Sam Bankman-Fried 'directed me' to commit crimes, testifies ex-girlfriend
Caroline Ellison, the former CEO of Alameda Research and Sam Bankman-Fried's ex-girlfriend, appeared as a witness in the ongoing FTX fraud trial. Ellison, who has already pleaded guilty to charges related to her role in cryptocurrency exchange FTX's collapse, testified that Bankman-Fried directed her to commit crimes like fraud, conspiracy to commit fraud, and money laundering. She also mentioned that their relationship suffered due to his lack of attention and emotional distance.
Why does this story matter?
Sam Bankman-Fried, once the golden boy of the cryptocurrency industry, experienced a sudden and dramatic fall from grace. This decline began when a report revealed the heavy dependence of Alameda Research, a sister company of FTX, on FTT, the native coin of FTX. This revelation cast doubt on the liquidity of FTX, and from that point, the decline unfolded rapidly.
Alameda misappropriated customer funds to repay lenders
In court, Ellison testified that Alameda Research had appropriated approximately $14 billion from FTX customers, which was then used for investments and to repay lenders. "He (Bankman-Fried) was the one who set up these systems that allowed Alameda to take the money and he was the one who directed us to take customer money to repay our loans," Ellison said. "For any major decisions, I would always run them by Sam. He directed me to commit these crimes," she said.
Customer funds were also used for these purposes
According to Ellison, Bankman-Fried instructed her to use FTX customer funds for various other purposes, such as buying back FTX shares from Binance and financing FTX Ventures. She also claimed that he told her to purchase FTT tokens if their price dropped below a dollar. Additionally, Ellison said that Bankman-Fried wanted to keep his connection with Alameda under wraps because he thought its brand was less appealing.
Ellison details Alameda's troubled history
Ellison shared that when she joined Alameda in 2018, the company was in worse shape than she initially thought. Funded by loans from friends, these loans were recalled shortly after she came on board. She also talked about her personal relationship with Bankman-Fried, which started in 2018 and continued on and off until 2022. During this time, he was her boss at work and often distant in their personal life.
Impact of Ellison's testimony on trial
Ellison's testimony could play a significant role in the outcome of Bankman-Fried's fraud trial. Her allegations of being told to commit crimes by Bankman-Fried, along with her detailed account of Alameda's troubled past and misuse of customer funds, might influence the jury against the defendant. The trial is ongoing, with more testimonies and evidence expected to be presented in the coming days.
