SBF allegedly continued to make risky investments anyway.
Empty Pockets, Big Bets
Remember when basketball superstar Steph Curry was encouraging you to use the crypto exchange FTX to buy and trade digital currencies, even if you had absolutely no idea what you were doing? Or when Tom Brady was telling you that FTX was the "safest" and "easiest" way to get into the crypto game?
Well, around the same time that Curry and Brady were inking their lucrative FTX contracts, Alameda Research — the hedge fund and sister company to FTX that held a central role in the exchange's finances and ultimately its financial demise — was compensating for an alleged $2.7 billion hole in its balance sheet and making risky bets with cash it didn't have.
Or so says former Alameda CEO Caroline Ellison, whose bombshell-smattered testimony continues to reveal new and bizarre alleged details about the volatility of FTX's financial tightrope-walking and the purported risks taken by defendant Sam Bankman-Fried, the since-disgraced founder of both FTX and Alameda. Ellison, who is both an ex-employee and ex-girlfriend of Bankman-Fried, has leveraged a number of allegations against her former lover since taking the stand yesterday, including the serious claim that Bankman-Fried ordered her to doctor Alameda's balance sheets illegally.
According to Ellison's testimony, as The Wall Street Journal reports from the courtroom, Alameda's 2021 balance sheets were very seriously in the red. And yet, in spite of that multibillion-dollar financial gap, Ellison told the court that Bankman-Fried pushed her to make risky venture assessments and investments anyway — meanwhile asking Ellison to exclude certain financial assets from a 2021 analysis of the firm's assets and liabilities.
Specifically, according to the WSJ, Ellison told the court that she was commanded to exclude Alameda's holdings of a cryptocurrency dubbed "Sam Coins" from this 2021 analysis. As the report reads, these cursed-sounding "Sam Coins" were comprised of "cryptocurrencies closely associated with and predominantly owned by Bankman-Fried," and included the likes of "FTX's native token FTT, Solana, and Serum." The extremely dubious-sounding tokens were said to be worth $10 billion on paper.
The Monolopy-money-feeling to these "Sam Coins" aside, however, the mention of FTT feels significant. FTX's November implosion — the crisis that led to today's ongoing criminal trial — is understood to have been triggered by a mass selloff of FTT coins launched by Binance CEO Changpeng "CZ" Zhao.
This selloff quickly plunged Alameda into catastrophic collapse, and swiftly thereafter, FTX was crumbling alongside its sister firm.
And now, almost one year later, the entangled CEOs of each bankrupted venture sit across from one another in a courtroom, battling it out over how, exactly, FTX and Alameda both ended in ruin.
More on Ellison's testimony: Caroline Ellison Says Sam Bankman-fried "Directed" Her to Commit Crimes
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