Caroline Ellison’s Testimony Reveals Struggles at Alameda Research
Caroline Ellison, the former CEO of Alameda Research, testified for over ten hours during Sam Bankman-Fried’s trial. She revealed that their communication had deteriorated even before the collapse of their crypto empire in November last year. The couple’s romantic relationship ended in April 2022, leading to Ellison avoiding meetings with Bankman-Fried. She expressed her dissatisfaction with their performance and considered leaving Alameda.
Bankman-Fried’s Plea to Ellison
Bankman-Fried urged Ellison to stay at Alameda, fearing that her departure would harm FTX’s credibility. Despite their strained relationship, she remained as CEO.
Ellison’s Rise at Alameda Research
Ellison joined Alameda as a trader in 2018 and gradually took on more responsibilities. By 2020, she was handling most of the company’s operations while Bankman-Fried focused on FTX. In August 2021, she became co-CEO alongside Sam Trabucco and took full charge of the company after his resignation in August 2022.
Dissenting Opinion on FTX
Ellison admitted that she was initially against creating FTX but became more ambitious under Bankman-Fried’s influence.
Dealing with Alameda’s Financial Crisis
As CEO, Ellison managed Alameda’s crypto lenders. When the Terra ecosystem failed in mid-2022, the company faced $1.3 billion in open-term loans. With a market downturn and liquidity drain, lenders demanded repayment. Bankman-Fried instructed Ellison to use FTX’s line of credit to repay creditors.
Creative Financial Reporting
To deceive creditors, Bankman-Fried suggested Ellison use “alternative means” of presenting Alameda’s financials. Multiple versions of a balance sheet were created, and an alternative version was leaked in November. This sparked rumors and triggered a bank run on FTX, revealing an $8 billion gap between the companies.
Cooperating with the Department of Justice
Since December, Ellison has been cooperating with the Department of Justice. She is awaiting sentencing for seven counts of fraud and conspiracy to commit fraud.
Hot Take: Ellison’s Struggles and Alameda’s Downfall
Caroline Ellison’s testimony during Sam Bankman-Fried’s trial shed light on the challenges faced by Alameda Research. Her dissatisfaction with leadership, strained relationship with Bankman-Fried, and creative financial reporting all contributed to the company’s collapse. The revelations highlight the importance of effective communication and ethical practices in the crypto industry.
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