caroline ellison sam bankman fried

caroline ellison sam bankman fried

Sam Bankman-Fried’s legal team struggled to undermine the credibility of the government’s principal witness in the fraud trial on Thursday. During the cross-examination of Caroline Ellison, the attorney, Mark Cohen, appeared to meander, leaving both the judge and observers perplexed and impatient.

caroline ellison sam bankman fried
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In the preceding two days of testimony, the prosecution had portrayed Ellison as a high-level insider who, at Bankman-Fried’s behest, oversaw the improper borrowing of funds from FTX crypto exchange customers. These funds were often channeled into investments at Alameda Research, an affiliated trading firm headed by Ellison, who was also Bankman-Fried’s former girlfriend.

caroline ellison sam bankman fried

Cohen, the lead defense attorney, was expected to redirect blame for the issues at Alameda towards Ellison, echoing his opening statement that Bankman-Fried had not committed fraud but was attempting to rectify a situation largely caused by his subordinates.

However, Cohen seemed to falter during his questioning of Ellison, failing to challenge her testimony effectively. His line of questioning frequently changed direction and focus, often appearing random.

Multiple times, Judge Lewis A. Kaplan had to seek clarification on Cohen’s intentions with his questions or what specific topics he was addressing.

Following Ellison’s testimony, prosecutors introduced a former software developer from Alameda who largely corroborated her statements. Christian Drappi, who had worked at the crypto trading firm for a year, was present when Ellison disclosed in November 2022 that FTX customer funds had been used at the trading firm. Such funds are meant to be kept separate from market bets.

caroline ellison sam bankman fried

Ellison’s testimony had outlined how she repeatedly utilized FTX customer deposits to address issues at the hedge fund or the exchange. The withdrawals were made to finance new investments, political contributions, or to conceal substantial losses on Alameda’s financial records, all under Bankman-Fried’s direction.

When losses at Alameda reached a critical point in November 2022, it became necessary to shut down the trading firm and potentially save both entities from bankruptcy. Ellison conducted an all-hands meeting that week, which was recorded by an Alameda employee and later shared with government investigators.

In the audio recordings presented to the jury, Alameda employees questioned whether the decision to use FTX customer funds had been a rash “YOLO” decision, implying it was done impulsively. Ellison clarified on those tapes that it had been done over several years.

Drappi testified that he resigned from his position 24 hours after that meeting.

Ellison, 28, pleaded guilty to fraud charges in December, around the time Bankman-Fried was extradited to the United States from the Bahamas. Bankman-Fried, 31, has maintained his innocence regarding the fraud charges.

Initially, Bankman-Fried was under house arrest in his parents’ Palo Alto, California residence, subject to a $250 million bond. However, he has been in jail since August, after Judge Kaplan determined that he had attempted to improperly influence potential witnesses, including Ellison.

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