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Former Alameda Research CEO Testifies About Fudging Financial Numbers in SBF’s Trial

TL;DR

  • Former Alameda Research CEO made startling admissions about manipulating financial data for review by Genesis.
  • She revealed that SBF had directed her to create “alternative” balance sheets regarding Alameda’s use of funds from the crypto exchange FTX. 
  • This revelation raises questions about the transparency and integrity of Alameda Research’s financial dealings.

In a shocking turn of events, former Alameda Research CEO Caroline Ellison took the witness stand on the sixth day of Sam “SBF” Bankman-Fried’s criminal trial in New York. Ellison made startling admissions about manipulating financial data for review by Genesis, a major player in the cryptocurrency world. 

According to courtroom reports, she revealed that Bankman-Fried had directed her to create “alternative” balance sheets regarding Alameda’s use of funds from the crypto exchange FTX. This testimony has shed light on a complex web of financial misconduct, further deepening the legal woes of the prominent crypto figure.

Allegations of misleading Genesis

Caroline Ellison’s testimony in the courtroom on October 11th was a pivotal moment in the trial. She claimed that Bankman-Fried instructed her to fabricate financial documents, specifically seven spreadsheets. One of these altered spreadsheets was subsequently presented to Genesis, a revelation that has sent shockwaves through the crypto community. This document, however, failed to disclose the fact that Alameda Research had borrowed a staggering $10 billion from FTX.

In her testimony, Ellison stated,

“Sam said, ‘Don’t send the balance sheet to Genesis.’ We were borrowing $10 billion from FTX, and we had $5 billion in loans to our own executives and affiliated entities. We thought Genesis might share the info.”

This revelation raises questions about the transparency and integrity of Alameda Research’s financial dealings during this period.

Concerns about deception and fallout

Ellison’s second appearance on the witness stand on October 10th marked a departure from her initial testimony. Prosecutors seized the opportunity to question her about her emotions surrounding the deception related to the firm’s financials. She expressed her concerns, stating, 

“I was worrying about customer withdrawals from FTX, this getting out, people to be hurt… I didn’t feel good. If people found out [about Alameda using FTX funds], they would all try to withdraw from FTX.”

When asked by prosecutors if she considered her actions to be “dishonest” and “wrong,” Ellison affirmed these labels. This acknowledgment of wrongdoing underscores the gravity of the allegations against Alameda Research and its former CEO.

Throughout her testimony, Caroline Ellison has largely attributed the events leading to the collapse of FTX to Sam Bankman-Fried. She has portrayed him as the instigator of the misuse of customer funds.

However, defense lawyers have taken a different approach, attempting to cast Ellison as the central figure responsible for the financial misconduct. The courtroom drama has intensified as both sides aim to establish culpability in a case that could have significant ramifications for the cryptocurrency industry.

Trial progress and what lies ahead

As the trial unfolds, the prosecution is relying heavily on Caroline Ellison as a star witness. Her testimony has been pivotal in unraveling the alleged misdeeds of Sam Bankman-Fried and Alameda Research. It follows testimony from FTX co-founder and former chief technology officer Gary Wang. Additionally, former FTX engineering director Nishad Singh has been named as a potential witness as part of an agreement with the United States Justice Department.

Prosecutors anticipate wrapping up their case on October 26th or 27th, after which the defense will begin calling witnesses. Sam Bankman-Fried faces seven criminal counts related to fraud at FTX, along with five additional charges set to be tried in March 2024. The outcome of this high-profile trial could have far-reaching implications for the cryptocurrency industry, shaping regulations and investor trust in the sector.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Benson Mawira

Benson is a blockchain reporter who has delved into industry news, on-chain analysis, non-fungible tokens (NFTs), Artificial Intelligence (AI), etc.His area of expertise is the cryptocurrency markets, fundamental and technical analysis.With his insightful coverage of everything in Financial Technologies, Benson has garnered a global readership.

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