FTX founder Sam Bankman-Fried believed in utilitarianism and concept rules towards mendacity or stealing inhibited his skill to maximize the best get advantages for the most of the people, his former female friend and co-worker testified Wednesday at his federal fraud trial.
“He didn’t think rules like ‘don’t lie’ or ‘don’t steal’ fit into that framework,” Caroline Ellison, Bankman-Fried’s on-again, off-again female friend, stated.
She stated Bankman-Fried’s trust led to her to settle for habits she identified as incorrect.
“I think it made me more willing to do things like lie or steal over time. When I started working at Alameda, I don’t think I would have believed if you told me I would be sending false balance sheets or taking customer money,” Ellison, who served as CEO of Alameda Research, stated. “Over time it became something I was more comfortable with.”
FTX founder Sam Bankman-Fried leaves Manhattan federal courtroom, June 15, 2023, in New York.
Bebeto Matthews/AP, FILE
Bankman-Fried faces seven counts of fraud, conspiracy and cash laundering targeted on his alleged use of purchaser deposits at the crypto buying and selling platform FTX to duvet losses at his hedge fund, Alameda Research, and to purchase lavish actual property, amongst different private bills.
On the witness stand for a 2d day Wednesday, Ellison walked the jury via Alameda steadiness sheets which, via October 2022, confirmed Bankman-Fried’s personal hedge fund owed FTX shoppers just about $14 billion.
“We had a lot of risk on and we owed a lot of money to FTX customers,” Ellison stated. “We had no way to repay it.”
She stated Bankman-Fried considered attempting to elevate cash from Mohammed bin Salman, the Saudi crown prince, or via promoting stocks in FTX, which might cave in in chapter the next month, in November 2022.
“I was in a state of dread. I was thinking, worrying, imagining every day what would happen if people tried to withdraw too much money at one time,” she stated. “I was imagining all the FTX customers who we worked with who would get hurt by this.”
To shore up Alameda’s precarious monetary place Bankman-Fried instructed Ellison to pay off Alameda’s loans with cash it borrowed surreptitiously from FTX shoppers, she testified Wednesday.
“He directed me to continue repaying Alameda’s loans,” Ellison stated.
“How?” prosecutor Danielle Sassoon requested.
“By taking money from FTX customer funds,” she spoke back.
Former crypto hedge fund Alameda Research CEO Caroline Ellison departs the trial of former FTX Chief Executive Sam Bankman-Fried who’s dealing with fraud fees over the cave in of the bankrupt cryptocurrency change, at Federal Court in New York City, Oct. 10, 2023.
Cheney Orr/Reuters
When Sassoon requested her if she knew it used to be incorrect, Ellison spoke back, “Yeah I thought it was wrong,” however persisted to do it as a result of “Sam told me to.”
By that time, Alameda had taken about $10 billion from FTX and Ellison stated she fearful its lender, Genesis, would to find out.
“We had been borrowing increasing amounts of money from FTX customers and I didn’t want Genesis to know that,” Ellison stated. “I didn’t want Genesis or others to know that Alameda was borrowing a lot of money from FTX.”
Ellison stated Bankman-Fried cautioned her towards striking anything else in writing, as soon as telling her, “Anything we put on Slack should be something we’re comfortable seeing in The New York Times.”
Ellison additionally described a “large bribe to Chinese government officials to get some of our trading accounts unlocked.” Alameda had two buying and selling accounts value a few billion greenbacks on exchanges based totally in China, that have been each frozen in 2021 as a part of a Chinese govt investigation into cash laundering.
It used to be quite a lot of Alameda’s buying and selling capital on the time and Ellison accused Bankman-Fried of claiming “that we should send the cryptocurrency transfers” equaling about $100 million.
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