On Tuesday, Alameda Research ex-CEO Caroline Ellison testified against former FTX CEO Sam Bankman-Fried. She told the jurors that the fallen crypto guru instructed her to commit financial crimes.
Ellison also told the court that Bankman-Fried directed some FTX employees to develop a system that would allow Alameda Research to withdraw user funds from the crypto exchange. She claimed that the billions she took from FTX users were used for investments, trading, and repaying the Alameda Research lenders.
Ellison revealed she withdrew about $14 billion from FTX and channeled $10 billion of the figure to lenders. The ex-CEO said Alameda Research was only able to repay less than 20% of the amount it took from crypto exchange FTX.
SBF Proposes a New Way to Cover Alameda Research Debt Troubles
Moreover, Ellison claimed that Bankman-Fried proposed a way of getting out of the debt after informing him that Alameda Research was in a risky position and that the company’s balance sheet would cause lenders to lose confidence.
According to Ellison, the FTX ex-CEO suggested the addition of Paper Bird to Alameda Research’s balance sheet in an effort to make it appear less risky to lenders. Paper Bird is a company owned by FTX. It was among the many FTX-owned firms included in last November’s bankruptcy filing.
In its bankruptcy protection petition, FTX claimed Paper Bird had granted Alameda a $2.3 billion loan in three phases.
Considering the market downturn in 2022, Ellison told the Jurors that she did not see how Alameda Research would have repaid the loans. All the risky bets that Bankman-Fried directed Alameda employees to place in the financial markets brought more losses.
Meanwhile, prosecutor Thane Rane says Ellison was never in control of Alameda Research, arguing that it was Bankman-Fried calling the shots at the firm. Previously, Ellison admitted that she did not qualify for the CEO role.
Other Witnesses Expect to Testify Against SBF
Other former close allies of Bankman-Fried expected to take the stand against him include FTX ex-Director of Digital Markets Ryan Salame, FTX ex-Director of Engineering, and FTX co-founder Gary Wang. Like Ellison, the trio has already pleaded guilty to charges brought against them in connection to the collapse of FTX.
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