The mastermind behind the scandalous collapse of crypto-currency platform FTX, Caroline Ellison, has apologized for her role in defrauding the exchange’s customers and investors by expressing to a judge that she “knew it was wrong“.
A transcript of his guilty plea noted by the New York Times gives the details of this alleged “repentance“.
The former CEO of Alameda Research, Sam Bankman-Fried’s crypto-currency exchange company, told Manhattan federal court Judge Ronnie Abrams, “I’m really sorry for what I did. I knew it was wrong.
The 28-year-old was released on $250 million bail after pleading guilty to seven counts on Dec. 19 in the FTX case, international media recalled.
“The charges include wire fraud and conspiracy to commit securities fraud, according to his plea agreement. The court released the transcript of his guilty plea on December 22“, Business Insider recalls.
Meanwhile, “Ellison told the judge that he agreed with the decision by his ex-boyfriend Bankman-Fried and others to conceal FTX’s close relationship with Alameda, according to the transcript seen by the Times. He also said he agreed with the decision to divert billions in customer deposits at FTX to pay off Alameda’s loans.“
“I understood that if Alameda’s FTX accounts had large negative balances in a given currency, it meant that Alameda was borrowing the funds that FTX customers had deposited in the exchange“, according to a transcript of the hearing reported by Bloomberg news agency.
The young executive also admitted that “FTX executives received billions of dollars in hidden loans from Alameda“, Reuters news agency reported.
Bankman-Fried, 30,”is facing eight criminal charges stemming from a scheme authorities believe he orchestrated by diverting billions of dollars in customer deposits to fuel Alameda’s business, pay off loans, buy real estate, lend money to FTX executives and make millions in campaign contributions“, Business Insider reported.
The young man “was extradited last week from the Bahamas, where FTX was based, after being arrested on December 12. Photos show him relaxing in the American Airlines lounge at JFK airport before heading to his parents’ home in California on Dec. 22“.
Recall that FTX filed for Chapter 11 bankruptcy protection on November 11, “following an implosion that wiped out billions of dollars in customer deposits“. Sam Bankman-Fried resigned as CEO the same day.
The Caroline Ellison Story
In March 2018, Caroline Ellison was working at quantum trading company Jane Street when one of her former colleagues made her a life-changing proposal.
Over coffee in California, Sam Bankman-Fried, a low-key crypto-entrepreneur, offered her the chance to join Alameda Research, a new digital currency hedge fund he was working on that would exploit the differences in bitcoin prices in different countries. It was the perfect arbitrage, he said. The trade would help him achieve his goal of “win to give“billions to charity.
“I was like, wow, that sounds really exciting. I mean, I love Jane Street“, Caroline Ellison told Forbes in an unpublished interview in October 2021. “It was a very difficult decision to leave.“
But Caroline Ellison “is gone, giving up her cushy job for a position on a crypto Icarus that crashed spectacularly last week. Behind Alameda and FTX was Bankman-Fried, a then-billionaire founder who founded FTX two years after Alameda to build what he saw as a modern crypto-currency exchange.“
“When Bankman-Fried decided to step away from Alameda to focus full-time on FTX’s rapid growth, Ellison, the daughter of MIT economics professors, took over as co-CEO“, notes Forbes.
“As FTX cartoonishly imploded from “assets are fine” tweets to bankruptcy in four days, attention focused on Alameda’s $10 billion in assets and its alleged practice of diverting FTX customer deposits to invest in risky speculative bets“, the report explains.