In the ongoing trial of Sam “SBF” Bankman-Fried in New York, the former CEO of Alameda Research, Caroline Ellison, took the witness stand. During her testimony on the sixth day of the trial, she disclosed that she had presented SBF with seven different spreadsheets containing misleading financial data about Alameda’s financial status, intended for Genesis lenders’ review.
On October 11, reports from the courtroom indicated that Ellison confessed to having been directed by Bankman-Fried to create “alternative” balance sheets related to Alameda’s use of crypto exchange FTX’s funds. She detailed how she had provided these seven spreadsheets, one of which SBF later presented to Genesis. Shockingly, none of these documents revealed that Alameda had borrowed a substantial $10 billion from FTX.
Ellison quoted Sam as saying, “Don’t send the balance sheet to Genesis,” and revealed that they had a significant $10 billion borrowed from FTX, in addition to $5 billion in loans extended to their own executives and affiliated entities. The fear was that Genesis might choose to disclose this information.
This marked Ellison’s second appearance on the witness stand during SBF’s trial, following her initial appearance on October 10. In this testimony, prosecutors delved into her emotions and concerns about her role in deceiving others about Alameda’s financial state. She admitted to worrying about customer withdrawals from FTX, the potential fallout, and the harm that could be inflicted on people, making it clear she didn’t feel good about it. She believed that if people found out about Alameda’s use of FTX funds, they would rush to withdraw from FTX.
In response to the prosecutors’ questions, Ellison conceded that she considered her actions to be “dishonest” and “wrong.” She primarily shifted the blame for the events leading to FTX’s collapse onto SBF, claiming he had directed the misuse of customer funds. Interestingly, the defense attorneys sought to portray the former Alameda CEO as the instigator.
As the trial progresses, Ellison is anticipated to become a pivotal witness for the prosecution, following earlier testimony from FTX co-founder and former CTO Gary Wang. While former FTX engineering director Nishad Singh has not yet taken the stand, he has been named as a potential witness as part of an agreement with the United States Justice Department.
Prosecutors involved in Bankman-Fried’s criminal trial have indicated that they intend to conclude their case around October 26 or 27. Afterward, the defense lawyers will commence calling their witnesses. SBF has entered a plea of not guilty to the seven criminal counts related to fraud at FTX, with five additional charges to be addressed in a March 2024 trial.
