SBF Trial – SBF claims he acted in good faith as lawyers blessed his decisions at FTX SBF Trial – SBF claims he acted in good faith as lawyers blessed his decisions at FTX
SBF told the court that his actions were driven by a sincere belief in their legality, given that legal experts had approved certain aspects of his policies.
5 min read
Updated: Oct. 27, 2023 at 1:59 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
SBF’s trial resumed on Oct. 27, with the former billionaire taking the stand in the latter half of the day after the prosecution’s final witness in the case was excused.
The hearing began with the prosecution bringing their witness — FBI agent Mark Troiano — to the stand to primarily provide insights into the existence, nature, and authenticity of Signal groups involving SBF.
Following Troiano’s testimony and cross-examination, the prosecution rested its case and handed over the courtroom’s reigns to the defense, which began its case with the testimony of SBF himself.
During his testimony, he asserted that attorneys played a pivotal role in shaping crucial decisions within the exchange. He maintains that his actions were driven by a sincere belief in their legality, given that legal experts had approved certain aspects of his policies.
Nevertheless, during the cross-examination, he occasionally faltered in his responses, frequently citing a lack of recollection regarding interactions with lawyers. The presiding judge continuously emphasized the importance of providing direct responses to the questions posed.
The jury was sent home before SBF took the stand, and none of the members were present during the former billionaire’s testimony.
Judge Lewis Kaplan told the courtroom that the government contends the jury should not hear certain parts of SBF’s testimony. It is unclear which aspects of the testimony are unsuitable for the jury.
300 Signal Groups
Troiano’s testimony revolved around his examination of Signal groups found on the devices of Caroline Ellison and Gary Wang. These Signal groups are central to the prosecution’s case.
To establish the credibility and authenticity of the electronic evidence, Troiano testified that he cross-referenced the names and phone numbers associated with the participants in these Signal groups. He said this step was essential in ensuring that the digital communication within these groups was a reliable basis for the trial.
One critical aspect that Troiano highlighted was the sheer volume of Signal groups that SBF was involved in. He revealed that the former billionaire had participated in over 300 Signal groups between 2021 and 2022. This information suggests that SBF was extensively engaged in digital communications and collaborations during that period.
Furthermore, Troiano noted that a substantial portion of these Signal groups — roughly 288 of them — had the auto-delete functionality enabled. This feature automatically deletes messages after a set period, which could affect data retention and information preservation within these groups.
Cross-examination
During Troiano’s cross-examination, the defense aimed to clarify several crucial aspects of the case.
The defense began by seeking to establish that Troiano had not directly worked on the case, suggesting a degree of detachment from the specific circumstances. The lawyers subsequently turned to the creation and handling of a significant document presented during Troiano’s testimony called GX 1083.
Troiano confirmed that he was not the author of this document and had received it from the prosecution. Furthermore, the defense inquired about the possibility of edits to GX 1083, with Troiano acknowledging that the prosecutors would have made any alterations.
The defense also probed Agent Troiano’s understanding of the secure messaging app Signal and the significance of an auto-delete column in GX 1083. Identity verification within Signal groups and the nature of these groups were additional points of interest.
The overarching objective of the defense’s cross-examination was to cast light on various facets of Troiano’s testimony, evaluate the credibility of the evidence presented, and potentially unearth any inconsistencies or gaps pertinent to SBF’s case.
Troiano was excused from the stand, and the courtroom took a break until 2 p.m. when the defense began presenting its case. However, the jury was sent home before SBF took the stand.
SBF takes the stand
During his time on the stand, SBF addressed several critical points relevant to the case.
Defense attorney Mark Cohen initiated the questioning by asking about the communication platforms FTX used. SBF mentioned Telegraph, Slack, and Signal as the primary platforms employed by the company.
When asked about Signal, SBF clarified that it was not saved by any host, highlighting the importance of encryption to protect data due to concerns about security breaches.
