Allegations of Concealing Loans on Alameda Research’s Balance Sheets
A recent report from Inner City Press suggests that Sam Bankman-Fried, the former CEO of Alameda Research, instructed Caroline Ellison to find ways to hide billions of dollars in loans on the company’s balance sheets.
Preparations Before Meeting with Genesis
During testimonies on October 11th, Ellison revealed that before meeting with Matt Ballensweig, co-head of trading and lending at Genesis, who requested updated information on Alameda’s balance sheet, Bankman-Fried advised against sending the balance sheet to Genesis.
The Borrowings and Concealment
Ellison stated that Alameda had borrowed $10 billion from FTX and had $5 billion in loans to its own executives and affiliated entities. They were concerned that Genesis might share this information.
Bankman-Fried asked Ellison to come up with alternative ways to present the information and conceal items on the balance sheet. She prepared seven different balance sheets and presented them to Bankman-Fried for his decision. This incident occurred on June 19, 2022.
Choosing a Deceptive Approach
Out of the seven alternatives, Bankman-Fried chose a version that did not disclose the $9.9 billion owed to FTX customers. The intention was to make Alameda appear less risky by concealing this information.
Resignation and Debt Accumulation
Matt Ballensweig resigned from his position on September 28, 2022. By September of 2022, Alameda had borrowed a total of $13 billion in FTX customer funds to repay loans and use as collateral for other debts.
Hot Take: Alameda Research’s Alleged Concealment of Loans Raises Serious Concerns
The allegations against Alameda Research and its former CEO, Sam Bankman-Fried, regarding the concealment of loans on their balance sheets are deeply troubling. This case highlights the potential risks and ethical issues within the crypto industry. Transparency and honesty are crucial for building trust in the market, and actions that aim to deceive investors and lenders undermine this trust. It is essential for regulators to thoroughly investigate these allegations and take appropriate measures to ensure the integrity of financial reporting in the crypto space.
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