In the period leading up to the collapse of the cryptocurrency exchange FTX, the former CEO Sam Bankman-Fried was reportedly engrossed in various activities and plans. According to notes from former Alameda Research CEO Caroline Ellison presented during her testimony in New York, Bankman-Fried exhibited significant interest in Alameda, where he contemplated closing the company and sought funding. This funding endeavor involved approaching a Saudi prince known for investing in blockchain games through the Saudi Arabian Sovereign Wealth Fund. Another priority for Bankman-Fried was pushing regulators to take action against rival cryptocurrency exchange Binance, potentially to bolster FTX's market share. However, the specifics of this plan were not disclosed.
Additionally, the notes mention Bankman-Fried's intent to secure further funding from cryptocurrency lender BlockFi, which had provided Alameda with loans exceeding $660 million. He was also focused on trading Japanese government bonds, purchasing shares of Snap Inc, and an enigmatic reference to "Willy is happy." The note doesn't clarify who "Willy" refers to, but it might be an allusion to Bankman Fried's mentor, William MacAskill.
Caroline Ellison testified during the trial and admitted that better hedging strategies could have helped Alameda endure the cryptocurrency market downturn. However, she pointed out that the company was facing other challenges, such as significant term loans and utilizing FTX's credit line to the tune of billions. Alameda's liabilities at FTX amounted to $13.7 billion by September 2022, with a term loan of $1.3 billion. Moreover, at Bankman-Fried's request, Ellison created "alternative" financial spreadsheets for Alameda's lenders, concealing the company's financial obligations on FTX to present a more favorable image and deter lenders from requesting full repayment.
Throughout her testimony, Ellison also revealed moments of emotional distress, expressing concerns about the potential withdrawal of funds by clients from FTX amid "tight liquidity" at Alameda, highlighting the daily apprehension about whether the loans would be called in simultaneously. Bankman-Fried's defense attorneys are expected to cross-examine Ellison on October 12.
