In bombshell testimony on Tuesday, Caroline Ellison, former CEO of Alameda Research, accused Sam Bankman-Fried of directing her and others to commit fraud under his leadership at FTX and Alameda. Taking the stand in a red dress, Ellison stated “Alameda took several billions of dollars from FTX customers and used it for investments.”
Caroline Ellison Exposes Alleged FTX Fund Siphoning and Political Payoffs
According to reporting by Matthew Russell Lee of Inner City Press, who streamed the proceedings from the courtroom, Caroline Ellison detailed how she and her colleagues improperly used billions in customer funds from FTX to pay back loans and make speculative investments for Alameda Research.
Lee reported that Ellison claimed she engaged in fraud at Sam Bankman-Fried‘s direction, alleging he “set up the systems and told us to take the money.” The former Alameda CEO estimated that between $10 to $20 billion in FTX customer funds were deposited into Alameda accounts and used for the crypto hedge fund’s purposes. Federal prosecutor Danielle Sassoon asked Ellison directly how Alameda also defrauded its lenders.
Ellison stated:
I sent balance sheets that made Alameda look less risky than it was.
When asked by prosecutors if she was concerned about Alameda tapping FTX customer funds, Ellison admitted she thought customers were unaware and that Bankman-Fried told her “not to worry” and that auditors wouldn’t look into it. She also described helping prop up the price of FTX’s native token FTT by purchasing it when the price fell below $1, allegedly at Bankman-Fried’s urging. She explained the ins and outs of Alameda’s mystery bank account dubbed “fiat@.”
Ellison’s testimony directly implicated Bankman-Fried in the alleged fraud scheme. Her statements appear to support federal prosecutors’ charges that the founder of FTX misappropriated billions in customer funds to cover losses at Alameda Research. Ellison’s account also highlighted the blurred lines between the two companies under Bankman-Fried’s leadership. Ellison also mentioned all the political donations FTX executives gave U.S. bureaucrats. She stated:
Sam gave $10 million to Biden, he thought it bought him access.
Ellison touched on her intermittent romantic ties with the ex-FTX chief over the years. The spotlight remains on Ellison’s testimony, set to resume tomorrow, while prosecutors anticipate summoning more witnesses as the week progresses. Her account stands as the most incriminating testimony against Bankman-Fried to date.
What do you think about Ellison’s testimony against Bankman-Fried? Share your thoughts and opinions about this subject in the comments section below.
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