The former Alameda Research CEO gave damning testimony in the fraud trial of her former boyfriend, Sam Bankman-Fried, making her one of CoinDesk’s Most Influential in 2023.
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Alameda Research Accused Of Bribing Chinese Officials To Recover $1 Billion In Exchange Accounts
During the trial of Sam Bankman-Fried, the founder of crypto exchange FTX, shocking revelations emerged from the testimony of former Alameda Research CEO Caroline Ellison.
According to a TechCrunch report, Ellison testified that the crypto trading firm paid Chinese officials to unlock their Alameda trading accounts on OKX and Huobi in China.
Judge Lewis Kaplan clarified that Bankman-Fried was not charged with bribery in this case. Still, the evidence was presented to demonstrate trust, confidence, and motive between Bankman-Fried and Ellison.
Alameda Research Former CEO Exposes Hidden Payments To Chinese Officials
According to Ellison’s testimony, while Bankman-Fried was CEO in 2020, the accounts valued at approximately $1 billion were frozen.
In November 2021, Bankman-Fried claimed that a colleague, David Ma, who had connections in China, found a way to unfreeze the accounts.
Ellison, who had become co-CEO of Alameda by then, made crypto transfers totaling around $100 million to $150 million to reopen the accounts, unaware that the payments were made to Chinese officials.
Ellison stated that Bankman-Fried and Sam Trabucco instructed her through a Signal chat to make the payments.
Before the accounts were reopened, Ellison revealed that Alameda employees explored various strategies to unlock the accounts, including involving lawyers and government officials.
Ellison testified that they even considered using Thai prostitutes to open accounts on the exchanges to facilitate fund transfers, but these efforts were unsuccessful.
One Alameda trader, “Handi,” resigned in early January 2022 due to her objection to paying bribes to Chinese officials, as her father held a government position.
Courtroom Clash
Ellison testified that Handi had a heated argument with Bankman-Fried about the matter, during which he allegedly told her to “shut the fuck up.” A month after Handi’s resignation, Trabucco asked in a Signal chat if Handi’s father had immediately reported them, to which Bankman-Fried responded with “lol.”
Ellison shared a list with prosecutors containing notes, one of which referred to a payment of “150m from the thing?” about the money transferred to regain the accounts.
Per the report, Ellison explained that she did not want to explicitly state in writing that the payment was made to China to unlock the accounts, fearing that it could be leaked and used against Alameda Research in court.
Bankman-Fried’s defense lawyer, Mark Cohen, attempted to strike Ellison’s statement about avoiding written evidence of the payments, but Judge Kaplan overruled the request.
The trial continues to uncover new details and allegations, shedding light on the actions and motivations of the individuals involved, and the cryptocurrency community eagerly awaits further developments and the subsequent outcome of the trial.
Featured image from Shutterstock, chart from TradingView.com
No Love For FTX: Ex-Girlfriend Delivers Scathing Testimony Against Sam Bankman-Fried
The trial of the former CEO of the defunct crypto exchange FTX, Sam Bankman-Fried (SBF), resumed on October 10. As expected, the prosecution called Alameda Research’s ex-CEO and SBF’s ex-girlfriend, Caroline Ellison, to testify against the defendant.
Ellison Does More Damage To Sam Bankman-Fried Defense
According to a thread on the X (formerly Twitter) platform by Inner City Press, which was present at the trial, Ellison confirmed what was already known as she stated that she and the defendant dated for a couple of years with their on-and-off relationship, beginning in the summer of 2020.
However, any affection or feelings that she may have had for the defendant didn’t seem to hinder her as she lived up to the hype as the prosecution’s star witness, providing key insights into how Sam Bankman-Fried allegedly misappropriated FTX’s customers’ funds through Alameda which she headed before its collapse.
During her testimony, she admitted that she had committed fraud alongside the defendant. Specifically, she stated that Sam Bankman-Fried directed her to commit these crimes. As to her involvement, she collaborated Wang’s testimony while stating Alameda (and her, by extension) took “several billions of dollars” from FTX customers and used these monies for investments.
Meanwhile, Ellison confirmed that Sam Bankman-Fried was the one who set up the systems and directed the trading firm to take the money. Besides using FTX’s customers’ funds for investments, Alameda also took around $14 million to repay its lenders. She also manipulated Alameda’s balance sheets, making the firm look risky to potential lenders.
Prosecution Uses Ellison To Drive Home Major Allegations
In its opening statement, the Prosecution alleged that Sam Bankman-Fried diverted customers’ fiat deposits to a bank account linked to Alameda, which Ellison confirmed on the stand. She stated that FTX received money into Alameda’s bank accounts between 2021 and 2022. The total sum deposited was between 10-20 billion dollars.
Alameda used some of these deposits to repay loans, investments, and stablecoin conversions like USDC. According to her, this summed up to about $2 billion. It didn’t stop there, though, as the trading firm used the other money for other Alameda-related purposes.
Sam Bankman-Fried and his lawyers have, at different times, tried to lay a foundation that SBF wasn’t in charge of Alameda and didn’t know what was going on at the trading firm after he stepped down as the CEO.
However, Ellison rebutted this on the stand as she stated that things didn’t change much, even when she became the co-CEO alongside Sam Trabucco, as she checked everything with Sam Bankman-Fried and directly reported to him. He also had the power to fire her.
Wire fraud on lenders to Alameda Research and conspiracy to commit wire fraud on lenders to Alameda Research is part of the seven charges brought against SBF. As such, Ellison’s testimony is deemed critical (as someone with first-hand knowledge) in the prosecution’s bid to prove these crimes beyond reasonable doubt.
SBF’s Lawyers Want to Ask Caroline Ellison About FTX’s Anthropic AI Stake
Sam Bankman-Fried’s attorneys asked Judge Lewis Kaplan, who’s overseeing the case, to grant them permission to ask former Alameda Research CEO Caroline Ellison about whether she deleted Signal messages at FTX lawyers’ advice and what Anthropic AI’s recent fundraise means for FTX creditors.
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Sam Bankman-Fried’s Closest Friends Will Testify Against Him. Here’s Who Else We’ll Hear From
Several of Bankman-Fried’s former colleagues and friends will testify against the one-time crypto mogul following plea deals they struck with the U.S. Department of Justice, including his former romantic partner Caroline Ellison and childhood friend Gary Wang, who were both deeply involved in the daily workings of both FTX and its quant-driven trading shop, Alameda Research. Another two individuals, who prosecutors have yet to publicly name, may testify if granted immunity, suggesting they may also be tied to the exchange. The DOJ also announced over the weekend that prosecutors intend to call former FTX customers from around the world and investors as witnesses during the trial.
Things We’re Freaking Out About
Sam Bankman-Fried Could Go Back to Jail Thanks to His Big Fat Mouth
The fallen FTX founder didn’t just violate his bail — he violated the trust of his family’s last remaining allies.
FTX’s former law firm hit with lawsuit alleging it set up ‘shadowy entities’
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Sam Bankman-Fried Wants to Seal Caroline Ellison’s Diary, Inner City Press Opposes
FTX founder Sam Bankman-Fried has asked the court to seal the contents of the private diary of his sometimes girlfriend and ex-Alameda Research CEO Caroline Ellison.
FTX’s Bankman-Fried seeks gag order for all witnesses in criminal case
Lawyers representing SBF have agreed to a gag order preventing him from making comments that could sway his criminal trial but says it should apply to other witnesses too.
FTX Leadership Seeks Return of Over $1B in Cash, Stocks From Former Executives
The lawsuit alleges that fraudulent transfers of cash and shares were used to finance political donations, real estate buys, Sam Bankman-Fried’s criminal defense, and even potentially an island.
SBF Accused of Leaking Caroline Ellison’s Private Diary by U.S. DOJ
The U.S. DOJ also wants to ban the disgraced founder of FTX and all parties involved in the FTX case from making any out of court statements in the future.
