Sam “SBF” Bankman Freed, former CEO of FTX, watched from the defense table as his former business partner and friend Carolyn Ellison testified at his criminal trial.
According to reports from the courtroom on October 10, Ellison I confess for fraud during her time in Alameda at the direction of Bankman-Fried. Alameda’s former CEO reportedly placed the blame squarely on SBF for misusing FTX users’ funds, claiming that it “set up the systems” that resulted in Alameda taking nearly $14 billion from the exchange.
“Alameda took several billion dollars from FTX clients and used it for investments,” Ellison said, according to reports. “I sent out balance sheets that made Alameda look less risky than it was.”
Ellison met Bankman-Fried through their jobs at Jane Street Capital, and SBF convinced her to leave the investment firm and join his cryptocurrency-focused endeavors. Reports indicated that the two were largely out of contact after FTX’s collapse in November 2022.
Sam Bankman-Fried included this photo of Caroline Ellison in a document he sent me, noting that she was “very intelligent,” but “very unsafe.” Caroline testifies against SBF in court this week. pic.twitter.com/n9WXyBXfd1
– Tiffany Fong (@TiffanyFong_) October 10, 2023
Ellison’s relationship with SBF is one of the central issues in the allegations facing the former CEO, as he was in charge of the cryptocurrency exchange while she led the team in Alameda. The fraud charges against Bankman-Fried are based on his directing Alameda to essentially access FTX users’ funds without customers’ consent, which he used for purchases including property and donations to political campaigns.
FTX co-founder and former CTO Gary Wang took the stand starting October 5 as one of prosecutors’ first witnesses, claiming he committed crimes with Ellison as well as former engineering director Nishad Singh. When questioned by Wang, SBF lawyers appeared to try to shift some of the blame for the stock market collapse onto Ellison, as they questioned the former CTO’s role. In opening arguments, the defense claimed she ignored Bankman-Fried’s request to place a hedge on the Alameda investments.
Related: SBF seeks to investigate FTX attorneys’ roles in $200 million Alameda loans
Ellison and Wang were among the first FTX and Alameda insiders to plead guilty as part of an agreement with US authorities to testify. It is unclear whether Bankman-Fried will take the stand as part of his defensive strategy.
The former Alameda Research CEO’s testimony marks the fifth day of SBF’s criminal trial, where he faces 7 counts of fraud. He has pleaded not guilty to all charges and is expected to appear in a second criminal trial beginning in March 2024.
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