Caroline Ellison, former CEO of Alameda Research founded by Sam Bankman-Fried, exits the Manhattan federal court after testifying on Tuesday, October 10, 2023, in New York. (AP Photo/Eduardo Munoz Alvarez)
NEW YORK — In the fraud trial of former crypto mogul Sam Bankman-Fried, his lawyer struggled to undermine the credibility of the government’s star witness, Caroline Ellison. The meandering cross-examination by Bankman-Fried’s lead defense attorney, Mark Cohen, left both the judge and onlookers puzzled and impatient.
Over the prior two days, the prosecution depicted Ellison as a high-level insider who, at Bankman-Fried’s direction, engaged in improper borrowing of funds from customers at the FTX crypto exchange. These funds were often used for investments at Alameda Research, a trading firm led by Ellison and founded by Bankman-Fried.
In his opening statement, Cohen aimed to shift blame for the issues at Alameda to Ellison. However, his questioning failed to poke holes in her testimony. He frequently changed topics and dates, often without clear direction.
Judge Lewis A. Kaplan had to repeatedly seek clarification from Cohen about the purpose and relevance of his questions.
Following Ellison’s testimony, prosecutors called a former software developer at Alameda who largely corroborated her statements.
“I was utterly shocked,” said Christian Drappi, who worked for the crypto trading firm for a year. He was present when Ellison revealed in November 2022 that the firm had been using customer funds from FTX. Exchanges like FTX are required to separate customer deposits from market bets.
During her testimony, Ellison detailed how she repeatedly tapped into customer deposits at FTX to address issues at the hedge fund or exchange. These funds were used for investments, political donations, and to hide losses on Alameda’s balance sheet, all under Bankman-Fried’s instruction.
When the losses at Alameda became too significant in November 2022, the decision was made to shut down the trading firm and potentially save both entities from bankruptcy. At an all-hands meeting recorded by an Alameda employee, Ellison explained the borrowing of FTX customer funds had occurred over several years.
Drappi testified that he resigned 24 hours after that meeting.
Ellison, 28, pleaded guilty to fraud charges in December, while Bankman-Fried, 31, has pleaded not guilty.
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Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
