Thread by @innercitypress

OK - now SBF trial continues with Caroline Ellison still on direct, after she got into wrong car, Inner City Press covers the case & for #CryptoCreeps exhibits & will live tweet, thread below matthewrussellleeicp.substack.com/p/crypto-creep…
amazon.com/dp/B0CFCJ68PS
patreon.com/posts/90769697…

Judge Kaplan: I won't be ruling on whether the Anthropic investment value comes in until after the direct...
Jury entering!
AUSA Sassoon: Good morning Ms. Ellison... We'll pick up. What happened with Alameda's trading positions?
Ellison: Coin values went down.

AUSA: How did the downturn in the cryptocurrency markets impact Alameda's loans?
Ellison: Lenders were recalling the loans.
AUSA: Was Alameda required to repay?
Ellison: Yes, they were open ended loans.
AUSA: How did you learn about it?
Ellison: Slack & Telegram

AUSA: Was the defendant also in these Telegram chats?
Ellison: Yes.
AUSA: Let me show you some exhibits
[Like, patreon.com/posts/90769697

AUSA: So let me ask you, Ms. Ellison, about this --
SBF's lawyer Mark Cohen: Your Honor, can we have a sidebar?
Judge Kaplan: Yes.
[This, we can't hear]

They're back.
Judge Kaplan: Government Exhibits 1648, 1649 & 1650 are admitted for all purposes. 1647 is admitted only for what Ms. Ellison was aware of. Issues?
AUSA Sassoon: There were others on the chat... Please publish 1647, a Telegram chat of June 13, 2022

AUSA: Please read this. What is a USD return?
Ellison: Return of our US Dollar loans, to this crypto currency address.
AUSA: What is an OT loans?
Ellison: An open term loan. Genesis wanted $400 million back. I was very stressed out. We would have to take from FTX

AUSA: Where would the money Alameda would take from FTX come from?
Ellison: Customers.
AUSA: And, mental state?
SBF's lawyer Cohen: Objection!
Judge Kaplan: Overruled.
Ellison: I was worrying about customer withdrawal from FTX, this getting out, people to be hurt

AUSA: You calculated Alameda's balances - did you share this with the defendant?
Ellison: Yes, updated balance sheets whenever he asked for them. He was my boss, the owner of Alameda
AUSA: What did he tell you to do?
Ellison: He directed me to repay loans

AUSA: What did you understand him to be telling you to do?
Ellison: To use Alameda's line of credit with FTX - that is, to use customers' funds. He knew that's the only way it could be repaid. Sam asked us --
AUSA: Who is us?
Ellison: Me, Gary and Nishad

Ellison: Gary told me there was a large bug in this.
AUSA: In the line of credit?
Ellison: Yes. We had borrowed $3 billion by this point.
AUSA: Who put this together?
Ellison: Gary or Nishad, I'm not sure which one. Here, it's $19 billion. Corrected to $8 billion.

AUSA: What did the defendant tell you to do?
Ellison: To continue repaying Alameda's loans.
AUSA: How did you?
Ellison: Taking money from FTX customer funds.

AUSA: How much USD had customers deposits vs how much was available to them on FTX?
Ellison: They had deposited $13 billion, but only $3 billion were available to them on FTX.
AUSA: What happened to the other $10 billion?
Ellison: It had been borrowed by Alameda

Ellison: Alameda had taken from FTX all of its BRZ, a stable coin pegged to the Brazilian real...
AUSA: Did you share this with the defendant? How?
Ellison: Yes, over Signal.
AUSA: Were you concerned?
Ellison: Yeah, I was worried we couldn't process withdrawals

AUSA: Did you think this was wrong?
Ellison: Yes, I thought it was wrong. We didn't find any new sources of capital. I continued to worry about FTX customers finding out and trying to withdraw all at once.
AUSA: How much did Alameda repay?
Ellison: $5 billion

AUSA: Who is Matt Ballensweig?
Ellison: He was the head of lending at Genesis. He was asking us for a more updated view of the balance sheet.
AUSA: Where were you living at the time?
Ellison: In the Bahamas.
AUSA: You had meetings in the apartment?
Ellison: Yes.

AUSA: What did you do?
Ellison: Sam said don't sent the balance sheet to Genesis. We were borrowing $10 billion from FTX and we had $5 billion in loans to our own executives and affiliated entities. We thought Genesis might share the info

AUSA: What did the defendant tell you to do?
Ellison: He told me to come up with alternative ways to present the information. He wanted me to conceal things on our balance sheet. So I prepared 7 different balance sheets. I did not want to be dishonest but...

