Bloomberg News reports that while the crypto meltdown was progressing in June 2022, Caroline Ellison and Sam Bankman Fried, co-founders of FTX, were busy working out fake balance sheets. They realized there was a massive hole in the balance sheet of Alameda Research.
How Did the Incident Unfold?
The affiliated hedge fund of FTX borrowed billions of dollars from various exchange deposits. Ellison, the chief executive officer of Alameda, feared that in the event customers of FTX found out about it, it would all collapse. However, Sam Bankman Fried had a suggestion, and that was to create fake balance sheets. As such, she created as many as seven of them.
Plan Revealed
The alternative balance sheets that were created were one way that the crypto empire of SBF could be saved. Ellison revealed the same as she took up the star witness role on the stand’s second day. She broke down while talking about the emotions she harbored while saying how FTX and Alameda fell like a pack of cards due to Alameda’s $14 billion debt to FTX.
Altruism -Is it Manipulation?
Following this testimony on Wednesday, it turned out that Ellison, who also happened to be the ex-girlfriend of SBF, was held responsible for the billions of dollars she borrowed from FTX and not Sam Bankman Fried.
Talking on the issue, Sam Bankman Fried has been saying for a long time that Ellison was solely responsible for the debt and that he just failed to keep tabs on the issue.
She also brought up the issue of Sam’s Altruism and how he adhered to the same. When times were good, Sam donated much to the Democratic Party. As per the Altruism principle. He suggested followers of this principle must make as much money as possible for the progress of the society.
Bloomberg News reports that Sam’s adherence to Altruism also moved her. And Sam believed that stealing and lying were valid for a larger cause.
What does FTX co-founder Gary Wang Say?
In the meantime, the co-founder of FTX, Gary Wang, has said that Sam Bankman Fried directed him to change the backend codes of the exchange so that Alameda could borrow huge amounts of unlimited money.
Saudi Connection
Sam Bankman Fried and Ellison also explored other possibilities. In one such instance, they discussed whether Saudi Arabia’s Crown Prince Mohammed bin Salman could be approached to buy shares of FTX. However, MBS was never listed publicly as an investor of FTX.
But other overseas connections were attempted. Ellison said that earlier, there were several discussions wherein a large bribe amount was paid to Chinese officials in November 2021. The aim was to unfreeze the $1 billion Alameda funds. The funds had been caught up amidst a crypto crackdown in the country.
