According to court documents filed on Friday, Caroline Ellison, a longtime confidante of FTX’s former CEO Sam Bankman-Fried, has revealed that she and Bankman-Fried conspired to defraud the exchange’s investors, lenders, and consumers.
In a report by Reuters, Bankman-Fried and other FTX executives received billions of dollars in clandestine loans from the crypto billionaire’s Alameda Research, Ellison who is the former CEO of the crypto trading firm, told a judge when she pleaded guilty to her involvement in the implosion of the exchange.
Bankman-Fried faces a multitude of criminal accusations related to allegations that he stole billions of dollars from FTX customers in light of this revelation.
Ellison stated, based on a court filing, that she understood “it was wrong” and had full knowledge that Alameda had access to a loan account on FTX.com between 2019 and 2022.
OK – on #FTX / Alameda, here now the unsealed guilty plea transcript of Caroline Ellison – it was held in secret, and not docketed until today, once Bankman-Fried was freed on $250 mln bond. Thread then stories on https://t.co/3AcCBJNU41 and pic.twitter.com/Ptd0L1u9oL
— Inner City Press (@innercitypress) December 23, 2022
Caroline Ellison: The Multi-Billion Dollar Conspiracy
According to the transcript of Ellison’s December 19 plea hearing, which was unsealed on Friday, the 28-year-old admitted that she and Bankman-Fried conspired to conceal the fact that the hedge fund could borrow an unlimited amount of cash from the exchange from FTX’s investors, lenders, and consumers.
Ellison and Gary Wang, the 29-year-old co-founder of FTX, pled guilty to a variety of offenses, including wire fraud, securities fraud, and commodities fraud.
U.S. Attorney Damian Williams said last week in a video statement posted to social media that the two are working with the Southern District of New York.
Ellison stated, according to the transcript of the hearing:
“I am truly sorry for what I did.”
She was quoted by The Wall Street Journal and Bloomberg as saying:
“I understood that FTX executives had implemented special settings on Alameda’s FTX.com account that permitted Alameda to maintain negative balances in various fiat currencies and crypto currencies.”
Gary Wang and Caroline Ellison. Image: ZeroHedge
Ellison, who has been romantically involved with Bankman-Fried, reportedly admitted she understood the agreement was unlawful and “recognized” that the majority of FTX clients would not anticipate FTX to lend out their crypto asset and fiat money deposits to Alameda in this manner.
Prosecutor Nicolas Roos indicated last week in court that Bankman-Fried’s trial would feature testimony from “several collaborating witnesses.” Roos also pointed out that Bankman-Fried perpetrated an “epic scam” that resulted in the loss of billions of dollars in client and investor monies.
On Bail Bonds & Long Prison Sentences
Bankman-Fried was released from detention last week after spending eight days in a Bahamas prison. His release was made possible through a $250 million bond, which many lawyers called the “largest ever pretrial bond.”
After pleading guilty to the fraud charges against them, Ellison and Wang were released on a $250,000 bail.
Crypto total market cap at nearly $769 billion on the daily chart | Chart: TradingView.com
Caroline Ellison is accused of “manipulating” the price of FTX’s native cryptocurrency, FTT, as ordered by Bankman-Fried, according to fraud charges brought separately by the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission against him and Wang.
The maximum sentence for Caroline Ellison is 110 years if she is proven guilty on all seven charges against her.
Wang is facing up to 50 years in prison on charges of conspiracy to conduct wire fraud and associated crimes, according to court documents.
Bankman-Fried faces 115 years in jail if found guilty.