Key witness Caroline Ellison points finger at former FTX CEO in criminal fraud case.
Caroline Ellison, the former business associate and ex-girlfriend of former FTX CEO Sam "SBF" Bankman-Fried, has come forward to testify on the alleged misuse of billions of dollars from FTX user accounts.
She reportedly testified that Bankman-Fried "set up the systems" that enabled Alameda Research, where she once served as CEO, to take approximately $14 billion from FTX for various investments.
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Ellison and Bankman-Fried initially met while working at Jane Street Capital. Bankman-Fried later persuaded her to leave her position at the investment firm and join him in the cryptocurrency venture. Following the downfall of FTX in November 2022, their professional and personal relationship seemed to have come to an end, as suggested by multiple reports.
She stated that Alameda utilized FTX funds for investment purposes without the consent of its users. Ellison's closeness to Bankman-Fried is considered a critical aspect of the case, as he led FTX while she was in a key position at Alameda.
FTX’s former CTO, Gary Wang, also testified against both Ellison and Bankman-Fried as one of the first witnesses for the prosecution. Starting his testimony on October 5, Wang confirmed that he participated in criminal activities with Ellison and Nishad Singh, the former engineering director.
The defense, however, seems to be aiming to refocus the blame on Ellison. During Wang's cross-examination, they questioned him extensively about Ellison's role in the downfall of FTX, hinting that she had neglected to implement hedges on Alameda investments, contrary to Bankman-Fried’s recommendations.
Ellison was quoted as saying:
I sent balance sheets that made Alameda look less risky than it was.
Ellison and Wang are among the first insiders from FTX and Alameda to strike a plea deal with US legal authorities in exchange for their testimonies. It remains to be seen whether Bankman-Fried himself will testify as part of his defense.
The trial against the former FTX CEO has now entered its fifth day. Bankman-Fried is contending with seven charges related to fraud. Despite the serious allegations, he has pleaded not guilty and is also slated for another trial in March 2024.
Caroline Ellison’s testimony against Sam Bankman-Fried has added another layer of complexity to an already high-profile case. As the trial continues, the crypto community is closely watching the proceedings, eager to see how this pivotal moment will shape not just the future of the involved parties but possibly the broader cryptocurrency regulatory landscape as well.
