Sam Bankman-Fried's former top executive, testifying in Manhattan federal court Wednesday, blamed the FTX founder for corrupting her values so she could lie and steal and got emotional when describing the cryptocurrency empire's final days, saying the collapse of his businesses resulted in a "relief that I didn't have to lie anymore." Caroline Ellison, who eventually was made chief executive of Bankman-Fried's cryptocurrency hedge fund, Alameda Research, blamed the man she was entwined with romantically for several years since 2018 for creating justifications so that she could do things that she now admits were wrong and illegal, the AP reports. On Tuesday, she testified that he had directed her to break the law.
Testifying for a second day, she recalled that Bankman-Fried said he wanted to do the greatest good for the most people and that rules like "don't lie" or "don't steal" must sometimes be set aside, effectively that the ends justified the means. Assistant US Attorney Danielle Sassoon asked Ellison how she was affected by Bankman-Fried's philosophy. "I think it made me more willing to do things like lie and steal over time," she said. Ellison spent much of the last two days walking the jury through how she, at Bankman-Fried's direction, repeatedly had to tap into the customer deposits at FTX to solve problems at the hedge fund or at the exchange.
FTX deposits would be withdrawn to pay for new investments or political donations, or to hide steep losses on Alameda's balance sheet, she testified. All of this was done at the direction of Bankman-Fried. After several hours on the witness stand, Ellison got choked up as she described the final days of FTX and Alameda, saying that the early November period before the businesses filed for bankruptcy "was overall the worst week of my life." Still, she said she felt bad for "all the people harmed" when there wasn't enough money left for all of FTX's customers and Alameda's lenders.
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Ellison revealed that she had to doctor balance sheets to try to hide that Alameda was borrowing about $10 billion from FTX customers in June 2022, when the cryptocurrency market was falling dramatically and some lenders were demanding that Alameda return their investments in full. Ellison said she was in a "constant state of dread" at that point, fearful that a rush of customer withdrawals from FTX couldn't be met or that what they had done would become public. The crash came months later. Ellison, 28, pleaded guilty to fraud charges in December, when Bankman-Fried was extradited to the United States from the Bahamas. She is expected to be cross-examined on Thursday.
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