Caroline Ellison, the former CEO of FTX’s crypto hedge fund Alameda Research, took the stand for the second time in Sam Bankman-Fried’s fraud trial to testify that the ultimate collapse of FTX brought her an “overwhelming feeling of relief” as it meant she won’t have to “lie anymore.”
Ellison’s Testimony: a Tale of Fear and Guilt
Recent reports revealed that Ellison’s testimony began with an open disclosure of her emotions in the final days before FTX’s demise. Ellison, who pleaded guilty to assisting Bankman-Fried in stealing billions of dollars from FTX customers, said that she was “terrified” that the truth about the exchange’s operations would be revealed.
Ellison had a significant role in the deception. Prosecutors have accused Bankman-Fried of using FTX customer’s funds to support Alameda Research, buy real estate, and make big donations to US political campaigns. The unexpected collapse of FTX in November 2022 sent shockwaves through financial markets and destroyed Bankman-Fried’s reputation as a reliable crypto stakeholder.
While testifying, Ellison admitted to feeling “indescribably bad” about the harm caused to FTX customers and employees due to the mismanagement of their assets. However, what stood out most was her assertion that the collapse of FTX brought an “overwhelming feeling of relief.” In her sober testimony, Ellison explained,
“I felt a sense of relief that I didn’t have to lie anymore.”
The courtroom scene was a touching one, with the deputy handing Ellison a box of tissues as she recounted her experiences.
Financial Deception Uncovered
At the heart of Ellison’s testimony lay in her revelations about the financial deception that transpired within FTX and Alameda Research. She disclosed that Bankman-Fried had directed her to falsify Alameda’s balance sheets to mislead crypto lenders, particularly during a downturn in crypto markets in 2022.
These misleading balance sheets concealed the fact that Alameda had borrowed approximately $10 billion in FTX customer funds. Furthermore, Ellison revealed that Bankman-Fried had instructed her to draw funds from the crypto exchange’s line of credit to repay loans in June 2022. These actions were alleged to be a part of a broader scheme to siphon customer assets for personal gain and to prop up Alameda’s operations.