Weeks and months earlier than the collapse of crypto change FTX, former CEO Sam Bankman-Fried was “freaking out” about Alameda, shopping for shares in Snapchat, raising capital from Saudi royalty and getting regulators to crack down on rival crypto change Binance.
So was written in former Alameda Research CEO Caroline Ellison’s private notes about FTX and Alameda, which prosecutors offered on the second day of her testimony in New York.
During the trial, Ellison informed jurors {that a} crash within the Terra ecosystem in May 2022 was vital sufficient to get Bankman-Fried to contemplate shutting down Alameda and searching for to lift $1 billion in capital from the Saudi Prince, recognized for his investments in blockchain gaming by Saudi Arabia’s sovereign wealth fund.
Another precedence for Bankman-Fried a yr in the past was “getting regulators to crack down” on the crypto change Binance, a transfer supposed to extend FTX’s market share, in keeping with Ellison. She didn’t present any particulars on how Bankman-Fried deliberate to do it.
One extra Caroline Ellison courtroom sketch.
This one that includes SBF himself! https://t.co/q3O6xqxEhl pic.twitter.com/cQJbj5V1H7
— Ariel Givner, Esq. (@GivnerAriel) October 11, 2023
Bankman-Fried was additionally searching for extra funds from crypto lender BlockFi, which had already lent Alameda over $660 million, she mentioned. His different high considerations included buying and selling bonds issued by the Japanese authorities, shopping for Snap Inc (SNAP) shares and “Willie being happy.”
While the listing doesn’t specify who “Willie” was, the title was presumably a reference to Bankman-Fried’s mentor, William MacAskill.
According to Ellison, Bankman-Fried blamed her for Alameda’s troubles and poor hedging. During the trial, Ellison admitted that a greater hedge technique might have helped Alameda face the crypto winter, however noted that the company also had large open-term loans and had spent billions from its line of credit score with FTX.
Open-term loans haven’t any maturity date, that means the borrower has a prepayment possibility, whereas the lender has a name possibility. In June, lenders akin to Genesis Capital began implementing their name possibility, requiring Alameda to repay hundreds of thousands of {dollars}. Under Bankman-Fried’s path, Ellison repaid a part of Alameda’s money owed with funds from FTX clients. In September 2022, Alameda’s liabilities with FTX mounted to $13.7 billion, whereas its open-term loans stood at $1.3 billion, she mentioned.
In addition, and additionally at Bankman-Fried’s request, Ellison additionally created “alternative” spreadsheets for Alameda’s lenders, hiding the corporate’s monetary liabilities with FTX to make it “look better” and to maintain lenders from calling for full reimbursement.
Ellison additionally revealed moments of emotional misery. Speaking calmly and firmly throughout the trial, she expressed her nervousness about the potential for clients withdrawing their funds from FTX amid the “liquidity crush” at Alameda.
“Every day, I was worrying about the possibility of [loans] being called at the same time.”
Ellison’s cross-examination by Bankman-Fried’s protection will start on Oct. 12.
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