Everything you need to know about SBF’s second week in court

In this post:

  • Of the six weeks set for the SBF trial, the court proceedings entered the second week with a mega testimony from his ex-girlfriend and the ex-CEO of Alameda Research, Caroline Ellison.
  • Gary Wang and Caroline Ellison took plea deals with the US Department of Justice (DOJ) in  December of 2022. 
  • Ellison also confirmed that both SBF and Saudi Prince Mohammed Bin Salman were in talks on backstopping the extreme FTX losses before its bankruptcy.
  • SBF’s fear of bad media coverage explains the lengths he took to create a good image for himself with the press and the crypto community – which, in the end, fell apart. 

Sam Bankman-Fried’s (SBF) ongoing lawsuit has been the current talk in the crypto world as he faces the second week in court. His lawsuit versus the US Security Exchange Commission (SEC) was brought about by allegations of the FTX former CEO accepting bribes from Chinese Communist Party officials. 

These misdeeds are just among the many allegations brought against him. Moreover, his actions have impacted the crypto realm at large and caused shifts in the digital market. For a year now, SBF has gone down as the worst villain in the defi space. The trial of the crypto ‘golden boy’ as mainstream media calls him – will be a turning point for the industry.

Clear details on the SBF trial

The FTX former chief executive, SBF,  has been on trial for violation of several crypto regulations. Reports have it that SBF was also well-informed about Alameda Research’s day-to-day operations, even after his denial and claims of installing firewalls between the hedge fund and exchange. 

SBF’s ex-girlfriend, 28-year-old Caroline Ellison, gave a testimony on the second week of Sam’s hearing in court. She had a mindblowing testimony on Tuesday, which she began by admitting to fraud at the beginning of her questioning. The previous week also had a rollercoaster of epiphanies as the FTX co-founder, Gary Wang, also admitted to the fraud allegations. 

Both witnesses took plea deals with the US Department of Justice (DOJ) in  December of 2022. Ellison had a lot to spill about concerning her relationship with SBF, which was unstable in the first place. 

She expressed her feelings of anxiety toward Alameda’s unlimited line of credit. Ellison also described the inevitable challenge that led to the collapse of FTX since it became clear that the necessary customer withdrawals could not be covered. She exclaimed, 

I felt indescribably bad about all the … people that lost their jobs … and the people that trusted us that we had betrayed.

Caroline Ellison

Caroline Ellison also explained about the balance sheet version of the one Alameda that was sent to lenders. She stated that it was a misleading document that was made to look like a financially healthy document, but she described the document as “dishonest.” She expressed her views on the balance sheet and said:

It understated the true extent of Alameda’s risk, but it still showed that Alameda was in a fairly risky position.

Caroline Ellison

Nishad Singh, another FTX higher-up, also took a plea deal and is set to take the stand later on in the trial. The major idea fostering this court case is SBM using the customers’ deposits, which can only be done by central institutions like banks.

The happenings of the Lawsuit

As it stands, under the leadership of SBF, FTX couldn’t meet the withdrawal requests of its customers, and Ellison said it was because the money had been stolen. The funds were withdrawn to meet Alameda’s financial obligations, such as the loans taken from crypto lenders. 

The main idea behind this was to patch the financial gaps in the balance sheet after some of the crypto investments from hedge funds went south. 

SBF instructed Ellison to create false versions of the balance sheet in order to hide the real figures that were misappropriated by the FXT firm. She also confirmed that she was aware of the situation. According to her review and testimony, an estimated $5 billion in personal loans was divided among FTX insiders.

Aditya Baradwaj, Alameda developer, said on Thursday that close to $200 million was lost in sorting preventable mistakes and an additional $100 million in phishing schemes. Among the revelations discovered about the firm was a $400 million FTX attack. SBF also considered shutting down the Alameda Research hedge fund in mid-last year.

Ellison also confirmed that both SBF and Saudi Prince Mohammed Bin Salman were in talks on backstopping the extreme FTX losses before its bankruptcy. SBF’s ex also confirmed that Alameda had tried to bribe the Chinese government officials into realizing the Huobi and OKX exchange capital. This was in an amount to recover $1 billion in frozen assets. 

Additionally, she expressed her insights on how SBF was growing anxious and tried to cover “bad press” to sic regulations on Binance, to absorb its customers, and fill the missing $8 billion.

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 decision.

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