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SBF Trial – 26 October 2023 - SBF Testimony (without jury)

Today SBF testified without the jury present. This appears to be a practice for the judge, to help judge Kaplan decide what the jury should and should not be allowed to hear. SBF will testify for real tomorrow, (unless he changes his mind overnight). The judge has not told the jury that this is going on.

THE COURT: There is something that has to happen at this point in the trial that will take a couple of hours, and that is not something that concerns you. In consequence, you've got the rest of the day off. We'll see you at 9:30 tomorrow morning.

THE COURT: Now just so that everyone who has taken the trouble to get here today understands what is going on and why, there are a number of areas of potential testimony from Mr. Bankman-Fried that the defense wishes to elicit. The government asserts that I shouldn't hear any of it, or, to be more precise, that the jury shouldn't hear any of it. And despite a great deal of effort on the part of everybody concerned, the amount of information that I have to date is, in my judgment, inadequate to resolve the admissibility of this testimony, in significant part because it's not sufficiently detailed or specific. I have the authority under the rules of evidence to conduct a hearing so that the defendant can put in the evidence for my ears alone, following which I'll be in a position to rule one way or another as to whether the evidence is admissible before the jury

Cross examination began with discussions about the auto-deletion of Signal messages and document retention policies

Q. Is it your recollection that the policy expressly authorized deleting company communications that did not fall within the regulated categories?
A. That is my memory, yes.
Q. Where is this written policy?
A. I'm not sure if my answer is admissible.
THE COURT: Don't worry about that. You worry about Blockchain explorers. I will worry about what's admissible.
A. When I was a member of the company, I remember interacting with the policy and discussing it. As part of this case I think we have been unable to serve the subpoenas we have requested asking for it.

Q. I think you said you mentioned in passing that you set this auto-delete feature on Signal. Did you ever discuss with a lawyer whether that was covered by this policy?
A. Yeah.
Q. With who?
A. With Dan Friedberg.
Q. When?
A. This was around the time that he was discussing the auto deletion and data-retention policy with us, which my memory was late 2021.
Q. So which is it? Did you just mention that you were putting on this setting or did you seek approval from Dan Friedberg?
A. I think -- I apologize. I may have misinterpreted. I interpreted your early question as what conversations I had contemporaneous with when I originally changed that setting, which my memory it was prior to the discussions around the auto-deletion policy. So there is no formal policy around it when I had initially changed the default settings on my Signal
app to one week, but we did have formal discussions about it in connection with the data-retention policy which happened some number of months later.
Q. Just to make sure I follow your testimony, you implemented this setting and later this policy was put into place?
A. I believe that is correct, yes.

Q. Is that the document retention policy you've been talking about?
A. No, this is not.
Q. And does it resemble in substance what was in the retention policy you've been talking about?
A. No, it does not.
Q. So the supposed policy you've been testifying about, you have no record of it sitting here today.
A. That's correct. We have requested it numerous times.
SBF mentions in late 2021 that “Trabucco was slowly drifting effectively towards retirement”

A. I think late 2021. I don't remember the exact time.
Q. And what was your involvement in Alameda at that point?
A. So this was after the CEO role had transitioned to Caroline Ellison and Sam Trabucco. It was during a period where it was, you know——Trabucco was slowly drifting effectively towards retirement, so it was primarily Caroline. I was involved in a few areas of Alameda. I was particularly involved in venture-related investments, and later on I became involved in
hedging decisions. I was not on a day-to-day level involved in other topics that I can recall——there——there may well be one or two I'm forgetting there——although I would get periodic updates from Caroline about it and she would sometimes elicit input from me.
North Dimension Bank, blaming Dan Friedberg for several failings and SBF repeating the phrase “I don't recall”

Q. First of all, whose idea was it to incorporate North Dimension?
A. It was communicated to me by Dan Friedberg. I know there were others involved. I'm not sure whose idea originally North Dimension in particular was.
Q. You've described a couple things now where you've said that something was Dan Friedberg's idea.
A. Mm-hmm.
Q. Can you explain generally the relationship between you and Dan Friedberg, and generally, were you giving him direction or was he just popping ideas on your desk?
A. There were some of each. That relationship, it changed a little bit over different periods of time. I can just give an overview. If there's a specific time period you want me to zoom in on, I'm happy to do that as well.
Q. Let's focus first on North Dimension. Did you give Dan Friedberg any direction about North Dimension?
A. I don't recall giving specific direction to him about it. Yeah, no, I don't recall giving a direction to him about it.
Q. And why the name North Dimension for this entity?
A. I honestly don't know where the name came from.
Q. So is it your testimony you didn't come up with the name?
A. That is correct.

