Day two of Caroline Ellison's testimony: “stressed out” by Alameda losses, Alameda borrowed $13B from FTX users by June 2022, and $5B loaned to FTX executives
- Ellison takes witness stand for second day at SBF trial — Prosecutors look at events from 2022 when crypto prices fell
Context & Ripple Effects
This testimony adds detail to the alleged commingling already described in reports that FTX customer money was lent to Alameda with senior leaders’ knowledge. It also sits alongside Ellison’s account that SBF directed the use of client funds for Alameda investments and debt repayment.
The reported $13B borrowing and $5B in loans to FTX executives make the relationship between the exchange and trading firm central to the trial’s account of how losses and internal financing were handled.
First-order effects
- Ellison’s testimony gives prosecutors a concrete account of the scale of Alameda’s alleged use of FTX customer funds and of funds routed to FTX executives.
- The evidence increases scrutiny of SBF, Alameda, and FTX executives by tying Alameda’s losses to internal borrowing rather than arm’s-length financing.
Second-order effects
- The testimony reinforces the significance of allegations that leadership knew of the lending arrangement, raising the evidentiary stakes for accounts of internal controls and disclosures.
- It makes the alleged false balance sheets used to hide debt more consequential: obscured liabilities would have affected how lenders, investors, and customers assessed the connected companies’ financial condition.
Third-order effects
- If such exchange–affiliate arrangements can operate without effective separation of customer assets, crypto platforms face sustained pressure to demonstrate custody, governance, and related-party controls.
- The case underscores how failures in those controls can turn a trading firm’s losses into a broader customer-asset and executive-accountability crisis.
The trend: The FTX trial is part of a wider shift toward treating crypto-platform custody and related-party financing as core governance and accountability issues.