Trump's former campaign press secretary Hope Hicks became the first former member of Donald Trump's inner circle to take the witness stand in his criminal trial on Friday.
Trump, 77, is charged with falsifying business records to reimburse his lawyer, Michael Cohen, for a $130,000 payment to Daniels just days ahead of the 2016 election against Hillary Clinton.
Hicks was mentioned in earlier testimony by David Pecker, the former publisher of the National Enquirer tabloid.
He said Hicks was present at a 2015 meeting at Trump Tower in New York at which he agreed to help Trump's nascent campaign for the Republican nomination the following year.
She would have been closely involved with the final stages of Trump's successful campaign for the White House when the payments to Daniels were allegedly made.
Prosecutors this week urged Judge Juan Merchan to fine Trump for more violations of a gag order he imposed to protect trial participants.
Merchan, who threatened Trump with jail time on Tuesday for further gag order violations, heard arguments from both sides and could issue a ruling Friday.
The judge started Friday's session by unusually addressing Trump directly, saying he wanted to "clear up (any) misunderstanding" on the gag order.
Merchan stressed that Trump had an "absolute right to testify" in court, and that the gag "only applies to extrajudicial statements... outside of court."
Trump, who had claimed that the gag order meant he would not be able to testify freely, was heard to respond "thank you."
On Thursday, prosecutor Christopher Conroy had urged Merchan to fine Trump for four new violations of the gag order barring him from publicly attacking witnesses, jurors, court staff or their relatives.
Merchan fined Trump, who wore an electric blue tie and dark suit, $9,000 earlier this week for violations of his gag order.
Conroy pointed to public comments Trump has made about Cohen, who has become a vocal critic of his former boss and is expected to be a star witness in the case.
"The defendant thinks the rules should be different for him," Conroy said.
'Made no threats'
On Thursday Daniels' former attorney, Keith Davidson, was grilled by the ex-president's lawyers. Davidson also represented another woman, Karen McDougal, who claimed to have had a year-long affair with Trump.
Trump attorney Emil Bove's questioning of Davidson quickly turned heated.
"When you were negotiating on behalf of McDougal and Daniels one of your concerns was staying on the right side of the law with regard to extortion," Bove said.
"I suppose so," Davidson replied. "I did everything I could to make sure my activities were lawful."
Bove asked Davidson about his involvement in other cases where he "extracted" money from celebrities with something to hide, citing a settlement involving the "Platoon" star Charlie Sheen.
The Los Angeles lawyer objected to the use of the word "extract" in a testy exchange.
Davidson acknowledged he was probed by federal and state investigators for alleged extortion while representing clients who had possession of a sex tape of the former professional wrestler Hulk Hogan. He did not end up facing any charges.
"I made a monetary demand," said Davidson, which would allow Hogan to acquire the tapes. "I made no threats to anyone."
The court also heard from a forensic expert, Douglas Daus, who examined Cohen's cell phones and retrieved what appeared to be recordings of Trump, and Cohen's phone calls.
Leaving court on Thursday, Trump denounced the case as "election interference at the highest level".
"I should be out campaigning right now," he said.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
