Ex-Alameda CEO Caroline Ellison Admits Committing Financial Crimes Under Sam Bankman-Fried’s Direction

Caroline Ellison confesses to financial crimes under Sam Bankman-Fried's direction

In a gripping courtroom drama that has held the financial world in thrall, Caroline Ellison, the former CEO of Alameda and purported ex-girlfriend of Sam Bankman-Fried (SBF), testified today during SBF's ongoing trial (Day 5). She confessed to engaging in financial wrongdoing under the guidance of SBF, leaving spectators in shock.

Assistant United States Attorney (AUSA) Sassoon wasted no time in questioning Ellison about her ties to the accused. In response, Ellison provided a concise account, stating, "At Jane Street then Alameda. We dated for a couple of years." When probed about the nature of her crimes, Ellison forthrightly admitted, "Fraud." Her involvement with others in these crimes also received a direct response, with her confessing, "Yes."

AUSA: What was his involvement in the crimes? Ellison: He was the head of Alameda then FTX. He directed me to commit these crimes. AUSA: What makes you guilty? Ellison: Alameda took several billions of dollars from FTX customers and used it for investments.

Ellison admits to fraud, implicating SBF in directing criminal actions

The courtroom buzzed with anticipation as Ellison, initially uncertain, later identified SBF in the courtroom. AUSA Sassoon persisted, inquiring about SBF's role in the crimes. Ellison didn't mince words, admitting, "He was the head of Alameda then FTX and directed me to commit the crimes."

Prosecution grills Ellison on her relationship with SBF and the crimes

When questioned about her culpability, Ellison revealed a startling revelation, saying, "Alameda took several billions of dollars from FTX customers and used it for investments." She went further, elaborating on how SBF had orchestrated the entire operation, explaining, "SBF set up the systems and told Alameda’s team to take the money." The scale of the financial deception was staggering as Ellison disclosed that Alameda had taken approximately $14 billion to repay its lenders.

AUSA: What was the defendant's role? Ellison: He set up the systems and told us to take the money. AUSA: How much did Alameda take to repay its lenders? Ellison: In the ballpark of $10 billion. Ultimately around $14 billion.

SBF set up systems for deception and instructed Alameda's team

AUSA Sassoon probed deeper into the mechanics of the fraud, asking, "How did you defraud Alameda’s lenders?". Ellison, who had pleaded guilty to fraud and conspiracy charges the previous year, did not shy away from implicating SBF in her actions, stating, "I sent balance sheets at the direction of Sam that made Alameda’s balances look less risky to investors." She also disclosed how Alameda had tapped into funds from FTX to fuel its own investments, painting a grim picture of financial mismanagement. Following these revelations, the court adjourned for lunch.

What heightens the intrigue of Ellison’s testimony is her close association with both SBF’s personal and business matters. This proximity is expected to provide the jury with unprecedented insight into the decision-making that contributed to FTX’s catastrophic collapse in November.

Ellison’s appearance on the witness stand followed testimony from Gary Wang, an insider who had previously revealed that he had written a significant portion of the code that enabled FTX’s fraudulent activities.

In the forthcoming days, Bankman-Fried’s defence team is expected to cross-examine Ellison, aiming to undermine her testimony. Mark Cohen, the lead defence lawyer, had argued in his opening statement that Ellison had disregarded instructions from SBF that could have potentially mitigated some of Alameda’s losses.

As the trial unfolds, the financial world watches with bated breath, awaiting the outcome that could have far-reaching implications for the world of cryptocurrency and financial markets.

This is an ongoing story and will continue to be updated as the trial progresses.