Ellison's testimony paints a picture of Bankman-Fried as willing to do anything to secure billions in capital — even risk his empire.
On May 7, 2022, Alameda Research CEO Caroline Ellison shared a document with Sam Bankman-Fried, the trading firm's majority owner and her on-and-off-boyfriend, that outlined her current estimation of Alameda’s risk, taking into account its "fairly leveraged" position and billions of dollars of borrowed capital from third-party lenders and FTX's own customers.
Over the course of her direct examination which began on Tuesday and is expected to continue well into Wednesday, prosecutors aimed to outline how, despite her CEO position, Ellison deferred to Bankman-Fried on most critical matters, such as when and how to repay Alameda's lenders, how much capital to commit to venture capital investments, and what to include on balance sheets sent to banks and investors.
According to Ellison, the practice of borrowing customer deposits began at Bankman-Fried's direction while he was CEO of Alameda Research. When Alameda ran into trouble courting new lenders, Ellison testified that Bankman-Fried came up with the FTT token, giving roughly 60-70% of FTT tokens to Alameda for free. Bankman-Fried also instructed Ellison to covertly buy FTT if it fell below $1, a price he felt was "psychologically important," without discussing the buys in front of employees, according to Ellison.
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