Former Alameda CEO Caroline Ellison to testify

The second week of the criminal trial for the former CEO of the FTX exchange, Sam “SBF” Bankman-Fried, will continue on October 10, with all eyes on the testimony of the main witness Caroline Ellison.

Ellison is SBF's former romantic partner and former CEO of FTX-affiliated hedge fund Alameda Research, which filed for Chapter 11 bankruptcy in November 2022.

The former Alameda CEO also lived with Bankman-Fried for some time in the Bahamas.

Given Ellison's previous positions, she was part of Bankman-Fried's inner circle. In her testimony, prosecutors and presiding Judge Lewis Kaplan expect her to provide details about the exchange of client funds between FTX and Alameda Research.

So far, the main focus of the trial has been FTX's fraudulent use of customer funds to pay off borrowers.

Of particular interest is Ellison's comments at the November 2022 meeting, where she said her staff at Alameda have given Banman-Fried permission to use funds for the above purposes.

Related: FTX used Python code to fake insurance fund figures – Gary Wang

In the year In December 2022, Ellison and former FTX chief technology officer Gary Wang pleaded guilty to their role in the fraud that led to the exchange's collapse.

Shortly after both pleaded guilty, on December 22, they were hit with additional fraud charges by the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The SEC alleges that Ellison further compounded the fraud scheme by manipulating the price of FTX Token (FTT).

Ellison then agreed to a plea deal with the U.S. Attorney's Office for the Southern District of New York, meaning full disclosure of information and documents requested by prosecutors during the trial. Instead, Ellison was able to escape the major charges against her, including 110 years in prison.

Shortly thereafter, Alameda stated that she was able to obtain a “borrowing facility” through FTX from 2019 to 2022, stating that she knew that FTX's customer funds would be used.

The US Department of Justice said Ellison's personal notes, which include diary entries, could possibly be used as evidence against Bankman Fried.

SBF has pleaded not guilty to seven counts of fraud and embezzlement related to the FTX collapse.

Cointelegraph reporters are covering the hearing on the ground in New York. As the saga unfolds, check here for the latest updates.

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