Sam Bankman-Fried spoke in code with his ex-girlfriend and business partner about possible illegal activities, the court heard today.
Caroline Ellison was asked on the stand Wednesday if she remembered ever speaking in ‘coded terms about potential criminal activity’ to Bankman-Fried.
She said, ‘Yes, I do. When Alameda, I believe, paid a large bribe to Chinese government officials to get some of our exchange accounts unlocked.’
Ellison recalled writing “The Thing” in a document describing the state of Alameda in 2021.
She said she worded it that way because she ‘didn’t want to put in writing what I think is a bribe.’
Caroline Ellison testified that she spoke in coded terms with Sam Bankman-Fried when Alameda paid a “large bribe to Chinese government officials.”
Ellison broke down in tears as she apologized to anyone who lost their money as a result of the FTX scam, saying it made her feel ‘indescribably bad’.
According to Ellison, $1 billion in Alameda’s assets were frozen, a figure that left Bankman-Fried “concerned” and eager to find a solution
Ellison said two cryptocurrency accounts Alameda had in China were “frozen” in 2021, meaning they could not withdraw any money.
Alameda was told it was part of a Chinese government investigation into money laundering by someone else.
According to Ellison, $1 billion in Alameda’s assets were frozen, a figure that left Bankman-Fried “concerned” and eager to find a solution.
Ellison said that it took nearly a year to unlock the money and that they first tried to hire a lawyer to negotiate with the Chinese government, but that didn’t work
They tried using trading strategies to get the money out, including making several accounts controlled by Thai prostitutes, but that didn’t work either.
Another employee suggested another way—paying a Chinese official—but this led to backlash from a Chinese employee named Handi whose father was a Chinese government official.
Ellison said at one meeting that she ‘protests a lot, a bad idea and it will get us into trouble’
She said: ‘At one point Handi was talking a lot and wouldn’t shut up and let other people talk. Finally he (Bankman-Fried) shouted at her to shut the fuck up’
To unlock the accounts, Bankman-Fried approved the transfer of $100 million to crypto wallets, the court heard. Ellison was asked to whom it was sent, but after an objection she was not allowed to answer.
In a document describing the state of Alameda, dated Nov. 25, 2021, Ellison listed “notable / distinctive stuff” that included a $150 million debt for “The Thing.”
Ellison said she worded it that way because she ‘didn’t want to put in writing what I think is a bribe’.
The following January, Sam Trabucco, who was Alameda’s co-CEO at the time, sent a message to Bankman-Fried that read: ‘Did Handi’s dad turn us in right away or something.’
Bankman-Fried responded: ‘Lol,’ meaning laugh out loud.
Ellison recalls writing “The Thing” in a document describing the state of Alameda in 2021. She said she worded it that way because she ‘didn’t want to put in writing what I thought was a bribe’
Caroline Ellison took the stand again on Wednesday in ex-boyfriend Sam Bankman-Fried’s fraud trial
Ellison broke down in tears as she apologized to anyone who lost their money as a result of the FTX scam, saying it made her feel ‘indescribably bad’.
The jury was given a message she sent to Bankman-Fried around November 7 of last year as FTX was about to collapse.
She told him that if ‘things got a lot worse, I don’t think I’m going to handle it well’.
Bankman-Fried gave her the bizarre reaction and said it was exciting.
Ellison replied: ‘I think I’ve just had a growing anxiety about this day that’s been weighing on me for a long time and now that it’s actually happening, it feels great to somehow get over it’.
Tearing up, she told the jury: ‘Overall it’s been the worst week of my life.
‘I had a lot of mood swings, a lot of different feelings. One of the feelings was an overwhelming sense of relief.
‘It was something I feared for so long, was on my mind every day, I was worried what would happen if the truth finally came out’.
Ellison said she felt ‘relief that I didn’t have to lie anymore’.
She said she was interested in ‘taking responsibility and being honest about what I did’.
She said: ‘Obviously I felt indescribably bad for all the people who were harmed, the people who lost their money, people who lost their jobs’.
Ellison was handed a box of tissues by a court clerk and used one to wipe her nose.
Ellison was head of Alameda’s sister company FTX, which was allegedly used as a slush fund paid for by FTX clients’ money.
FTX, which was worth $32 billion at its peak, collapsed in November last year amid falling crypto prices and media reports raising questions about its finances.
Ellison (28), the daughter of two MIT economics professors, has already pleaded guilty to her part in the fraud and is the prosecution’s star witness.
She testified that she became ‘very upset’ then Bankman Fried said that the financial challenges were ‘my fault’.
Ellison described how she and Bankman-Fried had a difficult conversation in August 2022 in the study of his $30 million penthouse in the Bahamas.
By then, it was clear that Alameda had borrowed more than $10 billion from FTX’s customers.
Ellison said Bankman-Fried told her she was “largely responsible for the financial situation at Alameda.”
She said: ‘He spoke quite wildly and strongly. I became very upset, I started crying and I struggled to continue the conversation.
‘(He said) that it was my fault that Alameda ended up in that situation’.
Ellison said that she ‘absolutely could and should have done things differently’.
But she told the jury: ‘The fundamental reason was that we borrowed these billions of dollars in loans and used them for illiquid investments.’
Assistant US Attorney Danielle Sassoon asked Ellison, ‘Whose decision was that?’
Ellison said: ‘It was Sam’s.
Sam Bankman-Fried dated Caroline Ellison and hired her as head of FTX’s sister company Alameda Research.
Sam Bankman-Fried blamed Caroline Ellison for the collapse of FTX in court documents obtained by DailyMail.com. Bankman-Fried claimed that the culture at Alameda Research, FTX’s sister company that Ellison ran, had become “mediocre” at best and said his ex was “not good enough to be trusted” with its liquidation.
The court previously heard that Ellison and Bankman-Fried started sleeping with each other in 2018 and started going out properly in the summer of 2020.
Their relationship lasted a year before they broke up, but got back together a few months later.
They finally broke up for good in the summer of 2022, when the extent of FTX’s problems became clear.
Ellison was appointed co-CEO at Alameda in 2021 – she and Bankman-Fried were ‘on a break’ at the time – and CEO in 2022.
Ellison said in her testimony that she broke up with Bankman-Fried forever because he “didn’t pay attention to me.”
The two did not look at each other in court even though they sat a few feet apart.
Testimony showed that Ellison was paid significantly less than the three other senior men at FTX.
She told the court her base salary was $100,000 and her biggest bonus was $20 million.
By comparison, securities filings showed that FTX’s chief engineer Nishad Singh was paid $587 million, his co-founder Gary Wang was paid $246 million and Bankman-Fried got $2.2 billion.
Bankman-Fried faces 115 years in prison and has denied 13 counts of fraud and money laundering.