the latest coverage of Friday’s trial proceedings on Fortune.com later today.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
