Cross-examination of Caroline Ellison, former CEO of Alameda Research
On the seventh day of Sam Bankman-Fried’s trial, Caroline Ellison, the former CEO of Alameda Research, faced cross-examination by the defendant’s lawyers. During her testimony, Ellison admitted that she found Bankman-Fried to be correct in some of his statements and saw him as ambitious. She also acknowledged that he was willing to take on more business risk than her. Additionally, Ellison revealed that after Sam Trabucco resigned in 2022, Bankman-Fried wanted to appoint another co-CEO, but she insisted on remaining the sole CEO. She handled various core tasks at Alameda, including HR, accounting, and dealing with major lenders like Voyager and Genesis.
Alameda’s Losses and FTX’s Collapse
Ellison disclosed that Alameda lost $100 million when Terra Luna and UST collapsed. She also mentioned that Alameda did not have enough liquid assets to repay its lenders. Moreover, Bankman-Fried attempted to raise funds from Saudi Prince Mohammed bin Salman but was unsuccessful. Instead, he expressed interest in making a significant investment through connections with Telegram. Ellison admitted to spreading false information about Alameda returning most of its loans and clarified that they only returned third-party loans by taking loans from FTX.
Testimony of Christian Drappi, Software Engineer at Alameda Research
Christian Drappi, a software engineer at Alameda Research, testified during the trial. He revealed that Sam Bankman-Fried had full access to Alameda’s accounts and that Ben Xie from Jane Street informed him that Bankman-Fried was directing Alameda’s trade of Japanese Bonds. An audio recording of an all-hands meeting in Hong Kong was presented as evidence, where Ellison mentioned that FTX always allowed Alameda to borrow user funds. This revelation led Drappi to resign within 24 hours.
Testimony of Zac Prince, Founder and CEO at BlockFi
Zac Prince, the Founder and CEO of BlockFi, testified that BlockFi had lent $650 million to Alameda in open-term loans since early 2021. However, the loans were called back in 2022 when they amounted to $800 million with interest. Following the collapse of FTX and Alameda, BlockFi was forced into bankruptcy as it could not retrieve these funds.
Hot Take: Testimonies Reveal Mishaps and Industry-Wide Impact
The ongoing trial of Sam Bankman-Fried has shed light on the mishaps within Alameda and FTX, leading to significant consequences for the crypto industry as a whole. Witness testimonies from Caroline Ellison, Christian Drappi, and Zac Prince have exposed Bankman-Fried’s ambitious nature, his willingness to take on business risks, and his access to Alameda’s accounts. The trial has revealed that Alameda suffered substantial losses, lacked sufficient liquid assets, and engaged in questionable borrowing practices. Furthermore, Bankman-Fried’s failed attempts to secure funding from influential figures like Mohammed bin Salman have come to light. These revelations emphasize the cascading effect that the collapse of FTX and Alameda had on the industry, ultimately impacting entities like BlockFi.
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