Former Alameda Research CEO Testifies About Misleading Statements and Stolen Customer Crypto
Defense attorney Mark Cohen cross-examined former Alameda Research CEO Caroline Ellison after she claimed that Sam Bankman-Fried, the former CEO of Alameda Research, coerced her into making false social media statements and ordered loan repayments funded with stolen customer crypto. The trial revealed months of questionable corporate practices and hidden secrets leading up to FTX’s collapse. Ellison testified that Bankman-Fried manipulated financial records and concealed the true value of FTT, the native token of FTX. Additionally, FTX and Alameda allegedly loaned at least $5 billion to select employees for speculative investments and political donations.
I told Alameda staffers that FTX borrowed customer funds – Ellison
During her testimony, Caroline Ellison expressed doubts about various investment decisions made by FTX and criticized the business practices of Sam Bankman-Fried. She also revealed that she took on most of the responsibilities at Bankman-Fried’s hedge fund after Alameda co-CEO Sam Trabucco resigned. Ellison stated that Bankman-Fried had the final say on decisions but often consulted with her and Trabucco. The witness highlighted issues with Alameda’s risk management, including a lack of formal structure for storing wallet keys and poor security practices that resulted in significant losses. Ellison also mentioned a bonus system that allegedly used FTX customer funds to issue loans to staff members.
FTX’s founder traded Japanese Bonds
The next witness, Christian Drappi, a software engineer at Alameda, testified that everyone reported to Sam Bankman-Fried and that he had total access within the company. Drappi mentioned how employees were shocked to learn about talks of a Binance takeover from social media posts by FTX and Alameda’s Hong Kong office. He resigned 24 hours after an all-hands meeting regarding the situation. The trial also heard from BlockFi CEO Zac Prince, who revealed that his firm had provided loans to Alameda and FTX. BlockFi recalled $650 million in loans in June 2022 and later went bankrupt along with FTX.
Hot Take: An Inside Look at FTX’s Downfall
The ongoing trial of Sam Bankman-Fried has shed light on the alleged misconduct and questionable practices within FTX and Alameda Research. Testimonies from former employees have revealed a pattern of misleading statements, illegal borrowing of customer funds, and lax risk management. These revelations not only tarnish the reputation of Bankman-Fried but also raise concerns about the overall integrity and transparency of the crypto industry. As the trial continues, it remains to be seen what further evidence will be presented and how it will impact the future of FTX and its founder.
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