Q. And is it your testimony that as CEO of Alameda, you had no insight into why Alameda stopped receiving customer funds into a bank account in Alameda's name?
A. I——it is correct that I do not know why it incorporated North Dimension. It wasn't a project that I was driving, although it was one that I was made aware of. I had contextual clues that I could try to draw on, but in general, I was——even for companies that I was fully running day to day, there were a lot of things that happened that I was either not informed of
or after the fact sort of summarily informed of, and at that point with Alameda, I was still CEO, I was still involved sometimes in the day-to-day operations, but I often was not. I was, you know, about halfway, I would say, through transitioning from running Alameda day to day to running FTX
day to day.

Q. What, if anything, did you discuss with Dan Friedberg about the purpose of this bank account?
A. I'm not sure I remember having discussions before or at the time about the purpose of the bank account. I know that there had been——yeah. Sorry. I'm not sure that I did. I'm not sure that I did entirely. I just don't recall any in particular.

A. Whose decision was it to roll it out for FTX or to open the bank account or——
Q. To use North Dimension to receive FTX customer money.
A. I'm actually not entirely sure whose decision it originally was. I think Nishad was the one who added it to the code base, but presumably that was after conversations with other people. I'm not sure who sort of made that decision initially.

Q. So what conversations, if any, did you have with lawyers about the permissibility of using North Dimension to receive FTX customer funds?
A. We had conversations around Alameda generally acting as a payment processor, as a payment agent for FTX, which were, you know, memorialized in a payment agent agreement, and I had conversations with that at a high level with lawyers, and I was at least aware of conversations that were happening with the ccountants and auditors around that as well. I know that there were lawyers who were, I mean, involved in and driving the incorporation and usage of North Dimension as part of this payment agent. I'm not sure if I initiated a specific conversation after seeing it around that, the——it was initiated with me. But yeah.
THE COURT: So I take it the answer is you don't remember; is that about it?
THE WITNESS: I don't remember that specifically. I do know that lawyers were involved in that decision. I don't know that I specifically
THE COURT: No. The question was about conversations you had.
THE WITNESS: That's right.
THE COURT: So the answer is you don't remember; is that right or not?
THE WITNESS: Sorry. I want to make sure I'm answering the right question. Conversations that I had with lawyers around——
THE COURT: The permissibility of using North Dimension to receive FTX customer funds. That was the question.
THE WITNESS: Right. No, I——not unless you count conversations I had around the permissibility of using Alameda as a payment agent, and North Dimension was a wholly-owned subsidiary of Alameda. I don't know that I had conversations around the permissibility of North Dimension in particular.
THE COURT: Listen to the question and answer the question directly.

Q. And did you read in one of those reports that Friedberg says he could not recall who asked for North Dimension to be formed but it would have been either you or Andy Croghan?
A. I don't specifically recall reading that, no, but it very well may have been in there.
Q. Is it possible that you asked Dan Friedberg to form North Dimension?
A. I don't recall doing so.

Q. Do you recall reading in the report that Friedberg said he was not part of any discussion of FTX customer funds depositing into Alameda Research accounts?
A. I remember hearing that that had been there.

Q. So I'm not asking you that. I'm asking whether, according to you, Dan Friedberg was in fact part of discussions of FTX customer funds depositing into Alameda Research accounts.
A. So just to clarify, I do think that Dan Friedberg——I do remember Dan Friedberg being involved in discussions relating to Alameda being——Alameda bank accounts being used as a way to accept deposits from customers of FTX.
SBF says that with respect to the North Dimension deposits, the payment agent agreement does allow Alameda to spend FTX customer deposits!

Q. And the payment agent agreement that we looked at during your direct testimony, does it say anything about Alameda being authorized to spend FTX customer funds?
A. So I believe that it authorizes——that it gives a fair bit of discretion to Alameda about what it——how it acts in general, clarifying that it has an obligation upon demand to FTX of that amount of money, but not specifying that it has to be——what has to——what Alameda has to do with any of it, of its assets. That is my understanding of it.
Q. So is it your understanding that under the agreement Alameda was permitted to spend FTX customer deposits?
A. I wouldn't phrase it that way. But I think that the answer to the question I understand you to be trying to ask is yes.

