Tuesday’s testimony from Caroline Ellison, the key witness in the ongoing trial and the former CEO of Alameda Research, revealed that she committed fraud at the behest of her ex-boyfriend SBF.
Prosecutors questioned Caroline on her role as the CEO of Alameda at the beginning of the second week of the SBF trial. Investors thought Alameda’s balance was less dangerous since she claimed, “I sent balance sheets at the direction of Sam.”
Since Sam Bankman’s ex-girlfriend admitted last year to charges of fraud and conspiracy stemming from her alleged involvement in Alameda’s collapse, the evidence from her was eagerly awaited. She further claimed that Alameda had borrowed money from FTX to invest in several projects. Caroline claimed that SBF advised using FTX funds while keeping them on the FTX exchange to accommodate customer withdrawal requests.
Even though part of the money was really invested, Sam’s pals received loans totaling a large portion of the fund’s assets. Caroline claims that further millions were donated to politics because Sam thought it was a very good way to influence politics and ensure the longevity of the FTX exchange.
She had to report to Sam Bankman-fried despite the fact that she was the CEO of Alameda Research notwithstanding his retreat from the Alameda. Caroine cried, “I would always ultimately bow to Sam.” She asked SBF for equity in Alameda but was only given silver equity in FTX notwithstanding her request. Caroline was talking about Alameda loans and how Sam was telling us to borrow as much money as we could.
The trading firm was borrowing billions from Genesis by using FTT as collateral, and the ex-girlfriend said in a statement that SBF wanted to buy additional FTT tokens to prevent any risk on loans. She claimed that including FTT tokens in Alameda’s balance sheet was misleading.
Gary Wang’s Continued Testimony
Gary Wang’s incomplete statement, in which he claimed to have written code that eventually allowed the FTX scam, was followed immediately by Caroline’s testimony. Cross-examining FTX co-founder Wang about the events leading up to and following the company’s failure as well as his interactions with prosecutors marked the start of the defense’s case. When asked if he was aware of Caroline’s choice to not hedge Alameda’s positions, Wang said that she was the CEO and added, “I don’t know who made the decision.”
Lewis Kaplan, the judge, also questioned Wang over loans that he had signed. Wang responded that the loan was for a company in which SBF wished to invest when the judge referred to a particular $35 million loan and inquired about its purpose.
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