Following the 5th day of trial, witness Caroline Ellison – former CEO of Alameda Research investment fund – continued to be called by the court for cross-examination. Caroline Ellison reveals a series of shocking details about the journey the fund has gone through during a challenging and risky period. According to Ellison’s statements, this case is generating considerable controversy within the cryptocurrency and financial communities.
The incident began in 2022, as the cryptocurrency industry grappled with a liquidity crisis following the collapse of the LUNA-UST model. In a financially dire situation, Alameda Research borrowed $400 million from the lending platform Genesis, with Caroline Ellison stating that she received direct instructions from Sam Bankman-Fried, the founder and CEO of FTX, to ensure the repayment of this debt.
The issue arose when Alameda Research did not have enough cash on hand to repay this debt, forcing them to withdraw funds from customer assets on the FTX exchange. Sam Bankman-Fried, in an effort to maintain financial credibility, instructed Caroline Ellison to create false asset balance statements to conceal the fact that they borrowed money from FTX. This case involves not only fraud but also fraud and threats to market stability.
Genesis subsequently demanded that Alameda Research provide financial reports to assess their financial situation, and Caroline Ellison admitted that the fund did not have sufficient cash at the time. Alameda had to borrow nearly $10 billion from FTX and allowed FTX managers to borrow $5 billion again. Tensions escalated as Genesis continued to demand an additional $500 million from Alameda.
This case raises questions about transparency and ethics within the cryptocurrency industry. Caroline Ellison confessed to participating in fraudulent and deceptive actions, and this pressure left her without enough assets to ensure FTX users could withdraw their funds.
Another part of the case is related to Alameda Research using bribery to “unfreeze” assets worth $1 billion that were frozen on the OKX and Huobi exchanges in China. Caroline Ellison revealed that they paid $150 million to resolve this situation.
This case is attracting global attention and highlighting important issues of transparency, financial responsibility, and ethics within the cryptocurrency industry. Sam Bankman-Fried and Alameda Research are facing the consequences of the actions they took during a challenging period in the cryptocurrency market.
Caroline Ellison will have her third day as a witness in court when the trial of former CEO Sam Bankman-Fried returns on October 12 (US time). Please follow CoinMinutes to see further developments.