The former CEO of Alameda Research-turned-star witness disclosed this when she testified before a federal court in Manhattan on Oct. 10. "Sam directed me to commit these crimes," she remarked following her admission that she, Bankman-Fried and other accomplices had committed fraud.
Ellison started at Alameda as a trader in 2018 and became co-CEO of the firm in October 2021 alongside Sam Trabucco. She became the sole CEO of Alameda in August 2022 following Trabucco's departure. Ellison had also dated and lived with Bankman-Fried over that period.
According to her testimony, Alameda took about $10 billion from customers who had put their money on the FTX cryptocurrency exchange to trade digital currencies. Bankman-Fried set up the system that let her move the money and directed her to send balance sheets to lenders that made Alameda's losses look less risky.
Ellison noted that when she joined Alameda in 2018, it had suffered huge losses. Thus, Bankman-Fried made getting more money a top priority.
To this end, he told Alameda employees to get loans on any terms they could and also created the digital token FTT. According to her, Alameda owned 60 to 70 percent of the supply of the digital coin that essentially cost nothing to make. The hedge fund gained billions when FTT's price from an initial 10 cents increased to $50 over time.
Ellison also testified that Bankman-Fried told her to put those billions in profits from FTT on the balance sheet, so Alameda could borrow money. He persuaded her to proceed, even though she initially felt it was misleading. She did so anyway, and the hedge fund later did the same with other coins. (Related: FTX head Sam Bankman-Fried declared a "pathological liar and a sociopath" for continuing to explain away his outrageous fraud and deception.)
Ellison, Wang cooperating with the feds for lighter sentences
In December 2022, the Securities and Exchange Commission said Ellison manipulated the price of FTT at Bankman-Fried's behest. FTT was then used as collateral for undisclosed loans Alameda took from FTX.
This essentially meant that Alameda was secretly using money that belonged to FTX customers to repay debts and cover losses it had sustained. It also meant the hedge fund was telling investors it had more collateral to back up its loans than it really did, making FTX look safer than it was.
Ellison's Oct. 10 testimony followed that of FTX co-founder-turned-prosecution witness Gary Wang. Both were charged with a series of financial crimes in December, with Ellison pleading guilty to a total of seven charges.
"Ellison, like Wang before her, is cooperating with the government in exchange for a reduction in her sentence," NBC News noted. "Without such a deal, both faced sentences that could have kept them in prison for the rest of their lives."
The outlet also indicated that the two accomplices of Bankman-Fried who flipped against him "both had close personal relationships" with the FTX founder. He also appeared "distressed at times" by Wang's testimony against him.
Bankman-Fried faces seven federal charges including wire fraud, securities fraud and money laundering – all of which he pleaded not guilty to. If convicted, he could be put behind bars for the rest of his life.
He is set to face additional charges at a separate trial in March 2024. However, the government ordered Bankman-Fried to be imprisoned in August following accusations of witness tampering. According to NBC News, he allegedly leaked diary entries from Ellison to the New York Times.
Visit BitcoinCollapse.news for more stories about FTX and Sam Bankman-Fried.
Watch this video about the parents of Sam Bankman-Fried being accused of taking millions of dollars stolen from FTX customers.
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