Caroline Ellison, former head of Sam Bankman-Fried’s crypto hedge fund and ex-girlfriend of the FTX founder, testified in court that Bankman-Fried considered seeking funds from Saudi Crown Prince Mohammed bin Salman to repay FTX customer accounts.
Ellison pleaded guilty to fraud charges and is now a key witness in Bankman-Fried’s trial. She revealed that Bankman-Fried instructed employees to move money from FTX customers to Alameda Research, a sister hedge fund.
Ellison’s testimony included details about manipulating balance sheets, with Bankman-Fried allegedly directing her to create “alternative” balance sheets to present a more favourable picture to Genesis, a crypto lender.
Ellison expressed concerns about the misuse of FTX customer funds to repay Alameda loans and the potential fallout if customers discovered the scheme.
The internal balance sheet reportedly concealed borrowed customer funds, making it appear that there were sufficient assets to cover open-term loans.
Notably, Ellison disclosed that Bankman-Fried discussed the possibility of obtaining funds from Mohammed bin Salman to address FTX clients’ repayment. The trial revolves around Bankman-Fried facing federal charges, including wire fraud, securities fraud, and money laundering, related to the failure of FTX and Alameda.
Other revelations from Ellison’s testimony included discussions about potential sources of money for FTX, such as acquiring BlockFi or selling shares.
Bankman-Fried’s communication practices were also highlighted, including using Signal’s disappearing message setting and cautioning employees about potential lawsuits.
Ellison outlined various concerns and pressures Bankman-Fried faced, including issues with startup investments, regulatory crackdowns on Binance, and fears of lousy PR affecting FTX’s futures trading license in the U.S.
The trial sheds light on the intricate details of financial irregularities and decision-making within the crypto firms led by Bankman-Fried, a prominent figure in the cryptocurrency industry.
The trial outcome could have significant consequences for Bankman-Fried, who faces potential imprisonment if found guilty of the charges.