Former CEO of Alameda Research, Caroline Ellison, testified in the trial of Sam Bankman-Fried that he approved using customer funds from his FTX cryptocurrency exchange to pay off loans for the hedge fund. Ellison played a recording during her testimony in which she stated that they borrowed funds on FTX in order to meet loan recalls. When questioned about who specifically authorized the use of customer funds, she mentioned Bankman-Fried. Prosecutors claim that Bankman-Fried embezzled billions of dollars from FTX customer accounts to support Alameda, purchase real estate, and donate to political campaigns. Bankman-Fried has pleaded not guilty to charges of fraud and conspiracy, asserting that he never intended to steal funds.
Ellison, a former girlfriend and confidant of Bankman-Fried, is one of three individuals who have pleaded guilty to fraud charges and agreed to cooperate with the Manhattan U.S. Attorney’s office. In her testimony, Ellison revealed that Alameda used $10 billion in FTX customer funds to repay debts and make investments. Defense lawyer Mark Cohen cross-examined Ellison, questioning whether she learned about the investigation into FTX before or after the “all hands” meeting where she made the statements. Ellison stated that she did not recall learning about the probe before the meeting, potentially weakening the defense argument that she fabricated her testimony for leniency. Throughout the trial, it has been revealed that Bankman-Fried falsely tweeted that FTX was “fine” as the exchange faced a surge in withdrawal demand.
These recent developments in the trial shed light on the alleged fraud committed by Sam Bankman-Fried at FTX and Alameda. The recorded statements of Caroline Ellison support the prosecutors’ claims that customer funds were misused, further implicating Bankman-Fried in the embezzlement of billions. However, Bankman-Fried maintains his innocence, asserting that any actions taken were not intended to defraud customers. The testimony also revealed the extent of Ellison’s involvement in Alameda’s operations and her deference to Bankman-Fried’s judgment. The trial is expected to last up to six weeks, with additional witnesses, including former FTX executives, expected to testify.
