Sam Bankman-Fried’s Lawyers Seek to Regain Ground in FTX Trial
Founder looks to rebound from cross-examination, with closing arguments expected to begin Wednesday
3 min
Sam Bankman-Fried’s lawyers rested their case Tuesday after seeking to rehabilitate the FTX founder’s credibility from the prosecutors’ two-day grilling.
Bankman-Fried, dressed in a grey suit, floundered through the end of Assistant U.S. Attorney Danielle Sassoon’s cross-examination.
For a second day, Sassoon walked Bankman-Fried through balance sheets, communications and tweets, again highlighting inconsistencies—or what she portrayed as outright lies—between the defendant’s public statements and his private knowledge.
Bankman-Fried repeatedly told jurors he couldn’t recall many of his past statements. He said he couldn’t remember the exact time line of things.
Defence attorney Mark Cohen sought to elicit testimony to explain his client’s evasiveness. He asked about reasons for his foggy memory and his use of a private jet and his contempt for regulation.
“You used the phrase ‘f— regulators,’ ” Cohen said, referring to a series of messages between Bankman-Fried and a Vox reporter. “Was that the full extent of the chain?”
It wasn’t, said Bankman-Fried, adding that he felt that his efforts to work with regulators might have only led to more bad regulation. “I was somewhat frustrated,” he said.
Cohen asked about the huge amount of evidence in the case—suggesting his client couldn’t possibly remember every document—and his many media interviews.
Bankman-Fried told the jury he talked to about 50 reporters during the time between FTX’s collapse and his arrest, typically preparing between 30 seconds and an hour for each interview. When he testified before Congress, others helped him prepare his testimony, he said.
Bankman-Fried’s testimony, which formed the bulk of his defence team’s presentation, is likely crucial to jurors’ determination of whether to find him guilty of fraud and other charges. Closing arguments are scheduled for Wednesday, clearing the way for the jury to likely get the case on Thursday.
About half of the jurors watched Bankman-Fried as he spoke. Some scribbled notes and others gazed at the floor. One man closed his eyes. Damian Williams, the Manhattan U.S. attorney who has given priority to prosecuting cryptocurrency cases, sat in the front row of the courtroom gallery.
Bankman-Fried again answered some of the prosecutor’s questions by quibbling with their premise. When asked about an $8 billion hole in the balance sheet of Alameda Research, FTX’s sister hedge fund, he said that “hole” wasn’t the word he would use. He said he couldn’t speak with exact confidence about whether some FTX customers, outside of its sister hedge fund, had special privileges.
Sassoon asked if it was Bankman-Fried’s practice to maximise making money even with the risk of going bust. “It depends on the context,” he replied. He later added, “With respect to some of them, yes.”
Sassoon concluded her cross-examination by playing a recording of a Nov. 9, 2022, all-hands meeting in which Caroline Ellison, the former chief executive of Alameda Research and Bankman-Fried’s former girlfriend, spoke with Alameda staffers. Ellison, her voice halting, said she had talked about Alameda’s use of customer funds with Bankman-Fried and two of his top deputies, Nishad Singh and Gary Wang.
“Ms. Ellison identified you, Gary and Nishad as her co-conspirators, correct?” Sassoon asked.
Sassoon showed jurors a document, from Dec. 25, 2022, in which Bankman-Fried appeared to be analysing his own potential legal jeopardy and assessing how the government viewed the alleged conspiracy. While it was public that Ellison and Wang were cooperating with prosecutors, Bankman-Fried wasn’t sure if Singh, a former FTX executive, would be charged.
“They don’t seem to be keeping a seat warm for him as a defendant,” the document said.
“You wrote that, Mr. Bankman-Fried?” asked Sassoon. “I think so,” he said.
Singh, who later pleaded guilty, testified for the government earlier in the trial.
Later, Bankman-Fried’s lawyer referenced a photograph of Bankman-Fried on a private jet, reclining with his eyes closed. The prosecution had showed the jury the photo as an example of excess spending. Cohen asked Bankman-Fried if he remembered the photo.
“A very flattering one,” Bankman-Fried said sarcastically, before agreeing that using a private jet was a valid business expense.
“It was very logistically difficult to travel between the Bahamas and a few places, chiefly Washington, D.C.,” the FTX founder told the jury.
After the defence attorney wrapped up, Sassoon told the judge she had no more questions. Bankman-Fried took a long swig from his water bottle as he stepped down for his final time from the witness stand.
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Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
4 minA sharp technology sell-off has exposed a new anxiety on global markets: whether the enormous borrowing behind the artificial-intelligence infrastructure boom can generate sufficient returns as interest rates rise and Chinese competition intensifies.
The artificial-intelligence investment boom has powered technology shares, semiconductor manufacturers and data-centre operators to extraordinary heights. Last week, investors were given a reminder that much of this expansion is being built with borrowed money.
The technology-heavy Nasdaq Composite fell 4.5 per cent over the week ended October 16, its weakest performance since late June. Semiconductor shares suffered an even deeper correction, with the Philadelphia Semiconductor Index losing about 11.4 per cent.
