Caroline Ellison, Star Witness in Sam Bankman-Fried Trial, Says He Made ‘Horrible Errors’

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A lawyer for Sam Bankman-Fried on Thursday sought to undermine the testimony of Caroline Ellison, the prosecution’s star witness in his prison fraud trial, as she continued to insist that the onetime crypto mogul was behind the misuse of billions of {dollars} in buyer cash at his FTX alternate.

Over about 5 hours of cross-examination, Mr. Bankman-Fried’s protection lawyer, Mark Cohen, questioned Ms. Ellison about her choice to cooperate with prosecutors in return for leniency. He additionally requested her a few doc she despatched to staff at Alameda Analysis, the crypto buying and selling agency she ran for Mr. Bankman-Fried, which had painted a rosier image of the agency’s funds than she had described in personal.

However Mr. Cohen didn’t elicit any main revelations or inconsistencies from Ms. Ellison, 28, who adhered to her earlier testimony that she adopted orders from Mr. Bankman-Fried about letting Alameda faucet into FTX buyer funds.

“I feel they had been horrible errors,” she stated of Mr. Bankman-Fried’s selections in the summertime of 2022, which in the end led to the collapse of FTX and Alameda Analysis.

Every week into Mr. Bankman-Fried’s trial, Ms. Ellison has emerged because the strongest witness in opposition to him. In somewhat over two days of testimony in federal court docket in Manhattan, she advised a jury that Mr. Bankman-Fried, 31, knew for months that Alameda’s funds had been in a precarious state and that the agency could be arduous pressed to pay again many of the $10 billion it had borrowed from FTX prospects.

Ms. Ellison ran Alameda and dated Mr. Bankman-Fried on and off. After FTX and Alameda failed in November, federal prosecutors charged Mr. Bankman-Fried with funneling billions of {dollars} in FTX buyer deposits to Alameda, after which spending the funds on political donations, actual property purchases and different initiatives. He turned an emblem of hubris and reckless danger taking throughout the crypto trade.

Ms. Ellison and two different high-ranking FTX executives, Gary Wang and Nishad Singh, later pleaded responsible to fraud and agreed to cooperate with the federal government.

Ms. Ellison, who was on the witness stand for a 3rd day, has supplied among the most uncooked and emotional testimony of the trial. On Wednesday, she fought again tears as she described the implosion of Mr. Bankman-Fried’s corporations, saying a part of her felt relieved that she wouldn’t need to lie anymore to hide that Alameda owed billions of {dollars} to FTX’s prospects.

Underneath questioning from Mr. Cohen, Ms. Ellison conceded that she despatched a deceptive doc to Alameda staff final 12 months that offered a extra bullish model of the buying and selling agency’s efficiency than she had mentioned with Mr. Bankman-Fried.

“Yeah I might say it was deceptive concerning the true state of Alameda on this doc,” she testified.

However Ms. Ellison stated she did that to maintain up the morale of Alameda staff at a time when the crypto market was below widespread stress.

Ms. Ellison additionally stated that after Mr. Bankman-Fried put her accountable for Alameda in 2021, he didn’t become involved in lots of the agency’s main selections. When a prosecutor adopted up, she stated Mr. Bankman-Fried acquired extra concerned in Alameda by spring 2022 and that he determined to faucet into FTX buyer cash to pay again lenders of the buying and selling agency.

Underneath questioning by Mr. Cohen, Ms. Ellison additionally stated that regardless of her considerations, she didn’t resign from Alameda. However when questioned once more by a prosecutor, she stated she had severely thought of resigning within the months earlier than the corporations imploded and that Mr. Bankman-Fried talked her out of it.

“I trusted his opinion and I didn’t need FTX and Alameda to break down, and if he thought my resigning would possibly trigger that, I didn’t need to do this,” she stated.

Mr. Cohen additionally centered on the occasions surrounding Ms. Ellison’s choice to plead responsible and cooperate with prosecutors and her considerations about Alameda utilizing FTX buyer cash.

Ms. Ellison stated that F.B.I. brokers confirmed up at her mother and father’ residence final November after FTX and Alameda went below. Ms. Ellison stated the brokers had a search warrant that allowed them to take computer systems that belonged to her boyfriend, who was staying together with her on the time; and her mom, Sara Fisher Ellison, an economist on the Massachusetts Institute of Expertise. She didn’t title her boyfriend however stated he had labored for Mr. Bankman-Fried’s companies.

In all, Ms. Ellison stated she had round 20 conferences with prosecutors, together with one which lasted for a number of hours on Monday, the day earlier than she took the witness stand.

Ms. Ellison additionally stated that regardless of her considerations about Alameda borrowing billions of {dollars} in FTX buyer cash, she by no means talked about it with anybody apart from Mr. Bankman-Fried, Mr. Wang and Mr. Singh.

At occasions, Ms. Ellison’s testimony this week devolved right into a struggle of attrition between Mr. Cohen and the prosecutors. The attorneys have had a number of conversations with the choose that the jury couldn’t hear to debate the admission of some reveals.

In a single dialog on Wednesday, Danielle Sassoon, an assistant U.S. legal professional, stated she seen Mr. Bankman-Fried had “laughed, visibly shaken his head, and scoffed” at varied factors throughout Ms. Ellison’s testimony. Ms. Sassoon speculated it is perhaps “having a visual impact on her,” in accordance with a trial transcript.

Decide Lewis A. Kaplan, the choose presiding over the trial, stated he didn’t see what Ms. Sassoon had referred to so he wouldn’t make any feedback to the jury. However the choose advised Mr. Bankman-Fried’s attorneys to privately inform their shopper that if he was making any seen expressions, he ought to cease.

Christian Drappi, a former developer at Alameda, took the stand after Ms. Ellison completed on Thursday afternoon. Throughout his testimony, the prosecution performed an audio recording of an “all-hands assembly” at which Ms. Ellison advised Alameda staff about the usage of FTX buyer funds and the agency’s imminent collapse.

The flip of occasions left Mr. Drappi “totally shocked,” he stated.