FTX associate Caroline Ellison has admitted to hiding billions of dollars worth of loans during a plea deal. Reuters report December 23rd.
As the former CEO of Alameda Research, Ellison made an agreement with former FTX CEO Sam Bankman-Fried to allow FTX to borrow unlimited funds from Alameda. The two executives also hid that fact from investors and the general public.
Alameda Research is generally considered a sister company to FTX, as Bankman-Fried founded both companies. While FTX operated as a cryptocurrency exchange, Alameda acted as a hedge fund, allowing the two companies to work closely together.
Ellison acknowledged the financing arrangement in a statement to Federal District Judge Ronnie Abrams in Manhattan Federal Court. she said:
“We have created certain quarterly balance sheets that hide the extent of Alameda’s borrowings and the billions of dollars in loans Alameda has made to FTX executives and affiliates.”
The confession was made as part of Ellison’s plea bargain.
The fact that Ellison and fellow FTX associate Gary Wang have opted to accept a plea deal was first reported on December 21st.
Ellison’s plea bargain was unsealed today, making it clear she will face no punishment beyond fines and confiscation of assets as long as she cooperates further with authorities.
Reported elsewhere, at the request of the attorneys involved in the case, Judge Abrams Hindered Bankman-Fried’s learning Ellison and King’s cooperation. Otherwise, Bankman-Fried may have chosen to fight extradition.
Bankman-Fried is out on bail and is under house arrest at his parents’ home in Palo Alto, California. His next court date is January 3, 2023.