The selling spread quickly through global markets. Micron Technology fell 14.6 per cent over the week, while South Korea’s Samsung Electronics and SK Hynix dropped approximately 18 per cent and 24 per cent respectively.
This was more than a routine bout of profit-taking. Investors were reassessing three interconnected risks: higher interest rates, the rapidly expanding debt burden attached to AI infrastructure and the prospect of stronger competition from Chinese memory-chip manufacturers.
The debt behind the AI build-out
Artificial intelligence requires a physical infrastructure network of enormous scale. Data centres must be built, advanced processors purchased, power supplies secured and cooling systems installed before customers begin generating meaningful revenue from them.
Technology companies are increasingly supplementing their own cash with corporate bonds, syndicated loans, equipment leases, private credit and project-level financing.
JPMorgan describes the emerging funding model as a combination of conventional corporate borrowing and project finance tied to individual data-centre assets. In Australia, the Reserve Bank estimates that syndicated loans accounted for approximately three-quarters of data-centre financing during 2025 and 2026 to date.
The numbers are becoming large enough to affect broader credit markets. The Federal Reserve Bank of Dallas has cited Wall Street estimates suggesting AI-related investment-grade bond issuance could approach US$300 billion in 2026 alone.
That borrowing is not automatically problematic. Debt can be an efficient way to finance long-lived infrastructure when future revenue is sufficiently predictable. The concern is that AI technology, customer demand and computing economics are changing much faster than the repayment schedules attached to the assets.
A data centre financed today may carry debt for years. Investors must therefore make assumptions about future utilisation rates, electricity prices, chip performance, customer concentration and the amount businesses will ultimately pay for AI computing.
When interest rates rise, those assumptions become less forgiving.
Inflation changes the calculation
September’s US inflation data intensified the pressure. Consumer prices increased 3.7 per cent over the year, ahead of market expectations and up from 3.4 per cent in August.
The hotter reading reduced confidence that interest rates would fall quickly and pushed bond yields higher. That matters particularly for companies whose valuations depend on profits expected well into the future, as well as highly leveraged infrastructure operators that may need to refinance.
CoreWeave has emerged as a closely watched test case. The specialist cloud-computing company has accumulated substantial debt and lease obligations to build AI capacity, while relying on a concentrated group of large technology customers.
Its shares fell sharply during the sell-off, while the cost of insuring its debt against default climbed. CoreWeave has argued that its contracted backlog more than covers its obligations and that financial markets do not always understand its business model. Nevertheless, its securities have become a proxy for investor confidence in debt-funded AI infrastructure.
Oracle, another major investor in AI computing capacity, fell 8.8 per cent in Friday trading, while CoreWeave dropped 15.5 per cent.
The question is shifting from how much AI infrastructure can be built to how profitably it can be operated.
China adds another source of pressure
Interest rates were not the only catalyst. Reports of advances by Chinese memory-chip producer ChangXin Memory Technologies raised concerns that lower-cost Chinese products could increase competition across the global semiconductor industry.
Memory chips are essential to AI systems, but the industry is historically cyclical. Periods of tight supply and high pricing can encourage rapid investment, eventually producing oversupply and falling margins.
The prospect of a well-funded Chinese competitor expanding its technological capabilities unsettled investors in Samsung, SK Hynix and Micron. It also demonstrated that AI-related demand does not insulate chipmakers from conventional competitive pressures.
That combination—slower rate cuts, more expensive financing and potentially cheaper supply—challenged the assumption that every company exposed to AI would enjoy continually expanding margins.
A reset rather than the end of the boom
The sell-off does not establish that the AI boom is ending. Demand for computing power remains strong, the largest technology companies continue to generate formidable cash flows and many infrastructure projects are backed by long-term customer contracts.
What has changed is the market’s willingness to overlook the price and financing structure of that growth.
The most resilient companies are likely to be those able to fund investment from operating cash flow, secure long-duration customers and demonstrate that new capacity will earn returns comfortably above its financing costs.
More speculative operators may face greater scrutiny, particularly where debt is expensive, customers are concentrated or expected revenue depends on demand that has not yet materialised.
For Australian investors, the lesson extends beyond US technology shares. Local data-centre operators, infrastructure funds, electricity suppliers and property groups are increasingly exposed to the same investment cycle.
Artificial intelligence may remain one of the defining growth themes of the decade. But last week’s correction showed that enthusiasm for the technology does not eliminate financial discipline.
The next stage of the AI boom will be judged not only by computing power, model performance or demand for chips, but by something more traditional: whether the assets being financed can generate enough cash to repay the money borrowed to build them.
Fact box
Nasdaq Composite: Down 4.5 per cent for the week ended October 16, 2026
Philadelphia Semiconductor Index: Down approximately 11.4 per cent
Micron Technology: Down approximately 14.6 per cent
Samsung Electronics: Down approximately 18 per cent
SK Hynix: Down approximately 24 per cent
US September inflation: 3.7 per cent annually
Estimated 2026 AI-related investment-grade issuance: Approximately US$300 billion
As interest rates, inflation and market sentiment fluctuate, investors are being urged to focus on data, not panic.
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