Here Are the Key Takeaways From Caroline Ellison’s Testimony at SBF Trial

Here are the key takeaways from former Alameda Research Chief Executive Officer Caroline Ellison’s first day of testimony in Sam Bankman-Fried’s trial over the collapse of FTX on Tuesday.

(Bloomberg) — Here are the key takeaways from former Alameda Research Chief Executive Officer Caroline Ellison’s first day of testimony in Sam Bankman-Fried’s trial over the collapse of FTX on Tuesday.

  • Eager and well-prepared in her testimony, Ellison was adamant that Bankman-Fried was complicit in orchestrating a massive fraud at FTX and Alameda Research. “He directed me to commit these crimes,” Ellison said, shortly after taking the stand and being asked to identify her former boss and boyfriend in the courtroom. Ellison pleaded guilty to seven felony counts in December. Bankman-Fried, meanwhile, has denied all allegations against him.
  • Like FTX co-founder Gary Wang, who finished his testimony right before her, Ellison claimed that Bankman-Fried was the ultimate decision-maker within the FTX empire. She said he was fully aware that Alameda was taking FTX customer money and had a practically unlimited credit line on the crypto exchange. Despite publicly distancing himself from Alameda and claiming he did not manage the firm, Ellison said Bankman-Fried directed her on how to handle Alameda’s FTT token holdings and its venture investing, as well as other important business decisions.
  • Ellison emphasized Bankman-Fried’s massive appetite for risk. In looking at her analyses of the potential danger Alameda faced from outstanding loans from crypto lender Genesis and a potential market downturn in digital assets, Bankman-Fried frequently dismissed her concerns and had her adjust calculations to make these scenarios more palatable, according to Ellison. She noted that he wanted to move ahead with a $3 billion venture investment despite the major risks it posed to Alameda.
  • She also provided insight into the more than $600 million stake Bankman-Fried took in Robinhood Markets Inc. in May 2022. She said the stake was paid for by Alameda, but when it came time to publicly disclose the purchase, Bankman-Fried asked to have the equity to moved to a different FTX entity because he didn’t want to be associated with Alameda. The purchase again showed Bankman-Fried’s continued involvement with Alameda, despite his claims that he had little involvement with the firm.
  • The on-and-off romantic relationship between Bankman-Fried and Ellison also came up. She touched on the difficulties of reporting directly to her boyfriend, noting that he could fire her at any time. “The whole time we were dating, he was also my boss at work, which created some awkward situations,” she said, adding that Bankman-Fried often seemed disengaged and did not pay her enough attention. With Ellison’s private diary in the hands of the prosecution, these personal tensions could come up again as her testimony continues.

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