Bankman-Fried says he knew little about cryptocurrencies before starting FTX

Former FTX CEO Sam Bankman Fried exits Manhattan federal court in New York City in July. He testified in his own defense on Friday, saying he knew little about cryptocurrencies before starting FTX. File Photo by Louis Lanzano/UPI

Oct. 27 (UPI) -- Sam Bankman-Fried, the founder and former chief executive officer of what was once the world's largest cryptocurrency exchanges, told a court on Friday he didn't know much about cryptocurrency before launching FTX and its closely associated hedge fund Alameda Research.

In the New York federal fraud trial, prosecutors have accused Bankman-Fried of being the mastermind behind billions of FTX customer funds being siphoned off for personal use.

"I had absolutely no idea how they worked," Bankman-Fried said in court on Friday. "I just knew they were things you could trade."

Bankman-Fried said he gave the exchange about a 20% chance of being successful when he partnered with Gary Wang, who has testified against Bankman-Fried in the trial.

Bankman-Fried said that he was not aware of the so-called digital back door that Alameda Research, his other company, used to withdraw FTX customer funds. That access is part of the key charges by prosecutors.

He said he gave program developers a free hand and trusted them because of his lack of tech knowledge.

"Ultimately, I had authority," Bankman-Friend said. "On the other hand, I wasn't much of a programmer. ... I wasn't entirely sure what was happening."

Under questioning from his attorney, Bankman-Fried said that, while he made "mistakes," he never intended to defraud anyone.

"We thought that we might be able to build the best product on the market," he said, believing he and Wang could make an easier-to-use exchange that could win over the market and "move the ecosystem forward. It turned out basically the opposite of that."

Bankman-Fried could spend decades in prison if convicted on various fraud charges that prosecutors said led to the collapse of the exchange.