Alameda Sold FTX Customer Bitcoin to Suppress Price

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  • Caroline Ellison yesterday implicated Sam Bankman-Fried in conspiracies to manipulate Bitcoin prices and misuse customer funds
  • Her testimony has revealed the illicit activities within the companies, including deception and misuse of funds, which led to FTX’s collapse
  • Ellison’s also claimed customer bitcoin was sold in order to suppress the Bitcoin price

Former Alameda Research CEO Caroline Ellison revealed more secrets behind the collapse of FTX and Alameda Research yesterday, including how Sam Bankman-Fried conspired to manipulate the Bitcoin price and keep it under $20,000. She also described her relief when the truth came out, saying that she was grateful that she no longer had to lie about what was going on inside Alameda. Ellison has already claimed that she was coerced into carrying out illegal operations by Bankman-Fried, who faces over a hundred years in prison.

Star Witness Doesn’t Disappoint

Ellison was always going to be the star witness for the state and so it has proved, with her riveting testimony revealing stunning behind-the-scenes details. She has already acknowledged misusing FTX customer deposits to settle Alameda debts at Bankman-Fried’s request, totaling approximately $10 billion, leading to FTX’s collapse when a run on the exchange started in November 2022.

Her testimony directly implicates Bankman-Fried in the illicit utilization of client funds and market activities, claiming she engaged in unlawful activities alongside the co-founder and co-CEO by deceiving lenders. Ellison also revealed that SBF directed Alameda to aggressively trade the native FTX token, FTT, to safeguard its peg when prices fell.

Ellison also revealed how bitcoin belonging to FTX customers was sold off in order to work against price jumps to try and keep the price below $20,000, which exacerbated an already troublesome situation with regard to the use of customer funds. 

Ellison Talks of “Relief” at No More Lying

Ellison cut an emotional figure in court yesterday, fighting back tears as she recounted the “relief” she experienced when Alameda’s illicit activities were exposed. During her testimony, Ellison shared private messages she exchanged with Bankman-Fried in the final days of their company, revealing her emotional turmoil. She expressed her relief at no longer having to maintain the “dread” of Alameda’s secret dealings, most pressingly the $10 billion of FTX customer funds for bets, while also feeling “indescribably bad” for the customers who lost their money.

As FTX faced bankruptcy, Ellison and Bankman-Fried discussed various options to save the exchange, including seeking help from Facebook co-founder Dustin Moskovitz and other philanthropists aligned with the effective altruism movement that both practiced. These proved ultimately futile, as did the attempt to get Binance to buy out FTX.

“Alternative” Balance Sheets Hid the Truth

Ellison’s testimony detailed how she was instructed to create multiple “alternative” balance sheets for Alameda, some of which concealed substantial kickbacks to FTX executives and the fact that the trading group had borrowed FTX customer funds for trading. She also revealed the alteration of financial documents provided to crypto lenders, such as Genesis, to make Alameda’s assets appear larger, obscuring the illicit financial activities.

Ellison’s testimony portrays Bankman-Fried as the mastermind behind a scheme that allowed Alameda to gamble with vast sums of FTX customer money while keeping these actions hidden from investors, journalists, and the public.