Sam was the repeatedly asked to point to the part of the agreement that authorized Alameda to spend the FTX customer funds. Sam eventually responded:

A. So I——there is the line that the——that FTX may, without notice or demand, without notice to or demand on provider, transfer any crypto or cash asset on hand to the provider, to Alameda, to be held and/or transferred by provider. I would have interpreted that as saying that Alameda had the right to hold or transfer those assets and that ——the——what these represented was, in the return section, a secured liability, and that it was secured, as described in the lien section, by a lien against the provider, in this case Alameda, which would implicitly have access to all of Alameda's assets, which is how I would imagine describing a contractual loan obligation, effectively.
Q. Did any lawyer at FTX tell you that any language in this agreement meant that Alameda could spend FTX customer deposits?
A. I don't know that I had contemporaneous conversations with lawyers about exactly what this agreement meant.

Q. As far as you know, was this agreement ever disclosed to the public?
A. I'm not sure if it was.
On Alameda’s “allow negative” account feature, it appears in our view as if SBF is being particularly evasive and pretending not to understand the question when repeatedly asked if he knew about this feature. The judge even said that “the witness has what I'll simply call an interesting way of responding to questions for the moment”.

Q. So "Allow Negative," in May 2022, you were not aware of it by name?
A. I don't recall being aware of it then, no.

Q. Okay. And you mentioned that at this time you were not aware of "Allow Negative" by name.
A. Yeah.
Q. So I just want to clarify.
A. Yeah.
Q. Were you aware that Alameda could go negative regardless of the name for that feature?
A. I was aware that Alameda and many other accounts on the exchange, in fact most by volume, could go negative in a particular asset. That was a core property of FTX as an exchange. I'm not——but I——I'm sorry. I'm probably not
addressing your——your question.

Q. Were you aware at that time in May of 2022 that Alameda could have an overall negative balance on FTX?
A. By an overall negative balance, are you referring to a negative balance, a negative net asset value, or are you
talking about a negative balance in a particular asset, or are you——sorry. I just want to make sure I understand what you
mean by overall.
Q. That if you added up all the accounts, they could have a overall negative balance.
A. And adding up all assets, not talking about particular assets; is that correct?
Q. That's correct.
A. Okay. My understanding was that we were ensuring that Alameda's——at that time my understanding was that we were ensuring Alameda had a positive overall net asset value on FTX. I was not sure whether that was enforced into a code base or whether that was something that we inspected to confirm it was true. It was something that I had discussed at various points with Gary and others, and had checked that Alameda's overall net asset value on the platform had remained positive.
Q. So when you said that you were not aware of "Allow Negative" by name but you had some understanding of it, tell me what you meant by that.
A. So I'm not sure that——I apologize. I might be misunderstanding what the "Allow Negative" feature did. I——I——I think I've given you what my understanding was, but I suspect I might be wrong about what it——what it did.
Q. Well, let's talk about Alameda's main trading account. Are you aware that that main trading account could go negative?
A. And so to clarify, you're talking about info@, the main account, or the entire user?
Q. The info@ main account.
A. So account No. 9.
Q. Yes.
A. And by "go negative," you're talking about negative in a particular coin or negative net asset value?
Q. Just have a negative balance, Mr. Bankman-Fried.
A. Sorry. I——
Q. Let me make this easier for you.

