FTX founder Sam Bankman-Fried’s legal team countered claims of reckless spending and frivolous investments during his fraud trial, emphasizing the business rationale behind the cryptocurrency exchange’s decisions. The defense attorney, Mark Cohen, challenged testimony from Nishad Singh, FTX’s former engineering chief, who had described the company’s marketing expenses and celebrity endorsements as excessive.
Singh, one of three former close associates of Bankman-Fried who had pleaded guilty to fraud and cooperated with prosecutors, testified on Monday that FTX’s venture investments and substantial marketing deals, such as obtaining naming rights for the Miami Heat NBA arena and featuring NFL quarterback Tom Brady in commercials, appeared extravagant.
During cross-examination, Cohen probed whether promoting the FTX brand could have practical business advantages. Singh acknowledged that marketing had both benefits and costs, suggesting that Bankman-Fried may have made well-intentioned business decisions despite differing opinions.
Singh had also expressed concerns about FTX’s dealings with investment firm K5, describing it as potentially harmful to the company’s culture. However, when questioned by Cohen, Singh revealed that K5 had assisted Bankman-Fried in investing in a tequila brand associated with a famous celebrity.
Cohen sought to challenge the characterization of these investments as reckless and frivolous, highlighting that there might be more complexity to them than previously conveyed in the trial.
FTX’s current management has previously filed a lawsuit against K5, seeking to recover $700 million. The lawsuit alleges that a Bankman-Fried-controlled shell company used $214 million in FTX funds to acquire a stake in Kendall Jenner’s 818 Tequila brand, even though its assets were valued at only $2.94 million at the time.
Sam Bankman-Fried’s trial, now in its third week in a Manhattan federal court, revolves around charges related to misappropriating customer funds for investments, political donations, and supporting his hedge fund, Alameda Research. Bankman-Fried, who maintains his innocence, has acknowledged mistakes in managing FTX but denied any intent to embezzle funds. His legal team has suggested that he might testify in his own defense.
The trial has already featured testimony from other key figures, including Gary Wang, FTX’s former chief technology officer, and Caroline Ellison, the former CEO of Alameda Research and Bankman-Fried’s former girlfriend.