The mastermind behind the FTX cryptocurrency platform scam, confesses his crimes and apologizes

Sam Bankman-Fried and other FTX executives received billions of dollars in secret loans from Alameda Research, the hedge fund of the cryptocurrency mogul, its former chief executive told a judge as she pleaded guilty to her role in the stock market crash.

Caroline Ellisonformer CEO of Alameda Researchsaid colluded with Bankman-Fried to hide from FTX investors, lenders and clients that the hedge fund could borrow unlimited amounts from the stock marketaccording to a transcript of his Dec. 19 plea hearing that was unsealed Friday.

SIGHT: What are they accusing Sam Bankman-Fried of, the billionaire behind the crash of cryptocurrencies who was captured in the Bahamas

“We prepared certain quarterly balance sheets that concealed the extent of the loans from Mall and the billions of dollars in loans Alameda had made to FTX executives and related parties.” said ellison to the US district judge Ronnie Abrams in Manhattan federal court, according to the transcript.

Ellison and FTX co-founder Gary Wang have pleaded guilty and are cooperating with prosecutors. as part of their plea agreements. His affidavits offer a preview of how two of the former associates of Bankman-Fried could testify in the trial against him as witnesses for the prosecution.

In another appearance, also on December 19, Wang stated that he was ordered to make changes to FTX’s code to grant Alameda special privileges on the trading platform.while being aware that other people were telling investors and clients that Alameda had no such privileges.

Wang did not specify who gave him those instructions.

FTX founder Sam Bankman-Fried is escorted from the Magistrate Court in Nassau, Bahamas on Wednesday, December 21, 2022, after agreeing to be extradited to the United States. (AP Photo/Rebecca Blackwell)

Prosecutor Nicolas Roos said in court on Thursday that the trial of Bankman-Fried it would include evidence from “multiple cooperating witnesses.” Roos claimed that Bankman-Fried carried out a “fraud of epic proportions” that caused the loss of billions of dollars in client and investor funds.

Bankman-Fried has acknowledged failings in risk management at FTX, but has said it does not believe it bears criminal liability. He has not yet pleaded guilty.

Bankman-Fried founded FTX in 2019 and took advantage of the boom in the values ​​of the bitcoin and other digital assets for become multimillionaireas well as an influential donor to US political campaigns.

A flurry of client withdrawals in early November amid concerns about the mix of funds from FTX with Alameda led FTX to file for bankruptcy on November 11.

Bankman-Fried, 30, was released Thursday on $250 million bail. Their spokesman declined to comment on the statements by Ellison and Wang.

Wang’s lawyers and ellison They declined to comment.

Ellison told the court that when investors in June 2022 withdrew the loans they had made to Alameda, she agreed with others to borrow billions of dollars in funds from FTX clients to pay them back.understanding that the clients were not aware of the agreement.

In this photo illustration taken on November 13, 2022, the FTX cryptocurrency logo is shown reflected in an image of former CEO Samuel Bankman-Fried. (STEFANI REYNOLDS / AFP).

“I am truly sorry for what I did” said ellisonadding that it is helping to recover clients’ assets.

Wang also said that he knew what he was doing was wrong.

The transcript of the hearing ellison was initially sealed for fear that disclosure of their cooperation could thwart prosecutors’ efforts to extradite Bankman-Fried from the Bahamaswhere he lived and where he had his headquarters FTXcourt records showed.

Bankman-Fried was arrested in the Bahamian capital Nassau on December 12 and arrived in the United States on Wednesday after consenting to extradition.

A coroner ordered her confinement at her parents’ home in California until trial.

On Friday night, Abrams recused herself from the case, saying in a court order that the law firm Davis Polk & Wardwell LLP, where her husband is a partner, advised FTX in 2021.

The firm also represented parties who might be adverse to FTX and Bankman-Fried in other proceedings, the judge said, and while her husband had no involvement in these matters, which “were confidential and their substance is unknown to the Court,” she recuses herself to avoid a possible conflict.

Source: Elcomercio