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Leniency Witness Ellison: Several Billion Dollars Withdrawn

Photo: Eduardo Munoz Alvarez / AP

In the fraud case against Sam Bankman-Fried, the former head of his hedge fund Alameda Research has admitted in her testimony joint fraud with the founder of the collapsed crypto exchange FTX. "Alameda withdrew billions of dollars in money from FTX customers and used it for our own investments and to repay our debts," Caroline Ellison told a New York court on Tuesday. Bankman-Fried also instructed her to provide the fund's lenders with a misleading Alameda balance sheet. When asked by a prosecutor if she had committed any crimes, Ellison replied, "Yes, we did."

The testimony of the Stanford graduate and former partner of Bankman-Fried had been awaited with particular excitement. She was appointed co-managing director of Alameda in 2021 and was promoted to sole managing director last year. She had pleaded guilty in advance. Most recently, former chief technology officer Gary Wang also incriminated his former boss. As the third former confidant of Bankman-Fried, Nishad Singh is also to testify in the course of the trial. The three had announced their intention to cooperate with the public prosecutor's office. Bankman-Fried has repeatedly denied all allegations of fraud and pleaded not guilty.

The authorities accuse him of billions of dollars in fraud and embezzlement of customer funds. He is said to have secretly shifted funds in order to speculate and finance his lavish lifestyle. If convicted, Bankman-Fried faces up to 115 years in prison. After graduating from college, he had been hired as a cryptocurrency trader at brokerage Jane Street and made a fortune betting on Bitcoin price differences on exchanges in the US and Asia. In 2017, he started his own business with the brokerage house Alameda, and in 2019 he founded the crypto exchange FTX. Their collapse at the end of 2022 shook the crypto industry.