The Most Shocking Details of Caroline Ellison's Damning SBF Testimony
Oct 14, 2023
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Caroline Ellison, prosecutions star witness in the case against Sam Bankman-Fried, reveals shocking details including massive bribes to Chinese officials, use of signal and self-deleting message apps, a bribery plan involving Thai prostitutes, and $100 million spent on bribes.
Caroline Ellison's testimony revealed Alameda Research's financial troubles and Sam Bankman-Fried's involvement in repaying loans with customer funds.
Caroline disclosed the use of creative balance sheet accounting and Alameda's involvement in bribery, providing motives for Sam's actions in the trial.
Deep dives
Testimony Highlights Caroline's Role in Alameda and Financial Troubles
Caroline Ellison's testimony in the SPF trial revealed her significant involvement in Alameda Research and the financial troubles the company faced. She admitted that Alameda had lost a substantial amount of money in the cryptocurrency market downturn and didn't have enough liquid assets to repay billions of dollars in loans. Sam, the CEO of FTX, directed the repayment of these loans using Alameda's line of credit, which Caroline stated would be sourced from customer funds. She mentioned her constant state of stress and dread, fearing customer withdrawals and the potential harm to those affected. The prosecution's questioning focused on revealing the case against Sam and the actions taken by Alameda to manage their financial situation.
The Use of Creative Balance Sheet Accounting and Bribery
In the SPF trial, Caroline disclosed the use of creative balance sheet accounting during Alameda's financial struggles. She prepared multiple variations, obscuring the loans from FTX and minimizing leverage and risk. The best version of the balance sheet, sent to Genesis, still raised concerns about the firm's health. Caroline also testified about Alameda's involvement in bribery, paying a large bribe to unlock exchange accounts frozen by the Chinese government. She revealed the use of Thai prostitute accounts for imbalanced trades, intended to release frozen funds, but this strategy failed. The prosecution introduced this evidence as motives for Sam's actions and for understanding the overall context of the trial.
Sam's Ethical Framework and Desperation to Keep FTX Afloat
Caroline's testimony shed light on Sam's ethical framework and the desperate measures taken to keep FTX afloat. Sam identified as a utilitarian, prioritizing maximizing utility over traditional moral rules. Caroline discussed meetings with Sam where he blamed her for Alameda's financial situation and expressed regret for not hedging earlier in the year. She revealed instances of misleading communication by Sam, both publicly and privately acknowledging the lack of assets to cover customer withdrawals. Caroline also mentioned Sam's intentions to acquire more funds, including an attempt to involve the Crown Prince of Saudi Arabia. As FTX faced increasing deposit withdrawals, Caroline shared her relief at the truth being revealed and her sense of responsibility for the harm caused to investors, employees, and trust that was betrayed.
Caroline Ellison is the prosecutions star witness in the case against Sam Bankman-Fried, and after this week it's not hard to see why. NLW covers the most shocking details, including massive bribes to Chinese officials and more.