Bankman Fried Trial: Ex-Girlfriend Offers Insight Into Cryptocurrency Collapse

Ellison said during her first hearing on Tuesday in federal court in New York that she and Bankman Fried embezzled “about $14 billion” (about 13.3 billion euros) from customers of cryptocurrency platform FTX. At that time, Bankman-Fried ordered them to “commit these crimes.”

The former Alameda president and current key witness for the prosecution said the businessman, once celebrated as a cryptocurrency prodigy, “created the system” through which client money flowed from FTX to the Alameda Research cryptocurrency investment fund. The money was used for “investments and debt repayment.”

Losses covered by client funds

Ellison described to the jury how, at Bankman-Fried’s direction, she repeatedly said she had to tap clients’ deposits at FTX to solve problems at the hedge fund and the stock exchange. It testified that FTX deposits were withdrawn to pay for new investments and political contributions or to hide significant losses on Alameda’s balance sheet.

Ellison also accused Bankman-Fried of pressuring her to provide lenders with a misleading financial statement for Alameda. She tearfully admitted that she lives in constant fear that the truth will one day come out. “In June 2022, we found ourselves in a difficult situation, and I was worried that if anyone found out, everything would fall apart,” she said.

She testified that Bankman-Fried blamed her for the financial debacle: It was her fault, she said, and she was “largely responsible for the financial situation in which Alameda found itself.”

“The relief of not having to lie anymore.”

The collapse came in November 2022 when FTX could no longer handle a wave of customer withdrawals. Attempts to rescue other cryptocurrency exchanges failed and exposed the machinations more clearly. Eventually, the company went bankrupt, and prosecutors and regulators began investigating. FTX’s bankruptcy was a heavy burden on her mind. “I felt relieved that I didn’t have to lie anymore.”

An on-and-off relationship in a luxury penthouse apartment

As a former friend, Ellison also provided deep insights into Bankman-Fried’s thinking: Ellison, a Stanford graduate with a major in mathematics, met Bankman-Fried as an intern at the investment firm Jane Street. She joined Alameda Research and shortly thereafter they had a secret and intimate relationship.

After breaking up in the summer of 2021, they resumed the relationship a few months later, this time officially. Ellison and Bankman Fred lived in a $40 million penthouse in the Bahamas with several other people in the company’s executive circle. They finally separated in the spring of 2022, Ellison told the court.

Ellison Bankman described Fried as someone who lives by his own rules. He sees himself as a “utilitarian” who strives to bring about the greatest possible good for the greatest number of people. “He didn’t think rules like ‘Don’t lie’ or ‘Don’t steal’ fit into this framework.”

Dream of the White House

She described him as “very ambitious” and with the idea of ​​one day running large companies and using his money effectively, especially in politics. Ellison said he believes he has a “5 percent chance” of becoming president of the United States one day.

Some of the money went to political donations, including $35 million that went to Republican candidates through a political activist and another $10 million that Bankman-Fried passed to President Joe Biden — money that Bankman-Fried passed on that he believes gave him a pot of money. Influence and recognition.

Dirty hair and a cheap car for the photo

Ellison testified that he cultivated relationships with reporters and maintained a presence on Twitter as part of his efforts to present himself as a “very smart, confident, somewhat eccentric founder.” Ellison said he made little effort into his appearance, dressing sloppily and rarely cutting his hair. “He said he thought his hair was valuable” because it made him look funky. There were luxury cars for the company, but: “He said it was better for his image to drive a Toyota Corolla.”

The defense attorney failed during cross-examination

On the third day of her testimony, attorney Bankman-Frieds attempted to cast doubt on Ellison’s credibility during her cross-examination and portrayed her as a frustrated ex-girlfriend who, as a key witness, could expect a reduced sentence if she convicted her ex-partner. According to US media reports, he does not appear to have succeeded. He was unable to uncover any contradictions in Ellison’s statements. On the other hand, the judge became “confused and impatient” during questioning, the AP news agency wrote.

However, things appear to be getting tight for Bankman-Fried, who has pleaded not guilty. In addition to Ellison, FTX co-founder Gary Wand also denounced him in court. Nishad Singh, Bankman Fareed’s third former confidant, is also expected to testify during the proceedings. The three had announced their desire to work with the Public Prosecutor. The operation is scheduled to last six weeks. If convicted, Bankman-Fried could face up to 115 years in prison.