Sam Bankman- Fried was a terrible boyfriend
The Alameda Company: Loans and Stock Investments to a War Chrystal from a High-Value Investor
Ellison said she was stressed and spoke to Bankman-Fried about the Alameda company’s ability to pay back loans.
Customer funds were used when Bankman-Fried bought back FTX shares from an early investor. Bankman-Fried told Ellison it was “really important,” otherwise “Binance would do things to mess with FTX.” Ellison says she told him Alameda didn’t have the money. Bankman-Fried took $1 billion of FTX customer funds, the first time Ellison recalled an amount that large. She said that Bankman-Fried was the CEO of FTX.
The problem here wasn’t really the math, which seemed pretty arbitrary. Ellison assumed that Alameda could borrow around two billion dollars in both normal dollars andCryptocurrencies from FTX. The spreadsheet makes this clear with a row labeled “FTX borrows,” which Ellison said were customer funds.
There was also the FTT token, which was created by Bankman-Fried and Wang. Alameda got its war chest — 60 percent to 70 percent of the initial supply — for free, while seed investors got FTT at 10 cents a coin, and FTT first listed at $1 a coin. Ellison said that Bankman-Fried felt that $1 per coin was important, and he instructed her to buy it if the price fell below a dollar.
She described how, in 2021, Bankman-Fried wanted Alameda to spend $3 billion on a series of speculative investments in start-up companies. She was tasked with modelling the effect of an investment of that size on Alameda’s balance sheet.
Bankman-Fried didn’t grant Ellison equity, even though she asked; he told her it would be too complicated. Instead, she got a $200,000 salary, even as CEO, and bonuses twice a year, which ranged from $100,000 to $20 million.
That gave Ellison an unusual view of his character. She said that he was very ambitious. Besides telling her about his presidential chances, he also told her that if there was a coin flip where tails destroyed the world and heads made the world twice as good, he’d flip the coin. He said this was risk-neutral, which seems like a fancy way of admitting he was a gambling junkie.
In Ellison’s telling, Alameda was troubled from her earliest time there in 2018. “Shortly after I started, I learned the company was in worse shape than I realized,” Ellison said. Alameda was funded initially with loans from acquaintances, but those loans were recalled a few weeks after she arrived. (There was a staff revolt within Alameda Research, over lost millions and general financial chaos, according to Michael Lewis’s Going Infinite.) Bankman-Fried didn’t tell the company’s shaky circumstances in the job offer. “He hadn’t known how to tell me,” she said.
It has been almost a year since Ellison pleaded guilty to several criminal charges, including counts of fraud and conspiracy, and agreed to cooperate with the U.S. government in its multi-count case against Bankman-Fried.
Ellison was the head of Alameda Research, the aforementioned hedge fund, during the implosion of it and FTX. She already pleaded guilty to criminal charges stemming from a terrible romantic relationship and was expected to testify at the trial. Today, that took the form of discussing a damning spreadsheet — one she prepared for her ex and boss Sam Bankman-Fried, now the defendant in a criminal fraud trial.
By the end of the day, that was all just a show. Bankman- Fried was vibrating a bit during Wang’s testimony. His bouncing became more noticeable as he testified.
Wang didn’t help himself at all. Apparently, what Wang said in court contradicted something he’d said in earlier interviews with the government about market making. Apparently, Wang was denying that he didn’t remember, despite Everdell giving him his previous testimony to refresh his recollection. Whatever Wang was shown did not get submitted as evidence or shown to the court. I bet the jury also did the strongest work the defense has done so far.
Last week Wang testified that Alameda got access to a special credit line and an option to take its balance into the negative without triggering liquidation — something he alleged other accounts at FTX didn’t get. Everdell tried to undermine this claim by talking about the spot margin program, which let users lend each other assets for margin trading. In those cases, it was possible to have a negative balance in a specific coin. It was not possible for the accounts to have a negative balance, as Wang testified. But I’m betting the defense is hoping the jurors will throw up their hands in confusion thinking about this.
