Ex-FTX CEO Bankman-Fried In Legal Battle as Former Partner Testifies for Fraud
Summary:
Former FTX CEO Sam Bankman-Fried is on trial with his former business associate and girlfriend, Caroline Ellison, testifying against him for fraud. Ellison, a former employee at Alameda, has admitted to fraudulent activities under Bankman-Fried’s supervision, involving misuse of FTX user's funds. The case also involves Gary Wang, FTX co-founder and former CTO as a witness for prosecution, alleging involvement in crimes alongside Ellison and former engineering director Nishad Singh. Bankman-Fried has pleaded not guilty to all fraud-related charges.
Ex-FTX chief, Sam "SBF" Bankman-Fried was positioned on the legal defense bench as his former colleague and romantic partner Caroline Ellison gave evidence in his criminal trial. From the happenings in the courtroom on Oct. 10, it was revealed that Ellison confessed to committing fraudulent activities during her tenure at Alameda, under Bankman-Fried's instructions. The blame of misusing FTX user funds amounting to about $14 billion was attributed to the former Alameda chief by Ellison, who held that Bankman-Fried established the systems that resulted in this withdrawal from the exchange. "FTX customers' billions of dollars was diverted by Alameda for investments," reported Ellison. "I was responsible for maintaining balance sheets that portrayed Alameda as bearing lower risks than its actual."
Ellison and Bankman-Fried's paths crossed at Jane Street Capital where the latter persuaded her to leave the investment organization and participate in his cryptocurrency-focused mission. Communication between the duo had been reportedly scanty following the unsuccessful run of FTX in November 2022. An image of Ellison sent to me by Sam Bankman-Fried indicates her as been "remarkably shrewd," but suffers "immense self-doubt." Ellison will testify against SBF in court this week, as informed by Tiffany Fong (@TiffanyFong_) on October 10, 2023.
The dispute involving Ellison and SBF has gained prominence given her role in Alameda, while he controlled FTX operations. The legal charges against Bankman-Fried arises from his instructions to Alameda to gain unauthorized access to FTX client funds for purchases inclusive of properties and political campaign donations. Previous chief technology officer and co-founder of FTX, Gary Wang started his evidence on October as the initial witness for the prosecution, alleging he committed crimes with both Ellison and Nishad Singh, the former engineering director. The cross-examination of Wang by legal representatives of SBF seemed aimed at diverting some blame concerning the collapse of FTX on Ellison, questioning her involvement as the former CTO within the proceedings. In response to opening submissions, the defense team maintained Ellison disregarded Bankman-Fried's request to place a hedge on Alameda investments.
Both Ellison and Wang are the earliest ex-FTX and Alameda employees to admit guilt in exchange for their evidence under an agreement reached with American authorities. It remains uncertain if Bankman-Fried will be testifying in his own defense during the trial. The fifth day of SBF's criminal trial was evidenced by the former Alameda CEO's testimony, where he's confronted with 7 charges all linked to fraud. All charges brought against him have been refuted by him, with a subsequent criminal trial set for March 2024.
The question now is whether crypto exchanges can be trusted following FTX's fall.
Published At
10/10/2023 4:54:26 PM
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