The ongoing trial of Sam Bankman-Fried, the co-founder of the now-defunct FTX crypto exchange, has brought to light some surprising revelations about his knowledge of cryptocurrency.
According to reports from The Guardian’s live coverage of the trial, Bankman-Fried admitted to having very little understanding of cryptocurrency before launching FTX and its associated hedge fund, Alameda Research.
While on the stand, he confessed, “I had absolutely no idea how they worked. I just knew they were things you could trade.”
The trial has also revealed that when Bankman-Fried partnered with co-founder Gary Wang, who is testifying against him, they had no clear strategy for attracting customers to their business.
Regarding FTX’s collapse, US Attorney Mark Cohen’s questioning suggested that the exchange’s operations and Bankman-Fried’s business decisions were not fundamentally flawed.
Cohen pointed to FTX’s terms of service, which were finalized in early to mid-2022 and included provisions allowing the use of a client’s balance to cover losses in specific situations, such as in futures trading.
Bankman-Fried also discussed FTT, the cryptocurrency created by FTX, emphasizing its role in the downfall of FTX and Alameda Research. The rush of customer withdrawals began when reports revealed that Alameda’s loans were heavily reliant on FTT.