Ellison: I presented the alternatives to Sam and let him decide.
AUSA: GX 44
Ellison: This is the spreadsheet with 7 alternatives, June 19, 2022.
AUSA: Show it to the jury.

AUSA: How did you feel about having $9.9 billion of borrows from FTX customers on Alameda's balance sheet?
SBF's lawyer Cohen: Objection!
Judge Kaplan: Overruled.
Ellison: I didn't feel good. If people found out, they would all try to withdraw from FTX

AUSA: If FTX customers all tried to withdraw, what would happen?
Ellison: We did not have the money.
AUSA: Which of the 7 did Sam choose?
Ellison: Alternative 7 with no disclosure of the $9.9 billion owed to FTX customers.

AUSA: What was the overall impact of the changes?
Ellison: To make Alameda look less risky than it was. Sam send, send Alternative 7 to Genesis. I did.
AUSA: GX1650, a telegram message of June 20, 2022.

Ellison: It's my message to Matt Ballensweig at Genesis, with a link to my Google Doc. He said, "Just got caught up with Sam."
Judge Kaplan: There might be people on the jury who don't know what a Google Doc is.
Ellison: ...It can be commented on.

Ellison: Genesis was getting recalls from retail lending platforms, so they asked us for $500 million.
AUSA: What did the defendant tell you about his call with Matt Ballensweig of Genesis?
Ellison: That Genesis might go under, so we should send it to them

AUSA Sassoon: When you sent this balance sheet to Genesis, did you consider it to be dishonest?
Ellison: Yes.
SBF lawyer Cohen: Objection!
Judge Kaplan: Overruled.
Ellison (again) Yes I did

AUSA: Did you consider it to be wrong?
Ellison: Yes, I did.
Judge Kaplan: Let's take out morning break.
Exhibits:
Tale:
Live tweets will continue in 15 min - watch this feedpatreon.com/posts/90769697
matthewrussellleeicp.substack.com/p/crypto-creep…

Back.
AUSA Sassoon: What does this June 27, 2022 tweet from the defendant say?
Ellison: That backstopping customer assets should always be primary.
AUSA: Did you consider this tweet to be misleading?
Ellison: Yes.

AUSA: Beyond Genesis, other remaining lender?
Ellison: BlockFi.
[Programming note: BlockFi's Zac Prince is a forthcoming witness, as well as Chris Drappi]
Ellison: And a few others. I would send them the balance sheets.

Ellison: Alameda by Sept 2022 was borrowing $13 billion from FTX customers.
AUSA: How did it go up?
Ellison: We used it to repay loans, and as collateral for other investments.

AUSA: What was Celsius?
Ellison: A crypto lending desk.
[Inner City Press covers US v [Celsius' Alex] Mashinsky: patreon.com/posts/88837070

AUSA: What are these?
Ellison: Notes from a conversation with Sam. I wrote, keep selling BTC if its over $20K.
AUSA: You wrote, FTX may raise. What does that mean?
Ellison: Raise capital by selling equity, to get more money. To investors like MSB, the Saudi Prince

Judge Kaplan: Where does it reference related party loans?
Ellison: That's not on this balance sheet. It was on the internal balance sheet.
AUSA: We can look at that. This is the last spreadsheet.
Judge Kaplan: Microsoft's stock will be plunging
[laughter]

AUSA: How would you describe your state of mind at this point, when Alameda owed SBF customers $14 billion?
[No objection]
Ellison: I was in a state of dread, if FTS customer tried to withdraw.
AUSA: How were you communicating with the defendant?
Ellison: Signal

AUSA: Do these Signal messages still exist?
Ellison: No. Sam told us to set them to erase.
AUSA: Who is "us"?
Ellison: FTX staff. He told us not to leave things in writing, to have sensitive conversations on Signal, or in person, or not at all

AUSA: What does this say?
Ellison: "Sam Bankman-Fried set the disappearing message time for 1 week."
AUSA: Did you speak in coded terms?
Ellison: Yes. When we gave a large bribe to China - our accounts were frozen in a money laundering investigation.

AUSA: How much was frozen in China?
Ellison: $1 billion. Sam wanted to find ways to address it.
AUSA: How were they unfrozen?
Ellison: Alameda paid a bribe to Chinese government officials
SBF: Objection, move to strike.
Judge Kaplan: I will strike that

AUSA: OK, who was involved?
Ellison: Constance, and David Ma
AUSA: Why were they involved?
Ellison: They were Chinese. We tried to hire a lawyer there. It didn't work. We used other people's accounts. Ryan Salame told me. But it didn't work either

Ellison: David Ma said we should try his way to unfreeze the accounts. Sam agreed. But Handee (sp) disagreed. Sam told her to shut the f*ck up.
AUSA: What did you think Ma's way was?
SBF's lawyer Cohen: Objection! Calls for speculation.
Judge Kaplan: Sustained.

