Caroline Ellison, the former CEO of Alameda Research, claims the trading firm made billions of dollars in short-term and open-term loans to fund its venture investments.
Ellison agreed with others to pay for the loans by borrowing from sister company FTX, according to a transcript of her guilty plea shared on Twitter by Inner City Press.
“While I was co-CEO and then CEO, I was aware that Alameda had made numerous large illiquid venture investments and lent money to Mr. Bankman-Fried and other FTX executives. I agreed with others to borrow several billion dollars from FTX to repay those loans in and around June 2022.“
She claims she was aware that FTX would lend money to Alameda using customer funds. “I understood that FTX would have to use customer funds to finance its Alameda loans…Most FTX customers did not expect FTX to lend Alameda their digital asset holdings and fiat currency deposits in this manner.”
According to the former executive, Alameda had a borrowing facility on FTX that used the trading platform’s clients’ funds.
“I understood that if Alameda’s FTX accounts had significant balances in a particular currency, it meant that Alameda was borrowing funds deposited on the exchange by FTX’s customers.”
After former FTX CEO Sam Bankman-Fried was released on $250 million bail, Ellison’s guilty plea transcript was released and docketed.