New York (AFP) – Caroline Ellison, ex-girlfriend and employee of Sam Bankman-Fried, described on Wednesday the man who once embodied cryptocurrencies before his downfall and trial as an impatient young man, willing to lie to achieve his goals without ever going back.
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“SBF,” accused of various frauds and embezzlements, has been on trial since early October in New York.
After more than six hours of testimony over two days, Caroline Ellison finally broke down when discussing the final hours of her professional relationship with Sam Bankman-Fried in early November.
The cryptocurrency exchange platform FTX, of which he was the majority shareholder, was inexorably heading towards bankruptcy, as was the investment company Alameda Research, another creation of “SBF.”
FTX’s clients, realizing that part of their funds had been used without their knowledge to finance Alameda’s activities, rushed to recover their money, causing the downfall of both entities.
“It was the worst week of my life,” said the 28-year-old mathematician, tearfully, in a federal court in Manhattan. However, “I felt relieved to no longer have to lie.”
Over the course of two days, she detailed, for the jury, the series of decisions made by Sam Bankman-Fried that, according to her, illegally diverted FTX from a conventional platform to an ATM for Alameda, siphoning off up to $14 billion.
In addition to these allegations, the prosecution presented numerous tweets showing that the defendant had repeatedly lied to the public, until bankruptcy, about the financial situation of FTX and Alameda.
Several documents and excerpts from conversations also showed how Sam Bankman-Fried knowingly sought to deceive investors and creditors, including by asking Caroline Ellison to produce false balance sheets.
He also asked the witness to include a heavy loss of approximately $800 million caused by an FTX client in Alameda’s accounts, in order not to tarnish the platform’s reputation.
Despite the reservations of the manager, “SBF” also ordered her to use Alameda to invest in cryptocurrency companies, still using money from FTX clients, or to grant nearly $5 billion in personal loans to group executives, including himself.
Driven by the “common good”
The former cryptocurrency tycoon accused her of not subscribing to financial instruments to hedge against the volatility of cryptocurrencies, claiming that this had precipitated Alameda’s decline.
“But it was Sam who asked me to make these investments that put us in this situation,” she replied.
Caroline Ellison said she expressed concern in the spring of 2022 to Sam Bankman-Fried that certain decisions made within the two companies were contrary to the law.
He replied that he was a utilitarian, a doctrine that evaluates everyone’s actions based on their ability to increase collective well-being.
He “tried to act for the common good,” the witness explained, and “he said he did not think that questioning lying or stealing was relevant in this context.”
At the end of the testimony, Caroline Ellison did not hide the fact that she had agreed to plead guilty and cooperate with the federal prosecutor’s office in Manhattan in the hope of a more lenient sentence, as she faces a maximum of 110 years in prison.
Charged with seven counts, just like his former girlfriend, Sam Bankman-Fried faces a similar sentence, but cannot hope for the same treatment, as he pleaded not guilty.
The trial continues on Thursday with Caroline Ellison’s cross-examination by the defense.
In his statements and in messages and writings published before his trial, Sam Bankman-Fried consistently portrayed himself as an overwhelmed young leader, a victim of the incompetence or indifference of his close collaborators, especially Caroline Ellison, but never having sought to break the law.
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