THE COURT: Well, look, I'm going to allow this. I understand your point.
I've gotten beyond my tether here. I'm going to allow this. I am going to acknowledge the point you make, but all things are relative, and there is a good deal to what the government says also, and part of the problem is that the witness has what I'll simply call an interesting way of responding to questions for the moment.
Q. Mr. Bankman-Fried, in May of 2022, were you aware that account ID 9 could have an overall negative value?
A. I am giving you my best guess at answering the question.
Q. I'm not asking for a guess. I'm asking what you understood at the time.
A. I am going to answer what I think the question you are asking is, but I apologize if I'm answering the wrong question. I don't know exactly what that cell was referring to. As of May 2022, I believe that I did not have any specific knowledge about the extent to which, for instance, one
subaccount of Alameda Research's info@ account, as in, i.e., the account number 9, was treated as part of a collection of or separate from other subaccounts of that user or other users affiliated with Alameda. What I believe I knew at that time was, or at least what I believed at that time was that Alameda overall maintained a positive net asset value on FTX. I don't think at that time I had specific beliefs about how that did or didn't apply to a particular subaccount of Alameda's. I'm assuming that overall net asset value, rather than value in a particular coin, is what I think that you are going for here, so that's how I was answering that question. That is my answer as of that time.
THE COURT: Mr. Bankman-Fried, you have been asked that question in one form or another quite a number of times and not once did the question include the phrase net asset value. Unless I'm mistaken, every single answer you have given responded on the assumption that counsel had asked you about
net asset value. Now, that's just an observation. If I'm mistaken, I'll stand corrected, but it says what it says
A. I apologize if that's correct. If that's true, I don't know what you mean by negative balance.
The moment SBF answered a question when he didn’t need to….

Q. Is that the limit of your understanding of what it means to safeguard assets?
A. No. I apologize. I think that answer was cut short a small fraction the way it's written. There are a number of things that I would have considered to be related to that.
Q. Would that include not embezzling customer assets, for example?
MR. COHEN: Objection.
THE COURT: Sustained.
A. Yes, it would include that.
MR. COHEN: You didn't have to answer if it has been sustained. Haven't you been sitting here for four weeks.
THE WITNESS: I felt the need to answer that one.
SBF when asked if its ok to take customer deposits

Q. Did you have conversations with CEOs of crypto exchanges about whether it was proper to use customer money out of omnibus crypto wallets for purposes other than customer trading and withdrawals and the like?
A. Let me, A, apologize if this isn't responsive, so tell me that. I will try to be responsive. I certainly did not have conversations with CEOs about them discretionarily taking funds from -- as CEO of the exchange from customer omnibus wallets for their own personal expenses.

Q. What about CEOs discussing using customer funds in omnibus crypto wallets for the spending of their affiliated companies?
A. So, once again, I will give a specific answer, but if this is not scoped correctly, tell me.
Q. Go ahead and give your answer, and I will ask another question if it's not responsive.
A. Thank you. I certainly did not have conversations with CEOs about them as CEO of an exchange, taking -- using funds from omnibus customer wallets for their own spending of any sort. However, I'm not entirely sure what the implied relationship there was between the CEO of the exchange and the affiliates, so it's hard for me to answer that.
Q. Let me ask it another way. Did you have any conversations with industry participants that led you to believe that it was proper for you to spend customer cryptocurrency deposited into omnibus crypto wallets for your affiliates?
A. So let me again attempt to answer that. What I did have discussions with industry participants about was on margin wallets for margin exchanges that
customers, including in some cases affiliates, might have borrows. They might have liabilities. And those would necessarily have come out -- been part of the net customer balances. There were negative numbers in those customer balances that added up to the overall customer balances. That would be a separate thing from a flow-of-funds perspective than the CEO not as a customer but as just the exchange or the CEO of the exchange using funds from customer wallets for corporate expenses.
Q. I apologize now. Now I'm apologizing. I don't know that I understood that answer.

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More from @BitMEXResearch

Oct 27
SBF Trial – 27 October 2023 – SBF Direct Examination from the defense

Q. Did you defraud anyone?
A. No, I did not.
Q. Did you take customer funds?
A. No.
Q. We're going to talk in detail about what happened at FTX, but can you tell us big picture.
A. Yeah. At a high level, there are multiple different types of exchanges. There are spot exchanges, which is where a customer deposits a hundred dollars to buy a hundred dollars of Bitcoin, or hundred dollars of Ethereum. And there are margin exchanges. On margin exchanges, customers might deposit a hundred dollars to buy $500 of Bitcoin or to sell $200 of Bitcoin that they don't have, to borrow; customers might also deposit a hundred dollars to withdraw $50 of Bitcoin that they don't have, going negative in Bitcoin. FTX was predominantly a margin exchange. The vast majority of activity happened on margin on FTX. When you have a margin exchange, you know, you can think of it in some ways like a mortgage. You know, if you have a hundred-thousand-dollar house, you might take out a $10,000 mortgage against that. That would be the equivalent of, you know, having a deposit of some number of Bitcoins, withdrawing dollars against that. And the biggest risk for margin exchanges in general, and for FTX, is what happens if one of those is threatening to go bad; that is to say
MS. SASSOON: Objection, your Honor. Narrative
Q. Mr. Bankman-Fried, did you make any mistakes along the way?
A. Yes, I made a number of small mistakes and a number of larger mistakes. By far the biggest mistake was we did not have a dedicated risk management team, we didn't have a chief risk officer. We had a number of people who were involved to some extent in managing risk, but no one dedicated to it, and there were significant oversights.
Alameda’s first office

