The trial of FTX founder Sam Bankman-Fried (hereinafter referred to as SBF) has entered its second week, and key witnesses closely related to the exchange have taken the stand to testify.
ET on Tuesday, October 10,Caroline Ellison, SBF’s ex-girlfriend and former head of FTX trading arm Alameda Research, has made serious allegations in court。
During the trial, defense attorney Mark Cohen, in his opening statement, blamed Ellisons failure to hedge Alamedas venture capital in 2022 for part of the reason for FTXs collapse, Bloomberg reported.
However, Ellison admitted that she knew FTX was using client funds to support Alameda and further stated that she, SBF and others conspired to defraud clients and conceal the true relationship between FTX and Alameda.
Ellison revealed in his testimony that they embezzled approximately $14 billion, some of which was later repaid. Ellison said Alameda borrowed billions of dollars from FTX clients and used it to invest and pay down debt.
It is worth noting thatEllison admitted participating in the fraud and claimed SBF, as CEO and owner of Alameda, directed her to commit the crimes。
Alameda had been FTX’s sole market maker, but accounted for only 2% of trading volume at the time of the trial. Alameda began borrowing money while running low on funds, even borrowing funds that did not belong to FTX, which exceeded FTXs total revenue and funding.
Ellison also expressed concern that clients were unaware of the activities, but SBF assured her that Alamedas credit line would not be uncovered in an audit.
also,Ellison also confirmed SBFs involvement in various financial transactions, including a proposed purchase of a $2 billion stake in FTX held by Binance. In 2021, Alameda relied primarily on loans from third-party crypto asset lending platform Genesis to raise capital.
Regarding the token associated with FTX, Ellison said that SBF and members of the FTX business development team created FTT to raise funds.
A large portion of FTTs initial allocation went to Alameda, estimated at between 60% and 70%. Alameda received the tokens for free, while the remainder was sold privately to investors and employees.
The trial provided clues about SBFs alleged involvement in Alameda operations, contradicting his public statements about quitting the company.
As the trial proceeds, testimony from key witnesses, including Ellison, will be crucial to the outcome。
Caroline Ellisons sentencing will take place at the conclusion of SBFs trial. If prosecutors find she has fulfilled the conditions of her plea agreement, which included providing truthful testimony against SBF, they will submit a key document called a 5 K letter detailing her cooperation. Ellison hopes the partnership will lead to a significant reduction in her sentence.
Ellisons testimony is the third example of a former SBF confidant and business associate testifying for prosecutors, previously the company’s former software developer and MIT classmate Adam Yedidia, and FTX co-founder Gary Wang also testified.
