According to Caroline Ellison, the former CEO of Alameda, FTX executives received billions in secret loans.

FTX’s investors, lenders, and clients were kept in the dark about the hedge fund’s ability to borrow an unlimited amount of money from the exchange, according to Caroline Ellison, the former CEO of Alameda Research, who agreed with Bankman-Fried to do so.

Sam Bankman

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The former head of the hedge fund revealed to the judge that Sam Bankman-Fried and other FTX executives received billions of dollars in covert loans from the crypto tycoon’s Alameda Research when she admitted to her role in the collapse of the exchange.

According to a transcript of her Dec. 19 plea hearing that was unsealed on Friday, Caroline Ellison, the former CEO of Alameda Research, claimed she and Bankman-Fried agreed to conceal from FTX’s investors, lenders, and customers that the hedge fund could borrow an unlimited amount from the exchange.

Ellison and FTX co-founder Gary Wang both entered guilty pleas; as part of their plea deals, they are working with prosecutors. Their sworn declarations provide a sneak peek into how two of Bankman-former Fried’s associates would testify as prosecution witnesses against him in court.

In a second plea hearing, which took place on December 19, Wang said that he was instructed to modify the FTX code so as to grant Alameda special access to the trading platform, while being aware that others were informing clients and investors that Alameda did not have such access.

Wang did not say from whence he received the instructions.

In court on Thursday, prosecutor Nicolas Roos stated that Bankman-trial Fried’s would feature testimony from “many cooperating witnesses.” According to Roos, Bankman-Fried committed a “fraud of epic proportions” that cost customers and investors billions of dollars.

FTX’s risk management shortcomings have been admitted by Bankman-Fried, although he has maintained he is not guilty of any crimes. He still hasn’t admitted guilt.

Bankman-Fried established FTX in 2019 and profited from a surge in the value of bitcoin and other digital assets to become a multi-billionaire and a significant contributor to American political campaigns.

FTX filed for bankruptcy on November 11 as a result of a surge of customer withdrawals in early November amid worries over the mixing of FTX funds with Alameda.

Bankman-Fried, 30, was freed on bail of $250 million on Thursday. His spokesman failed to respond to the remarks made by Ellison and Wang.Wang and Ellison’s attorneys declined to comment.

Ellison testified in court that she and others agreed to borrow billions of dollars in FTX customer cash to repay investors when they called back loans they had made to Alameda in June 2022, knowing that customers were unaware of the agreement.Ellison added, “I am very remorseful for what I did, and I am assisting in the recovery of customer assets.

Sam Bankman

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Wang added that he was aware of the error of his ways.

According to court documents, the transcript of Ellison’s hearing was initially kept confidential because of fear that the revelation of her cooperation may obstruct prosecutors’ attempts to extradite Bankman-Fried from The Bahamas, where he resided and where FTX was based.

After being detained in Nassau’s capital on December 12 and agreeing to be extradited, Bankman-Fried arrived in the United States on Wednesday.He was confined to his California parents’ house by a judge pending trial.