- Sam Bankman-Fried in court
- Caroline Ellison’s testimony
- Allegations of fund theft
Caroline Ellison, the former partner of Sam Bankman-Fried, the owner of the defunct cryptocurrency exchange FTX, is now in a courtroom battle.
On Tuesday, she began her testimony against the former cryptocurrency tycoon, who faces charges of embezzling billions from clients.
The 28-year-old, who previously managed Alameda Research, Bankman-Fried’s cryptocurrency trading company, is alleged to have played a key role in the scheme.
In December, she pleaded guilty and testified, admitting, “I was fully aware of the wrongdoing.”
Bankman-Fried has consistently denied all accusations against him.
Ellison took the stand shortly after 12:30 local time (16:30 GMT) and revealed that Alameda had ultimately recovered approximately £11.4 billion (£14 billion) from FTX clients, which was intended for investment and lender repayment.
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She further mentioned that Alameda was in a position to return a portion of these funds to the exchange.
Ms. Ellison’s appearance in the courtroom was met with nervous anticipation, particularly since she had spent a significant amount of time searching for Mr. Bankman-Fried in the courtroom.
A diverse range of individuals, including casual observers and former FTX clients, eagerly awaited her first-hand account of the events that led to the downfall of the once-dominant exchange a year ago, making Ms. Ellison a significant witness.
Ben McKenzie, known for The OC and his criticism of cryptocurrencies, was among the courtroom and overflow attendees.
FTX was once one of the world’s largest platforms, enabling cryptocurrency investors to buy and sell digital assets. It declared bankruptcy in November, with unaccounted funds exceeding $8 billion.
According to prosecutors, the collapse was a result of Mr. Bankman-Fried embezzling billions of dollars in client funds through Alameda, which had an account at the firm that allowed nearly unlimited withdrawals.
He allegedly used these funds for real estate purchases, political contributions, and financing Alameda, a company engaged in high-risk cryptocurrency bets that faced challenges when cryptocurrency markets declined in 2022.
That year, Alameda lenders claimed Mr. Bankman-Fried told Ms. Ellison to use FTX client monies to cover the organization’s debts.
She pleaded guilty to lying about the two companies’ ties for a shorter sentence.
Alameda’s position in supporting FTX trading suggests good business practises, according to Bankman-Fried’s legal team.
In their opening statements, they asserted that Ms. Ellison’s disregard for Mr. Bankman-Fried’s warnings to protect the firm from cryptocurrency market volatility exacerbated the company’s troubles.
It’s expected that ongoing romantic ties between Ms. Ellison and Mr. Bankman-Fried, which were a source of stress for both parties, will influence her testimony, as suggested by prosecutorial filings and her personal writings, which were disclosed by Mr. Bankman-Fried to the New York Times over the summer.
As a result, his parole was revoked, and he was compelled to serve his trial in custody, as a judge, Lewis Kaplan, ruled that his actions constituted witness intimidation.
Mr. Bankman-Fried and Ms. Ellison were colleagues at the investment firm Jane Street.
Ms. Ellison, a Stanford mathematics graduate, was the daughter of MIT economists and wanted to utilise her riches for good.
Her and others in Mr. Bankman-Fried’s intimate circle have testified against him.
