Featured Image Credit: Michael M. Santiago / Staff
Topics: Money, Cryptocurrency, Crime
Emily Brown
The ex-girlfriend of cryptocurrency entrepreneur Sam Bankman-Fried has taken the stand to give testimony as he faces charges of money laundering and securities fraud, among other crimes.
Bankman-Fried is facing seven charges from prosecutors after his FTX cryptocurrency exchange was forced to shut down withdrawals in November with more than $8 billion in customer funds missing.
Prosecutors have claimed that the founder orchestrated a scheme to siphon FTX customer money into political contributions, real estate purchases and charitable donations, while also lying to his venture capital backers and the companies which lent money to FTX.
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As his trial continues, Bankman-Fried's ex-girlfriend Caroline Ellison took to the stand as a star witness.
Her testimony came after she pleaded guilty to fraud, and agreed to testify against Bankman-Fried as part of an agreement with prosecutors.
Ellison told the court she met Bankman-Fried while working at a Wall Street firm, and that they dated for 'a couple of years'.
In her testimony, Ellison claimed she and Bankman-Fried had committed crimes of fraud, conspiracy and money-laundering together.
After meeting Bankman-Fried on Wall Street, Ellison became a trader at the cryptocurrency hedge fund he created, Alameda Research.
Prosecutors have claimed Bankman-Fried and his accomplices later diverted billions of dollars from the accounts of FTX customers to pay off creditors of Alameda.
Bankman-Fried has pleaded not guilty to charges of fraud and money-laundering, but Ellison told the court: “We ultimately took around $14 billion [from FTX], some of which we were able to pay back.”
Ellison claimed that the balance sheet at Alameda Research revealed $35 million that was partly used for donations to Republican politicians, as well as a donation of '$10 million to [Joe] Biden'.
This, Ellison claimed, was considered by Bankman-Fried as a 'relatively small amount of money... that got him some amount of influence and recognition'.
When asked to describe the founder's attitude to risk, Ellison said he would call himself 'risk neutral' and 'totally comfortable taking a risk'.
“He talked about being willing to do large coin flips: if it comes up tails he loses $10 million and it comes up heads he makes slightly more than $10 million," she said.
"He said he would be happy to flip a coin if it came up tails and the world was destroyed, as long as if it came up heads the world was more than twice as good.”
Ellison went on to claim that Bankman-Fried had asked her to study the risks for Alameda of investing $3 billion in start-ups in 2021.
She determined there was a 100 percent chance that the company would be left unable to meet its liabilities, but that Bankman-Fried decided to go ahead with the investments.
Bankman-Fried has claimed that although he made mistakes while running FTX, he never intended to steal funds.