Defense attorney cross-examines former CEO of Alameda Research
Defense attorney Mark Cohen cross-examined Carolyn Ellison, the former CEO of Alameda Research, after the witness said Sam Bankman-Fried convinced her to make misleading statements on social media and ordered repayment of loans financed with stolen cryptocurrencies to clients.
Witness testimony on Day 6 revealed a shaky months leading up to FTX’s collapse that was marked by substandard corporate practices and buried secrets.
Not only did Bankman-Fried oversee fake financial records sent to lenders like Genesis and hide FTT’s hollow value, Ellison reported, FTX and Alameda also lent at least $5 billion to select employees for speculative investments and political donations, she reported News Agencies covering SBF. trial.
Accounts of alleged bribes paid to Chinese officials to unfreeze about $1 billion, which may have belonged to FTX clients, suggest violations of the Foreign Corrupt Practices Act (FCPA) by employees including SBF itself and Alameda’s co-CEO at the time, Sam Trabucco.
FCPA laws prohibit individuals and entities from engaging in illegal acts, including bribery, involving foreign officials.
according to Inner City Press, the bribes were given with the help of Constance Wang, David Ma, and another name mentioned only as “Handy.” Ma asked FTX and Alameda to transfer $100 million in cryptocurrencies to wallets reportedly owned by Thai escorts.
She told Alameda employees that FTX borrowed customer money – Ellison
The seventh day of the SBF fraud trial in federal court in Manhattan continued with defense attorney Mark Cohen’s cross-examination of Ellison’s testimony. District Judge Louis A. Kaplan not to consider a $1 billion stake in artificial intelligence company Anthropic during the hearing.
Carolyn Ellison, former CEO of FTX’s sister company Alameda Research, said she believed FTX as a business and SBF’s love of Solana were never the best ideas.
Ellison also had doubts about investing in TerraUSD or UST, an algorithmic stablecoin tied to TerraLuna, now known as Luna Classic. FTX and Alameda directly lost at least $100 million, according to each witness account, as UST’s mid-2022 collapse reverberated through cryptocurrency markets, and Do Kwon, the creator of Terra, became an international fugitive soon after.
They took over most of the duties at SBF’s hedge fund, which in her view was structured somewhat like a trading company, when Alameda co-CEO Sam Trabucco resigned in August 2022, the witness said.
SBF suggested that Ben Xie become Trabucco’s replacement, but Caroline thought one executive was better than two, Ellison countered during questioning.
Carolyn noted, in more than three hours under oath on October 11, that the SBF had veto power over final decisions, despite often consulting Trabucco and itself regarding trading.
Gary Wang, former Alameda and FTX CTO, and former FTX principal engineer Nishad Singh handled programming and development.
Alameda’s risk management left much to be desired by witness accounts despite access to significant property. The company has been hacked at least once and the wallet keys were stored internally without a formal structure.
This testimony supports what was said by former employee Aditya Bharadwaj, who said that the Alameda company lost large sums of money due to “poor security practices.”
Ex-employee exposes risk management flaws at FTX, Alameda
The company also had a “classroom bonus system” that issued millions in loans to employees twice a year, allegedly lined with cash from FTX customers and flexible loans from lenders.
Binance CEO Changpeng ‘CZ’ Zhao’s tweets may have lit the fire, but SBF’s cryptocurrency empire has been undone due to illegal borrowing of FTX clients’ funds according to witness while responding to AUSA Danielle Sassoon’s redirect.
SBF said it may start a new company and Ellison admitted wrongdoing to about 30 employees during an all-hands meeting after FTX’s collapse.
Yes. Sam, Gary, Nishad and I said it was Sam’s decision to repay the loans with customer funds.
Carolyn Ellison, former CEO of Alameda Research
The founder of FTX traded Japanese bonds
The next witness, Christian Drape, a software engineer in Alameda, worked 40 feet away from the SBF in 2022 of his $30 million New Albany condo. Darabi believed that everyone informed Bankman Fried and that SBF had full access.
Distraught employees read about conversations about Binance’s takeover on social media from FTX and the Alameda office in Hong Kong, and pressed Ellison for updates on November 8 before calling a staff meeting.
Darabi says he resigned after 24 hours of maneuvering.
The Prince of BlockFi bears witness
The seventh witness in the SBF trial, BlockFi CEO Zach Prince, said his company began lending to Alameda and FTX in early 2021. BlockFi called in $650 million in open-term loans in June 2022, and eventually went bankrupt in the same month as FTX.
At 4:30 PM New York time, Judge Kaplan adjourned the hearing until October 13. Prosecutors named two other witnesses, including a law enforcement employee.
Day 6 of SBF Trial: FTX paid $100 million in Chinese bribes to unfreeze $1 billion in funds investigated
Editorial Team
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