Caroline Ellison’s testimony this week provided an inside look at the fraudulent inner workings of Sam Bankman-Fried’s crypto empire. Her statements exposed how Bankman-Fried and his associates deceived investors and misused customer funds to keep their companies afloat.
Key Points:
- Caroline Ellison, former CEO of Alameda Research, testified against her ex-boss Sam Bankman-Fried in his fraud trial.
- Ellison said she felt “relieved” when FTX collapsed in November 2022 because she could stop lying.
- She discussed the leaked Alameda balance sheet that triggered FTX’s downfall. Ellison said the document was designed to mislead lenders into thinking Alameda was financially healthier than it was.
- Ellison said Bankman-Fried told her to use FTX customer funds to repay Alameda’s lenders, despite her concerns.
- She revealed Alameda executives paid a $100 million bribe to Chinese officials to retrieve locked funds, showing the trust Bankman-Fried had in her.
- The judge barred the defense from mentioning FTX’s stake in AI firm Anthropic to show FTX could have survived with more time.
Perhaps the most alarming revelation was Ellison’s admission that she and other FTX/Alameda executives paid a massive $100 million bribe to Chinese officials in order to regain access to locked funds. This startling incident underscores just how far Bankman-Fried was willing to go to retrieve money, even if it meant resorting to bribery and corruption.
Ellison also detailed how she created phony balance sheets riddled with lies to trick Alameda’s lenders into thinking the trading firm was financially stable. In reality, Alameda relied heavily on loans from FTX, which came directly from customer deposits.
Despite growing increasingly uncomfortable with the practice, Ellison followed orders to continue using FTX customer funds to repay Alameda’s debts. She recounted Bankman-Fried’s flippant attitude toward lying and stealing money, as he believed typical ethics rules didn’t apply to him.
The defense suffered a major setback when the judge prohibited any mention of FTX’s investment in AI startup Anthropic. The defense hoped to use this to argue FTX could have survived with more time, but the judge likened it to saying a bank robber was justified because they spent the money on lottery tickets and won.
Ellison’s emotional testimony provided a raw account of the dysfunction and criminal deceit pervading Bankman-Fried’s inner circle in the months leading up to FTX’s implosion. Her statements have severely damaged his defense.
