In the fraud case against Sam Bankman-Fried, the former head of his hedge fund Alameda Research admitted in her testimony to joint fraud with the founder of the collapsed crypto exchange FTX. “Alameda withdrew billions of dollars of money from FTX customers and used it for our own investments and to repay our debts,” Caroline Ellison told a New York court on Tuesday. Bankman-Fried also ordered her to present a misleading Alameda balance sheet to the fund’s lenders. When asked by a prosecutor whether she had committed any crimes, Ellison replied: “Yes, we have.”
The testimony of the Stanford graduate and former partner of Bankman-Fried was particularly eagerly awaited. She was named co-chief executive officer of Alameda in 2021 and assumed full control last year. She had previously pleaded guilty. Most recently, former head of technology Gary Wang also put pressure on his boss at the time. Nishad Singh, Bankman-Fried’s third former confidant, is also expected to testify during the proceedings. The three had announced that they wanted to work with the public prosecutor.
Bankman-Fried has repeatedly denied all allegations of fraud and has pleaded innocent. The authorities accuse him of billion-dollar fraud and embezzlement of customer funds. He is said to have secretly moved money around in order to speculate and finance his lavish lifestyle. If convicted, Bankman-Fried could face up to 115 years in prison. After graduating from university, he started working as a cryptocurrency trader at the Jane Street brokerage firm and made a fortune betting on Bitcoin price differences on stock exchanges in the USA and Asia. In 2017 he set up his own brokerage firm Alameda, and in 2019 he founded the crypto exchange FTX. Their collapse at the end of 2022 shocked the crypto industry.