She lost her temper when Bankman-Fried told her that FTX borrowed from Alameda Research and he sold it to FTT
She was stressed, Ellison said, and detailed how she conferred with Bankman-Fried about the balance sheet at Alameda, noting growing problems with the company’s ability to pay back loans.
Though Ellison was Alameda Research’s CEO, she described her role as frustrating. She said Bankman-Fried continued to make decisions even after he left Alameda formally to focus on FTX, because she didn’t get a raise when she was promoted.
The problem here wasn’t really the math, which seemed pretty arbitrary. It was that Ellison’s calculations assumed Alameda could borrow $1.8 billion in normal dollars and $1.5 billion in crypto from FTX. Ellison said “FTX borrows” in a row which was labeled as customer funds.
The t-shirt was created by Bankman-Fried and Wang. Alameda got a 60 percent to 70 percent warchest for free, while seed investors got 10 cents a coin, and first listed at $1 a coin. Bankman-Fried felt that $1 per coin was psychologically important, Ellison said, and that he directed her to buy up FTT using Alameda if its price fell below a dollar.
Part of Ellison’s job was pulling together balance sheets — by definition, writing something down. She said the customer funds were marked on the “FTX borrows” row on Alameda’s balance sheets. She says she wanted to identify it — but didn’t feel she could do so directly. There were related party loans to Bankman-Fried on the original balance sheet. This is the place where lies came in.
Bankman-Fried didn’t grant Ellison equity, even though she asked; he told her it would be too complicated. Instead, she was given a $200,000 salary, even as CEO, with bonuses that ranged from $100,000 to $20 million.
That gave Ellison an unusual view of his character. She said that he was very ambitious. Besides telling her about his presidential chances, he also told her that if there was a coin flip where tails destroyed the world and heads made the world twice as good, he’d flip the coin. He called this being “risk-neutral,” which seems like a fancy way of saying he was a gambling addict.
Bankman–Fried’s Accounts at the Liquidation Exclusion Tribunal: How a Bouncing Plaintiff Seen During Ellison’s Testimony
Bankman-Fried was making public assertions that were at odds with what was happening while he and his deputy worked to find a solution to pay back the loans. He claimed on social media that his businesses were fine.
Almost a year ago, Ellison pleaded guilty to various charges and agreed to help the US government in its case against Bankman-Fried.
As Ellison approached the courtroom, she wore a dusty rose dress and a gray blazer that looked less like an executive than a girl who borrowed her boyfriend’s coat. When the prosecution asked her to identify Bankman-Fried, she had trouble finding him and gazed around the courtroom for more than 20 seconds — apparently he was incognito with his new haircut. She was asked to identify him after she found him, but she first identified him as wearing a suit. This got chuckles from the rest of the defense table, also all in suits.
by the end of the day, it seemed like that was a sideshow. Bankman-Fried was vibrating at Wang’s testimony. During Ellison’s testimony, his bouncing became more noticeable.
Wang didn’t help himself at all. In previous interviews with the government, Wang said something that was not true in what he said in court. I think that he was trying to refresh his memory, but Wang was adamant that he didn’t remember. In any event whatever Wang was shown wasn’t submitted as evidence or shown to the court. I am pretty sure the jury did the same thing as I did, probably the strongest work the defense has done so far.
Last week Wang testified that Alameda got access to a special credit line and an option to take its balance into the negative without triggering liquidation — something he alleged other accounts at FTX didn’t get. The spot margin program lets users lend each others assets for margin trading, but Everdell tried to undermine this claim by talking about it. In those cases, it was possible to have a negative balance in a specific coin. It was not possible to have a negative balance in those accounts and not be liquidated. But I’m betting the defense is hoping the jurors will throw up their hands in confusion thinking about this.
The day started off promisingly for the defense as it cross-examined Gary Wang, the chief technology officer of FTX and co-owner of both FTX and Alameda. Christian Everdell, one of Bankman-Fried’s defense attorneys, couldn’t undo the damage of last week’s code review. But he managed to shake the rust off long enough to make Wang sound less reliable, drowning the jury in confusing technicalities.
I’ve got some shitty ex-boyfriends, but none of them made me the CEO of their sin-eater hedge fund while refusing to give me equity and bragging about how there was a 5 percent chance they’d become the President of the United States, you know? I am counting my blessings after the first day of a witness stand. I wonder how many of the nine women on the jury are doing the same.
The government’s star witness in the trial of FTX’s disgraced founder is the ex-lover of Bankman-Fried, a top executive in his business empire.
For a long time, Bankman- Fried tried to get access to those assets. Ellison testified how colleagues at Alameda set up accounts on the Chinese exchange tied to the identities of Thai prostitutes, hoping they could somehow use them to siphon the money away from the frozen account.
As Bankman- Fried’s girlfriend, she had intimate knowledge of both the company and of the former celebrity who now faces seven criminal charges that will send him to prison for the rest of his life.
Sam Bankman-Fried, the founder of failed cryptocurrency exchange FTX, is on trial for seven counts of wire fraud and conspiracy. FTX was a fraud “from the start,” the Securities and Exchange Commission alleges — with a “multi-billion-dollar deficiency caused by his own misappropriation of customer funds.”