Q. Where was Alameda's first office?
A. The first office, it was in——it was a airbnb that we rented out in North Berkeley, California.
Q. Can you describe the layout of that airbnb.
A. Yeah. So it was listed as a two-bedroom airbnb. There were three of us, but it had an attic, so that seemed like three bedrooms to us. There was a living room which was a couch, so a fourth bedroom. And then the rest of the area here was the office. We packed that with desks and computers, and mostly boxes from Amazon. Eventually we had to start dealing with the cardboard box problem pretty soon. And after overflowing that apartment, after a few months, we got a more traditional office space in downtown Berkeley.
The Alameda split in 2018

SBF claims that after the split, teh fund made 50% to 100% annualised returns

Q. Okay. Coming back to Ms. Ellison, about when did she join the company?
A. She joined in——right around late February or early March of 2018.
Q. And after she joined, did anything happen?
A. Yeah. There was a split, a schism, in the company. There were sharp divides between two groups of the company, and ultimately one of them resigned and took most of the capital with it.

See this Tweet:

Q. What did you say to Ms. Ellison?
A. I——I said that I was——I apologized for not telling her earlier when problems had started bubbling up that I suspected that there might be bigger problems.

Q. Okay. Now after this schism and half of the company left, what happened to Alameda's performance?
A. It did——I felt like it did quite well after that. We had addressed the——the problems that had led to the schism. We had dozens of weeks of profit in a row. We were making between 50 and a hundred percent returns annualized.
Read 5 tweets
Oct 16
SBF Trial - Nishad Singh Testimony – 16 October 2023

Just as for the other FTX insiders, a quick admission of the crimes committed at the start

Q. What was your job at FTX?
A. I was the head of engineering.
Q. Did you commit financial crimes while at FTX?
A. I did.
Q. What crimes did you commit while working at the company?
A. I defrauded customers, investors, I participated in money laundering, and I violated campaign finance laws.
Q. Did you commit those crimes on your own or with others?
A. With others.
Q. Who?
A. Sam Bankman-Fried, Gary Wang, Caroline Ellison, Ryan Salame.
The $1 billion investment in Genesis Digital Assets. SBF, Ramnik, and Ryan Salame visited Kazakhstan to make the deal. SBF “called the shots” with the investment.

Q. Okay. So starting with the top of the sheet, do you see in column A2 and A3, Genesis Digital Assets?
A. Yes.
Q. And do you see the——in column E, what the category of that is?
A. Yes. Mining.
Q. So are you familiar with an investment in Genesis or a mining company?
A. Yeah. I don't——yes. I don't recognize the name Genesis Digital Assets, but I know that Sam, Ramnik, and Ryan Salame visited Kazakhstan sometime in late 2021 or early 2022 to look into making a deal with a mining firm there, and I heard later in 2022 from Ramnik that they had spent a billion dollars on it.

Q. What, if any, involvement did the defendant have in acquiring or investing in the mining company you heard about?
A. I think he was calling the shots there. He went to go visit them for multiple days. That's a pretty extreme sort of sacrifice in Sam's calendar.
$500m Anthropic Investment - SBF had “extreme” involvement in the deal

[This appears to have subsequently been a very good investment from a returns perspective]

Q. Let's take a look at row 4 here on the spreadsheet. Do you see a payment to a project name called Anthropic and the investment amount of $499,999,900?
A. Yes.
Q. Are you familiar with Anthropic?
A. Yes, I am.
Q. What is it?
A. It's an AI company focused on AI safety.
Q. Do you know what the almost $500 million to Anthropic was for?
A. I know what we were told it was for. It was compute.

