Ex-FTX chief Sam Bankman-Fried and other executives of his collapsed crypto empire received hefty sums from the hedge fund Alameda Research, associated with FTX, the fund’s former chief executive Caroline Ellison has admitted.
"We prepared certain quarterly balance sheets that concealed the extent of Alameda's borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties," Ellison told US District Judge Ronnie Abrams in Manhattan federal court on Friday.
3 December 2022, 09:59 GMT
She added that after investors recalled loans they had made to Alameda in June 2022, she agreed to borrow billions of dollars in FTX customer funds to repay them, realizing the fact that customers were not aware of the arrangement.
Ellison said that she was “truly sorry for what” she did and that she was helping to recover customer assets.
The claims come as Ellison, along with FTX co-founder Gary Wang, pleaded guilty to multiple counts of conspiracy and fraud for their roles in the fraud scheme that resulted in the collapse of the crypto-trading platform. Both are cooperating with prosecutors as part of their plea agreements.
In a separate development, a New York judge said on Thursday that Bankman-Fried had been released to his parents on $250 million bail ahead of trial for eight federal criminal charges against him pertaining to alleged fraud, money laundering and campaign finance violations at FTX.
Federal prosecutors accused the 30-year-old of unlawfully using customer deposits made at FTX to fund Alameda Research, buy property and make millions of dollars in political donations.
They described the Sam Bankman-Fried case as "one of the biggest financial frauds in US history", with prosecutor Nicolas Roos arguing that the ex-FTX boss carried out a "fraud of epic proportions" that led to the loss of billions of dollars of customer and investor funds.
FTX, which was founded in 2019 and was once valued at more than $30 billion, declared bankruptcy in November, when customers and investors rushed to pull their funds from the crypto firm amid reports about the exchange’s “shaky” finances.