This week, Caroline Ellison's testimony peeled back the curtain on the fraudulent schemes within Sam Bankman-Fried's cryptocurrency empire, revealing how he and his team misled investors and misappropriated client funds to support their businesses.
Key Points:
- Caroline Ellison, who once led Alameda Research, took to the stand to testify against her former employer, Sam Bankman-Fried, in his ongoing fraud trial.
- Ellison expressed a sense of relief following FTX's collapse in November 2022, as it meant she could finally stop perpetuating lies.
- She addressed the leaked balance sheet from Alameda that helped spark FTX’s downfall, noting that the document was crafted to give lenders a false sense of financial stability.
- Ellison revealed that, against her better judgment, Bankman-Fried instructed her to use FTX's customer funds to settle Alameda’s debts.
- She disclosed that Alameda executives bribed Chinese officials with $100 million to unlock restricted funds, a testament to the level of trust Bankman-Fried placed in her.
- The court denied the defense a chance to discuss FTX’s investment in AI firm Anthropic, which could have suggested the company might have persevered with additional time.
Among the most shocking revelations was Ellison’s acknowledgment that they resorted to paying a $100 million bribe to Chinese officials in a bid to access locked funds, highlighting the extremes Bankman-Fried would go to recover money, even by unethical means.
Ellison elaborated on fabricating misleading balance sheets to deceive Alameda’s lenders into believing the trading firm was financially sound, despite their heavy dependence on FTX loans sourced from customer deposits.
Ellison, though increasingly apprehensive, continued using FTX’s customer funds to pay off Alameda’s liabilities, as instructed by Bankman-Fried, who showed a cavalier disregard for ethical norms.
The defense faced a significant hurdle when barred from mentioning FTX’s stake in the AI startup Anthropic. The intention was to argue that FTX needed more time, but the judge likened this to justifying a bank robber because the stolen money was used in a lottery ticket that won.
Ellison’s heartfelt testimony delivered a raw account of the chaos and criminal fraud rampant in Bankman-Fried’s circle leading to FTX’s downfall, delivering a severe blow to his defense.
