Caroline Ellison, the former CEO of cryptocurrency hedge fund Alameda Research, broke down at the end of her second day in court. “I feel relieved because I don’t have to lie anymore,” she said, her voice cracking as she detailed the final days of now-bankrupt cryptocurrency exchange FTX.
It was the culmination of one of the most explosive testimony in the trial of former FTX executive Sam Bankman-Fried. Ellison, who ran a crypto hedge fund that prosecutors say facilitated the misappropriation of billions in client funds, continued to build on a narrative from the previous day that already detailed her unfair pay, Alameda’s market Manipulation and other revelations.
Yet her testimony Wednesday also contained more bizarre details: Bankman-Fried’s distrust of a blanket rule against lying and stealing, Saudi princes and Thai prostitutes, and concerns about Ellison’s role in the business she helped found. An inside look at the state of mind when a cryptocurrency empire collapsed. She called it “the worst week of my life.”
“Maximizing utility”
In addition to Gary Wang and Nishad Singh, Ellison is also an important lieutenant in the Bankman-Fried cryptocurrency group. However, having been dating Sam Bankman-Fried on and off since the fall of 2018, she arguably has a more privileged window into the FTX founder’s mind.
On Tuesday, she testified that Bankman-Fried told her at one point that he gave himself a 5 percent chance “that one day he would be president,” hinting at his alleged self-interest. “When you say ‘president,’ what do you mean?” prosecutor Danielle Sassoon asked. “From America,” Allison replied.
On Wednesday, Allison gave jurors more insight into Bankman-Fried’s potential motive for the alleged fraud.Shortly after lunch break, she said Bankman-Fried was a utilitarianmeaning “he believed that the only moral value that mattered was whatever maximized utility,” which she explained as “essentially trying to create the greatest good for the greatest number of people or beings.”
Contrary to other utilitarians, Bankman-Fried believed that “rules like ‘Don’t lie’ or ‘Don’t steal’ don’t fit into this framework,” she said, adding that his views slowly gained influence Her point of view.
“When I started working in Alameda,” she testified, “if you had told me that a few years later I would be sending false balance sheets to lenders or collecting client funds, I don’t think I would have believed you.”
foreign romance
Ellison’s testimony Wednesday began with a dry account of how she fabricated the balance sheet, turning shocking when she mentioned a Saudi prince and then, inexplicably, a Thai prostitute.
The prince she is talking about is none other than Saudi Arabian leader Mohammed bin Salman Al Saud. Allison said Bankman-Fried was courting the crown prince to invest in FTX in the fall of 2022, as Alameda allegedly continued to withdraw billions of dollars in customer funds from the cryptocurrency exchange to repay loans and make risky bets .
Later, when prosecutor Sassoon questioned Allison about how Alameda allegedly bribed a Chinese government official to release about 10 of Alameda’s stranded funds on two Chinese cryptocurrency exchanges, OKX and Huobi (now HTX), Billions of dollars in funding, she mentioned Thai prostitutes in her testimony.
The Justice Department previously charged Bankman-Fried with bribing a Chinese official in March, but later dropped the charge in preparation for another trial tentatively scheduled for next year. But the $150 million bribe she said was not Alameda’s first attempt to recover funds from OKX and Huobi.
She testified that Alameda created multiple accounts on OKX “using the IDs of different people, who I believe were Thai prostitutes, and we basically tried to make our main account lose money and the other accounts make money.” She testified Said that another FTX executive, Ryan Salame, who also pleaded guilty, told her about the accounts but did not explain how Salame knew about them.
Suffice to say, the Thai prostitute’s strategy didn’t work, and Alameda decided to pay $150 million to “buy the thing,” she later wrote in a document sent to Bankman-Fried.
‘end it’
Prosecutors’ direct examination of Allison was largely chronological, with Sassoon questioning her on Wednesday afternoon about the last week before FTX declared bankruptcy.
After CoinDesk launchesbalance sheet Starting with cryptocurrency hedge funds, clients began withdrawing funds from FTX. There was a run on the bank and lenders began calling in loans, she testified.
“Honestly, this is the best I’ve been in almost a year,” she wrote in a message to Bankman-Fried. “I guess I was just getting more and more scared of this day, and it’s something that’s been bothering me for a long time, and now that it’s actually happening, it feels great to have it end one way or another.”
Ellison began to cry and her voice cracked as she read the message aloud. In fact, she said, “This has been the worst week of my life.”
Svlook