Q. Did you have conversations with the defendant about a payment to Anthropic?
A. I did.

Q. What did the defendant say to you?
A. That we were going to invest $500 million in Anthropic.
Q. Okay. And what involvement, if any, did the defendant have in the Anthropic investment?
A. Extreme amount of involvement. I was in the Hong Kong office

Q. Based on your conversations and your observations, what, if any, involvement did the defendant have in the Anthropic investment?
A. He set it up and decided on it.
Q. What entity does the spreadsheet say was the investment entity for these Anthropic investments?
A. Alameda Research Ventures LLC
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Oct 16
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In the summer of 2011, the Bitcoin price crashed down to just 1 cent.

Read the 🧵 below to find out more. Image
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Oct 11
SBF Trial – 11th October 2023 – Caroline Ellison Testimony Day 2

June 2022 market crash and Gensis asking for loans to be re-paid

Q. Apart from coins, the trading that Alameda was doing on various exchanges.
A. The day-to-day trading that we were doing during this time was profitable.
Q. And after the value of many of Alameda's cryptocurrency coins went down, what kinds of conversations, if any, were you having with the defendant about Alameda's assets and balances?
A. He started asking for a lot more frequent updates on Alameda's positions. I was sharing balance sheets and, yeah, talking about Alameda's assets and liabilities.
Q. How did the downturn in the cryptocurrency market affect the billions of dollars in loans that Alameda had around this time from third-party lenders like Genesis?
A. They started to be recalled a bit after the market downturn, so mostly starting in the middle of June.

Q. How did you learn about Alameda's third-party lenders asking for their money back?
A. A variety of sources. Some was from messages on Slack from other Alameda employees, some was from being in Telegram groups or in calls directly with lenders.

Q. Ms. Ellison, is that a Telegram chat?
A. Yes, it is.
Q. And what is the date of this Telegram chat group?
A. The date of these messages is on June 13, 2022.
Q. And generally who is part of this group? I see a number of names at the top, but generally who are these folks?
A. These are either Alameda employees or affiliates or Genesis employees.

Q. And can you read the top message from Matt Ballensweig. Who is Matt Ballensweig?
A. He was the head of lending at Genesis.
Q. If you could read that.
A. It says, "hey, guys - seeing a fair amount of continued outflows from retail deposit aggregators, so to get ahead of this, we're going to increase the OT loan pullback to $400 million. Can you please let us know once the first batch and second batch are sent. Do we have an ETA on the first 250 million?"

Q. What was your reaction to third-party lenders all asking for their money back around the same time in mid-June?
A. I was very stressed out, and we were talking about billions of dollars, and I knew that Alameda had lost a lot of money in the cryptocurrency market downturn and we didn't have the liquid assets to pay all of the money back and that we would have to be taking money from FTX.
Q. When you say "we would have to be taking money from FTX," what do you mean?
A. I mean in order to repay all of our loans, we would have to borrow money using our FTX line of credit.
Q. And whose funds would that be?
A. That would be coming from customer funds.
Q. Ms. Ellison, I'll ask you again: What was your mental state when you realized that Alameda had billions of dollars in loans to repay and that it didn't have the money?
A. I was in sort of a constant state of dread at that point. I——I knew that we would have to take the money from our FTX line of credit and I knew that that was money that could be called at any time, and every day, I mean, I was worrying about the possibility of customer withdrawals from FTX and the possibility of this getting out and what would happen to people that would be hurt by that.

Q. And when you say you understood him to be telling you to use Alameda's line of credit on FTX, can you spell out what you mean.
A. I understood that he was telling me to use FTX customer funds to repay our loans.
Q. And why was that your understanding?
A. Because I had shared Alameda's balance sheet information with him that showed that that was the only source of capital large enough to repay all of our loans. We also had, you know, had many discussions in the past about using this FTX line of credit for various Alameda purposes, including discussions about using it as a——a backstop if our loans were called, so I——yeah, I considered that to be the most reasonable and really
the only option on the table.

Q. Over what time period did you repay Alameda's lenders?
A. A lot of it was in June, and there continued to be loan recalls over the next few months as well.

