On October 10, in a courtroom drama, former FTX CEO Sam "SBF" Bankman-Fried watched as his former business partner and girlfriend, Caroline Ellison, took the stand and testified in his criminal trial. During her testimony, Ellison admitted to committing fraud while working under Bankman-Fried's direction at Alameda. She squarely placed the blame for the misuse of FTX user funds on SBF, asserting that he had "set up the system" that allowed Alameda to take approximately $14 billion from the exchange.
Ellison revealed that "Alameda took billions of dollars from FTX clients and invested them." She further explained that the balance sheet she presented made Alameda appear less risky than it actually was. Ellison's relationship with SBF is a central issue in the charges against the former CEO, as she had run the cryptocurrency exchange while leading the team at Alameda. Bankman-Fried is facing fraud charges for directing Alameda to acquire FTX user funds without customer consent and using those funds for various purposes, including property purchases and political campaign contributions.
Former FTX co-founder and Chief Technology Officer, Gary Wang, had taken the stand earlier on October 5, becoming one of the first witnesses for the prosecution. He admitted to committing a crime with Ellison and former Engineering Director Nishad Singh. During cross-examination of Wang, SBF's defense lawyers seemed to attempt to shift some of the blame for FTX's collapse onto Ellison and raised questions about the former CTO's role. Ellison and Wang were among the first FTX and Alameda insiders to plead guilty as part of a deal with U.S. authorities in exchange for their testimony. It remains unclear whether Bankman-Fried will appear in court as part of his defense strategy.
Ellison's testimony marked the fifth day of SBF's criminal trial, where he is facing seven fraud-related charges. He has entered a plea of not guilty to all charges and is anticipated to face a second criminal trial beginning in March 2024.
