SBF’s ex-girlfriend testifies against him in court


In her statements, Ellison describes how she reported directly to former FTX CEO Sam Bankman-Fried (SBF). The testimony of the former CEO of Alameda details that she was fully aware that Alameda Research had access to a special loan line that allowed the company to maintain an unlimited line of credit with zero collateral. The “line of credit,” according to Ellison, was the funds of FTX clients.

Following the release of Caroline Ellison’s plea deal, Inner City Press journalist Matthew Russell Lee posted a storm of tweets containing screenshots of Ellison’s plea transcript. Russell Lee said the plea arraignment “was held in secret and went unrecorded until today after Bankman-Fried was released on $250 [million] bail.” If Ellison’s testimony is true, the document highlights a series of breaches in which both FTX and Alameda executives participated since 2019.

“From 2019 to 2022, I was made aware that Alameda was provided with access to a lending service on, the cryptocurrency exchange run by SBF. I understood that executives had implemented special settings in Alameda’s account that allowed Alameda to maintain negative balances in fiat currencies and cryptocurrencies,” Ellison’s testimony details. “In practical terms, this agreement allowed Alameda to access an unlimited line of credit without having to deposit collateral, without having to pay interest on negative balances, and without being subject to margin calls or settlement protocols.” added the former CEO of Alameda.

Ellison’s account of the situation continued:

I understood that if Alameda had significant negative balances in a particular currency, it meant that Alameda was borrowing funds that customers had deposited with the exchange.

Ellison understood that FTX client funds were being used to “finance FTX’s loans to Alameda,” the former Alameda CEO is “really sorry” for what she did
Ellison was aware that many of Alameda’s investments were illiquid, and he said he was all for borrowing funds from FTX’s coffers. “While I was co-CEO and then CEO, I realized that Alameda had numerous large illiquid investments and had lent a lot of money to SBF and other FTX executives,” Ellison’s testimony explains. “I also understood that Alameda had financed the investments with multi-billion-dollar short-term and open-ended loans from third-party lenders to the cryptocurrency industry. On or about June 2022, I agreed to borrow several billion dollars from FTX to repay those loans. I understood that FTX would need to use customer funds to finance its loans to Alameda.”

Ellison further added:

I also understood that many FTX clients invested in crypto derivatives and that most FTX clients did not expect FTX to lend their digital asset holdings and fiat currency deposits to Alameda in this way.”

Additionally, Ellison said that on or from July 2022 to October 2022, he agreed with SBF to “provide materially misleading financial statements to Alameda lenders.” Ellison said the team served lenders botched quarterly reports that obfuscated “the extent of Alameda’s indebtedness.” The former Alameda CEO also detailed that she was aware that FTX’s equity investors were blinded to the nature of the relationship between FTX and Alameda. “I have agreed with SBF and others not to publicly disclose the true nature of the relationship between Alameda and FTX, including the Alameda loan agreement. I also understood that Mr. Bankman-Fried and others concealed the origin and nature of those funds,” Ellison details in his account of the situation.

Ellison’s unveiled testimony completely contradicts SBF’s position during his media tour, not only apologizing but also explaining a series of misdeeds he personally committed. “I’m really sorry for what I did,” Ellison concludes. “I knew it was wrong. I want to apologize for my actions to affected FTX customers, Alameda lenders and FTX investors.” Since FTX and Alameda collapsed in November 2022, I have worked hard to assist in asset recovery for the benefit of clients and to cooperate with the government investigation. I am here today to accept my responsibility for my actions by pleading guilty.” When the judge asked Ellison if he knew what he had done was illegal, he answered “yes.”