During her testimony in court on Wednesday, former CEO of Alameda Research, Caroline Ellison, revealed detailed information about several financial crimes she committed along with her former boyfriend, Sam Bankman-Fried, while working at FTX.
Besides embezzling money from FTX customers, Ellison alleged that FTX paid a $100 million bribe to the Chinese government to release a significant amount of frozen assets.
Bribery by FTX
According to a summary provided by Inner City Press on Wednesday, Alameda resorted to bribery after alternative methods of recovering funds had failed.
"We tried to hire a lawyer. It didn't work," Ellison said. "We were using other people's accounts. Ryan Salame told me. But that didn't work either."
Instead, the exchange forged a conspiracy with two Chinese individuals who had close ties to the Chinese government. One of these individuals, David Ma, informed FTX management at the time that he had a method to release their $1 billion in seized money as part of a money laundering investigation. Despite some objection, Bankman-Fried was determined to use Ma's method.
At the time, Ellison did not know who the recipient would be and explained how Sam told them that Ma had found a way to unblock their accounts if they sent $100 million to a certain crypto address.
Initially, the US Department of Justice (DOJ) had charged Bankman-Fried with bribing Chinese government officials to the tune of $40 million. In addition, charges had been filed for violations of US campaign finance laws. However, based on treaty obligations with the Bahamas, both charges were later dropped.
SBF media appearance
Ellison also testified that she had prepared a list called "Things Sam cares about," which she "frequently updated." This included important details about some of Bankman-Fried's other drives, including the purchase of Snapchat and "pushing for tighter oversight of Binance."
Ellison revealed that Sam Bankman-Fried had investments in media site Semafor, and that he was also considering investing in Vox and Forbes.
She also noted that he frequently sat with Michael Lewis, the author of "The Big Short", with whom he was cultivating his image as an eccentric founder. His deliberately sloppy haircut and choice to drive a Toyota Corolla were part of this effort.
In addition to his media activities, Ellison stressed that Alameda took deliberate steps to create the image of stability for creditors of the trading desk.
In June 2022, institutional crypto trading company Genesis called back a $400 million loan from Alameda and also requested an updated view of Alameda's balance sheet. At that time, Alameda had already borrowed $10 billion from FTX customers through a huge line of credit, and Bankman-Fried was reluctant to reveal the truth.
SBF asked Ellison to come up with alternative ways to present the information to hide things on balance sheet. In the end, Ellison produced seven different versions of their balance sheet to show to Genesis, from which Bankman-Fried chose a version that did not reveal their $9.9 billion deficit.