Former Alameda Research chief Caroline Ellison told the court that, together with FTX founder Sam Bankman-Fried, she deliberately misled creditors about the amount of the loan provided to the firm by the exchange. This is reported by Bloomberg citing the transcript of a December 19 hearing.
Ellison said that she “knew this was wrong.”
“From 2019 to 2022 I was aware that Alameda had access to loans at FTX. This mechanism allowed Alameda to obtain access to an unlimited line of credit without collateral,” she explained.
The former Alameda CEO admitted that together with Bankman-Fried they decided to conceal such an agreement from creditors and to falsify financial reports to cover it.
At the same hearing, FTX co-founder and the exchange’s chief technology officer Gary Wang said he had been directed to make changes to the platform’s code that granted Alameda special privileges.
The executive said he knew it was wrong.
Wang also acknowledged that the changes distorted the company’s position for investors and customers.
Meanwhile, U.S. District Judge Ronnie Abrams of the Southern District of New York recused herself due to a possible conflict of interest. The law firm Davis Polk & Wardwell, in which her husband is a partner, advised FTX in 2021.
It remains unclear why Abrams did not recuse herself earlier. The timetable for appointing a new judge was not specified.
Earlier Ellison and Van pleaded guilty to charges related to the FTX collapse and agreed to cooperate with the investigation. The former head of Alameda Research told about manipulating the price of the FTT utility token at SBF’s direction.
As noted, arrested in the Bahamas, Bankman-Fried agreed to extradition to the United States, where he was released on bail of $250 million.
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