Latest update — Former FTX CEO Sam Bankman-Fried trial [Day 14]

Cointelegraph reporters are on the ground in New York for the trial of former FTX CEO Sam “SBF” Bankman-Fried. As the saga unfolds, check below for the latest updates.

Oct. 27: Bankman-Fried faces jurors

Sam Bankman-Fried recognized that a “lot of people got hurt” due to FTX’s collapse but denied any wrongdoing in the exchange’s relationship with Alameda Research.

“I made a number of small mistakes and a number of big mistakes,” he told jurors in the first minutes of his testimony on Oct. 27. Jurors are listening to Bankman-Fried’s testimony for the first time. A hearing was held with him on Oct. 26 without the jurors present.

Compared with the previous day, Bankman-Fried appeared to be much better prepared for questions this morning. He delivered the jurors a narrative of FTX’s inception, its first months in business and its relationship with Alameda. According to him, Alameda was the primary market maker and liquidity provider of FTX, which meant it would be responsible for covering customer losses if FTX’s risk engine failed.

Due to Alameda’s role in FTX, it received customized features in FTX code, such as the ability to go negative without activating the risk engine. The exemption, according to him, was necessary to avoid Alameda’s potential liquidation, which would have an adverse impact on the crypto markets.

Bankman-Fried also noted that as a customer and liquidity provider for FTX, Alameda was able to borrow funds from the exchange if collateral was provided. As per FTX’s terms of use, borrowers would not have any restrictions on using borrowed funds, meaning Alameda could use the funds for trading purposes.

FTX’s former CEO also noted that Alameda handled wire transactions on behalf of FTX, acting as a payment processor for the platform.

In response to a question regarding whether he knew how FTX’s customer deposits on Alameda’s account were traced, he replied, “I wish I had a better understanding than I did.”

Bankman-Fried also pointed out that the exchange’s terms of use had a provision regarding the clawback of funds. According to the document, margin trading and futures would fall under the provision stating: