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- Former Alameda CEO Caroline Ellison confessed to committing criminal fraud charges alongside Sam Bankman-Fried.
- Ellison disclosed how Alameda defrauded FTX customers, FTX investors, and Alameda lenders.
- According to Ellison, SBF proposed using the customers’ money to pay back Alameda’s loans.
Following the ongoing legal case of Sam Bankman-Fried, on day five of the trial, Caroline Ellison, former CEO of Alameda Research and SBF’s former partner, testified against him. Ellison’s trial followed Gary Wang, co-founder of FTX and Alameda Research, and he pleaded guilty to the financial crimes.
Ellison pleaded guilty to federal criminal fraud charges in December 2022 and is one of the key players to testify against SBF. At the beginning of the trial, when asked about the crimes she committed, she said, “Fraud, conspiracy to commit fraud, and money laundering.” Moreover, Ellison shared that she committed those crimes with Bankman-Fried, and they defrauded FTX customers, FTX investors, and Alameda lenders.
Ellison shared that some of the way Alameda was about to steal customer money was through access to an unlimited line of credit on FTX. She added that Alameda received FTX customer funds directly into their bank accounts. When asked about SBF’s role, she said, “He was the one who set up the systems that allowed Alameda to take the money, and he was the one who directed us to take customer money to repay our loans.”
Furthermore, Ellison claimed that she defrauded Alameda’s lenders by sending them balance sheets, which “made Alameda look less risky than it was.” She added that there wasn’t enough money for customers in November 2022 because they had to repay the lenders.
Binance was mentioned in court as Ellison shared that Binance was “a competitor that owned $2 billion of our FTX stock.” She said that Bankman-Fried had the intention “to buy it back in the summer of 2021.”/
As for the money, Ellison shared that she withdrew $10 million for an investment in a startup, $100,000 for a loan for her parents, and $2 million for her “own donor-advised fund.” Moreover, she stated that a considerable amount of the money went to political contributions.
Ryan Salame, a former FTX executive who pleaded guilty in September 2023, took a $35 million loan, according to Ellison. She claimed that Salame was using the loans to contribute to Republicans and gave $10 million to U.S. President Joe Biden.
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