Author: Nancy, LianGuaiNews
Recently, SBF leaked private documents of Caroline Ellison, former CEO of Alameda Research, who serves as a witness, to the media. The U.S. prosecutor believes that SBF’s actions are intentionally discrediting the credibility of the witness in an attempt to shift responsibility. At the same time, court documents continue to reveal more truths about the collapse of FTX, including FTX’s plans to purchase national Nauru rights for “doomsday refuge,” executives using their power for personal gain, misuse of funds in the purchase of real estate, and SBF’s intention to list FTX.
Previously, the U.S. New York Federal Court has brought eight criminal charges against SBF, and if these charges are proven, SBF could face a maximum sentence of 115 years in prison. However, SBF refuses to plead guilty and has been granted bail for 10 months. The first trial is scheduled to begin on October 2, which means that SBF has won more time and opportunities for dialectical reasoning.
Alameda Former CEO’s Diary “Exposed,” SBF Accused ofAttempting to Shift Criminal Responsibility
In December of last year, Caroline Ellison pleaded guilty to the criminal charges brought by the U.S. prosecutor and the fraud charges brought by the U.S. CFTC. These charges include intentionally misleading lenders on the amount of loans borrowed by Alameda, obtaining lending services from FTX.com without collateral, negative balances, or additional margin requirements, as well as SBF’s agreement to falsify financial statements, etc.
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For SBF, Caroline Ellison is a dangerous “tainted witness.” In order to avoid additional charges, Caroline Ellison is cooperating fully with the U.S. prosecutor, including providing multiple electronic devices, etc. However, the U.S. prosecutor has not yet handed over the evidence collected from Caroline Ellison. As the trial date approaches, SBF has even raised to the U.S. judge that this will affect their pre-trial defense preparation.
In a recent report by The New York Times, Google documents revealed the conflicting mentality between Caroline Ellison and SBF, who were former comrades and lovers, as well as the role she played at Alameda. In the documents, Caroline Ellison wrote that she was very unhappy with her work and believed that she was not suitable for managing Alameda and was not good at making decisive decisions. Especially in the on-and-off relationship with SBF, her work became complicated, and she stated, “When he is around, there is an instinctive fear, and I become quieter and more obedient.” After truly breaking up with SBF, Caroline Ellison also stated that she no longer has enthusiasm for Alameda and is even disgusted with SBF’s celebrity halo. She intentionally cut off contact with SBF to “regain her power.”
In May 2022, the collapse of the cryptocurrency market led to a wave of bankruptcies in the market, and as a result, SBF and others used billions of dollars of FTX customer funds to fill the gaps in Alameda’s accounts. SBF also intended to shut down Alameda and invested over $400 million in another trading company, Modulo Capital, which made Caroline Ellison feel excluded. The collapse of SBF’s business empire made Caroline Ellison feel “great to end it all.”
The report also points out that Caroline Ellison’s salary is far less lucrative than other executives at FTX and Alameda, but it is unclear whether she is aware of this. According to court documents, the founder of the exchange and other key employees received $3.2 billion in payments and loans. Ellison received a salary of $6 million, while FTX engineering director Nishad Singh received $587 million, co-founder Gary Wang received $246 million, and SBF received $2.2 billion.
Regarding the public release of this document at this time, US prosecutors believe that SBF selectively released partial documents in an attempt to discredit the witness and portray Caroline Ellison as a “spurned lover who single-handedly committed the alleged FTX crimes”, and advance his defense beyond the limits of media, court, and evidence rules. “While the government hopes to have overwhelming evidence proving the defense’s lies are wrong, it is biased and inappropriate for the defendant to defame Caroline Ellison’s credibility before the trial, especially when the defense has not yet proven materials that can be accepted in the trial, let alone provided to the government.” The prosecutor requested the judge to issue an order limiting “extrajudicial statements by parties and witnesses that may interfere with a fair trial by the impartial jury.”
Currently, SBF’s lawyer has not responded to this. Prior to this, SBF had blamed Alameda for FTX’s collapse, claiming that they did not have real involvement in Alameda’s daily operations. However, according to a previous report by Bloomberg, Gary Wang is a more dangerous witness compared to Caroline Ellison. According to the CFTC’s allegations, Gary Wang helped create the underlying code that allowed Alameda to “maintain unlimited credit limit” on FTX, Wang also helped create other methods that gave Alameda unfair advantages in trading on the platform, including faster execution times. Gary Wang has already pleaded guilty and is cooperating with prosecutors’ investigation.
Planned to purchase a “refuge” built by a sovereign country, multiple executives misappropriated hundreds of millions of dollars
The latest court documents also show that Caroline Ellison revealed that about 8 months before FTX’s collapse, FTX’s cash deficit had exceeded $10 billion, and she also admitted in the documents that she and FTX executives privately estimated in August last year that FTX owed customers over $8 billion in fiat currency and was “unable to repay”.
SBF squandered these funds, for example, as previously reported by LianGuaiNews, in addition to investments in the cryptocurrency field, there were also many “incomprehensible” unconventional investments in the months leading up to the collapse, involving agriculture, drones, and other fields.
Recently, according to a report shared by FTX debtors, SBF also spent over $243 million on real estate in the Bahamas, including properties worth millions of dollars purchased for employees, friends, and family, such as the top-floor apartment in the 11,500 square foot Albany Resort Community, the “Albany Beehive” unit purchased for over $18 million, and the “Old Fort A Block” purchased for over $16 million.
Not only that, but FTX Trading Ltd recently filed a lawsuit against SBF and other former executives, including Caroline Ellison, former FTX CTO Zixiao “Gary” Wang, and former FTX Engineering Director Nishad Singh, seeking to recover over $1 billion that they allegedly misappropriated before FTX went bankrupt. This includes the $546 million that SBF and Gary Wang allegedly took from Alameda in May 2022 to purchase shares of Robinhood Markets Inc.
In addition, Bloomberg’s latest report reveals the extravagant spending behavior of FTX and Alameda. Court documents show that in the allegations of FTX using mixed funds for political and “charitable” donations, a memorandum exchanged between SBF’s brother Gabriel Bankman-Fried and an official from the FTX Foundation described a plan to purchase the sovereignty of Nauru, with the aim of building a “bunker/refuge” that would ensure the survival of the majority of effective altruists if 50% to 99.99% of the global population died. They also proposed “reasonable regulations on human genetic enhancement and the construction of a laboratory there.” The memorandum also stated that “there may be other things that are useful for a sovereign nation.”
The documents also point out that SBF’s inner circle abused their power for profit. For example, former FTX Engineering Director Nishad Singh received approximately $477 million worth of FTX common stock transfers for free; in February 2020, SBF also granted himself over $6 million in equity without any compensation. It is said that Caroline Ellison also received 2.75 million valuable FTX call options from December 2020 to March 2021 without providing any compensation. Despite estimating a funding gap of billions of dollars in FTX, Caroline Ellison still chose to award herself a $22.5 million bonus around March 2022, with $10 million funds entering her personal bank account and investing in an AI company in her own name, and the remaining amount being deposited into the FTX account. Furthermore, Caroline Ellison misappropriated millions of dollars of funds for herself during 2021 and 2022, and received 2.75 million valuable FTX call options from December 2020 to March 2021.
It is worth mentioning that the aforementioned court documents also reveal that SBF has expressed ambitions to list FTX on multiple occasions and claimed to be taking steps to do so. The court documents state that in April 2021, SBF signed a false “payment agency agreement” that mistakenly advanced the date by two years. The agreement was prepared for an external auditor who was supposed to prepare financial statements for the company when FTX considered an IPO.