SBF's Ex-Girlfriend & Ex-Alameda Chief Testifies

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SBF's EX & Ex-Alameda's Chief Testifies

So, it has begun. The real villains are in the court room, testifying against each other, making things worse for others, while trying to improve their own situation. The crypto drama meets romantic drama, so to say.

As the fraud trial of Sam Bankman-Fried enters its sixth day, Caroline Ellison, his ex-girlfriend and the former CEO of the hedge fund connected to his collapsed cryptocurrency exchange (Alameda Research), has spilled some beans.

During her Tuesday testimony, Ellison disclosed her involvement in unlawful activities while leading Alameda Research. She is a key witness for the prosecution in Bankman-Fried's trial, where he faces seven fraud and conspiracy charges for allegedly defrauding customers of $10 billion. Bankman-Fried has entered a plea of not guilty.

The tension was immediate.

When Danielle Sassoon, a prosecutor, requested Ellison to point out the defendant, she took her time, scanning the room for nearly half a minute. Eventually pointed out Bankman-Fried, noting that he was seated "over there, wearing a suit."

So, C. Ellisson didn't recognise her ex (and her ex-boss) for 30 seconds. That's because SBF has changed his appearance before the trial started. Reportedly, he got a new fresh cut from a fellow inmate at the Brooklyn jail.

But then, things continued.

Prosecutor Danielle Sassoon asked on Tuesday:

"While you were working at Alameda, did you commit any crimes?" To which Ellison responded:

"Yes, we did. [Bankman-Fried] directed me to commit these crimes."

Shortly after joining Alameda as a trader in the fall of 2018, Ellison discovered that the company's financial situation was far worse than she had initially believed. She questioned Bankman-Fried about why he hadn't informed her before she started.

Ellison recalled, "I asked why he didn't share more information. He apologized and said he didn't know how to tell me."

Ellison reiterated Bankman-Fried's establishment of a system to transfer FTX customer funds to Alameda to cover loan expenses.

She explained that he believed FTX would be a valuable source of capital and had set up a system that allowed Alameda to borrow from FTX. Importantly, Bankman-Fried did not inform FTX's customers that his hedge fund was using their money for investments.

Well, of course. But it doesn't count until it's said out loud in the court room…

Ellison also described the precarious financial situation resulting from FTX's substantial loans to Alameda, which, she claimed, led to an $8 billion deficit during the 2022 cryptocurrency downturn and eventual bankruptcy.

When asked by Sassoon, "Around how much FTX customer money did Alameda use to repay its lenders?" Ellison responded:

"Uh, in the ballpark of $10 billion."

Ellison and Bankman-Fried found themselves in a romantic relationship spanning several years. They went through periods of separation, reconciliation in the fall of 2021, and another breakup in the spring of 2022.

Ellison testified about the complexities of dating her boss, saying:

"The whole time that we were dating he was also my boss at work, which created some awkward situations. There was a general theme that I sort of wanted more from our relationship... I sort of felt like he was distant or not paying attention to me."

During their first stint, they agreed to keep their relationship secret, although some people eventually discovered it. On their second go-round, Sam agreed to make it public, and they lived together in a $40 million penthouse in the Bahamas alongside other FTX executives.

In December 2022, Ellison pleaded guilty to wire fraud and conspiracy charges for her role in the dramatic collapse of FTX and Alameda.

Oh boy. There is going to be a movie about all this. We all know it.

TL;DR: The courtroom showdown continues as Sam Bankman-Fried's ex-girlfriend and former CEO of Alameda Research, Caroline Ellison, spills the beans during his fraud trial. Ellison, a key prosecution witness, admitted to being involved in criminal activities directed by Bankman-Fried, who faces seven fraud and conspiracy charges for allegedly defrauding customers of $10 billion. Their romantic involvement further complicates the crypto drama that's unfolding in court.

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