Tearful Caroline Ellison reveals Bankman-Fried instructed her to falsify records, commit fraud

Caroline Ellison, a close associate andformer girlfriend of Sam Bankman-Fried, on Wednesday testified that she was "terrified" that the truth would come out and that she was relieved when the FTX crypto exchange collapsed last year.

Ellison, the former co-CEO of Alameda Research, Bankman-Fried's crypto hedge fund, in a teary testimony during the fraud trial revealed that her former boyfriend had led her to commit fraud.

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As per Ellison's testimony, Bankman-Fried directed her to falsify Alameda's balance sheets. This was supposed to keep lenders at bay amid a downturn in cryptocurrency markets in 2022.

"I felt a sense of relief that I didn't have to lie anymore," she said tearfully.

Ellison, who has confessed to assisting in misappropriating billions of FTX customer assets, revealed that these manipulated balance sheets hid the fact that Alameda had borrowed approximately $10 billion in FTX customer funds.

The Stanford University graduate also disclosed thatBankman-Fried instructed her to use the fund's line of credit on the FTX cryptocurrency exchange to repay loans in June 2022.

During her testimony, Ellison emphasised that Bankman-Fried did not adhere to principles like "don't lie" and "don't steal" and described himself as a "utilitarian" who believed that the most crucial rule was to achieve the greatest good for the greatest number of people.

Bankman-Fried's not guilty plea

Ellison, along with two other former members of Bankman-Fried's inner circle, have pleaded guilty to fraud charges. They've also agreed to cooperate with the Manhattan US attorney general's office, reports Reuters.

However, Bankman-Fried has entered a not-guilty plea to two counts of fraud and five counts of conspiracy. He also contends that while he made mistakes running FTX, he never intended to steal funds.

Prosecutors allege that Bankman-Fried used customer funds to support Alameda, purchase real estate, and donate over $100 million to US political campaigns.

Gary Wang, FTX's former technology chief, also testified during the trial. As per Wang's testimony, Bankman-Fried falsely tweeted that FTX was "fine" in November, despite the exchange facing a surge in withdrawal demands. Another cooperating witness, former FTX engineering chief Nishad Singh, is expected to testify in the trial, which could, as per Reuters, last up to six weeks.

(With inputs from agencies)

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