Former SBF Partner in Court: 'I Knew It Was Wrong'

Caroline Ellison is cooperating in case against former business and romantic partner
By John Johnson,  Newser Staff
Posted Dec 24, 2022 1:05 PM CST
Former SBF Partner in Court: 'I Knew It Was Wrong'
Cryptocurrency entrepreneur Sam Bankman-Fried leaves Manhattan federal court on bail Thursday, Dec. 22, 2022, in New York.   (AP Photo/Ted Shaffrey)

One of the key parts of the case against disgraced crypto entrepreneur Sam Bankman-Fried may come from a former business and romantic partner. Caroline Ellison, 28, told a federal judge this week that she knew the way they were shifting money around was illegal, reports the Wall Street Journal. SBF founded the FTX cryptocurrency exchange and co-founded the trading firm Alameda Research, which Ellison ran. Ellison says they took billions of dollars in customer deposits from FTX to pay off loans at Alameda. “I knew that it was wrong,” Ellison told a Manhattan judge on Monday, per transcripts that came out Friday, reports the New York Times.

“I agreed with others to borrow several billion dollars from FTX to repay those loans,” Ellison told Judge Ronnie Abrams of the US District Court for the Southern District of New York. When Abrams pressed her on whether she knew it was illegal, she said yes. “I also understood that many FTX customers invested in crypto derivatives and that most FTX customers did not expect that FTX would lend out their digital asset holdings and fiat currency deposits to Alameda in this fashion,” she said. "I am truly sorry for what I did."

Ellison and another former FTX exec, Gary Wang, have pleaded guilty to fraud charges and are cooperating in the case against SBF. Wang also admitted acting illegally at his court appearance. "As part of my employment at FTX, I was directed to and agreed to make certain changes to the platform’s code,” he said, referring to changes that facilitated the improper FTX-Alameda connection. SBF has acknowledged mismanagement at FTX but not fraud. (He is currently under home arrest at his parents' house in California.)

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