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Former Alameda Research co-CEO Caroline Ellison spent all day Wednesday on the stand in her second day in court in the criminal trial of Sam Bankman-Fried, the founder of failed cryptocurrency exchange FTX. She provided further details on how FTX sister company Alameda and Bankman-Fried defrauded investors and misused customer funds.<\/p>\n
Bankman-Fried\u2019s on-and-off again girlfriend has pleaded<\/a> guilty to criminal charges including defrauding FTX customers and investors. In her testimony yesterday<\/a>, she said she deceived lenders by sending balance sheets that made Alameda look less risky than it was.\u00a0<\/p>\n On the stand Wednesday, she provided more details about the firm\u2019s relationships with lenders, who had started to recall loans amid a downturn in the crypto market last year, according to a live blog<\/a> of the trial from court reporting organization Inner City Press.<\/p>\n One of Alameda\u2019s key lenders Genesis, the now bankrupt<\/a> crypto trading service, wanted the return of US$400 million in loans. Its head of lending asked to see an up-to-date balance sheet to understand the firm\u2019s financial position, Ellison said. Bankman-Fried pushed back on this, she added.<\/p>\n \u201cHe told me to come up with alternative ways to present the information,\u201d Ellison said. \u201cHe wanted me to conceal things on our balance sheet. So I prepared seven different balance sheets.\u201d<\/p>\n Bankman-Fried selected a balance sheet that did not disclose that Alameda owed around US$10 billion to FTX customers, Ellison said. This figure then rose to US$13 billion by September of last year, Ellison added.<\/p>\n One way Bankman-Fried planned to recoup funds was by raising capital from investors, Ellison said. The Saudi Crown Prince and Prime Minister Mohammed Bin Salman was listed as a key target in a google document, Ellison testified.<\/p>\n At this time last year, it was widely reported<\/a> that Bankman-Fried was seeking to raise funds for FTX. By October he was in the Middle East trying<\/a> to raise funds in person.<\/p>\n The google doc also listed that Bankman-Fried was keen to get regulators to crack down on rival exchange Binance, Ellison said.\u00a0<\/p>\n Binance\u2019s CEO Changpeng Zhao triggered<\/a> the collapse of FTX by selling his large stake in the token FTT. That then created a surge in withdrawals and revealed FTX\u2019s shortfall in customer funds.<\/p>\n Another key revelation from Ellison was details on the decision to pay bribes to Chinese officials to unlock US$1 billion of Alameda funds frozen in the country as part of a money laundering investigation.<\/p>\n \u201cSam said [David] Ma had found a way to get our accounts unfrozen, if we just sent to these crypto addresses, US$100 million. It was November of 2021,\u201d Ellison said.<\/p>\n An Alameda employee named Handi disagreed with FTX business development manager<\/a> Ma\u2019s decision, Ellison said. But was told to \u201cshut the f\u2014 up,\u201d by Bankman-Fried, Ellison added.<\/p>\n U.S. District Court Judge Lewis Kaplan<\/a> told the jury that Bankman-Fried was not being charged in this case for bribery of Chinese officials, but that it was being offered for motive.\u00a0<\/p>\n The prosecution had attempted to include violations of anti-bribery provisions of the Foreign Corrupt Practices Act. However, a court ruling upheld Bankman-Fried\u2019s request that the government of the Bahamas \u2014 where he was first arrested in December last year \u2014 should not allow additional charges. The bribery charge was then dropped<\/a>.\u00a0<\/p>\n The defense had less than<\/a> 30 minutes of cross examination of Ellison before court wrapped up. The cross examination will continue into tomorrow.<\/p>\nCourting MBS<\/strong><\/h2>\n
Bribing Chinese officials<\/strong><\/h2>\n