In a startling revelation, Caroline Ellison has testified during the trial of Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, that he directed her to commit fraud in a risky strategy that ultimately contributed to the fall of the exchange.
Sam Bankman-Fried is currently facing charges of fraud and money laundering related to the FTX scandal.
FTX was once one of the world’s largest cryptocurrency trading platforms, but it went bankrupt in November, with over $8 billion reportedly missing.
According to prosecutors, the collapse of FTX was due to Bankman-Fried’s alleged theft of billions of dollars in customer funds.
These funds were purportedly used to buy property, make political donations, and support his crypto trading firm, Alameda Research.
During her testimony, Ellison claimed that Bankman-Fried instructed her to falsify Alameda’s balance sheets to maintain the confidence of lenders during a downturn in cryptocurrency markets in 2022.
“He was the one who set up these systems that allowed Alameda to take the money, and he was the one who directed us to take customer money to repay our loans,” Ellison stated.
She further revealed that he instructed her to extend loans to FTX executives and to buy digital currencies to maintain their values, even when it resulted in financial losses for Alameda.
Ellison emphasized that Bankman-Fried did not abide by principles such as “don’t lie” and “don’t steal.” She described him as a “utilitarian” who believed that the most critical rule was to achieve the greatest good for the greatest number of people.
Caroline Ellison, along with two other former members of Bankman-Fried’s inner circle, have pleaded guilty to fraud charges and have agreed to cooperate with the Manhattan U.S. Attorney’s Office.
Sam Bankman-Fried, however, has entered a not-guilty plea to two counts of fraud and five counts of conspiracy. He maintains that while he made mistakes in running FTX, he never intended to steal funds.