Ellison: Sam said Ma had found a way to get our accounts unfrozen, if we just sent to these crypto addresses, $100 million. It was November of 2021.
AUSA: Did you know who the recipient was?
Ellison: No
AUSA: Did you have a belief?
SBF's lawyer: Objection!
Sidebar

After sidebar:
Judge Kaplan: Jurors, the defendant is not charged in this case with bribery of Chinese officials
[Inner City Press note: Thanks to Bahamas]
Judge: It is offered for motive. W
AUSA: How were you told to pay?
Ellison: Signal, with Sam Trabucco

Ellison: There was talk about the FCPA
AUSA: What's that?
SBF's lawyer Cohen: Objection!
Judge Kaplan: FCPA is not charged here.
Ellison: It's the Foreign Corrupt Practices Act

AUSA: What's in this chat?
Ellison: Sam wrote that Handi was being "pretty shitty." Then Sam Trabucco asked, Did her father just turn us in. Sam replied, LOL.
AUSA: What's that?
Ellison: Laughing out loud.

AUSA: Here you wrote, Negative $150 million from the thing - what was the thing?
Ellison: The bribe to China.
SBF's lawyer: Objection!
AUSA: It's not being offered for the truth.
Judge Kaplan: Overruled.
SBF's lawyer: It is -
Judge Kaplan: I have ruled. Move on.

AUSA: I want to move on to the summer and fall of 2022. What did you and the defendant discuss, to get more money for FTX?
Ellison: He was talking about raising equity.
AUSA: How was your relationship?
Ellison: We had broken up. I tried to avoid one on ones

AUSA: When did you make this list?
Ellison: Fall of 2022. I was talking about hedging.
[Note: SBF's lawyer in opening statement blamed Ellison for NOT hedging]
Ellison: Sam tried to say that it was my fault.
AUSA: Where was this?
Ellison: In the apartment study

Ellison: We were discussing having borrowed $10 billion
AUSA: From where?
Ellison: FTX customers. Sam was screaming that it was my fault
AUSA: How did you feel?
Ellison: I was crying. But it was Sam who made all these investments that put us in this situation

AUSA: Here is says, "Things Sam is freaking out about"
Ellison: Yes, I updated the list frequently.
AUSA: What does this say?
Ellison: "Raisings funds from MBS." The Saudi Prince. Sam also wanted to set the regulators against Binance

Ellison: At this time, Sam wanted to buy Snapchat... Also, to trade Japanese government bonds.
[The specific line is "getting regulators to crack down on binance]

AUSA: I have about an hour and a half left
Judge Kaplan: So we'll break
[Inner City Press will pick up the live tweeting when it happens- esp cross after all this.
Will get today's exhibits asap, here's earlier memo matthewrussellleeicp.substack.com/p/crypto-creep…
patreon.com/posts/here-is-…

THey're back.
AUSA: What media sites did Sam invest in?
Ellison: Semafor... He talked about Vox and Forbes.
AUSA: Tell us about The Block.
Ellison: He said it was a great crypto news site.

AUSA: What's this SIgnal chat - how do we have it?
Ellison: Not everyone had delete on. Especially about our philanthropy. Here Sam says, "Michael Lewis is going to be in the Bahamas profiling us."

Ellison: I said I was more in favor of going under the radar. Sam replied, Same except the absolute opposite.
AUSA: Did Michael Lewis spend time with you in the Bahamas?
Ellison: Yes. Sam was cultivating an image as an eccentric founder....

Ellison: I tried to be low keep. But once Sam Trabucco stepped back, I went on Twitter. Sam said someone at Alameda had to be there.
AUSA: What did Sam say about Twitter?
Ellison: It was important, he said, to get customers and investors.

AUSA: How would you describe his personal appearance?
Ellison: He didn't comb his hair. He said it had gotten him bonuses at Jane Street and was important to FTX

AUSA: What about cars?
SBF's lawyer: Objection, relevance.
Judge Kaplan: Overruled.
Ellison: Sam said it was better for his image to drive a Toyota Corolla. So I drove a Honda.

AUSA: Why did you make misleading statements to reporters?
Ellison: I was saying things similar to what Sam had said in the past. But he was concerned about it.. He was concerned about the CFTC, trying to get a futures license.

