Plea hearing court transcript: Caroline Ellison said she and Sam Bankman-Fried knowingly misled investors, lenders, and customers that Alameda borrowed from FTX

Sam Bankman-Fried and other FTX executives received billions of dollars in secret loans from the crypto mogul's Alameda Research …

Reuters 2022-12-24

Context & Ripple Effects

The plea account follows reports that Ellison told Alameda staff that she, Bankman-Fried and other FTX executives knew customer money had been lent to Alameda, and an SEC case alleging customer funds were diverted while FTX raised capital. It turns an internal-account allegation into a sworn account tied directly to Bankman-Fried.

Later trial testimony describing Bankman-Fried's direction of the conduct kept the same alleged use of FTX client funds at the center of the case, making Ellison's account a key bridge between Alameda's operations and FTX's customer-facing assurances.

First-order effects

Ellison's plea-hearing statements directly implicate both her and Bankman-Fried in misleading FTX investors, lenders and customers about Alameda's borrowing from the exchange.
The account aligns with the SEC's earlier allegations of concealed diversion of FTX customer funds to Alameda, strengthening the factual overlap between regulatory accusations and the criminal proceedings.

Second-order effects

FTX and Alameda's separation becomes the central credibility issue for parties that relied on representations about how customer assets were handled, rather than merely a question of Alameda's trading losses.
The overlap between Ellison's account and the earlier report of her disclosure to Alameda staff concentrates scrutiny on what FTX executives knew and when they knew it.

Third-order effects

If affiliated trading firms at crypto exchanges can access customer funds without clear disclosure, the sector's legitimacy problem shifts from volatility risk to whether platform safeguards and conflicts are independently verifiable.
The case points toward a market in which exchanges' claims about customer-asset handling carry less weight unless their relationships with affiliated entities are transparent and auditable.

The trend: Crypto platforms are being judged increasingly on whether customer assets are genuinely insulated from affiliated trading operations, not just on the scale of their market activity.