The day started off promisingly for the defense as it cross-examined Gary Wang, the chief technology officer of FTX and co-owner of both FTX and Alameda. Christian Everdell, one of Bankman-Fried’s defense attorneys, couldn’t undo the damage of last week’s code review. He was able to shake the rust off long enough to make Wang sound less reliable, putting the jury in confusion.
None of my exes made me the CEO of their hedge fund, refused to give me equity or bragged about how they would be the President of the United States. I counted my blessings after the first day on the stand. I wonder if any of the jurors are doing the same thing.
Caroline Ellison, the former girlfriend of Sam Bankman-Fried and a top executive in his crypto business empire, has long loomed as the government’s star witness in the ongoing trial of the disgraced founder of FTX.
Ellison described Bankman-Fried as being “the one who set up the systems that allowed Alameda to take the money, and he was the one who directed us to take customer money to repay our loans.”
She had a lot of knowledge of the company and of Bankman-Fried who could go to prison for the rest of his life if he is found guilty of seven criminal charges.
Although Bankman-Fried’s lawyers are justifying the transfer of funds as legitimate loans, prosecutors are seeking to paint it as fraud, arguing FTX customer money was used to plug financial holes at Alameda, as well as to make speculative investments, and to finance Bankman-Fried’s lavish lifestyle.
Judge Kaplan’s Hearing of Bankman-Fried, Alameda’s Personal Money, and Bank Amoebas: A Comparative Analysis
She worked in Alameda and dealt with many day-to-day decisions. “If Sam thought that we needed to take action, I would run them by him, but also defer if he wanted us to do something.”
Ellison noted there was always a difficult power dynamic between her and Bankman-Fried.
At several times during her testimony, Ellison said Bankman-Fried directed her to manipulate spreadsheets to make Alameda’s financial picture look more favorable and to ignore requests from lenders for additional information.
As panic grew among the top ranks of FTX, Bankman-Fried spoke a lot about how he could raise more money.
Bankman-Fried talked about trying to get money from Mohammed bin Salman, the Crown Prince of Saudi Arabia. The plan, as she detailed it, was to use money from Saudi Arabia to pay back Alameda’s lenders. That funding never came to fruition.
By the fall of 2022, Ellison said, she and other executives at the company were holding onto hope, however blindly, that they could secure additional financing from someone, or that the price of cryptocurrencies would go up. That will increase the value of the assets on the books.
Ultimately, Ellison said, Alameda transferred $100 million in payments to what she understood to be Chinese government officials to unfreeze the account, which could constitute a bribe.
Ellison described a meeting in which a colleague whose father worked for the Chinese government protested repeatedly. Ellison said Bankman-Fried screamed at the employee to “shut the f— up.”
Judge Lewis Kaplan, who’s presiding over the trial, allowed the use of that testimony “for limited purposes,” — to demonstrate “the trust and confidence” Ellison and Bankman-Fried had in each other.
Kaplan told the jury that an allegation of bribed a foreign official isn’t one of the charges. But at a separate trial, expected to take place next year, Bankman-Fried will face charges of bribery and bank fraud.
Everyone stood and faced the back of Judge Kaplan’s courtroom after prosecutors called her to the witness stand. Ellison was taken down the aisle to the witness stand.
The daughter of M.I.T. economists, Ellison was a math major at Stanford University, and in her testimony, she described how she and Bankman-Fried met at the trading firm Jane Street. She was an intern, and he was a trader.
In 2018, she and Bankman-Fried “started sleeping together on and off,” Ellison told the court. And “in the summer of 2020, we eventually started a romantic relationship.”
How Did She Get What She Wanted to Know About Them? A Brief Introduction and Overview of a Woman’s Personal and Professional Ups and Downs
She described personal and professional ups and downs in detail, as well as the conspiracy she admitted to being an integral part in.
