Caroline Ellison, SBF's former girlfriend and former CEO of Alameda Research, provided significant testimony in court.
She revealed that Bankman-Fried instructed her and her colleagues to transfer billions of dollars in customer funds from FTX to Alameda accounts.
Additionally, SBF allegedly asked Ellison to create fabricated spreadsheets, depicting scenarios that could impact Alameda's ability to secure loans.
Ellison claimed that Bankman-Fried assured her that auditors wouldn't scrutinize the falsified financial data.
Furthermore, Ellison disclosed that FTX had extended loans, amounting to millions of dollars, to its executives, including SBF.
SBF's Alleged Role in the Fraud Scheme Unveiled
In a recent courtroom testimony, Ellison shed light on the role of SBF (Sam Bankman-Fried) as the alleged mastermind behind a massive fraud scheme at the collapsed exchange. According to Ellison, this scheme involved diverting billions of dollars from FTX customer funds for the benefit of Alameda.
The Testimony Ellison, during her testimony, explained that she crossed paths with Bankman-Fried while working at Jane Street Capital, a New York trading firm. She later joined Alameda in 2018 when it was co-founded as a hedge fund specializing in quantitative crypto trading. Over time, she was appointed as co-CEO in 2021 and sole CEO in 2022, with a substantial salary and bonuses.
Allegations of Misuse Ellison detailed how she and SBF discussed Alameda and FTX regularly. SBF allegedly emphasized the importance of increasing Alameda's borrowing capabilities to facilitate more trades, investments, and acquisitions. In her words, "SBF was directing us to borrow as much money as we could."
FTX's Borrowing Spree As time went on, Alameda's debt swelled to an alarming $10-15 billion. This debt was problematic because it consisted of open-term loans that could be recalled at any moment. To address this issue, Ellison claimed that Bankman-Fried instructed her to create spreadsheets that fabricated scenarios impacting Alameda's ability to borrow and repay loans.
Using FTX Funds Alameda started tapping into FTX's fiat currency deposits, using these funds for investments and arbitrage trades in various cryptocurrencies. When Ellison raised concerns during an FTX audit, she alleged that SBF assured her, "The auditors aren't going to look at that."
Reservations and Risks Ellison expressed her discomfort with Alameda's long-term investments and the growing debt, given their inability to pay the open-term loans if called. She even shared analyses of worst-case and bad-case scenarios for repaying the loans, which showed significant risks.
Bankman-Fried's Defense Bankman-Fried, who has pleaded not guilty to all charges, maintains that he believed Alameda could use the funds on deposit with FTX. His lawyers argue that he is an entrepreneurial visionary who aimed to revolutionize the crypto industry.
Challenging Testimonies Bankman-Fried's legal team questioned the credibility of witnesses, including Ellison and Gary Wang, who had testified about Alameda's access to FTX customer funds. They argue that these individuals were trying to save themselves from prosecution.
A Firm Defense SBF's lawyer asserts that Bankman-Fried is a pioneer and a crypto industry leader who acted in the best interests of his customers and investors. They believe he will be vindicated and his reputation restored."
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