After a long sidebar:
AUSA: Did you discuss with Gary and Nishad just turning Alameda off?
Ellison: Yes, but we decided to do nothing.

Another long sidebar.
Judge Kaplan: OK, let's see if we have made some progress.
AUSA Sassoon: What is this exhibit?
Ellison: Alameda loans to Sam, Ryan Salame, Gary and Nishad... Paper Bird...
AUSA: What's the total in Column C?
Ellison: $8.2 billion

AUSA: How much did Ryan Salame get?
Ellison: $35 million.
AUSA: And this to Sam, what is GAP?
Ellison: Guarding Against Pandemic. It mostly gave the money to political candidates.

AUSA: Let's pull up GX 1987. Where were you when the leak happened?
Ellison: On vacation in Japan. I decided not to comment.
AUSA: What did the leaked balance sheet show?
Ellison: It understated things, it was dishonest, but it still showed risk, FTT

AUSA: What happened next?
Ellison: FTT went down and people started withdrawing from FTX.
AUSA: On Nov 6 where were you?
Ellison: Working out of the Hong Kong office.
AUSA: How did you communicate with the defendant?
Ellison: Signal.

AUSA: GX 1621, you, Nishad and the defendant. Did you start preserving messages?
Ellison: Yes, I did. Here, Nishad summarized the withdrawals. They were larger than usual, $120 million an hour.
AUSA: You wrote back with a sad face. Why?
Ellison: I was terrified

AUSA: You wrote, Ryan is asking if FTX can meet all withdrawal. Why?
Ellison: I knew we couldn't, I wondered if I should start being honest.
AUSA: What did the defendant say?
Ellison: He said, we can meet a ton but it is already large. I thought we should say, No

Ellison: Sam said someone else should tweet. I didn't want to, it would be false.
AUSA: GX 875. Do you recognize this?
Ellison: They are my tweets that day. I wrote, "We have hedges that aren't listed."
AUSA: Was the tweet misleading?
Ellison: Yes, I think it was

AUSA: What was the process for drafting this tweet?
Ellison: Sam drafted it... Gary & Nishad worked on it... I ultimately rewrote it in my own words & tweeted it.
AUSA: Is this a Google Doc of the drafts?
Ellison: Yes.
AUSA: Was this one misleading?
Ellison: Yes

Ellison: The tweet characterizes the delay as being about anti-spam and nodes. But we just didn't have the money.
AUSA: Are these the tweets of CZ of Binance?
Ellison: Yes. He tweeted, "we have decided to liquidate any FTT on our books." I was stressed out.

AUSA: Did you discuss this tweet with the defendant?
Ellison: Yes. We decided I should write a tweet in response. We had a Signal chat group.
AUSA: You said, You would buy all of Binance's FTT at $22.
Ellison: I wanted to call his bluff - his aim was to hurt FTX

AUSA: You wrote, I'm about to tweet. Did you?
Ellison: Yes.
AUSA: Let's turn to Nov 7. Did you continue to chat with the defendant?
Ellison: Yes. This was Small Group Chat on Nov 7. We had only #1 to 2 billion liquid left. I said, we could scrape up a bit more

AUSA: GX 480. Who's in these chats?
Ellison: Chats between me and Sam.
SBF's lawyer Cohen: May I consult with Ms. "Sason" for a moment?
Judge: Yes.
[A beat, a whisper]
Cohen: Fine, your Honor.
AUSA: Who wrote, I'm not going to handle it well?
Ellison: Me.

AUSA: What did Sam write?
Ellison: Wow, congrats? cuz shit is exciting?
SBF's lawyer: What's the date on this?
AUSA: It's a screen shot with out a date.
Ellison: November 7. I was having mood swings. But I felt ..relief. I didn't have to lie any more [voice breaks

Ellison: I felt bad... (sobs)
AUSA: Why were you sharing this with the defendant?
Ellison: I didn't know who else I could share it with. I didn't share my feelings about this with the defendant prior to this
AUSA: We can take that down.

AUSA: GX 407. It said reach out to Dustin, Sequoia, and others. Who were they?
Ellison: Potential investors.
AUSA: It was Briger, Genesis, Apollo, Mubadala, Silverlake - what was number six in this document?
Ellison: That we only had half of the assets.