Q. By the way, we saw this term "FTX borrows" here and on a spreadsheet we looked at yesterday. Why did you call money being taken from customers "FTX borrows" in your spreadsheet?
A. I guess I wanted to strike a balance of identifying what it was, but, I mean, I didn't want to say explicitly something like FTX customer money.
Q. And why didn't you want to say explicitly in a spreadsheet FTX customer money?
A. Because Sam always directed us to be careful about what we put in writing and not put things in writing that might get us in legal trouble.
Q. And did you consider putting something like "FTX customer money" in that category?
A. Yeah, I did.
Q. So according to this spreadsheet, at the time that you made it, around mid-June, how much money had Alameda borrowed from FTX customers at that point?
A. Around $13 billion.
The state of FTXs asset miss match in June 2022

Q. And so at the time how much US dollars, for example, had customers deposited versus how much was available for them on FTX?
A. They had deposited $13 billion, and only $3 billion was available on FTX.
Q. And what about Bitcoin?
A. Bitcoin, they deposited about——they had deposited $2.9 billion and it was——2.17 billion was left on FTX.

Q. So let's take the example of BRZ, which is second from the bottom. What is BRZ?
A. I think a stablecoin that tracks the Brazilian real.
Q. And how much of customers' BRZ had Alameda taken off FTX?
A. This spreadsheet shows it had taken a hundred percent.

Q. We saw in column H more than $15 billion of customer money that had been deposited with FTX. What happened to all that money apart from the remaining 6.8 billion?
A. It had been taken by Alameda.
Q. And to be clear, is this before Alameda had repaid all of its lenders?
A. Yes, that's right
Read 27 tweets
Oct 10
SBF Trial – 10th October 2023 – Caroline Ellison Testimony

Just like with other witnesses, quick admission of crimes at the start:

Q. When you were working at Alameda, did you commit any crimes
A. Yes, we did.
Q. When you say "we," who do you mean by "we"?
A. I mean Sam and I and others.
Q. What kinds of crimes did you commit with Sam?
A. Fraud, conspiracy to commit fraud, and money laundering.
Q. Who did you defraud?
A. The customers of FTX, the investors in FTX, and lenders to Alameda.
Q. And just to be clear, did you commit these crimes alone?
A. No. They were committed with Sam.

Q. What are some of the ways that Alameda was able to steal customer money?
A. We had access to an essentially unlimited line of credit on FTX, and we received FTX customer funds directly into our bank accounts as part of the FTX fiat deposit system.
Q. And what was the defendant's role in taking that money and spending it on Alameda?
A. He was the one who set up the systems that allowed Alameda to take the money, and he was the one who directed us to take customer money to repay our loans.

Q. You said you defrauded Alameda's lenders with the
defendant. How did you defraud Alameda's lenders?
A. I sent balance sheets to our lenders at the direction of Sam that incorrectly stated the amount of our assets and our liabilities and made Alameda's balance sheet look less risky than it really was.
Caroline joined Alameda in March 2018, she learnt things were bad pretty fast and SBF appears to have tricked her into joining

Q. When you started working at Alameda as a trader, what did you learn shortly after starting this new job?
A. Shortly after I started, I learned that the company was in much worse shape than I realized. Right before I had started working there, they had suffered large losses and just discovered them. Right after I started working there, the lenders pulled out a lot of their money and more than half of the company ended up quitting.
Q. When the defendant offered you a job at Alameda, had he shared with you the rough circumstances at Alameda?
A. No.
Q. And when you learned about it, did you discuss this with him?
A. Yes, I did.
Q. And what did you talk about?
A. I asked why he hadn't shared more of this information. He apologized and he said that he hadn't known how to tell me.
According to Ellison, SBF had a plan to borrow FTX customer funds for speculative investments, right from the start

Q. Of course. What was the defendant's involvement in using FTX customer money as a source of funds for Alameda in those early days at FTX?
A. He said that FTX would be a good source of capital, and he set up the system that allowed Alameda to borrow from FTX.
Read 14 tweets
Oct 2
We are listening to another @agerhanssen Twitter spaces so you don’t have to.

CAH is going to write a book about all this. It is a super interesting case and a big fraud, which Calvin and Craig colluded together to do.
@agerhanssen CAH: Calvin wrote this below email "from his heart" and Calvin really beleived Craig had the keys.

@agerhanssen CAH: Craig was completely demolished in the COPA mock preparation trial. After the mock trial and increasing pressure to find the keys, Craig said he found a new hard drive with “serious shit” on it. Then CAH found the search history, where CSW searched how to fake documents.
Read 7 tweets

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