The first trial of Bankman-Fried for bribery and bank fraud involving Alameda and the Crown Prince of Saudi Arabia
She said that she handled a lot of day to day decisions in Alameda. “But for any major decisions, I would always run them by Sam, and I would always defer to Sam if he thought that we should do something.”
When the prosecution asked her to explain why she was so deferential, Ellison noted there was always a difficult power dynamic between her and Bankman-Fried.
At several times during her testimony, Ellison said Bankman-Fried directed her to manipulate spreadsheets to make Alameda’s financial picture look more favorable and to ignore requests from lenders for additional information.
As panic grew among the top ranks of FTX, Bankman-Fried talked a lot about how he could raise more money from lenders and investors, Ellison testified.
She said Bankman-Fried talked repeatedly about trying to get money from Mohammed bin Salman, the Crown Prince of Saudi Arabia. The plan, as she detailed it, was to use money from Saudi Arabia to pay back Alameda’s lenders. Funding never came to fruition.
By the fall of 2022, Ellison said, she and other executives at the company were holding onto hope, however blindly, that they could secure additional financing from someone, or that the price of cryptocurrencies would go up. She said it would increase the value of the assets on the books.
Ultimately, Ellison said, Alameda transferred $100 million in payments to what she understood to be Chinese government officials to unfreeze the account, which could constitute a bribe.
Ellison described a meeting in which a colleague whose father worked for the Chinese government protested repeatedly. Ellison said Bankman-Fried shouted at the employee to shut up.
The testimony was allowed for limited purposes to demonstrate the trust and confidence Ellison and Bankman-Fried had in each other.
But Kaplan also made clear to jurors that an allegation of bribing a foreign official is not one of the charges in this trial. Bankman-Fried is due to be tried for bribery and bank fraud next year.
Everyone stood and faced the doors at the back of the courtroom after she was called to testify. Ellison was taken down the center aisle to the witness stand.
The daughter of M.I.T. economists, Ellison was a math major at Stanford University, and in her testimony, she described how she and Bankman-Fried met at the trading firm Jane Street. She was an intern, and he was a trader.
In 2018, she and Bankman-Fried “started sleeping together on and off,” Ellison told the court. We had a romantic relationship in the summer of 2020.
Source: She’s the star witness against Sam Bankman-Fried. Her testimony was explosive
Sam Bankman-Fried lied to me at FTX, but never did tell me about him: he never told his ex-boyfriend
She described in detail personal and professional ups and downs as well as the conspiracy of which she admitted to be an integral part.
Sam Bankman- Fried was an ambassador for improving the world through effective altruism. And if you were wondering how he squared those values with all the lying he allegedly did during his time at FTX, wonder no more: the answer is utilitarianism.
Lying and stealing were permitted, as “the only moral rule that mattered would be maximal utility,” Caroline Ellison testified on her second day at Bankman-Fried’s fraud trial. I glanced over at his parents, Joseph Bankman and Barbara Fried, to see what they made of this; both appeared to be busy scribbling into legal pads. The approach apparently worked for most of Bankman-Fried’s life, right up to the demand for doctored balance sheets for the company Ellison supposedly ran.
Ellison knew this wasn’t possible. She said that FTX customer funds were used to pay off those loans. If a large number of FTX customers withdrew all at once, the exchange wouldn’t have the money. Ellison said that he was stressed out. At that point, I was in an ongoing state of dread.
Bankman-Fried’s defense lawyers claim that the customer funds were just in an investment portfolio. The problem is that putting those funds in an investment portfolio is still stealing the funds. Customers aren’t allowed to loan money to CRYPTO EXCHANGES. At least, the honest ones don’t.
During opening statements, the defense suggested that the failures at Alameda were Ellison’s fault — and that Bankman-Fried acted appropriately given what he knew at the time. To prove fraud, the prosecution must show Bankman-Fried lied. Bankman- Fried was hesitant about what he wrote in the paper. He had the company set their Slack and Signal messages to disappear, resulting in a lot of blank Signal chats in previous court exhibits, and again today.
Bankman-Fried was right. The things you put in writing can come back to bite you. Your ex-boyfriend may be able to leak your diaries. In those notes — memos, really — Ellison discussed her concerns about her personal relationship with Bankman-Fried affecting their professional relationship. She felt like a second-class partner in their relationship. Today’s evidence suggested that was certainly true in their professional life.
At least he did really sleep on a bean bag in the office, according to Ellison. This had been thrown into question by Bankman-Fried’s college roommate in earlier testimony.
Bankman-Fried thought the move was to make bold tweets, but he didn’t want to do it. Instead, Ellison did — writing in her own words a workshopped version of a tweet Bankman-Fried originally wrote, which began, “Heh, I see someone is really trying to FUD us.”
As the collapse was happening, we saw a text from Ellison. Ellison said the mood is the best he has been in a year. Bankman-Fried was the source of the screenshot. Ellison cried looking at the messages. “To be clear,” she said, “that was overall the worst week of my life. There was a lot of moods and feelings that week.
One of those feelings was relief. She said that she had been thinking about the truth every day. She didn’t have to lie anymore and it was the thing she had been worried about. She said she felt bad for all the people who had been betrayed by us. A clerk gave her the tissue.
It also suggested something else: the things you put in writing can, potentially, save you. It is difficult to depict Ellison as the sole decision-maker when there exists proof she did not make a move without knowing about Bankman- Fried.