- SBF had asked Ellison to use Alameda’s line of credit to buy out Binance’s shares.
- He had also asked Ellison to put FTT on Alameda’s balance sheet to secure loans from Genesis.
Several new details have emerged as the testimony of Caroline Ellison, the former CEO of FTX’s [FTT] investment branch Alameda Research, continued into 11 October. The testimony has shed light on what went on behind closed doors at these two intertwined entities.
Ellison told the court that Binance [BNB] owned FTX stocks worth $2 billion. FTX founder Sam Bankman-Fried “SBF,” who also happens to be Ellison’s ex, wanted to buy those stocks back in 2021.
Binance would otherwise cause trouble to FTX, SBF thought. In fact, he asked her to use Alameda’s line of credit to buy out Binance.
At no point did FTX disclose Alameda’s line of credit to its customers, investors, or auditors, Ellison confirmed.
SBF even told Ellison to put FTT on Alameda’s balance sheet in order to get loans from Genesis. Genesis was one of the third-party crypto lenders that formed Alameda’s line of credit. Ellison remarked,
“I thought it was misleading.”
But she did it anyway.
Audit an appeal to investors
Ellison was well aware of the exchange of funds between FTX and Alameda. She said she even raised the issue with SBF in 2020. But he told her that the auditors wouldn’t be looking at these transactions. The audit was instead aimed at appealing to investors only.
AUSA: Why did the defendant say you were having an audit?
Allison: He said, to appeal to investors.
AUSA: Was FTX disclosing to customers the Alameda line of credit?
Judge Kaplan: Compound. Rephrase.
AUSA: To auditors?
Ellison: No.
AUSA: Investors?
Ellison: No— Inner City Press (@innercitypress) October 10, 2023
Ellison also talked about the controversial political donations made by FTX. Ryan Salame, a senior FTX executive, got a $35 million loan from Alameda that he used to funnel into contributions to Republican politicians. SBF gave $10 million to President Joe Biden to buy access.
AUSA: What was Ryan Salame using the loans for?
Ellison: Contributions to Republicans. Sam gave $10 million to Biden, he thought it bought him access.— Inner City Press (@innercitypress) October 10, 2023
The former Alameda CEO also told the court that due to several such transactions in the past, she assumed that FTX customer funds would be available to her organization. She was aware that Alameda couldn’t repay its loans and kept reminding SBF.
However, he dismissed these concerns as he wanted to keep expanding investments.
The testimony also revealed SBF thought he had a “5% chance” of becoming the president of the U.S. one day!
I’m seeing this screenshot get spread around a lot — important to note that in court, Caroline said that SBF estimated he had a “5% chance” of becoming President one day.
This screenshot makes it sounds like SBF said it was a certainty https://t.co/ii8qlcZjAV
— Zack Abrams (@ZackDAbrams) October 10, 2023