SBF then explained that FTX was headquartered in Hong Kong and had security concerns during its time there. Additionally, there were concerns about former employees potentially selling data to competitors.
When questioned whether FTX had been hacked, SBF stated that there had never been a core breach but acknowledged that third parties had experienced hacks.
The discussion then turned to document retention, with SBF mentioning that Dan Friedman, who previously worked at Fenwick & West, was involved in shaping the policy. When asked what participants could do with messages, SBF explained that messages could be set to auto-delete for informal discussions on Signal.
However, Judge Kaplan requested more specific information, and Cohen inquired whether SBF had acted in accordance with the document retention policy. SBF indicated that, to his knowledge, he had complied with the policy and that auto-deletion was typically used for non-decision-making channels.
Cohen then presented document GX 1083 and questioned why SBF had turned off auto-delete. SBF explained that he had heard concerns from regulators. Cohen also asked about individuals like Ryne Miller, the General Counsel of FTX US, and Brett Harrison, the CEO of FTX US, about the document retention policy.
Moving on, the discussion shifted to North Dimension, with SBF revealing that Alameda had set it up in 2020. He also mentioned that Friedberg had provided him with documents to sign for this purpose.
Cohen asked about SBF signing for both FTX and Alameda, to which SBF responded that he was the CEO of both entities at that time and that FTX did not have a bank account. SBF also expressed his belief that taking FTX deposits through Alameda was legal.
A banking application document for the North Dimension bank account was presented during the cross-examination, with Dan Friedberg’s signature on it.
SBF also confirmed that the funds for venture capital investments came from Alameda Research.
Cross-examination
SBF faced relentless cross-examination by U.S. prosecutor Danielle Sassoon, which aimed to shed light on various aspects of the case, including the alleged misappropriation of customer funds and questionable communication practices within the company.
Throughout the cross-examination, SBF frequently apologized for not understanding or correctly addressing questions. He repeatedly used the word “contemporaneously” when asked about his understanding of documents or conversations, which seemed to frustrate the prosecutor.
Sassoon interrupted SBF multiple times, insisting that he answer her questions directly.
One notable point of contention was the purpose of the North Dimension bank account and who decided to accept customer deposits into that account. SBF repeatedly referred to a payment agent agreement between Alameda and FTX, which he had signed, and did not provide a straightforward answer to the question.
Sassoon also inquired about the auto-delete feature in some Signal chats to determine if SBF or former Alameda CEO Caroline Ellison had discussed the alleged $13 billion hole in customer funds using this messaging app. SBF responded uncertainly and said they “probably” did, but he wasn’t entirely sure.
When asked about any paper communications with attorneys, SBF mentioned that they had requested some documents but had not received them, even though the trial had been ongoing for approximately four weeks.
At this point, Judge Kaplan urged him to listen to the questions and provide direct answers.
An interesting moment occurred when Sassoon asked if SBF understood that safeguarding customer assets included not embezzling those funds, resulting in an objection from the defense.
Sassoon’s persistent questioning led to numerous objections from the defense, with Cohen remarking that the cross-examination had exceeded its scope and resembled a deposition.
However, Judge Kaplan allowed the questioning to continue despite those objections. SBF’s testimony and cross-examination lasted roughly three hours. The court is set to reconvene on Oct. 27.
What’s next?
The trial is now in its final stages, with additional witnesses, including Krystal Rolle and Joseph Pimbley, expected to testify.
Rolle’s testimony will provide insight into a meeting between SBF and Bahamian regulators in November 2022, while Pimbley, a database expert, will discuss data related to letters of credit balances.
As the trial nears its conclusion, Judge Kaplan expressed concern over the extensive paperwork submitted during the proceedings, jokingly referring to it as “the deforestation of America.”
The trial’s outcome remains uncertain, with deliberations by the jury expected to follow the final days of testimony.
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Author 
Assad Jafri
AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.
Caroline Ellison is the former lead trader and former CEO at Alameda Research.
Brett Harrison is the former President of FTX US, a US-regulated cryptocurrency exchange.