- Ellison Continues to Reveal Facts Associated with Complex FTX Embezzlement Scheme
- He revealed that they used FTX customer funds to pay off loans and lines of credit for Alameda.
- To keep this secret, they made altered balance sheets with which to sell false security.
- He also revealed that they carried out BTC sales to keep its price low.
The trial against the founder and former CEO of FTX, Sam Bankman-Fried, continues, and on the second day of statements by the former CEO of Alameda Research, Caroline Ellison, more revelations emerge about the complex plot of corruption and embezzlement of funds. which led the exchange and its associated companies to collapse.
However, Ellison’s most recent testimony revealed how Bankman-Fried and FTX ‘s top managers used high-level tactics to maintain the liquidity of their business, including making large operations with Bitcoin to manipulate its price in the international market.
A complex embezzlement plot
According to information published by the X (Twitter) account @Innercitypress, Ellison detailed what they did with FTX client funds, with which they were able to pay bills and honor commitments with some partners and investors of Alameda Research. For example, there is the case of Genesis, to which they paid USD $400 million with the assets of the exchange’s users.
He indicated that this practice was very common, and that everything was done on the orders of Bankman-Fried, so they reached a point where they had already taken about USD $3 billion from FTX clients to pay for the loans they had requested. Alameda Research.
AUSA: You calculated Alameda's balances – did you share this with the defendant?
— Inner City Press (@innercitypress) October 11, 2023
Ellison: Yes, updated balance sheets whenever he asked for them. He was my boss, the owner of Alameda
AUSA: What did he tell you to do?
Ellison: He directed me to repay loans
However, things went even further, as debts amounted to more than USD $13 billion and there were few options to pay the debtors. Ellison indicated that he was concerned that the situation would directly affect FTX clients, since if this were evident it could lead to a wave of capital withdrawals, which would reveal the embezzlement scheme that was underway.
Therefore, under pressure from debtors, Ellison prepared seven falsified balance sheets that covered up the deficit of FTX and Alameda Research, so Bankman-Fried chose the one that made the company look less risky in financial terms.
Manipulating the price of Bitcoin
But perhaps one of the most notable details discussed by Ellison had to do with the purchase/sale operations carried out with Bitcoin, which served to manipulate in a certain way the price of the digital currency in international markets.
In this regard, Ellison revealed some notes from a conversation with Bankman-Fried, where he showed that they had a plan to sell Bitcoin funds to keep their value below USD $20,000 per unit.
It is worth noting that this entire plot was taking place in 2022, just when the market faced a sharp drop that mainly affected the price of Bitcoin and the most reputable cryptocurrencies in the ecosystem. Therefore, with this practice they sought to strengthen FTX ‘s position as an exchange, in order to raise more capital from other investors by selling a false image of prosperity and security while this whole plot was happening behind the scenes.
The revelations continue
For now, Ellison continues to testify in court and appears as one of the key witnesses in the case against Bankman-Fried, who is the only FTX executive who has pleaded not guilty to crimes associated with the collapse of the exchange and its allied companies. .
As we commented in a previous edition, Ellison pleaded guilty before the US authorities after the collapse of the FTX ecosystem, and as part of his agreement with prosecutors, he agreed to collaborate in the investigations to clarify the events perpetrated under the administration of Bankman-Fried.
In addition to Ellison, other directors and senior officials at FTX also accepted the charges against them and are collaborating with the prosecution. Their testimonies are expected to come to light in the upcoming hearings of the case.