AUSA: This says, Send a confident tweet thread.
Ellison: Yeah, Sam did that. He tweeted, "nodes can be slow."
AUSA: Did FTX customers tweet back?
Ellison: Yes. One said "can't wait for my FTX airdrop for not moving any of my funds." Sam said he might add an emoji

AUSA: Did Alameda still have lenders?
Ellison: Yes. They were recalling the loans. I wasn't sure how to balance with responsibilities to FTX customers.
AUSA: GX 410. Mr. Arora, an agent of the defendant.
SBF's lawyer: Not in the scope of the agency
Judge: Denied

Ellison: I said I could start repaying the lenders. Sam said, the small ones, fine, but not BlockFi yet. How much is Genesis?
AUSA: GX 412
[Note: this "Small Group Chat" included... Joe Bankman

AUSA: When did you meet with the FBI and prosecutors?
Ellison: December 2022.
AUSA: What had happened?
Ellison: The FBI searched my parents' home, took my phone and computer and journal.
AUSA: What info did you provide?
Ellison: The crimes we had committed.

AUSA Sassoon: Your Honor, I'm not going to wrap up in the next 15 minutes...
Judge Kaplan: How much longer?
AUSA: 25 minutes.
Judge Kaplan: We're break now. Back at 3:30.
[We'll be back then
…
Patreon Back at 3:30matthewrussellleeicp.substack.com/p/crypto-creep…
patreon.com/posts/here-is-…

They're back, with tech snafu
SBF's lawyer: I believe one of the jurors has his hands raised.
[His video monitor is not working]
Judge Kaplan: Can you share with the juror next to you?
AUSA Sassoon: I'll also limit our exhibits
Judge Kaplan: good.

SBF's lawyer: We object to testimony about the all-hands meeting.
AUSA Sassoon: We're almost done. With the government did you describe your on again and off again relationship with the defendant?

Ellison: Yes. We shared Google Docs. I shared feelings about being unhappy with our relationship, and its interaction with our professional relationship
AUSA: How did that make you feel?
SBF's lawyer: Objection! Relevance.
Judge Kaplan: Overruled.

AUSA: Is this your cooperation agreement?
Ellison: Yes... I believe I am guilty.... I made false statements on twitter, with investors as the audience.
AUSA: What about the FTX audit - was any other information being concealed?
SBF's lawyer: Objection, leading.

Ellison: I learned that $1.6 billion from FTX to Alameda was concealed from the auditors.
AUSA: Who told you?
Ellison: I believe it was Nishad Singh.
SBF's lawyer: Objection, speculation.
Judge Kaplan: I believe it is Wednesday. That is not speculation. Overruled

AUSA: Have you been sentenced?
Ellison: No.
AUSA: What do you have to do under the cooperation agreement?
Ellison: Tell the truth.
AUSA: And the gov't will do what?
Ellison: Write a letter to the judge about my crimes and cooperation.
AUSA: No further questions

Judge Kaplan: Mr. Cohen.
Cross examination.
SBF's lawyer Cohen: Just a few questions. Custmoers could wire dollars into Alameda's accounts?
Ellison: That's right.
Cohen: These dollars weren't labeled, correct?
Ellison: That's right.

SBF's lawyer Cohen: Before 2022 - we'll talk a lot about 2022 tomorrow - but before that, you did not track the dollars, did you?
Ellison: We did not have a tracking system.
Cohen: Fair enough. What did the FTX slash dot com refer to?
Ellison: Excuse me?

SBF's lawyer Cohen: FTX underscore fiat
Judge Kaplan: I am confused.
Cohen: There are two things going on here.
Judge Kaplan: Let's break for the day.
Cohen: I could tell stories of my legal career, but people might fall asleep.
Judge: On the occasion of...

Jury leave, witness [Ellison] leaves.
Judge: We can talk about [Anthopic] What about it?
AUSA: Post-collapse performance is irrelevant.
SBF's lawyer: It was a $91 million investment now worth $1 billion.
Judge Kaplan: The crime charged is that he took the money.

Judge: The government's motion on this is granted. Later, you may proffer a witness on this. The other issue concerns auto-deletion, the witness said the defendant told people to set auto-deletion on. Mr. Cohen?
Cohen: They opened the door. We want to probe

SBF's lawyer Cohen: We propose to take the witness' testimony outside the presence of the jury, then maybe in front of them.
AUSA Roos: They need to have more than this.
Cohen: I would be find asking her, Yes or No, were lawyers involved in the policy.

AUSA Sassoon: They gave us a list of exhibits they may use in cross. We have objections. But I am wary of a late evening letter-
Judge: I have a moratorium on those. Good night
Stories soon , & InnerCityPress.com
matthewrussellleeicp.substack.com/p/crypto-creep…
patreon.com/posts/here-is-…