Caroline Ellison, the former CEO of hedge fund Alameda Research and ex-girlfriend of disgraced FTX CEO Sam Bankman-Fried, testified on Tuesday that she committed fraud at the behest of Bankman-Fried. Ellison claims she didn’t like the arrangement allowing Alameda to take massive loans from FTX, explaining that it “might look like Alameda sort of … funneling money to FTX executives.”
Caroline Ellison led Alameda Research, which prosecutors say stole billions of dollars from its sister company, FTX. The former hedge fund CEO also dated disgraced FTX CEO and alleged fraudster Sam Bankman-Fried. Ellison pleaded guilty to fraud and conspiracy charges last year and testified that she had committed on behalf of Bankman-Fried.
Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, during the Bloomberg Crypto Summit in New York, US, on Tuesday, July 19, 2022. Photographer: Jeenah Moon/Bloomberg
Sam Bankman-Fried leaves the courthouse (Michael M. Santiago/Getty)
“I sent balance sheets at the direction of Sam that made Alameda’s balances look less risky to investors,” Ellison said.
She said that Bankman-Fried said to “use FTX funds but to keep money on FTX” to comply with customer withdrawal requests. However, she explained that much of this money went to Bankman-Fried’s inner circle, which included “investments and political donations.”
Bankman-Fried was a top donor during the 2022 midterm elections who aimed to outpace Democrat megadonor George Soros.
The former Alameda executive said that the political donation strategy was “highly effective” and gave Bankman-Fried “very high returns in terms of political influence.”
Despite their rising influence in Washington, DC, Ellison said she did not like the implications of their financial maneuvering.
Ellison said she did not like the loans taken from FTX, saying it “might look like Alameda sort of … funneling money to FTX executives.”
“I would always ultimately defer to Sam,” she said. She explained that Bankman-Fried thought was prudent to “separate Alameda and FTX more optically.”
Bankman-Fried stands accused of seven counts of fraud, conspiracy, and money laundering on his alleged use of FTX customer funds to cover the losses of his hedge fund, Alameda Research. He also allegedly used those funds to purchase real estate and cover other personal expenses. Bankman-Fried pled not guilty to all counts and faces up to 110 years in prison.
Judge Lewis Kaplan, who is presiding over the case, appeared to lose patience with Bankman-Fried’s lawyers. Kaplan has a “no nonsense” approach towards his courtroom, but he has appeared to be “unusually” short with Bankman-Fried’s lawyers.
Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter @SeanMoran3.
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