Caroline Ellison (center), former CEO of Alameda Research LLC, appears in court in New York, USA, on Tuesday, October 10, 2023.
Yuki Iwamura | Bloomberg | Getty Images
Caroline Ellison, the former head of Sam Bankman Fried’s crypto hedge fund and the government’s lead witness in the criminal fraud case against the FTX founder, said Tuesday that she and her former boss had no control over customers, investors, He testified that he had defrauded a financier.
When Assistant U.S. Attorney Daniel Sassoon asked if he had committed a crime, Ellison replied, “Yes, I did.” “I mean Sam and me and the others.”
In court in downtown Manhattan, Ellison listed his crimes as “fraud, conspiracy to defraud and money laundering.”
Mr. Ellison, who ran Alameda Research, plead guilty In December, he was charged with two counts of wire fraud, two counts of wire fraud conspiracy, commodity fraud conspiracy, securities fraud conspiracy and money laundering conspiracy. Part of the 28-year-old’s plea deal with the government includes cooperating with prosecutors in the case against Bankman Fried.
Ellison’s testimony began at 12:37 p.m. and lasted less than 10 minutes before the court went for lunch.It will reopen around 2 p.m.
Wearing a red dress, a loose gray blazer and glasses, Ellison briefly explained how she met Bankman Freed. They met while she was interning at Jane Street, a private trading company in New York. The two later worked together in Alameda and dated for several years.
Ellison was one of Bankman Freed’s first hires at Alameda in 2017. Mr. Bankman Fried reportedly persuaded the Stanford University graduate to leave his job at Jane Capital and join Alameda as a trader when the hedge fund was still in its original office in the Sun District. Francisco Bay Area.
When Sassoon asked him to identify him, Ellison stood up and looked around the room for almost 30 seconds. She repeats the motion of turning her face to the left toward her jury box and back to the right again and again until Bankman Freed says, “He’s sitting over there in a suit.” ” was specified. Bankman Freed, known for his floppy hair and beach shorts, reportedly had his hair cut before his trial by a fellow inmate at the Brooklyn jail where he has been held since August.
Ellison said Bankman Freed was Alameda’s original CEO and owner.
“Sam directed me to commit these crimes,” she said. He “instructed us to take money from the customer to pay the loan.”
Bankman Freed, 31, is indicted on seven federal charges, including wire fraud, securities fraud and money laundering, in connection with the collapse of FTX and Alameda late last year. If convicted in a trial that began a week ago, Bankman-Fried could spend the rest of his life in prison. He maintains his innocence.
The lawsuit against Bankman Freed centers on the leakage of billions of dollars from FTX customer accounts to Alameda, which suffered a gaping hole in its balance sheet after the cryptocurrency market pivoted in 2022.
Ellison alleges that Alameda has extracted billions of dollars from FTX customers, and that Bankman Freed not only built a system to steal those funds, but also used customer funds to repay $10 billion in loans. He said that he had instructed Mr. Ellison and others to do so.
“We ended up receiving about $14 billion, some of which we were able to repay,” she said. She said, “At Sam’s direction, I sent the lender a balance sheet that incorrectly listed Alameda’s assets and liabilities.”
He said the numbers have been adjusted to make Alameda appear less risky as an investment.
clock: Caroline Ellison testifies that Sam Bankman Freed directed her to commit the crime
