Caroline Ellison accepted a guilty plea and is assisting the government.
Ellison admitted that she and Sam Bankman-Fried concealed misleading funds.
The former CEO of Alameda Research, Caroline Ellison, admitted that she and Sam Bankman-Fried, a co-founder of FTX, deliberately misled lenders about the funds which the bankrupt trading company was borrowing from the cryptocurrency exchange.
Additionally, Caroline Ellison admitted in the court record of her hearing on 19th December how she concealed a $1 billion loan from FTX to Alameda Research. At the subsequent hearing, she accepted a guilty plea and revealed Sam Bankman-Fried and other FTX executives received “billions of dollars in secret loans” from crypto tycoon Alameda Research, as per a Reuters report.
A fake Balance sheet to hide the Transaction
According to the former Alameda CEO, the defunct crypto exchange FTX was a resource of limitless borrowing for the trading company. The transcript also showed that Bankman-Fried and Ellison had planned to hide this significant information from FTX’s creditors, customers, and investors.
Ellison said to U.S. District Judge Ronnie Abrams in Manhattan federal court;
We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties.
Further, she is also aware that from 2019 to 2022, Alameda has access to a borrowing facility on FTX.com. This arrangement allowed Alameda to access an unlimited ‘line of credit’ without the need to provide collateral. Including maintain negative balances, or be susceptible to margin calls under FTX.com’s liquidation processes.
On 23rd December, the US Department of Justice issued a press statement. Announcing that Caroline Ellison had accepted a plea agreement and would assist investigators. Co-founder of FTX Gary Wang also agreed to a plea agreement with the authorities and admitted guilt.
However, Sam Bankman-Fried has not attempted to negotiate a plea deal. The former billionaire has maintained that he is not legally responsible for FTX’s failure. He was returned to his parent’s custody on Thursday after being freed on a $250 million bail.