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Thursday, December 7, 2023

Caroline Ellison Says FTX Bribed The Chinese Government With $100 Million

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Former Alameda Research CEO Caroline Ellison offered more details about various financial crimes she committed at FTX with her ex-boyfriend, Sam Bankman-Fried while testifying in court on Wednesday.

Besides stealing FTX customers’ money, Ellison said FTX bribed the Chinese government with $100 million to unlock a much larger pool of frozen assets.

FTX’s Bribes

According to a summary provided by Inner City Press on Wednesday, Alameda resorted to bribery after alternative methods to recover funds had failed.

“We tried to hire a lawyer there. It didn’t work,” Ellison said. “We used other people’s accounts. Ryan Salame told me. But it didn’t work either.”

Instead, the exchange conspired with two Chinese individuals with insider connections to the Chinese government. One of the individuals – David Ma – told FTX’s executives at the time that he had a way to get their $1 billion in funds unfrozen, after they had been seized as part of a money laundering investigation. Though some objected, Bankman-Fried was intent on using Ma’s method.

“Sam said Ma had found a way to get our accounts unfrozen, if we just sent to these crypto addresses, $100 million,” Ellison explained. At the time, she said she didn’t know who the recipient would be.

The DOJ had initially charged Bankman-Fried with bribery of Chinese government officials with $40 million. They had also charged him with campaign finance violations within the United States, though both charges were later dropped in accordance with treaty obligations to the Bahamas.

Sam Bankman Fried’s Media Presentation

Ellison also attested to writing a list called “Things Sam is freaking out about,” which she “updated frequently.” They included key details about some of Bankman-Fried’s other motivations, including buying Snapchat, and “getting regulators to crack down on Binance.”

Ellison noted that he had investments in the media site Semafor, and had considered Vox and Forbes as well.

She also referenced his frequent meetings with The Big Short author Michael Lewis, with whom she said he was “cultivating his image as an eccentric founder.” The founder’s purposely uncombed hair and choice to drive a Toyota Corolla were also a part of this effort.

Beyond the media, Ellison said Alameda made deliberate efforts to manufacture an image of stability to the trading desk’s creditors.

In June 2022, institutional crypto trading firm Genesis had recalled a $400 million loan from Alameda, and also requested an updated view of Alameda’s balance sheet. At the time, Alameda had already taken $10 billion from FTX customers through a massive line of credit, and Bankman-Fried was reluctant to reveal the truth, according to Ellison.

“He told me to come up with alternative ways to present the information,” she said. “He wanted me to conceal things on our balance sheet.”

Ellison ultimately produced seven different versions of their balance sheet to show Genesis, from which Bankman-Fried chose a version that didn’t reveal their $9.9 billion hole.

Featured Image Courtesy Of CNBC.

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