With the publication of Caroline Ellison’s remarks during her hearing on December 19, we learn that Alameda Research has been borrowing money from FTX customers since the exchange’s inception.
FTX loaned unlimited amounts to Alameda Research
While Caroline Ellison, the former CEO of Alameda Research pleaded guilty in the FTX case, new revelations come to demonstrate once again the extent of the fraud that has been committed. Indeed, journalist Matthew Russell Lee, who covers New York’s Southern District Court cases, published the minutes of the hearing of the person concerned on December 19 :
OK – we #FTX / Alameda, here now the unsealed guilty plea transcript of Caroline Ellison – it was held in secret, and not docketed until today, once Bankman-Fried was freed on $250 mln bond. Thread then stories on https://t.co/3AcCBJNU41 and pic.twitter.com/Ptd0L1u9oL
— Inner City Press (@innercitypress) December 23, 2022
In these revelations, we learn that the fraudulent cash management of the two companies actually lasted from the very inception of FTX :
“From 2019 to 2022, I knew Alameda had access to a borrowing facility on FTX.com, the cryptocurrency exchange run by Mr. Bankman-Fried […]. Effectively, this arrangement allowed Alameda to access an unlimited line of credit without being required to post collateral, without having negative balances and without being subject to margin calls on FTX.com’s liquidation protocols. »
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The problem being that the funds lent by FTX were not the company’s funds, but rather money from platform customersas Caroline Ellison reiterated:
“I understood that if Alameda’s FTX accounts had large negative balances in a particular currency, it meant that Alameda was borrowing funds that FTX customers had deposited on the exchange. »
If today the former CEO of Allameda Research says to himself “sincerely sorry for doing this», it is a speech that contrasts with the assurance that she displayed at the very beginning of the crisiswhen she denied the problems of her society:
A few notes on the balance sheet info that has been circulating recently:
– that specific balance sheet is for a subset of our corporate entities, we have > $10b of assets that aren’t reflected there— Caroline (@carolinecapital) November 6, 2022
All this shows that despite appearances, the empire FTX was actually just a ticking time bomb which was bound to explode sooner or later. Meanwhile, we learned this week that Sam Bankman-Fried was released on bail for $250 million.
👉 Also in the news – FTX fights legal action to recover $440 million worth of Robinhood stock
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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