Discussion

@Popehat@mastodon.social Ken White on mastodon
Over at Serious Trouble, a blog post: How did Sam Bankman-Fried get bail? A lawsplainer on the federal bail system, what terms he got, and how he got them. https://www.serioustrouble.show/ ...
@innercitypress @innercitypress on x
OK - on #FTX / Alameda, here now the unsealed guilty plea transcript of Caroline Ellison - it was held in secret, and not docketed until today, once Bankman-Fried was freed on $250 mln bond. Thread then stories on https://innercitypress.com/ and https://twitter.com/...
@innercitypress @innercitypress on x
On #FTX / Alameda, here from (scripted) allocution in unsealed guilty plea transcript of Caroline Ellison 4/x https://patreon.com/... https://twitter.com/...
@austen Austen Allred on x
That... is not even remotely what caused FTX to collapse. Apparently if you steal billions of dollars the three reporters writing the story about it will blame everything on the person who sold the worthless token before you declare bankruptcy and it goes to zero. https://twitter…
@compound248 @compound248 on x
From a just-released transcript of FTX's Caroline Ellison and Gary Wang in front of a judge. Caroline, “I knew what I did was wrong.” Gary, “I was directed to and agreed to make certain changes to [FTX's] code.” https://twitter.com/...
@paleofuture Matt Novak on x
“In his own plea hearing, Wang said he was ‘directed’ to make changes to the FTX platform's code that he knew would give Alameda special privileges, and that misrepresentations were being made to customers and investors.” https://twitter.com/...
@sirajahashmi Siraj Hashmi on x
show me one person who says they wouldn't risk it all for Caroline Ellison, and i'll show you a liar. https://twitter.com/... https://twitter.com/...
@qtrresearch @qtrresearch on x
As my plumber would say: “Welp, there's your problem right there” https://twitter.com/...
@charlesornstein Charles Ornstein on x
Alameda Research's former CEO Caroline Ellison apologized for misconduct in the FTX collapse this week, telling a judge she knew her actions were illegal https://www.wsj.com/...
@ericbalchunas Eric Balchunas on x
Caroline could end up a hero in all this. If she can get SBF out of first class/parents mansion/headlines etc and into jail it would be hard not to appreciate her for that, and root for a lightened sentence. https://twitter.com/...
@zerohedge @zerohedge on x
*ELLISON SAID SHE, BANKMAN-FRIED AGREED TO MISLEAD FTX LENDERS
@compound248 @compound248 on x
More from the WSJ's report on Caroline and Gary, as well as a link to my tweet that broke down what we learned from the SEC's civil complaint filed earlier this week. https://twitter.com/... https://twitter.com/...
@frank_giustra Frank Giustra on x
Sadly, I suspect there are more of these revelations to come as this entire crypto mania unravels. Why investors are still long this asset class is a mystery to me. This will go down in the history books as the greatest financial scam of all time. https://www.reuters.com/...
@reuterslegal @reuterslegal on x
“We prepared certain quarterly balance sheets that concealed the extent of Alameda's borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” former Alameda Research CEO told a judge in a guilty plea https://www.reuters.com/.…
@tree_of_alpha @tree_of_alpha on x
Reuters: Caroline Ellison said she agreed with Bankman-Fried to hide from FTX's investors, lenders and customers that the hedge fund could borrow unlimited sums from the exchange.
@crypto_coffee Coffee on x
Caroline ruthless in snitching: “We prepared certain quarterly balance sheets that concealed the extent of Alameda's borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” Ellison told U.S. District Judge Ronnie Abrams. htt…
@wublockchain Wu Blockchain on x
FTX former CTO Gary Wang said he was “directed” to make changes to the FTX platform's code that he knew would give Alameda special privileges, and that misrepresentations were being made to customers and investors.
@mattgoldstein26 Matthew Goldstein on x
Former FTX executives Caroline Ellison and Zixiao “Gary” Wang entered their guilty pleas on Monday, Dec. 19. Pleas were not docketed as to not tip off Bankman-Fried and his counsel before he had agreed to extradition and was on a plane back to the U.S. (1)
@watcherguru @watcherguru on x
JUST IN: Caroline Ellison admits she and SBF agreed to hide that Alameda Research could borrow unlimited assets from FTX.
@innercitypress @innercitypress on x
On #FTX / Alameda, here from (scripted) allocution in unsealed guilty plea transcript of Caroline Ellison 2/x https://twitter.com/...
@ahcastor Amy Castor on x
Bloomberg got hold of the transcripts of Caroline Ellison's and Gary Wang's plea hearings on Dec.19. The two admitted they knew what they were doing was wrong. https://www.bloomberg.com/...
@cate_long Cate Long on x
Alameda CEO Caroline Ellison says she and Sam Bankman-Fried knowingly misled FTX lenders: ‘I knew that it was wrong’ [Why keep doing what you know is wrong?] https://fortune.com/... https://twitter.com/...
@trengriffin Tren Griffin on x
That she wasn't gonna accept a plea was a bad bet. Bahamas jail a bad bed. Ellison gave her first public account of her actions in a Dec. 19 plea hearing in federal court. “I knew that it was wrong,” she said, according to a transcript of the hearing. https://www.bloomberg.com/..…
@innercitypress @innercitypress on x
On #FTX / Alameda, here from (scripted) allocution in unsealed guilty plea transcript of Caroline Ellison 6/6 (for now) more on https://www.patreon.com/... https://twitter.com/...
@wholemarsblog @wholemarsblog on x
Alameda Research's former CEO Caroline Ellison apologized for misconduct in the FTX collapse this week, telling a judge she knew her actions were illegal and that she conspired to steal customer funds “I knew what I was doing was wrong” https://www.wsj.com/...
@wublockchain Wu Blockchain on x
Caroline Ellison said in court: From 2019 through 2022, Alameda has an unlimited line of credit without being required to post collateral, without having negative balances and without being subject to margin calls on FTX's liquidation protocols. Bloomberg https://www.bloomberg.co…
@goldtelegraph_ @goldtelegraph_ on x
BREAKING NEWS: FORMER ALAMEDA CEO, CAROLINE ELLISON, CONFIRMS THE FIRM BORROWED BILLIONS FROM FTX CUSTOMER DEPOSITS AS PART OF PLEA DEAL Boom. Somebody tell Bill Ackman.
@mikemcdonald89 Mike McDonald on x
Quick reminder that next cycle's heroes will be cut from the same cloth! https://twitter.com/...
@jeffclarkus Jeff Clark on x
Just open fraud & a Ponzi scheme by Alameda Research & FTX run by Sam Bankman-Fried, working together to rip off FTX clients, according to SBF's own girlfriend, Alameda CEO Caroline Ellison. Yet Left fell hard for SBF's and Ellison's “effective altruism” https://www.foxbusiness.c…
@xrpcryptowolf @xrpcryptowolf on x
Caroline Ellison told federal court in New York that she knowingly misled lenders about how much the firm had been borrowing. Ellison said she and former FTX CEO Sam Bankman-Fried had agreed to hide the arrangement by creating false financial statements 🤡 https://www.theblock.co/…
@lex_node @lex_node on x
interesting factoid—the plea agreements were signed December 19th they waited until SBF was in the U.S. to announce them (otherwise he might have been more likely to fight extradition?) https://twitter.com/...
@wublockchain Wu Blockchain on x
She said: “if Alameda's FTX accounts had significant negative balances in any particular currency, it meant that Alameda was borrowing funds that FTX's customers had deposited on the exchange”.
@crypto_coffee Coffee on x
They cooked the books But the plan was only half-baked. https://twitter.com/...
@stephofrnt Stéphane Ouellette on x
Can others confirm the veracity of these documents? They seem highly credible - assuming they are, the guilty plea very succinctly and clearly explains the extent of fraud and intent... Don't know how the dwindling Sam proponents can look themselves in the mirror after this... ht…
@paleofuture Matt Novak on x
“She said she and Bankman-Fried agreed to conceal this arrangement from lenders and crafted false financial statements to hide the amount of Alameda's borrowing, including billions in loans made out to FTX executives.” https://twitter.com/... https://twitter.com/...
@phil_lewis_ Philip Lewis on x
Sam Bankman-Fried and other FTX execs received billions of $ in secret loans from the crypto mogul's Alameda Research, the hedge fund's ex-chief told a judge in her guilty plea https://www.reuters.com/...
@innercitypress @innercitypress on x
Exactly. And the transcripts of the guilty plea allocutions, which were held without any public notice, were kept sealed until today, after SBF was already released on $250 million (mostly unsecured) bail... https://twitter.com/...
@invresdynamics Dave Kranzler on x
I would not bet against Hairy Plotter disappearing in the wind. What does he have to lose, especially if it was his parents who posted the 10% down on the bail bond? I just can't believe the court system allowed bail. https://twitter.com/...
@cgasparino Charles Gasparino on x
Scoop: Further indictments expected in the FTX scandal as early as Monday as @SBF_FTX ex girlfriend Caroline Ellison turn evidence against her former lover and others more now @FoxBusiness
@compound248 @compound248 on x
Sam not too stressed as he flew first class last night back to hang at his parents' house (not even kidding). https://twitter.com/...

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