FTX founder Sam Bankman-Fried’s lawyer on Tuesday mentioned the now-bankrupt cryptocurrency change’s investments weren’t “reckless and frivolous,” pushing again in opposition to testimony by former government Nishad Singh portraying its spending on advertising and celeb endorsements as extreme.
Singh, FTX’s former engineering chief, testified for a second straight day at Bankman-Fried’s fraud trial in Manhattan federal court docket. Underneath cross-examination, Singh advised the jury that he thought FTX would have the ability to keep in enterprise upon studying in September 2022 of a $13 billion shortfall in buyer funds, probably bolstering Bankman-Fried’s argument that he believed the change’s troubles have been manageable.
FTX declared chapter on Nov. 11, 2022.
Singh testified on Monday that the corporate’s enterprise investments and $1.1 billion in deliberate advertising offers, together with naming rights to the sector the place the NBA’s Miami Warmth play and that includes NFL quarterback Tom Brady in commercials, “reeked of extra and flashiness.”
Protection lawyer Mark Cohen on Tuesday requested Singh, one among three former members of Bankman-Fried’s inside circle who’ve pleaded responsible to fraud and agreed to cooperate with prosecutors, whether or not selling FTX’s model could possibly be helpful.
“I understood it had enterprise advantages and prices,” Singh mentioned in testimony that protection legal professionals might use to argue that Bankman-Fried was making what he believed to be good-faith enterprise choices in shelling out funds for advertising and investments even when others disagreed.
Bankman-Fried is within the third week of his trial on fees involving the looting billions of {dollars} in FTX buyer funds to make investments, donate to US political campaigns and prop up his hedge fund, Alameda Analysis. He has pleaded not responsible.
Singh testified on Monday that he apprehensive a deal the corporate had with an funding agency known as K5, which Bankman-Fried described as a “one-stop store” for brokering relationships with celebrities, would show “poisonous” for FTX’s tradition.
On Tuesday, Singh mentioned K5 additionally helped Bankman-Fried spend money on a tequila model run by a “well-known celeb,” when requested by Cohen whether or not the agency was something greater than a relationship dealer.
“Yesterday (Monday) we have been advised these have been all reckless and frivolous investments, and I’m entitled to point out that there was far more to it than we have been advised yesterday,” Cohen mentioned, after a prosecutor objected to his questioning about K5.
In a lawsuit filed in opposition to K5 in June in search of to claw again $700 million, FTX’s present administration mentioned a Bankman-Fried-controlled shell firm used $214 million in FTX funds to purchase a stake in celeb Kendall Jenner’s 818 Tequila model at a time when the tequila firm’s property have been valued at simply $2.94 million. K5 mentioned the lawsuit was with out benefit.
Bankman-Fried has argued that whereas he made errors working FTX, he by no means supposed to steal funds. His legal professionals have mentioned he’s contemplating taking the witness stand in his personal protection.
Jurors have already heard from Gary Wang, FTX’s former chief expertise officer, and Caroline Ellison, Alameda’s onetime chief government officer and Bankman-Fried’s former girlfriend.
Cohen questioned Singh on Tuesday a couple of confrontation he had with Bankman-Fried in September 2022 after studying Alameda owed billions of {dollars} to FTX clients. He confronted Bankman-Fried on the balcony of the $35 million Bahamas penthouse they shared with many FTX and Alameda workers.
Singh acknowledged that he was anxious on the time, and mentioned he was suicidal then and for a number of extra months. He testified on Monday that Bankman-Fried was offended through the dialog.
After telling Cohen he thought FTX might keep in enterprise “for some period of time” regardless of the shortfall, Singh mentioned he had beforehand advised US authorities he thought the corporate might survive for years.
Cohen additionally pressed Singh a couple of $3.7 million residence he bought utilizing FTX buyer funds in Washington state within the fall of 2022. Singh acknowledged shopping for the Orcas Island residence, however mentioned he was “ashamed” and had agreed to forfeit it as a part of his plea settlement.
“I used to be placing myself forward of consumers,” Singh mentioned.