Caroline Ellison Testifies Against Sam Bankman-Fried in Fraud Trial

Caroline Ellison, the former co-head of Sam Bankman-Fried’s hedge fund, Alameda Research, took the stand on Wednesday in Bankman-Fried’s ongoing fraud trial. Ellison testified that she had been instructed by the ex-co-CEO to falsify the firm’s financial statements to prevent a major lender from demanding repayment during the cryptocurrency market downturn of 2022.

Facing mounting pressure as certain lenders sought repayment, Bankman-Fried allegedly directed Ellison to find “alternative ways” to present the company’s financial liabilities. In her words, “I understood him to be directing me to conceal things in our balance sheet that we thought looked bad,” as reported by Reuters.

One of the key allegations made by Ellison was that Bankman-Fried had her send lender Genesis Global Capital a deceptive balance sheet that concealed the fact that Alameda Research had borrowed approximately $10 billion in customer funds from the FTX cryptocurrency exchange.

Read more: Bankman-Fried Prosecutors Agree To Temporarily Withdraw Some Charges

Prosecutors contend that Bankman-Fried utilized these dubious financial maneuvers to siphon billions from customer funds, ostensibly to support Alameda Research, purchase real estate, and contribute over $100 million to various U.S. political campaigns. This alleged mismanagement culminated in the bankruptcy of FTX in November 2022, sending shockwaves through financial markets and severely damaging Bankman-Fried’s reputation.

In earlier testimony on that fateful Wednesday, Ellison revealed that Bankman-Fried had instructed her to tap into the fund’s line of credit on the FTX cryptocurrency exchange to repay loans in June 2022. As cryptocurrency prices plummeted and the value of Alameda’s assets declined, Ellison described the constant state of dread she experienced, knowing that the funds used to repay the loans ultimately came from FTX customers. “Every day I was worrying about the possibility of customer withdrawals at FTX,” she testified.

These allegations by Ellison provide further insights into the case against Sam Bankman-Fried, shedding light on the alleged financial improprieties that transpired during the turbulent times of the cryptocurrency market in 2022.

Source: Reuters