- Former Alameda Research CEO Caroline Ellison apologized for her involvement in the FTX debacle. This is according to a transcript of her plea reviewed by The New York Times.
- Ellison said she “knew it was wrong” to funnel customer funds from FTX to Alameda.
- Ellison further admitted she agreed with others, including disgraced former FTX CEO Sam Bankman-Fried, to “borrow several billion dollars from FTX” to repay Alameda’s loans.
- She also understood that the funds Alameda borrowed from FTX were customer deposits.
Former Alameda Research CEO Caroline Ellison has apologized for defrauding FTX users, saying she “knew it was wrong” to funnel customer funds from FTX to her hedge fund.
According to a transcript of her plea reviewed by The New York Times, Allison told a Manhattan federal court judge that she acknowledged her involvement in the FTX debacle. She adds that she is “truly sorry” for what she did.
Allison refers to Sam Bankman-Fried’s FTX reportedly sending billions of dollars of customer funds to Alameda, Bankman-Fried’s trading firm, to cover its loan obligations. Some reports indicate that FTX might have sent up to $10 billion in customer funds.
“I agreed with others to borrow several billion dollars from FTX to repay those loans,” Allison admitted. “I understood that if Alameda’s FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing funds that FTX’s customers had deposited on the exchange.” Ellison also said she “knew it was wrong” to use customer funds without their permission.
Ellison pleaded guilty to seven fraud charges. They include wire fraud, money laundering, and conspiracy to commit securities fraud. She was released on a $250,000 bail bond and faces up to 110 years in prison.
Her co-conspirator, Bankman-Fried, is charged with wire fraud, money laundering, conspiracy to commit securities fraud, conspiracy to defraud the United States and violate the campaign finance laws, and others.
Bankman-Fried was also released from custody on a record-breaking $250 million bail bond. He’s facing up to 115 years in jail.
On the Flipside
- It’s unclear whether Ellison will be convicted.
- Some speculate that Ellison and other FTX insiders might have thrown Bankman-Fried under the bus and struck a deal with prosecutors.
Why You Should Care
Caroline Ellison played an important role in the FTX debacle. Her admitting to fraud is a massive development in the FTX story. It also potentially sheds light on how decisions were made inside the two companies.
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