I knew it was wrong, Caroline Ellison told the court, referring to the case of her former partner Sam Bankman-Fried, the founder of the FTX exchange, accused of fraud and money laundering. She confirmed that the company she runs, Alameda Research, misappropriated approximately $14 billion belonging to FTX clients. She emphasized that the most important decisions were always made by Bankman-Fried. “He told me to commit these crimes,” Ellison said.
Caroline Ellison, in her testimony in the trial of Sam Bankman-Fried, the founder of the FTX exchange accused of fraud and money laundering, said that her former boss used a risky strategy with FTX deposits. His actions led to the theft of billions of dollars from customers at the time.
Misappropriation of $14 billion. “I knew it was wrong”
FTX was one of the largest cryptocurrency exchanges in the world. It went bankrupt last November, with more than $8 billion reportedly stolen.
Prosecutors say the exchange’s collapse came after Bankman-Fried stole billions of dollars from customers, allegedly using the funds to buy real estate, make political donations and fund his cryptocurrency trading company Alameda Research.
The main witness in this case is Caroline Ellison, who has headed Alameda Research since 2021. In December, she pleaded guilty, among other things, to lying to investors, telling the court: “I knew it was wrong.”
She also confirmed to the court that Alameda Research misappropriated approximately $14 billion belonging to FTX clients. The money was used for investments and loan repayments. She added that Alameda was able to return some of the money to the FTX exchange.
– He created the systems that allowed Alameda to seize the money. He instructed us to take customers’ money to repay our loans,” Ellison said.
She noted that she consulted with Bankman-Fried many times about the company’s financial condition, carrying out analyzes at his request. She said that they showed that the company risks taking out loans that may require repayment at any time.
– The most important decisions were always made by Sam – she pointed out. “He ordered me to commit these crimes,” she added.
What led to the collapse of the stock exchange?
According to her, Sam Backman was well aware of the risks of his activities. He asked her to conduct analyzes and identify worst-case scenarios, many of which later came true.
Ellison’s testimony sparked interest among, among others, former FTX clients. Many of them wanted to find out what led to the collapse of the stock exchange last year.
Bankman-Fried’s lawyers argued that Alameda’s relationship with FTX was characterized by sound business practices. In their initial arguments, they claimed that the company’s problems resulted from Ellison’s failure to heed Bankman-Fried’s warnings to protect the company from turmoil in cryptocurrency markets.
– The entire time we were dating, he was also my boss – admitted Ellison, saying that she also had a personal relationship with Bankman. “I often felt like he was distant or didn’t pay much attention to me,” she said.
Main photo source: BRENDAN MCDERMID / Reuters / Forum