In a recent court hearing, Caroline Ellison, former business associate and girlfriend of Sam Bankman-Fried, the erstwhile chief of FTX, made startling allegations against him.
She accused Bankman-Fried of directing her to engage in fraudulent activities and using loans for political contributions. She also claimed that customer deposits were utilized to bribe Chinese officials.
Bankman-Fried, who had already been under scrutiny from colleagues Adam Yedidia and Gary Wang, found himself once again at the center of the blame for the downfall of the cryptocurrency trading company, FTX.
Ellison, who has been cooperating with federal authorities, is anticipated to receive a plea deal in return for her assistance in the case against her former boyfriend.
At the onset of her testimony, Ellison admitted to committing fraud, conspiracy to commit fraud, and money laundering, for which she pleaded guilty in December 2022, as reported by the Epoch Times.
"He directed me to commit these crimes," Ellison was quoted as saying in court. She was also reported to have received over $20 million in salary and bonuses in 2021 as the head of Alamada Research, the sister hedge fund of FTX.
Earlier court disclosures revealed that Alameda had a $65 billion line of credit with FTX, which eventually led to an $8 billion debt, comprised of customer deposits.
"CBS Mornings" reported additional shocking allegations made by Ellison, including the claim that Alameda used $100 million of FTX customer deposits to bribe Chinese officials. This was purportedly done to gain access to up to $1 billion in cryptocurrency that was frozen in China. The company also allegedly attempted to recover the money through accounts established in the names of Thai sex workers.
Ellison also alleged that Bankman-Fried contemplated selling shares in the company to investors such as Saudi Crown Prince Mohammad bin Salman.
She further claimed that Alameda lent money to Bankman-Fried and other FTX executives, funds that were then used for political donations.
Yedidia, who previously worked in FTXs Hong Kong office and then the Bahamas before the company's collapse, had earlier testified that FTX was using customer deposits to settle loans. He described the company's actions as "flagrantly wrong."
FTX is reported to have taken $10 billion from customer deposits. This would imply that FTX was using customer deposits, allowing Alameda Research to borrow from that money, and then Bankman-Fried allegedly loaned money back to himself to pay off his own loans and debts.
Political donations primarily included $5.2 million to President Biden's 2020 campaign, which instantly propelled Bankman-Fried to near the top of the donor list.
Time reported that over $70 million was donated to election campaigns, along with another $40 million to politicians and committees ahead of the 2022 midterms.
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