Weeks and months earlier than the collapse of crypto change FTX, former CEO Sam Bankman-Fried was “freaking out” about Alameda, shopping for shares in Snapchat, elevating capital from Saudi royalty, and getting regulators to crack down on rival crypto change Binance.
So was written in former Alameda Analysis CEO Caroline Ellison’s private notes about FTX and Alameda, which prosecutors offered on the second day of her testimony in New York.
Throughout the trial, Ellison informed jurors {that a} crash within the Terra ecosystem in Could 2022 was important sufficient to get Bankman-Fried to think about shutting down Alameda and in search of to boost $1 billion in capital from the Saudi Prince, identified for his investments in blockchain gaming by way of Saudi Arabia’s sovereign wealth fund.
One other precedence for Bankman-Fried a yr in the past was “getting regulators to crack down” on the crypto change Binance, a transfer supposed to extend FTX’s market share, in accordance with Ellison. She didn’t present any particulars on how Bankman-Fried deliberate to do it.
Yet another Caroline Ellison courtroom sketch.
This one that includes SBF himself! https://t.co/q3O6xqxEhl pic.twitter.com/cQJbj5V1H7
— Ariel Givner, Esq. (@GivnerAriel) October 11, 2023
Bankman-Fried was additionally in search of extra funds from crypto lender BlockFi, which had already lent Alameda over $660 million, she mentioned. His different high considerations included buying and selling bonds issued by the Japanese authorities, shopping for Snap Inc (SNAP) shares, and “Willie being completely satisfied.”
Whereas the record doesn’t specify who Willie was, the title was presumably a reference to Bankman-Fried’s mentor William MacAskill.
In accordance with Ellison, Bankman-Fried blamed her for Alameda’s troubles and poor hedging. Throughout the trial, Ellison admitted that a greater hedge technique may have helped Alameda face the crypto winter, however famous that the corporate additionally had giant open-term loans and had spent billions from its line of credit score with FTX.
Open-term loans don’t have any maturity date, which means the borrower has a prepayment choice, whereas the lender has a name choice. In June, lenders comparable to Genesis Capital began imposing their name choice, requiring Alameda to repay tens of millions of {dollars}. Below Bankman-Fried’s route, Ellison repaid a part of Alameda’s money owed with funds from FTX prospects. In September 2022, Alameda’s liabilities with FTX mounted $13.7 billion, whereas its open-term loans stood at $1.3 billion, she mentioned.
As well as, and likewise at Bankman-Fried’s request, Ellison additionally created “various” spreadsheets for Alameda’s lenders, hiding the corporate’s monetary liabilities with FTX to make it “look higher” and to maintain lenders from calling for full compensation.
Ellison additionally revealed moments of emotional misery. Talking calmly and firmly throughout the trial, she expressed her nervousness about the potential of prospects withdrawing their funds from FTX amid the “liquidity crush” at Alameda.
“Daily, I used to be worrying about the potential of [loans] being referred to as on the identical time.”
Ellison’s cross-examination by Bankman-Fried’s protection will start on Oct. 12.
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