Caroline Ellison’s Testimony Rocks the Trial of Ex-FTX Boss Sam Bankman-Fried

In a dramatic turn of events at the trial of former FTX boss Sam Bankman-Fried, Caroline Ellison, the former CEO of Alameda Research and Bankman-Fried’s former girlfriend, took the stand on Tuesday. Her testimony provided an unprecedented look into the complex world of cryptocurrency trading, personal loans, and the controversial dealings between Alameda Research and FTX.

Ellison, who had previously pleaded guilty to counts of fraud and conspiracy, wasted no time in shedding light on the inner workings of Alameda Research. She began by stating that the company was in a “fairly risky situation” in 2022, highlighting concerns over increased leverage. Ellison also openly admitted that she was “not particularly” qualified to be the CEO, an astonishing revelation considering her position.

One of the most striking revelations from her testimony was the staggering amount of personal loans issued by Alameda Research. According to Ellison, the company had provided personal loans to Bankman-Fried, FTX co-founder Gary Wang, and former director of engineering Nishad Singh, with the total sum exceeding $5 billion by mid-2022.

Painting depicting Caroline Ellison and Sam Bankman-Fried in the courtroom | Photo by Jane Rosenberg

What was even more concerning was Bankman-Fried’s desire to make an additional $3 billion venture investment from Alameda into various companies. Ellison, despite her lack of qualifications, was tasked with analyzing the potential risks. Her analysis revealed a shocking 100% chance that Alameda would be unable to meet its obligations if the existing loan terms remained unchanged and market conditions deteriorated. Surprisingly, Bankman-Fried allegedly disregarded these ominous figures and continued with the investment plan.

“Bankman-Fried didn’t raise any objections to the calculations,” Ellison claimed, emphasizing that her former boss fully comprehended the risks, which she had meticulously detailed in a spreadsheet shared with him. Shortly after, Bankman-Fried announced the launch of a $2 billion venture fund in a January 2022 tweet, which was allegedly controlled by Alameda but placed under the FTX name.

This revelation suggested that Bankman-Fried may have believed Alameda’s brand was less credible, a contentious claim that could significantly impact the trial’s outcome.

Throughout Ellison’s testimony, a recurring theme was Bankman-Fried’s willingness to take substantial risks. This aspect of his character was something the defense had sought to undermine in their opening statements, but Ellison’s statements further reinforced the prosecution’s narrative that Bankman-Fried was the decision-maker, despite her role as Alameda’s co-CEO and later CEO.

She testified that “any major decisions” for Alameda were consistently run through Bankman-Fried. He held the power to dismiss her at any time, and she always reported to him, even though their romantic relationship had started in 2018 shortly after she joined Alameda as a trader.

The trial took another intriguing turn when Ellison disclosed that Alameda was in much worse shape than she had initially realized when she joined the company. Over half of Alameda’s employees had left around the time of her arrival, and the company was grappling with difficulties in raising capital. To exacerbate matters, Alameda’s lenders were recalling loans, further straining the company’s financial situation.

In an eyebrow-raising revelation, Ellison claimed that Bankman-Fried had directed Alameda to borrow as much money as possible, illustrating a pattern of aggressive risk-taking.

In a striking moment, Ellison admitted to defrauding both FTX customers and FTX lenders, as well as deceiving lenders to Alameda. She stated that she was cooperating with the U.S. government in the hopes of receiving a more lenient sentence, asserting that Bankman-Fried had directed her to commit these crimes.

Perhaps the most shocking revelation was Ellison’s statement that Alameda had ultimately taken around $14 billion from FTX customers. This staggering sum, if proven, could have significant legal repercussions for Bankman-Fried and further taint his image in the cryptocurrency world.

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