When informed that there was no legal justification for seizing customer funds, Sam Bankman-Fried replied with a simple « Yep. »

In Manhattan federal court on Thursday, FTX's corporate attorney, Can Sun, testified against his former employer, Sam Bankman-Fried, regarding the company's bankruptcy in November 2022.

Sun expressed his dismay upon discovering that Alameda Research, FTX's hedge fund sister company, had preferential treatment over other customers on the crypto exchange. He also revealed that both companies, owned by Bankman-Fried, had mixed funds taken from customers without their consent.

Testifying in court, Sun, who traveled from Japan for this, stated, "I was shocked. I consistently told our investors that FTX and Alameda are two completely independent and separate entities."

Bankman-Fried faces seven financial crime charges related to defrauding investors and customers, with several former members of his executive team having pleaded guilty to financial crimes and testifying against him in the trial.

On November 7, 2022, just four days before FTX filed for bankruptcy, Sun revealed that Bankman-Fried had a conversation with a potential investor who raised concerns about FTX's financial situation. During this discussion, Bankman-Fried asked Sun to find legal justifications for FTX's use of customer funds.

Before the investor call, Bankman-Fried had a private conversation with Sun. Sun informed the court that he explained there were no valid reasons for FTX to utilize customer funds without their explicit consent, only theoretical arguments lacking factual support.

According to Sun's testimony, Bankman-Fried responded with a simple "Yep, yep." Sun noted that he had anticipated a more substantial reaction but described his former boss's response as very subdued. Bankman-Fried displayed no surprise at all.

Shortly before his conversation with Bankman-Fried, Sun also noticed Nishad Singh in a state of panic at the Bahamas office. Singh, the former engineering director for FTX, had pleaded guilty to financial offenses earlier in the year and testified the previous week, revealing that the bankruptcy had left him feeling "suicidal."

Sun recounted Singh's appearance, stating, "Nishad was sitting there, and his entire complexion was ashen and lifeless. It appeared as though his spirit had been drained from him."

During their conversation, Singh inquired about Sun's "personal exposure" in relation to loans he had received from Alameda. Singh admitted that he had become aware of the financial gap in FTX's operations several months earlier. Sun's testimony indicated that Singh informed him that when he confronted Bankman-Fried about the financial shortfall, the CEO remained unperturbed and conveyed a message along the lines of, "It is what it is. The only course of action is to expand the company and fill the gap."

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