Bankman-Fried Associate Admits Misuse of FTX Client Funds

Caroline Ellison, a former colleague of Sam Bankman-Fried, says she and the FTX founder hid the fact that they used customer deposits from crypto exchanges to make “illiquid” investments. I was.

Ellison is the former head of Alameda Research, a trading affiliate of FTX. plead guilty In seven criminal charges Monday, a New York judge told a judge that the company had access to an “unlimited line of credit on FTX.com” from 2019 to 2022 and that it “knew it was wrong.” ‘ said. A plea hearing released Friday.

“I understand that FTX executives implemented special settings on Alameda’s FTX.com account to maintain negative balances in various fiat and cryptocurrencies,” Ellison said at the hearing, Bankman said.・He spoke a few days before Freed was handed over. Bahamas to the United States.

She added, “I understood that if Alameda’s FTX account had a significant negative balance in a particular currency, it meant that Alameda owed funds deposited by FTX customers.”

These deals are hidden from both FTX customers and investors, Ellison said under oath. She agreed to cooperate with the government in its lawsuit against Bankman-Fried. defendant A U.S. engineering prosecutor said it was “one of the greatest financial frauds in U.S. history.”

of opaque relationship The deal between Bahamas-based FTX and Alameda played a central role in the demise of the exchange once valued at $32 billion. This has resulted in numerous legal investigations and potential losses for millions of creditors, including private investors.

Ellison’s testimony Monday afternoon was kept secret for days. By revealing her plea, federal prosecutors may find it more difficult to convince Bankman-Fried, who has been charged with eight crimes, to bring her back from the Bahamas to New York to plead guilty to her charges. claimed that there was

The former billionaire’s attorney said Bankman-Fried would agree to extradition, but “there were some problems in the Bahamian court,” prosecutor Danielle Sassoon said at a hearing on Monday. told to

“We believe that any disclosure of Ms. Ellison’s cooperation at this time could thwart law enforcement’s objective to extradite him,” Sassoon claimed.

Ellison’s plea deal and FTX co-founder Gary Wang’s plea deal were announced Wednesday night by a US attorney’s office while Bankman-Fried was en route to the US.

During Monday’s proceedings, the government said it had evidence from multiple witnesses, as well as Signal and Slack messages and financial records that could implicate Ellison and Wan.

Both are expected to testify against Sam Bankman-Fried if the case against Sam Bankman-Fried goes to trial. The FTX founder was released on bail Thursday after agreeing to a $250 million bail and agreeing to be confined to his parents’ home in Palo Alto, California.

Before being arrested in the Bahamas last week, Bankman-Fried claimed he “made many mistakes” with FTX but “deliberately failed to mix funds” in exchange for Alameda. Bankman-Fried, who founded FTX and Alameda, has previously said the two groups operate independently.

Additional reporting by Nikou Asgari