• Sam Bankman-Fried of FTX has in a latest report been accused of sanctioning Alameda Research’s CEO to commit fraud. 

• According to Caroline Ellison, SBF set up a system to make it easier to move money from FTX.

In December 2022, the founder of FTX, Sam Bankman-Fried was arrested in the Bahamas after being accused of misusing money from investors and customers for his personal gains. Recently, Judge Lewis Kaplan sided with the prosecutor on the attempts of the defendant to tamper with witnesses at least twice.

In a new update, Caroline Ellison who was a long-term romantic partner of SBF and the CEO of Alameda Research, a sister company of FTX, has confessed to having committed fraud upon the instructions of SBF.

According to her, a system was set up to make it easier for him to funnel money out of the exchange. Interestingly, this system was responsible for $14 billion secured by Alameda Research from FTX. To hide this from third parties, the balance sheet was massaged to give a false impression of the financial status of the company. 

Alameda took several billions of dollars from FTX customers and used it for investments. I sent balance sheets that made Alameda look less risky than it was.

Last year, Ellison and FTX co-founder Gary Wang pleaded guilty to criminal charges. To atone for their role in collapsing the exchange, both Ellison and Wang would cooperate with authorities to get to the bottom of the case. According to reports, they may likely give up the money made during their tenure at the Alameda and FTX when a settlement is approved. On top of that, they would be banned from “issuance, purchase, offer, or sale of any securities.”

More Updates on the FTX Collapsed and SBF’s Court Proceedings

SEC Chair Gary Gensler spoke about this development:

As part of their deception, we allege that Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards.

In an article published by the New York Times in July, the confessional writings of Ellison were captured featuring a reflection of their breakup. According to the prosecutor, the document was shared by SBF in an attempt to make a case that Ellison was a jilted lover, and worked alone. 

In his recent appearance at the court, SBF maintained his innocence and pleaded not guilty to the seven counts of fraud and conspiracy in connection with the failed FTX empire. It is important to note that he has repeatedly declared his views on the case in writing.

He once said that he was an inexperienced businessman who never knew his actions were illegal. In one of his writings, SBF blamed Alameda’s losses on Ellison. The trial has been said to last up to six weeks. During this period, SBF would be at the Metropolitan Detention Center in Brooklyn. 

The FTX failure together with the collapse of the Terra ecosystem is such a big deal in the crypto sphere as it sent the entire crypto market down. Till now, most of the leading assets are at least 60 percent down from their all-time highs. The situation has also forced various relevant Agencies to subject the crypto market and related companies to critical scrutiny.