Former Girlfriend Implicates Sam Bankman-Fried in Cryptocurrency Scandal: Alameda Research and FTX Exposed

2023-10-10 18:42:00

Caroline Ellison, the former girlfriend of Sam Bankman-Fried, implicated the ex-cryptocurrency superstar in the first minutes of her hearing on Tuesday, claiming that she broke the law on his orders.

“He was the boss of Alameda and the owner of Alameda and he gave me instructions to commit these crimes,” Caroline Ellison said.

This graduate in mathematics from Stanford University was named, by the accused, head of the hedge fund Alameda Research whose activities were largely financed by money from clients of the cryptocurrency exchange platform FTX, without their knowledge.

Co-founded in 2019 by Sam Bankman-Fried, FTX filed for bankruptcy in November 2022 following many customers, learning that their funds had been used in this way, sought to recoup their stake. After the bankruptcy, some eight billion dollars were missing.

Sam Bankman-Fried is accused of having set up this system of communicating vessels between FTX and Alameda, while concealing it from the platform’s clients, investors and creditors.

Alameda pumped some $14 billion in total from FTX accounts, estimated at the hearing Caroline Ellison, who indicated that she had been in a relationship with “SBF” for “regarding two years”.

“Alameda took billions of dollars to make investments and repay debts,” she explained, indicating that in addition to FTX customers, investors in the platform and creditors of Alameda had been deceived regarding the the state of the finances of the two companies.

The 28-year-old pleaded guilty to seven counts in December and agreed to cooperate with Manhattan federal prosecutor Damian Williams. She agreed to testify at the trial of Sam Bankman-Fried and should receive, in exchange, a reduced sentence, which has not yet been pronounced.

Questioned by Danielle Sassoon, assistant federal prosecutor in Manhattan, regarding the nature of the facts with which she was accused, she mentioned “fraud, criminal conspiracy to commit fraud, and money laundering”.

Since the bankruptcy, “SBF” has regularly accused Caroline Ellison of faults and negligence in the management of Alameda.

He assured that he no longer followed the daily activities or the financial situation of Alameda during the last months preceding the failure of FTX, relying on his boss, even if he was still the majority shareholder.

But during his hearing Friday, FTX co-founder Zixiao “Gary” Wang maintained that Sam Bankman-Fried continued to closely monitor the operations of Alameda until the bankruptcy filing.

“It was he who set up the system” which made it possible to siphon funds from FTX clients, assured Caroline Ellison.

Tuesday morning began with the cross-examination, by the defense, of Gary Wang, who was not put in difficulty. The lawyers of “SBF” especially insisted on the collaboration of this former technical manager of FTX with the authorities.

Also charged with seven counts, Sam Bankman-Fried faces more than a hundred years in prison if convicted.

published on October 10 at 8:42 p.m., AFP

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