Caroline Ellison Blames Sam Bankman-Fried for Misuse of FTX User Funds at Trial – News sources have indicated that after the downfall of FTX in November 2022, Sam “SBF” Bankman-Fried, the former CEO of Alameda Research, had limited communication. During his criminal trial, Bankman-Fried observed as his former associate and girlfriend, Caroline Ellison, testified.
In the courtroom on October 10, Ellison confessed to committing fraud while working at Alameda under Bankman-Fried’s guidance. The former Alameda CEO placed responsibility for the misuse of approximately $14 billion in FTX user funds squarely on SBF, alleging that he was the one who established the systems that led to Alameda’s actions. “Alameda took several billions of dollars from FTX customers and used it for investments,” said Ellison, according to reports.
“I sent balance sheets that made Alameda look less risky than it was.” Ellison and Bankman-Fried initially crossed paths while working at Jane Street Capital, where SBF eventually persuaded her to depart from the traditional investment firm and join his cryptocurrency-focused ventures. Subsequent to the FTX collapse in November 2022, it has been indicated that they had minimal contact. The allegations against the former CEO primarily revolve around his involvement with SBF.
During his tenure as the head of the crypto exchange, Ellison led the team at Alameda. Bankman-Fried faces fraud charges for instructing Alameda to access FTX user funds without their consent, using these funds for various purposes, such as property acquisitions and political campaign donations. During the trial, Gary Wang, FTX co-founder and former chief technology officer, testified as one of the initial witnesses for the prosecution.
He alleged that he, Ellison, and former engineering director Nishad Singh had engaged in criminal activities. SBF’s defense, during Wang’s cross-examination, attempted to shift some responsibility for the exchange’s downfall onto Ellison, questioning her role. The defense argued in their opening statements that she had disregarded Bankman-Fried’s request to hedge Alameda investments.
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Both Ellison and Wang were among the first individuals from FTX and Alameda to plead guilty in exchange for cooperating with U.S. authorities. It remains uncertain whether Bankman-Fried will testify in his defense. This marked the fifth day of SBF’s criminal trial, where he faces seven fraud-related charges. He has pleaded not guilty to all charges and is expected to face a second criminal trial in March 2024.