Former Alameda CEO confirms firm borrowed billions from FTX customer deposits as part of plea deal

Caroline Ellison, the erstwhile main enforcement serviceman of Alameda Research, said arsenic portion of her plea woody that she was alert FTX funds had been made disposable for the task superior firm’s investments.

In a transcript of proceedings for her plea woody successful the Southern District of New York released connected Dec. 23, Ellison acknowledged the fiscal ties betwixt FTX and Alameda astatine the halfway of prosecutors’ lawsuit against erstwhile FTX CEO Sam Bankman-Fried. According to the erstwhile Alameda CEO, Alameda had entree to a “borrowing facility" done FTX from 2019 to 2022.

“I understood that FTX executives had implemented peculiar settings connected Alameda's FTX.com relationship that permitted Alameda to support antagonistic balances successful assorted fiat currencies and crypto currencies,” said Ellison. “In applicable terms, this statement permitted Alameda entree to an unlimited enactment of recognition without being required to station collateral, without having to wage involvement connected antagonistic balances and without being taxable to borderline calls oregon FTX.com’s liquidation protocols. She added:

“If Alameda's FTX accounts had important antagonistic balances successful a peculiar currency, it meant that Alameda was borrowing funds that FTX's customers had deposited onto the exchange.”

OK - connected #FTX / Alameda, present present the unsealed blameworthy plea transcript of Caroline Ellison - it was held successful secret, and not docketed until today, erstwhile Bankman-Fried was freed connected $250 mln bond. Thread past stories connected https://t.co/3AcCBJNU41 and pic.twitter.com/Ptd0L1u9oL

— Inner City Press (@innercitypress) December 23, 2022

Ellison’s connection included allegations that Bankman-Fried and different FTX executives had borrowed funds from Alameda, and utilized FTX funds to repay “loans worthy respective cardinal dollars." She said that astir FTX customers would person expected their funds to beryllium utilized for this purpose, and some she and Bankman-Fried signed disconnected connected “materially misleading fiscal statements” for Alameda lenders — knowing it was illegal.

“I americium genuinely atrocious for what I did,” said Ellison. “I knew that it was wrong.”

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Ellison’s plea deal, released connected Dec. 21, largely spared the erstwhile Alameda CEO of galore of the charges Bankman-Fried presently faces including ligament fraud and securities fraud. She whitethorn inactive beryllium prosecuted for transgression taxation violations, but the statement acceptable bail astatine $250,000 connected the information she surrendered each question documents.

U.S. authorities extradited Bankman-Fried from the Bahamas connected Dec. 21 aft much than a week successful the country’s Fox Hill Prison. Prosecutors allowed the erstwhile FTX CEO location detention with an ankle bracelet pursuing a $250 cardinal enslaved enactment up by his parents. He is expected to look successful tribunal again connected Jan. 5.