- EllFTX bribed Chinese officials to release $1 billion, Ellison said during today’s hearing (Oct. 11)
- The former Alameda chief claimed Sam made her lie multiple times
Today (October 11) is the second day of former Alameda CEO Caroline Ellison’s testimony in court. Ellison delved deeper into Sam Bankman-Fried’s web of lies that held FTX – now a bankrupt crypto exchange for years – together.
During yesterday’s (October 10) hearing, the former director admitted that FTX client money was used to buy back Binance’s stake. According to her, SBF made the decision because he was afraid that his competitor would “cause problems”.
Billions of FTX customer funds have been leaked
According to Inner City Press, today hearing, she delved into the events that took place before the stock market witnessed a bank run. Topics such as accounting fraud, Chinese bribes and the Saudi Prince Mohammed bin Salman (MBS) emerged during the witness hearing.
The hearing began with Ellison speaking about Alameda’s financial situation as cryptocurrencies face a bear market. Ellison stated that the financial partners began recalling loans during the market downturn. And this was possible because they had open-ended loans, a type of loan that has no definitive end date.
She further claimed that Genesis Trading – a now-bankrupt crypto lending firm and a subsidiary of DCG – was among the companies that recalled the loan. Ellison said the money “would have to be taken from FTX” to meet this demand. She announced that Bankman-Fried had instructed her, Nishad Singh and Gary Wang to repay Alameda’s loan with FTX customer money.
In addition, the head of Genesis’ credit department had requested access to Alameda’s balance sheets. However, the company could not present an actual loan as it would reflect the FTX loans and the executive branch loans. To address this, Ellison “prepared seven balance sheets,” with Sam ultimately selecting one that omitted $9.9 billion in FTX customers.
By September 2022, all $13 billion had been acquired by Alameda. But at one point, Ellison said they believed they would raise capital by selling shares for their company, and one of the potential investors was the Saudi Crown Prince – MBS. She also said:
Ellison: We talked about borrowing $10 billion
AUSA: Where from?
Ellison: FTX customers. Sam shouted that it was my fault
AUSA: How did you feel?
Ellison: I cried. But it was Sam who made all these investments that got us into this situation— Binnenstadspers (@innercitypress) October 11, 2023
Frozen Funds and the Fall of FTX
The testimony also sheds light on previously unknown facts. One of these was the large amount of bribes given to Chinese government officials. The company resorted to this action because nearly a billion dollars was frozen in China due to a money laundering investigation. In November 2021, the crypto company shelled out a total of $150 million to retrieve the frozen funds.
Fast forward to FTX’s fall in November 2022, Alameda’s CEO said the withdrawals started as FTT plummeted in the market. Additionally, she felt that she and Nishad Sigh, a co-executive at FTX, started saving messages around this time. Previously, Sam had set a one-week automatic deletion period for conversations that took place on Signal.
Additionally, Ellison recalled being terrified by the big shots. Furthermore, when asked if withdrawals could be met, Sam lied and said, “We can meet a ton.” Additionally, to prevent panicked customers from retreating, Sam drafted a message, which was eventually posted to Ellison’s Twitter (X) account.
Alameda’s CEO Ellison responded to Binance’s CEO CZ’s tweet about the sale of their FTT. They stated that they would buy FTT directly from Binance for $22 per coin, calling CZ’s “bluff.” She further said:
“AUSA: When did you meet with the FBI and prosecutors?
Ellison: December 2022.
AUSA: What happened?
Ellison: The FBI searched my parents’ house and took my phone, computer and diary.
AUSA: What information did you provide?
Ellison: The crimes we had committed.’
