Caroline Ellison, the former Chief Executive Officer of Sam Bankman-Fried (SBF)'s crypto hedge fund Alameda Research, took the stand today (Wednesday) to testify against him for the second day. Her testimony revealed aspects of SBF’s character, who faces allegations of fraud related to the collapse of FTX.
In a report by Reuters, Ellison described SBF as a "utilitarian" who believed that the only moral rule that mattered was doing the greatest good for the greatest number of people. She further stated that he didn't think basic rules like "don't lie" or "don't steal" fit into his utilitarian framework. This perspective allegedly created an environment where people around him felt comfortable doing what they knew was ethically wrong.
SBF's Allegations of Misappropriation
Ellison's testimony also delved into SBF's efforts to support his companies during challenging times. She claimed that he suggested selling a stake in FTX to Saudi Arabian Crown Prince Mohammed bin Salman and called for regulators to take strict actions against the rival crypto exchange, Binance. While Ellison mentioned that regulators had assured such action, specific details remain scarce.
A key witness in the FTX fraud trial, Caroline Ellison, the former CEO of Sam Bankman-Fried's hedge fund, Alameda Research, testified against him at a New York City court https://t.co/Crb4Vts4hA pic.twitter.com/tG7oSKIOZ6
— Reuters Business (@ReutersBiz) October 11, 2023
Additionally, Ellison told the jury about a significant bribe paid to Chinese officials by a group of FTX and Alameda executives, Coindesk reported. This was done to secure funds that had been locked in Chinese exchanges. Although the alleged bribery has raised significant ethical and legal concerns, SBF has not been charged in relation to these allegations.
Judge Denies SBF's Defense Requests
As the trial unfolded, Judge Lewis Kaplan denied multiple requests from SBF’s defense team. The defense sought to raise issues related to the lack of crypto-specific regulations in the US, potential recoveries from the FTX bankruptcy, and SBF's donations.
In her first appearance in court, Ellison painted a picture of SBF's inclination toward borrowing substantial sums of money to support Alameda Research's operations. She detailed how he directed her and others to secure large loans to finance the dealings of the hedge fund. The trial further unveiled the complexities of using FTX's native token, FTT, as collateral for the loans.
The prosecution's case against SBF centers around the allegation that he misappropriated billions of customer funds to support his companies (including Alameda Research), buy real estate, and donate more than $100 million to US political campaigns.
This article was written by Jared Kirui at www.financemagnates.com.
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