In continuation of her testimony, former Alameda Research CEO Caroline Ellison told the court about attempts to hide the hole in the firm’s balance sheet, a list of things that make Sam Bankman-Fried (SBF) ‘lose it’ and possible bribery of a Chinese official. According to transcripts by journalist Inner City Press.
Ellison’s Hard Work
According to SBF’s former girlfriend, she prepared seven different versions of balance-sheet tables detailing Alameda’s finances for Genesis, the lender. Her task was to conceal a $9.9 billion hole in the balance sheet.
The situation arose in June 2022, when the company was trying to raise investments just months before collapse. At that time the firm had already borrowed from FTX about $15 billion, including customer deposits.
Ellison again testified that she manipulated the data at the instruction of FTX’s founder.
«He told me to come up with alternative ways of presenting the information. SBF wanted me to hide some details of our balance sheet. […] I did not intend to lie, but I presented options to Sam and let him decide», said the former Alameda head.
Of all the proposed presentations, he chose the one that did not disclose the hole in the budget, Ellison clarified.
During questioning she also said that she kept and regularly updated a ‘list of things that make Sam angry’. It included questions about the purchase of Snapchat and investments from Saudi Arabia’s Crown Prince Mohammed bin Salman.
SBF also lamented that regulators were not taking ‘tough measures against Binance’. He saw the development of this scenario as ‘the best potential way to increase FTX’s market share’.
Thai Escorts and Bribes
Ellison said that in 2021 Alameda accounts on Huobi and OKX exchanges were frozen as part of a Chinese government money-laundering investigation involving the company’s counterparty.
At that time, Bankman-Fried was the firm’s CEO. To unlock the assets he hired local lawyers to negotiate with authorities, but to no avail.
Then SBF decided to resort to various trading strategies. According to Ellison, his boss created several accounts that were labeled as ‘Thai prostitutes’.
He traded from these accounts, taking positions opposite to those on the blocked accounts. Thus, while the main account was losing money, the ‘escort traders’ were making money.
Another Alameda employee proposed bribing a Chinese official. Bankman-Fried was initially opposed, but then supported the proposal. Ultimately the accounts were unfrozen, and Ellison suggested the bribery scenario.
Sam’s Hair
The disheveled appearance in court and SBF’s short haircut was a calculated PR strategy, says his former girlfriend.
Ellison explained that SBF called his hair ‘very valuable’. Since the start of his trading career at Jane Street, he has received higher bonuses ‘because of his haircut’.
According to the former Alameda CEO, the founder of the collapsed exchange was trying to create an image of an ‘eccentric pioneer of the cryptocurrency market’. Bankman-Fried told reporters that he drove an old Toyota Corolla. But before these statements he rode in an expensive corporate car, Ellison added.
Court documents show that SBF prepared for the Alameda shutdown as early as September 2022. He even drafted a post for X, which investigators found.
«We came. We saw. We explored», was how the introduction began.
Bankman-Fried described Alameda Research as one of his ‘largest successes, then the biggest failures, and then successes again’.
He called the company ‘the only link supporting the ecosystem’ and ‘a buyer who is ready to buy when no one else intends to’.
[Alameda] became a major global source of liquidity, leadership and support for the entire ecosystem. And, you know, from time to time we did good deals,’ Bankman-Fried listed the company’s virtues before its potential shutdown.
As reported, on October 3 hearings began in the SBF case. He faces charges on seven counts, including conspiracy to commit fraud.