Crypto

[NEWS] Former aide testifies at trial that former FTX CEO Bankman-Fried ordered falsification of balance sheets

2024/08/09 09:13 (Updated 2025/01/17 17:14)
Editors of Iolite
SHARE
  • sns-x-icon
  • sns-facebook-icon
  • sns-line-icon
[NEWS] Former aide testifies at trial that former FTX CEO Bankman-Fried ordered falsification of balance sheets

I was instructed to falsify balance sheets, etc.

In the trial of Sam Bankman-Fried, founder and former CEO of the cryptocurrency exchange FTX, which collapsed last year, accused of fraud and other charges, his close aide Caroline Ellison, former CEO of Arameda Research, testified that he instructed him to falsify balance sheets and other documents.

Bankman-Fried is charged with two counts of fraud and five counts of conspiracy, but has pleaded not guilty and maintains that he made mistakes in the operation of FTX but did not steal customer funds.

Ellison appeared as a witness at the trial held on the 10th and 11th. He spoke about FTX's final days before its bankruptcy in November last year.

Ellison commented on the damage suffered by FTX's customers, saying, "I am sorry beyond words." He also said that the collapse of FTX had erased his "fear" and that he was "relieved to think that I would no longer have to lie."

Prosecutors alleged that Bankman-Fried plundered billions of dollars in client assets to support Alameda, buy real estate, and donate more than $100 million to U.S. political campaigns. Ellison is one of Bankman-Fried's closest aides, who pleaded guilty to fraud and agreed to cooperate with the Manhattan U.S. Attorney's Office.

Ellison testified that as the cryptocurrency market slumped in 2022, "Bankman-Fried instructed me to falsify Alameda's balance sheet to keep lenders away." The balance sheet sent to cryptocurrency-related companies such as Genesis Global Capital concealed that Alameda had borrowed about $10 billion. According to Ellison, the funds were FTX client funds.

He also said that Bankman-Fried had instructed him to withdraw funds from the fund's credit line at FTX in June last year to repay the loan. Ellison also testified that Bankman-Fried had not followed financial institutions' rules, such as "not lying to clients" and "not stealing client funds."

Bankman-Fried was a utilitarian and believed that the most important thing was to "do the greatest good for the greatest number of people." As time passed, he said, he was more comfortable following Bankman-Fried's instructions, even though he knew they were wrong.

He also said that Bankman-Fried considered his appearance and hairstyle to be "very important" in order to create the image of a "smart, competent, and somewhat eccentric founder." It has been revealed that the entire image of charisma in the cryptocurrency industry was fabricated.

Ellison said he was in a "constant state of fear" as the price of cryptocurrencies, including Bitcoin (BTC), plummeted and Alameda's assets plummeted, knowing that the funds used to repay the loan were coming from FTX's customer assets.

The trial also revealed that just before FTX's collapse last year, when he brainstormed with Bankman-Fried to revive the company, he was seeking investment from Saudi Arabia's Crown Prince Mohammed bin Salman. He also planned to get regulators, including the U.S. Securities and Exchange Commission (SEC), to crack down on rival Binance and expand his market share.

The trial is expected to last up to six weeks, and new facts may come to light in the future.

Source:Court report,Reuters
Image: Shutterstock

SHARE
  • sns-x-icon
  • sns-facebook-icon
  • sns-line-icon
Side Banner
Side Banner
MAGAZINE
Iolite Vol.13

Iolite Vol.13

May 2025 issueReleased on 2025/03/28

Interview Iolite FACE vol.13 Joseph Lubin, co-founder of Ethereum and founder of Consensys PHOTO & INTERVIEW Yusuke Narita Features: "Dawnbreak Players 30: 30 Web 3.0 Players to Watch in 2025", "How to Use EXPO2025 DIGITAL WALLET", "The Global Controversy Over Meme Coins: What Happened in the U.S. and Argentina", "Finally, Technology Has Entered the Social Implementation Phase: Examples of Web 3.0 Use in an Era of Declining Population" Crypto Journey: Interview with Mohsin, a Popular Crypto YouTuber Special Series: Virtual Nishi: "Market Trends in Crypto Assets and Key Points to Interpret" Series: Tech and Future: Toshinao Sasaki, etc.

MAGAZINE

Iolite Vol.13

May 2025 issueReleased on 2025/03/28
Interview Iolite FACE vol.13 Joseph Lubin, co-founder of Ethereum and founder of Consensys PHOTO & INTERVIEW Yusuke Narita Features: "Dawnbreak Players 30: 30 Web 3.0 Players to Watch in 2025", "How to Use EXPO2025 DIGITAL WALLET", "The Global Controversy Over Meme Coins: What Happened in the U.S. and Argentina", "Finally, Technology Has Entered the Social Implementation Phase: Examples of Web 3.0 Use in an Era of Declining Population" Crypto Journey: Interview with Mohsin, a Popular Crypto YouTuber Special Series: Virtual Nishi: "Market Trends in Crypto Assets and Key Points to Interpret" Series: Tech and Future: Toshinao Sasaki, etc.