The trial of former FTX CEO Sam Bankman-Fried has unfolded as a source of startling revelations, driven by the testimonies of ex-executives from FTX and Alameda Research. Recent courtroom episode, which unfolded on October 12, showcased Caroline Ellison, the former CEO of Alameda, taking the stand for the third consecutive day. Within the course of her testimony, a clandestiine recording surfaced, shedding light on the contentious ties between Alameda and FTX.
Alameda’s Bad Investments
At the heart of the meeting was the confession that Alameda had borrowed money from FTX for a year and had made a series of ill-fated investments with these funds. As the market downturned, Alameda’s loan positions were called in, creating a financial crisis at FTX. Users began to withdraw their funds, causing FTX to temporarily halt withdrawals and ultimately leading to the exchange’s downfall.
FTX’s Plan to Compensate Users
When questioned about how FTX planned to reimburse its customers, Ellison revealed that the exchange intended to raise additional funds to cover the gap. However, this approach appeared problematic to some, as it was uncommon for investors to bear the consequences of a company’s poor financial decisions.
During the playback of the secret recording in court, Ellison’s nervous laughter was noticeable. This reaction, which she often exhibited when under pressure, was observed by those in attendance and added a layer of tension to the revelations.
Alameda’s Access to User Funds
Another crucial inquiry during the meeting concerned Alameda’s access to FTX user funds and how long this practice had been ongoing. Ellison’s response shed light on the extent of Alameda’s involvement in managing FTX’s financial challenges.
This courtroom drama continues to unveil the intricate web of relationships and decisions that contributed to the collapse of the FTX exchange. As the trial progresses, the crypto community watches closely, awaiting further revelations and insights into this high-profile case.