Caroline Ellison, the former CEO of Sam Bankman-Fried's (SBF) hedge fund, Alameda Research, has testified that the crypto mogul directed a scheme to defraud customers of his cryptocurrency exchange, FTX. Ellison's allegations painted a picture of ambition, deception, and misuse of customer funds by SBF.

According to a report by Reuters, the former executive provided a detailed account of how an estimated $10 billion from FTX customer funds were allegedly misappropriated to repay debts and make investments. This action was allegedly orchestrated by SBF, who had set up systems allowing Alameda to access customers' funds.

Alleged Fraud at Alameda Research

The trial centered on the prosecution's assertion that Alameda misappropriated billions of dollars from FTX's customers, leading to its collapse in November 2022. Ellison, who has already pled guilty to fraud and conspiracy charges, has emerged as a central figure in the case and provided firsthand accounts of her involvement in these activities under the instructions of SBF.

However, SBF is maintaining his innocence, arguing that any financial discrepancies were a result of error and not deliberate attempts to steal funds. Moreover, Ellison disclosed that she had no equity stake in Alameda despite expressing interest in it, according to a report by Coindesk.

Confessions of a Collaborative Crime

Ellison's testimony highlighted SBF's inclination toward borrowing substantial sums of money for Alameda's operations. She claimed that SBF directed her and others to secure huge amounts in loans. This intense borrowing strategy played a pivotal role in Alameda's financial dealings.

The witness also highlighted Alameda's substantial line of credit at FTX, a move orchestrated by SBF. The complexities of using FTX's native token, FTT, as collateral for loans were revealed in detail during the hearing.

Ellison's testimony commenced with a moment of suspense when she had to search the courtroom for nearly 30 seconds before identifying SBF, CNBC reported. The tension was noticeable as she eventually pointed out the defendant, describing him as sitting "over there and wearing a suit."

In response to questions from Assistant US Attorney Danielle Sassoon, Ellison openly admitted to her involvement in committing various crimes, including fraud, conspiracy to commit fraud, and money laundering. Ellison met SBF during her internship at Jane Street, and their journey together continued as they worked at Alameda.