Ex-Alameda CEO Admits to Manipulating Balance Sheets in SBF's Fraud Trial
Summary:
Former Alameda Research CEO, Caroline Ellison, testified in Sam "SBF" Bankman-Fried's criminal trial in New York, admitting to preparing manipulated financial statements regarding Alameda's use of crypto exchange FTX's assets. She revealed that SBF had directed her to create these alternative balance sheets which did not disclose that Alameda had borrowed $10 billion from FTX. Ellison claimed responsibility for her "dishonest" and "wrong" actions but pinned the fallout of FTX on SBF's alleged misuse of customer funds. The ongoing trial becomes increasingly complex as more witnesses are set to testify.
During the sixth day of Sam "SBF" Bankman-Fried's ongoing criminal trial in New York, Caroline Ellison, the former CEO of Alameda Research, confessed to supplying manipulated data for Genesis's scrutiny. In the courtroom on October 11th, Ellison purportedly stated that Bankman-Fried had instructed her to produce "alternative" financial statements indicating Alameda's use of crypto exchange FTX's resources. She admitted to providing seven such spreadsheets, one of which SBF gave to Genesis. The document, however, didn't disclose that Alameda had borrowed $10 billion from FTX.
Ellison was said to quote Bankman-Fried, "Don't send the balance sheet to Genesis. We are in debt to FTX for $10 billion and owe $5 billion in loans to our executives and related entities. We were apprehensive Genesis might disclose this information."
Ellison revisited the witness stand in SBF’s court case, following her initial appearance on October 10th. Unlike in her previous testimony, the prosecution asked the former Alameda CEO about her emotions regarding her misleading representations of the company's financial affairs:
Ellison said, "I had concerns about FTX customers withdrawing, and the potential harm if this information got out. It didn't sit well with me, knowing that people’s knowledge of Alameda’s use of FTX funds could lead to massive withdrawals from FTX."
The former CEO responded affirmatively when asked by the prosecution whether she found her actions to be "dishonest" and "wrong." Most of the blame for the events leading to the downfall of FTX has been put on SBF by Ellison, pointing at his supposed instructions related to the misuse of client funds. However, the defense seems to portray the former Alameda CEO as the initiator of the situation.
Ellison is anticipated to be a key witness for the prosecution, following Gary Wang's, the co-founder and ex-CTO of FTX, statement in SBF's court case. Nishad Singh, the former FTX engineering director, hasn’t taken the stand but is listed as a likely witness according to an arrangement with the Department of Justice. The prosecutors for Bankman-Fried's criminal trial mentioned that they'd likely conclude their case by October 26th or 27th, after which the defense will begin calling witnesses.
SBF has denied guilt on seven criminal charges linked to fraud at FTX and faces five further charges in a trial set for March 2024.
Published At
10/11/2023 3:43:45 PM
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