Caroline Ellison, the CEO of Alameda Research, and Sam Bankman-Fried, a co-founder of FTX, revealed that they purposefully mislead bankers about the money that the bankrupt investment company was borrowing from the bitcoin exchange.
Additionally, Caroline Ellison acknowledged how she hid a $1 billion loan from FTX to Alameda Research in the case file of her hearing on December 19th. She entered a guilty plea at the subsequent court, according to a Reuters article, and that Sam Bankman-Fried and other FTX officials had received “billions of dollars in hidden financing” from crypto tycoon Alameda Research.
A False Balance Sheet was used to Cover the Transaction
The former CEO of Alameda claimed that the trading company could borrow money at any time from the defunct cryptocurrency exchange FTX. The transcript also revealed that Bankman-Fried and Ellison had wanted to keep FTX’s creditors, clients, and investors in the dark about this crucial information.
In federal court in Manhattan, Ellison addressed U.S. District Judge Ronnie Abrams as follows:
“The amount of borrowing by Alameda and the billions of dollars in loans that Alameda has provided to FTX officials and linked parties were hidden by specific quarterly balance sheets that we generated.”
She is also known that Alameda has the availability of a borrowing facility on FTX.com from 2019 to 2022. Alameda can get an endless “line of credit” because of this arrangement without having to put up any security. Maintaining negative balances or being vulnerable to margin calls under the liquidation procedures of FTX.com.